Nigerian banks spent an estimated N377.85 billion on regulatory charges from the Asset Management Corporation of Nigeria (AMCON) and the Nigeria Deposit Insurance Corporation (NDIC) in the first quarter of 2025, according to unaudited results filed on the Nigerian Exchange Limited (NGX).

The figure marks a 34.6 per cent increase from N280.67 billion in the same period of 2024, heightening industry concerns over the impact of rising levies on profitability and shareholder returns.

Of the total, AMCON levies accounted for N283.85 billion, a 28.3 percent jump from N221.18 billion recorded in Q1 2024. Deposit insurance premiums also surged, rising 58 percent to N93.99 billion compared with N59.5 billion a year earlier.

The analysis covered 10 major banks, including First Bank Holdings Plc, Zenith Bank Plc, Guaranty Trust Holding Company Plc (GTCO), United Bank for Africa Plc (UBA), Access Holdings Plc, Fidelity Bank Plc, Wema Bank Plc, Stanbic IBTC Holdings Plc, Sterling Financial Holdings Plc, and FCMB Group Plc collectively. They reported pre-tax profits of N1.58 trillion for the quarter, reflecting only a marginal 0.36 percent growth from N1.51 trillion in Q1 2024.

AMCON, set up in 2010 as a crisis-resolution vehicle to absorb toxic loans after the global financial crisis, was initially expected to wind down after 10 years. Fifteen years later, it remains a permanent fixture, largely funded by annual levies on deposit money banks. While official figures put the 2023 levy at N367 billion, industry disclosures suggest actual contributions were closer to N847 billion.

Today, AMCON is under a proactive and competent management but most analysts warn that sustaining AMCON has become a heavy burden, cutting banks’ return on equity by as much as 150 basis points and diverting resources away from lending to businesses, mortgages, and SMEs. Investor groups are equally frustrated, noting that rising charges eat into distributable profits and dividends.

“Banks are being penalized for sins they did not commit. Well-managed lenders that avoided reckless lending in the 2000s are still paying for the mistakes of others,” a shareholder association leader told Nigerian Tribune.

The strain is compounded by higher compliance costs, foreign exchange volatility, and elevated risk premiums. Experts say the uncertainty over AMCON’s future has created distortions in the financial system.

Tilewa Adebajo, CEO of CFG Advisory, stressed the need for urgent policy clarity. “The federal government must come out openly to clarify its position on AMCON. If AMCON must remain, a fundamental review of its laws is required. Otherwise, it should be wound down and integrated into a reformed NDIC structure,” he said.

He cautioned that delay could worsen legal and governance risks: “The longer it takes, the worse the legitimacy issues will snowball into regulatory incoherence and weakened stability.”

Lawmakers, however, have argued against a hasty wind-down, citing over N4 trillion in unresolved debt. At a recent stakeholders’ roundtable, House Committee Chairman on Banking, Hon. Eze Nwachukwu Eze, emphasized that AMCON’s exit strategy must be carefully designed to avoid systemic risks.

With stronger governance and capital rules now in place, many experts believe AMCON’s original purpose has been served and that continuous levies approaching N1 trillion annually are unsustainable. Calls are growing for the government to either reform the corporation’s mandate or phase it out entirely.

For now, Nigerian banks continue to bear the cost, even as pressure mounts for clarity on whether AMCON will remain a permanent feature or finally fade into the sunset. (Nigerian Tribune)