The Central Bank of Nigeria (CBN) has reiterated its position on how banks utilize their FX revaluation gains referencing a previous circular dated September 11, 2023.
The bank said that FX revaluation gains should serve as a buffer to cushion significant movement in the FX rate and should not be used to pay dividends or operating expenses.
On September 11, 2023, the apex bank issued guidelines on how banks can manage the impact of FX reforms and warned against the use of foreign currency revaluation gains for their operations.
In a statement signed by Adetona Adedeji, acting director, CBN banking supervision department, banks are to exercise utmost prudence in handling foreign currency gains.
“Further to our letter dated September 11, 2023, referenced BSD/DIR/CON/LAB/16/020 on the above subject, the Central Bank of Nigeria wishes to reiterate that banks are required to exercise utmost prudence and set aside FCY revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the FX rate,” CBN said.
“In this regard, banks shall not utilize such FX revaluation gains to pay dividends or meet operating expenses.”
CBN’s statement came at a period when banks are releasing their financial statements for the full year 2023.
First City Monument Bank (FCMB) disclosed it overshot the full-year 2023 profit target on N84 billion foreign exchange gains.
Although FCMB recorded foreign currency gains, FBN Holdings reported foreign exchange losses swelled to N350 billion last year.
