• Nigeria - 7 YEAR TREASURY BOND
  • Issue No:27-03-2019 7 YEAR
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Nigeria’s banks are expected to take a big hit to revenues and face rising borrowing costs this year as Central Bank of Nigeria’s (CBN) measures to support the naira squeeze lenders already hit by fallout from coronavirus and the oil price shock, analysts told Reuters.

Banks in Africa’s largest economy – a mainstay for equity and fixed income frontier market investors – have learned to navigate challenges in a country that has long struggled with dollar shortages and multiple exchange rates.

But the prospect of anaemic growth, dwindling oil revenues, declining remittances and dollar shortages exacerbated by the central bank’s latest action aimed at curbing naira liquidity and currency speculation are putting pressure on lending by banks and the quality of existing assets.

The central bank has sucked as much as N900 billion out of the local banking system since raising the cash reserve ratio (CRR) by five per cent to 27.5 per cent in January, according to analysts’ calculations.

"General sentiment in the markets is that CRR debits are carried out quite close to FX auctions to prevent the banks from presenting large ticket FX demands at auctions," said Nkemdilim Nwadialor at Tellimer Capital.

Those debits also hamper wider lending, going against central bank measures of lowering banks’ loan to deposit ratios, she said.

"Banks are dealing with slow growth, fall in lending, a lack of forex in the market and asset quality issues," senior director EMEA bank ratings at Fitch, Mahin Dissanayake said.

He expects banks’ revenues to drop at least 20 per cent this year, though he did not expect any to make a loss.

Some banks had already indicated they expect a hit.

In April, mid-tier lender Fidelity Bank had warned 2020 profits would drop by 15 per cent.

Bankers said lenders were relying on existing customers to weather the storm as new lending looked risky with the economy expected to tip back into recession.Fitch predicts impaired loan ratios will rise sharply in 2020 with Nigerian banks the most exposed to stress in the oil sector compared to their peers in emerging markets elsewhere.Nwadialor expected a, "significant pick-up" of non-performing loan ratios from 6.6 per cent in the first quarter to an average of 10 per cent for the full year – double the central bank’s benchmark.Some banks have already announced plans to tackle this. Mid-tier lender FCMB plans to complete a restructuring of half its loan book at the end of April. A central […]

THE banking sector has remained sound and stable, with levels of capital and liquidity above regulatory requirements.

According to the Bank of Tanzania (BoT) Monetary Policy Statement for June, banks maintained adequate capital buffer to withstand shocks, as the ratio of core capital to total risk weighted assets and off-balance sheet exposure was 17.4 per cent in April this year, well above the minimum regulatory benchmark of 10.0 per cent.

The report said banks have remained liquid, evidenced by the ratio of liquid assets to demand liabilities of around 32.7 per cent against the minimum regulatory requirement of 20.0 per cent.

The quality of assets of banks deteriorated as reflected by the ratio of nonperforming loans to gross loans that rose to 11.0 per cent in April this year, from 10.7 per cent in June 2019.

The monetary and fiscal policy measures implemented to cushion the economy from the impact of coronavirus are expected to significantly reduce the risk of further deterioration of quality of loan portfolios of banks due to slow down of some businesses such as tourism.

The measures include flexibility on regulatory requirement for loan restructuring in various forms.

This was manifested in a number of measures, including reduction of the statutory minimum reserves (SMR) requirement ratio in two stages from 8.0 per cent to 7.0 per cent, and further down to 6.0 per cent, downward revision of discount rate from 7.0 per cent to 5.0 per cent.

The haircuts on government securities pledged for central bank borrowing windows for banks were reduced, from 10.0 per cent to 5.0 per cent for securities maturing within one year, and from 40.0 per cent to 20.0 per cent for securities with remaining maturities exceeding one year.

Furthermore, the BoT intensified deployment of instruments for injection of liquidity, including reverse repo transactions and standing credit facilities.

The measures significantly improved liquidity in the banking sector and ultimately lowering interbank interest rates.

