FACTS BEHIND BANKS PROFITABILITY HAVING CRAWL OUT OF THE GLOBAL FINANCIAL SCRUNCH AND THE CBN SANITISATION
BY OKEMAKINDE adeyinka

It is obvious and need be point out the facts behind the financial figures depicting profitability among banks in the industry in the last three quarters.
Close to 98% of the banks in the industry has in the last quarter showed surpluses on the faces of their financials having survived the global financial crises which has left an indelible experience in the financial industry globally. Economies of the world have bowed to this shocking and yanked off experience and even the world topmost where it all started.
Policy enactment and implementation by central banks of various economies almost proved inefficient and unrealistic as the situation was like but not the first of its kind.
For a country like Nigeria it was nothing but a double blow to her immature and youngly milked financial industry which has posed a lot of challenges in the aspect of profitability, liquidity and provision of full employment both for private and public sector.
Most organization in the last two years has being failing to meet their major objectives and the expectations of their stakeholders and shareholders at large.
In the banking industry however, about ninety nine percent of the banks declared deficit and about thirty five percent had a case of a negative capital both in the wake and departure of this sad experience. The central bank of Nigeria at this time carried out a thorough examination of the books of all the banks and came up with a three list categories of banks namely; the strong, weak and fair. The weak are the banks with the negative capital which has lead to the controversial and ongoing recapitalization and or sell off of these banks.
However, in the last quarter of this year most of Nigeria banks financial statement are showing profit and even the weak classified banks and this has made us raised our spectacle of research into this fast turnaround and here are the findings;
Their profitability were not made from real / normal banking business as most banks are not lending to the real sector or has frantically shot their doors to credit provisions but only lend to few prime customers and this was showed in the fall of their GROSS EARNINGS compared to last year when their was deficit
Thirty percent of their profit was made from investment in government securities, like treasury bills, bonds etc
Forty percent was made from savings in their overheads and other general expenses which lead to the layoff of a large number of staffs and the unwelcome cut down of salaries.
Five percent was recoveries from over provisions / excess bad debt provisions.
These and many more have been given a lot of organization some concern and majorly those that milks from the banks about their inability to make profit and forgetting the fact that their was no real banking transactions that could spill over and translates to business opportunities.
Most times their were always idle liquidity in the system and this has made one of the former CEO’s speech “Idle funds seeking destination in Africa”, these excess were not given to the real sector in a bid to avoid CBN sleg Hammer hence the economy growth and development being hindered.