Heritage Bank groaning under weight of unprofitability, NPLs

Exposed! Heritage Bank in multi-billion Naira fraud

By Odunewu Segun

Heritage Bank may go the way of defunct Skye Bank if drastic action is not taken to redress its downward following weak liquidity occasioned by rising Non-Performing Loans and bad market decision,National Daily has gathered.

In a confidential report released by Proshare, the bank’s retail base and its poor quality risk assets have put inevitable pressure on its profitability and liquidity.

“By this time, and curiously; it wasn’t such a big news that some of the bank depositors had experienced recurring challenges with withdrawals and staff exits did little to help matters,” the report stated.

According to findings by National Daily, Heritage Bank’s non-performing loans portfolio is among the most challenged in the industry with impairment charges in H1 2018 estimated at N37.5bn.

It was also gathered from the report that the bank’s debt to equity ratio was -0.17. The negative value reflected negative shareholders fund which could be impaired by as much as $1bn.

Also, it posted an operating loss before tax of N38.5bn in H1 2018 and a loss of N4.4bn in the unaudited figures for the month of December 2018 and its equity capital has been virtually wiped out by accumulated losses.

Similarly, corporate governance has been a challenge as a number of the bank’s directors have allegedly been involved in a series of poor performing insider loan transactions, and little known about such resolutions.

A former director of the bank who had worked as a director in another defunct bank, specifically Bank PHB, is known to have received over N1bn in loans which went bad; and which have not been recovered till date.

Heritage Bank’s erstwhile chairman was also known to have used the banks tills to acquire two electricity distribution licenses’ the underlying cash flow difficulties of the businesses were subsequently and promptly transmitted to the bank, resulting in large repayment defaults.

Meanwhile, the introduction of the Treasury Single Account (TSA) policy by the federal government in 2015 has also left the bank’s Asset and Liability Management (ALM) position in tatters.

Implementation of the TSA, it was gathered undermined the bank’s fiscal stability through the reduction of its deposits; its ability to give short term loans, and most importantly weakened the bank’s already fragile profitability.


The acquisition of Enterprise Bank in 2014 also worsened the financial status of the bank. The decision to acquire Enterprise Bank for N56bn in 2014 resulted in unintended consequence.

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At the time, the bank’s Board rationale in acquiring Enterprise Bank from AMCON was to rapidly expand the retail end of HBL’s operations and reduce its cost to income ratio based on representations that informed their decision.

The Enterprise Bank wedlock, as consummated, turned into a fiasco as it added a further two hundred (200) branches to the banks operations and cut interest expense while improving net interest income.

“From indicators received, there is a small window to achieve a technical resolution of the Heritage Bank situation, lest it could find itself taking remedial action(s) at a much higher economic cost later than it would now,” the report stated.