Specifically, overnight interbank cash market interest rate averaged at 4.83 per cent in April 2020, from 5.47 per cent in June 2019 and 5.20 per cent in April 2019.Likewise, overall weighted average yields of Treasury bills decreased to an average rate of 4.88 per cent in April 2020, compared with 8.69 per cent and 8.20 per cent in June 2019 and April 2019, respectively.The overall interest rates charged by banks on loans also declined, albeit moderately, to an average of 16.85 per cent during the period July 2019 […]

The market data shows that among actively traded stocks, 27 or 47 per cent of the companies registered gains while 30 or 53 per cent posted losses. FILE PHOTO | NMG Troubled Kenya Airways leads a group of loss-making companies to emerge with the best stocks from a period when the country imposed tight coronavirus restrictions and the market shed Sh18 billion.

Bamburi Cement ranks worst.

The KQ share gained 127 percent since March 13, when the first case was confirmed, and closed trading at Sh3.83 on July 3 when it was suspended from trading on the Nairobi Securities Exchange (NSE) .

This means an investor who put Sh1 million in the stock on March 13 has gained Sh1, 270,000.

In contrast, investors who bought Bamburi shares worth Sh1 million suffered a loss of Sh480,000 given the share has shed 48 per cent since Kenya reported its first case of coronavirus to stand at Sh26.10 at the close of trading Thursday.

This analysis is based on investors who bought shares in mid-March and measures their return at the end of the trading yesterday.

The review does not capture speculators who enter and exit stocks in short periods.

The market data shows that among actively traded stocks, 27 or 47 per cent of the companies registered gains while 30 or 53 per cent posted losses.

While the Covid-19 pandemic has been blamed for the overall market decline that has seen the benchmark NSE-20 Index drop to levels last seen in 2003, the performance of individual stocks has been driven by speculators with little link to a firm’s business indicators.

Williamson Tea is the only profitable firm among the top five best-performing stocks that includes Sameer Africa , East Africa Cables and struggling Uchumi Supermarket .

Hotel operator TPS Eastern Africa , for instance, dropped by a marginal 0.4 per cent to Sh13.45 despite being among the victims of the ban on international travel. Cigarette maker BAT Kenya also dropped 22.8 per cent to Sh310 despite improved profitability that was partly caused by lower taxes.The jump in KQ shares was driven by investors accumulating the airline’s stock in anticipation of being bought out later at a premium by the government, which plans to nationalise the company.The expectation led investors to ignore the firm’s losses and negative equity which stood at Sh12.9 billion and Sh17.8 billion respectively in the year ended December 2019.Details of KQ’s nationalisation, including the price at which the […]

Fidelity Bank Plc has notified the Nigerian Stock Exchange (NSE) and the general public of the appointment of Nneka Onyeali-Ikpe, as the incoming Managing Director/Chief Executive Officer, effective January 1, 2021.

The bank made the announcement on Monday in a notice on the NSE website, signed by Ezinwa Unuigboje, its Company Secretary.

The notice said the appointment followed the impending retirement of its Managing Director/Chief Executive Officer, Nnamdi Okonkwo, from the Board of Directors of the bank, with effect from December 31 upon completion of his contract tenure.

"In compliance with the succession policy of the bank, the board has approved the appointment of Onyeali-Ikpe, the current Executive Director, Lagos and South West Directorate as the MD/CEO designate of the bank, to assume office with effect from January 1, 2021.

"The approval of the Central Bank of Nigeria (CBN) has been obtained for the appointment," said the statement.

It said the board had also approved the appointment of Kevin Ugwuoke, the current Chief Risk Officer of the Bank, as Executive Director, Chief Risk Officer, subject to the approval of the CBN.

The statement said that Mr Okonkwo was appointed to the Board of the bank in April 2012 as an Executive Director and was subsequently appointed the MD/CEO on January 1, 2014.

It said Mr Okonkwo implemented a digital-led strategy which led to significant growth across key performance metrics and increased market share, with the bank currently ranked sixth amongst Nigerian banks on most performance indices.

The statement said the bank under his leadership successfully accessed the local and international markets through the issuance of N30 billion Corporate Bonds in 2015 and $400million Eurobonds in 2017.

