Several major Nigerian banks have failed to meet the February deadline for submitting their audited financial reports, causing concern among investors and market analysts. The Central Bank of Nigeria (CBN) is currently reviewing the banks’ results to ensure compliance with financial regulations and best practices.
Major Banks Miss Submission Deadline
The financial reports for the 2024 business year were expected to be submitted to the Nigerian Exchange (NGX) by the end of February. However, leading banks such as Guaranty Trust Holding Company, Zenith Bank, Access Holdings, United Bank for Africa (UBA), and Stanbic IBTC Holding Plc did not meet the deadline.
These tier 1 banks, which collectively control over 75% of Nigeria’s banking sector, cited delays in obtaining approval from the CBN as the reason for their late submissions. The banks explained that they had already completed their internal reviews and board approvals but were waiting for the CBN’s final clearance before proceeding with the public disclosure of their reports.
Regulatory Process Delays Release
The process for releasing audited financial reports involves several steps. First, the board of directors of a bank reviews and approves the financial statements and dividend recommendations. Once this is done, the approved documents are sent to the CBN for regulatory scrutiny. After securing CBN approval, the reports are then forwarded to the Securities and Exchange Commission (SEC) and the NGX for public release.
The affected banks have confirmed that they have completed their board approvals and forwarded their results to the CBN. However, without clearance from the apex bank, they cannot proceed with publishing their reports or making dividend declarations to shareholders.
Market Reacts to Delay
The delay in releasing the financial results has had an immediate impact on the Nigerian stock market. Investors who had been expecting these reports responded by selling off bank stocks, leading to a decline in the NGX Banking Index.
Over the past two days, the NGX Banking Index has been the worst-performing sector in the stock market, recording a 1.8% drop on Tuesday and a 1.2% decline on Monday. This contributed to an overall slump in the Nigerian equities market, with the All Share Index (ASI) falling by 0.5% on Tuesday. Market analysts warn that continued uncertainty in the banking sector could further affect investor confidence.
David Adonri, Managing Director of HighCap Securities, described the situation as having a “contagious effect” on the broader stock market. He noted that banks play a crucial role in determining market direction due to the large volume and value of their trades. Similarly, analysts at Cordros Capital linked the current market downturn to the banking sector’s underperformance.
NGX Rules on Financial Reporting
Under the NGX’s post-listing rules, all publicly traded companies are required to submit interim (unaudited) financial reports within 30 days after the end of a quarter. Full-year audited reports must be submitted within 90 days after the end of the financial year. If a company chooses to audit its quarterly accounts, the deadline for submission is extended to 60 days after the quarter’s end.
Since most Nigerian banks follow the 12-month Gregorian calendar as their business year, those that opted to audit their fourth-quarter results had until February 29, 2025, to submit their audited financial statements. However, banks that submitted unaudited interim reports for the fourth quarter have until March 31, 2025, to file their full-year audited reports.
Failure to meet the earnings report deadline carries penalties. The NGX imposes fines ranging from N100,000 to N100 million on companies that fail to comply. Additionally, defaulters risk being tagged with poor corporate governance ratings, which can affect their stock performance and investor confidence. In extreme cases, the NGX has the authority to suspend trading on the shares of companies that consistently fail to meet reporting deadlines.
Possible Waivers and Extensions
Despite the strict regulations, the NGX has the discretion to grant extensions or waivers under special circumstances. These may include national crises, extended holidays, or industrial disruptions. Companies may also apply for an individual extension if they provide a valid reason for their delay.
Several banks have indicated that they have received regulatory extensions that allow them to submit their financial statements after the deadline. This means that while they are technically late, they may not face significant penalties if their extensions are approved.
What This Means for Investors
For shareholders and potential investors, the delayed reports mean uncertainty over banks’ financial health and dividend payouts. Many investors rely on these financial statements to make informed decisions about buying or selling stocks. With the banking sector being a key driver of Nigeria’s capital market, prolonged delays could lead to increased volatility and reduced investor confidence.
Market experts are advising investors to remain patient while awaiting further clarification from the CBN and the NGX. They also urge the regulatory bodies to expedite the review process to prevent further market instability.
