Five banks declared N67.89bn in foreign exchange gains.

Five banks declared N67.89bn in foreign exchange gains in the first half of 2024, according to their interim reports analyzed by The PUNCH. This amount is about 67.89% lower than the N211.42bn recorded in the same period of 2023.

The banks involved are FCMB Group, Ecobank Transnational Incorporated (ETI), Wema Bank, Sterling Financial Holding Company, and Jaiz Bank. FCMB Group reported N35.19bn in unrealized forex gains, down from N50.99bn in the previous year.

ETI recorded N21.07bn, a significant drop from N156.28bn in 2023. Wema Bank’s forex revaluation income increased to N6.20bn from N623.02m, while Sterling HoldCo posted a gain of N5.34bn, up from N3.63bn. Jaiz Bank recorded N73.89m in unrealized forex gains, reversing a loss of N110.31m in the previous year.

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FCMB Group

**Foreign Exchange Gains:**
– **2024 H1:** N35.19bn (unrealised)
– **2023 H1:** N50.99bn

**Explanation:**
– FCMB Group attributed the gains to the revaluation of foreign currency-denominated assets and liabilities held in the non-trading books.
– The Central Bank of Nigeria’s more liberal foreign exchange management system in 2023 resulted in a significant movement in the naira exchange rate against the US dollar, which impacted these gains.

Ecobank Transnational Incorporated (ETI)

**Foreign Exchange Gains:**
– **2024 H1:** N21.07bn
– **2023 H1:** N156.28bn

**Explanation:**
– ETI recorded N21.07bn as forex translation gains, significantly lower than the N156.28bn posted in the previous year.

Wema Bank

**Foreign Exchange Gains:**
– **2024 H1:** N6.20bn
– **2023 H1:** N623.02m

**Explanation:**
– Wema Bank’s forex revaluation income surged to N6.20bn in the first half of 2024 from N623.02m in the same period in 2023. This increase is substantial but is still about half of what the bank earned in the full year 2023 (N13.60bn).

Sterling Financial Holding Company

Foreign Exchange Gains:
– **2024 H1:** N5.34bn
– **2023 H1:** N3.63bn

Explanation:
– Sterling HoldCo reported a forex revaluation gain of N5.34bn, higher than the N3.63bn recorded in June 2023.

Acknowledgment of Windfall Tax:
– Sterling HoldCo acknowledged the proposed 70% windfall tax on realised profits from all foreign exchange transactions of banks. The company noted that the bill is currently undergoing the legislative process and would review its full impact once the law is enacted.

Jaiz Bank

**Foreign Exchange Gains:**
– **2024 H1:** N73.89m (unrealised)
– **2023 H1:** Loss of N110.31m

Explanation:
– Jaiz Bank experienced an unrealised forex revaluation gain of N73.89m, a significant turnaround from the N110.31m loss in the previous year.

FBN Holdings.
**Foreign Exchange Losses:**
– **2024 H1:** N80.85bn
– **2023 H1:** N192.57bn

Explanation:
– FBN Holdings reported a forex revaluation loss of N80.85bn, which, although a loss, is an improvement from the N192.57bn loss in the corresponding period of last year.

Government’s Windfall Tax Proposal.
– In mid-July, President Bola Tinubu introduced a one-time 50% windfall tax on the substantial foreign exchange gains reported by banks in 2023.
– The Senate has since increased this tax to 70%, to be applied to FX gains from the period when the naira was devalued until the 2025 financial year.

**Support and Criticism:**
– FBN Holdings’ Chairman, Femi Otedola, supported the government’s move, emphasizing the need for economic stability and integrity in the financial sector.
– Otedola criticized the ownership of private jets by banking executives, citing it as an extravagance that erodes public trust and diverts crucial resources.
– UBA Chairman, Tony Elumelu, also supported the windfall tax, highlighting its potential to alleviate poverty and promote mutual prosperity.

The forex gains and losses reported by these banks in the first half of 2024 varied significantly, reflecting the impact of changes in foreign exchange rates and the Central Bank of Nigeria’s policies. The proposed windfall tax has garnered both support and criticism, with key industry figures advocating for its potential to contribute to economic reforms and poverty alleviation.