"The board seizes this opportunity to express sincere appreciation to Okonkwo for his significant contributions to the growth and development of the Bank during his tenure of the board," the statement added.

It said Mrs Onyeali-Ikpe was appointed to the Board of Fidelity Bank in 2015 as an Executive Director and currently oversees the Lagos and Southwest Directorate.It stated that she led the transformation of the directorate to profitability and sustained its impressive year-on-year growth across key performance metrics.The bank said Mrs Onyeali-Ikpe had been an integral part of the current management team responsible for the remarkable increase in the bank’s performance in the last five years.It stated that the area under her direct responsibility, in the period, contributed over 28 per cent of the bank’s profit before tax, deposits and loans."Onyeali-Ikpe has […]

dollar bills United Capital Plc has released its first quarter financial scorecard , showing growth in some indicators, despite the challenges in the nations economy. Total assets increased by three per cent to N153.15 billion from N148.70 billion in the previous period. Funds under management grew by five per cent to N79.16 billion from N75.69 billion.The company’s profit after tax drop by 49 per cent to N 644.189 million from N1.25 billion reported the same period of 2018 while profit before tax went down year on year by 48 per cent to N766.868 million from N1.49 billion.The company revenue stood at N1.45 billion in 2019 first quarter from N2.20 billion, representing 34 per cent. Operating income declined year on year by 21 per cent to N1.35 billion from N1.72 billion.

The company said the the revenue declined by 34 per cent year on year owing to a decrease in income from fixed deposit and instrument securities as well as drop in other fees and charges by 26 per cent year on year and Net income down by 71 per cent year on year from the sales of financial instrument.

Analysts said that this trend was not unusual during an election year, adding there would be significant upside in the next quarter.They however said that despite the 66 per cent decline in other income, year on year, dividend income grew by 194 per cent y-o-y.On the total expenses, the company said that the group leveraged on cost savings techniques to deliver a four per cent reduction in its total expenses.The total assets which appreciated by three per cent year to date was due to the increase in money market placement- a cash and cash equivalent component as well as a two per cent increase in investment in financial assets.Cash to income ratio increased 10 per cent beyond that of the previous period to print at 51 per cent.

This was as a result of the significant drop in revenue. However steps are in the works to reduce this ratio going into the next quarter by growing revenue while containing cost.

Commenting on the group’s performance, the group chief executive officer, Mr Peter Ashade said “the quarter under review was indeed a challenging one for us as uncertainties around the 2019 general elections which took place therein plagued the capital market ( equity and Debt market), resulting in slower than expected economic activities in the […]

United Capital Plc has assured its shareholders of higher returns in the years ahead as appropriate strategic measures have been put in place to overcome challenges in the operating environment.

The Chairman of United Capital Plc, Mr. Chika Mordi , who gave the assurance, said despite the challenging operating global and local environment, the company strived hard to deliver on its set goals in 2018 and was optimistic that it would further improve in 2019.

He said: “We have put in place appropriate strategies to respond to possible scenarios that the year 2019 would throw at us, hence we believe that we will continue to make progress in our quest to build Africa’s quest to build Africa’s leading investment bank.”

Commenting on the financial performance for the year ended December 31, 2018, he said: “United Capital made good progress in its financial performance for 2018. The Group generated gross earnings of N9.3 billion representing a growth of four percent year-on-year from N8.9 billion in 2017.

“Profit before tax stood at N6.2 billion up by 12 per cent from N5.5 billion in 2017and profit after tax, stood at N4.34 billion compared with N4.3 billion in 2017 despite the challenging macroeconomic and operating conditions. Total assets improved to N148.7 billion due to growth in funds management, which is a reflection of our commitment to deliver values at all times.”

He further said that beyond its primary mandate of providing financial and investment solutions, the company acted as an agent for economic development.

The directors recommended a dividend of 30 kobo, which was approved by the shareholders at the AGM.

The Group Chief Executive Officer of United Capital Plc, Mr. Peter Ashade, had said gross earnings grew up by four largely due to increase in net Interest margin, fees and commission income, net Income from trading arising from our dealings in financial instruments.

“Our continuous dedication to providing optimum satisfaction to our wide clientele base has necessitated the need for us to be creative and innovative in our operations, and this is evident in the reduction in our operating expenses,” he had said, adding, “This is a modest performance over that of the prior financial year 2017. We are confident that there will be marked improvement this year and years to come. This confidence stems from the various strategic initiatives we are currently implementing which are designed to create value for the various stakeholders.”

The United Capital Plc Board of Directors has assured shareholders that it has put in place appropriate strategies to ensure that the company continues to make progress and deliver better returns, irrespective of the challenges in the operating environment.

Addressing shareholders at the annual general meeting in Lagos, its Chairman, Chika Mordi, said things are definitely looking up for the company, a development he attributed to deliberate implementation of actionable strategies, that have paid off.

Shareholders approved payment of N1.8 billion as cash dividend for the 2018 business year, representing a dividend per share of 30 kobo. “I am confident in our ability to deliver superior returns to you going forward,” Mordi assured.

He said the company is cognisant of the challenges in the current operating environment and it will strive to maximise value creation for its shareholders.

“Our staff remained resourceful, motivated and dedicated, and we continue to attract the best of talent to execute our short-medium and long-term strategic objectives,” Mordi said.

United Capital drew on operating efficiency and steady growth in the top-line to grow its profit to N6.22 billion in 2018. Key extracts of the audited report and accounts of the company for the year ended December 31, 2018 showed that profit before tax rose by 12 per cent from N5.55 billion in 2017 to N6.22 billion in 2018.

However with 58.8 per cent in taxes, profit after tax dipped marginally to N4.34 billion in 2018 as against N4.36 billion in 2017. Total turnover improved by four per cent to N9.26 billion compared with N8.92 billion in previous year. Operating income had grown from N7.0 billion in 2017 to N7.2 billion in 2018.

With earnings per share of 72 Kobo, the company’s board of directors recommended N1.8 billion payment as cash dividend for the 2018 business year, representing dividend per share of 30 kobo. The dividend payout represents a dividend yield of about 9.0 per cent, which most analysts considered attractive.

The report also showed that the investment and finance group leveraged cost saving techniques to deliver a 10 per cent reduction in operating expenses. Net trading income also grew by 43 per cent on the back of increased gains from the sales and purchases of financial instruments. Net interest margin quadrupled by 428 per cent from N143.52 million in 2017 to N757.48 million in 2018. Total assets rose to N148.70 billion in 2018 as against N136.60 billion in 2017.

Group Chief Executive Officer, […]

United Capital Plc, one of Nigeria’s foremost investment banking groups, has held its much-awaited Annual General Meeting (AGM).

The AGM took place yesterday at the Oriental Hotel in Lagos, and was well attended by the company’s shareholders, board members, and the management. The Chairman’s speech

The company’s Chairman of Board, Mr Chika Mordi, used the occasion to present the financial results for FY 2018. According to him, the company performed well despite the challenging business environment. He also promised to deliver better results to shareholders. “Distinguished ladies and gentlemen, I am confident in our ability to deliver superior returns to you going forward. We have put in place appropriate strategies to respond to possible scenarios that the year 2019 could throw at us, hence we believe that we will continue to make progress in our quest to build Africa’s leading investment bank.” Directors were re-elected

In the course of the event, the company’s shareholders unanimously re-elected Sir Stephen Nnadiukwu and Mr Sunny Anene to continue serving as Directors of United Capital Plc. Auditors confirm FY 2018 results

Information contained in the company’s full-year 2018 financial results was confirmed by the private auditors, Deloitte Touche Tohmatsu Limited. Shareholders also unanimously supported the result. A look at the company’s 2018 financial results

The company recorded N9 billion worth of Gross Earnings in FY 2018, as against N8 billion in 2017.

Profit before tax stood at N6 billion as against N5 billion in 2017. And profit after tax was N4.33 billion as against N4.36 billion in 2017. Dividend payment

The company’s Board Chairman, Mr Chika Mordi, also used the occasion to declare a 30 kobo per share dividend. The shareholders approved. About United Capital Plc

United Capital Plc is a financial and investment banking services group. Its services include investment banking, asset management, securities trading, and trusteeship.

The company has a track record of assisting African Governments, individuals and corporate citizens achieve their strategic objectives throughout the market cycle, with a robust suite of financial and investment banking service offerings.

Feyisayo Popoola

United Capital Plc has posted a 48 per cent decline in its profit for the first quarter of the year.

The company’s financial statement, which was obtained from the Nigerian Stock Exchange on Wednesday, showed that the group’s profit before tax dropped to N766.9m in 2019, compared with the N1.5bn recorded in the corresponding period of 2018.

The group reported a total income of N1.5bn, made up of N771.6m investment income, N365.6m fees and commission income, N31.9m trading income and N182.7m net interest margin.

Its profit after tax dropped to N644.2m, compared to the N1.3bn recorded in the corresponding period of 2018.

The Group Chief Executive Officer, United Capital, Mr Peter Ashade, described the first quarter of the year as challenging due to the uncertainties around the 2019 general elections, which plagued the capital market.

He stated that economic activities in Q1 were slower than expected, adding that this was responsible for the reduction in the issuance of registered bonds, promissory notes and commercial papers by all tiers of government.

Ashade said, “More so, considering the decline in the revenue of some states and a rising debt profile, many states were restricted by the provisions of section 223(1b) of the Investment and Securities Act 2007, which mandates that no body to which the rule applies can issue securities in the form of promissory note, provided their outstanding loan and proposed loan do not exceed 50 per cent of the actual revenue of the body concerned in the prior year.

“All these combined led to a reduction of what could have been accrued to us from advisory fees, even though we weathered the harsh condition to increase it (advisory fee income) by seven per cent year-on-year.”

He said going into the second quarter of the year, it was expected that the pace of bond and commercial paper issuance would pick up.

Ashade added, “With shareholders’ interest perfectly etched on our minds, the group is confident that with its arsenal of time-tested strategies, its effort will begin to yield results in the coming quarter.“We implore all our stakeholders to rest assured that we are on top of the situation as critical steps are being taken by top management to ensure a better result next quarter.” Copyright PUNCH. All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission […]

Access Bank Plc has declared N45.10 billion as Profit Before Tax, for its first quarter ended March 31, 2019, representing 64.4 percent increase compared to N27.44 billion posted in the corresponding quarter in Q1’18.

Highlights of the bank’s Q1 financial statement released on the Nigerian Stock Exchange, NSE, showed that the bank’s earnings rose by 16.4 percent to N160.12 billion on the back of 9.1 percent increase in interest income.

Its net assets also was up 17.5 percent to N576.47 billion from N490.51 billion in Q1’18, while the interest income rose to N95.12 billion from N87.24 billion.

The basic earnings per share at N1.39 kobo was 80.5 percent increase compared to N0.77 in the corresponding period in 2018.

Access Bank Commenting, Herbert Wigwe, Group Managing Director/Chief Executive Officer, Access Bank, said: “The group delivered solid earnings underscoring the value potentials of the newly expanded business model. Gross earnings showed a16 percent increase to N160.1 billion from the prior year, comprising strong earnings on interest income and non-interest income of 69 percent and 31 percent respectively, whilst Profit before Tax (PBT) grew by 66 percent to N45.1billion “Our capital and liquidity position remained above regulatory levels, with CAR at 19.5 percent and liquidity ratio of 47.6 percent further demonstrating the capacity of the enlarged balance sheet to cope with possible negative shocks.

Following the successful completion of the merger with Diamond Bank in March 2019, we have now fully positioned ourselves in the retail market with a view to bringing the power of banking to the doorsteps of millions.

“We are providing a broader platform to facilitate payments services in Nigeria and across Africa, by harnessing our significantly enhanced digital technology capabilities.” Continuing, he said: “We have made solid progress throughout the first quarter of 2019 in line with our 2018-2022 five-year strategy, and we remain committed to the achievement of our strategic imperatives going forward; as we continue to invest in our people, technology and most importantly, our product offerings to customers.

“Our focus is to become the world’s most respected African bank by leveraging on the strength of our retail and wholesale business to provide unrivalled value to our customers.”