Category: Capital Market

Transnational Corporation of Nigeria (Transcorp) Plc saw a major rebound in 2021 with net profit rising by 530 per cent to N23.9 billion.

Key extracts of the audited report and accounts of Transcorp for the year ended December 31, 2021 showed that turnover rose by 48 per cent to N111.2 billion in 2021 as against N75.3 billion in 2020.

Operating income grew by 114 per cent from N18 billion in 2020 to N38.5 billion in 2021. Profit before tax grew significantly by 1,600 per cent from N1.6 billion in 2020 to N27.9 billion in 2021. After taxes, net profit rose from N3.8 billion in 2020 to N23.9 billion in 2021. Shareholders’ funds also grew by 53 per cent from N95,4 billion to N146 billion.

President and Group Chief Executive Officer, Transnational Corporation of Nigeria (Transcorp) Plc, Owen Omogiafo, said the performance was as a result of the improved performance across all the group’s businesses.

She noted that the conglomerates investments in key segments of energy and hospitality have been turning in huge returns.

“We are very pleased with the progress of our transformation agenda for Transcorp. We remain committed to building an institution that will delight all our stakeholders and will be here for many generations to come,”  Omogiafo said.

She pointed out that the group also recorded growth in both its power and hospitality investments, with the hospitality arm showing a strong recovery from the COVID-19 pandemic, with results comparable with pre-COVID era.

“The 143 per cent growth reported in the hospitality arm of the business this year, is a testament to the strong spirit of resilience, innovation, and execution within the group.

“The additional investments we made in our power businesses, led to the increased revenue witnessed in that sector, notwithstanding some of the challenges in the sector, which are now being addressed. We stayed on course with our OPL281 investment and are well on the way towards the attainment of our integrated energy strategy,” Omogiafo said.

 

According to her, the hotel business as well as its other concerns are fully geared up to continue to churn out outstanding performance in the current year especially as the world continues to recover from the effect of the COVID-19 pandemic.

She assured that the “Transcorp Group remains committed to its strategy of sustainable growth and continuous drive to deliver value,

“We do not plan to rest on our laurels, and we will continue to work diligently and remain well-positioned to provide significant value for our stakeholders,” Omogiafo said

With a diversified shareholder base of over 300,000 shareholders Transcorp’s portfolio comprises strategic investments in the power, hospitality, and oil and gas sectors. The group’s businesses include Transcorp Hilton Abuja, Transcorp Hotels Calabar, Transcorp Power, Trans Afam Limited, and Transcorp Energy.

 

Africa Finance Corporation (AFC) grew its assets by 16.3 per cent in 2021 to $8.56 billion

President, AFC,  Samaila Zubairu, who spoke in Lagos at the weekend at the end of its board meeting, which coincided with its 15th anniversary, said AFC’s performance in its latest full-year earnings, was driven by high-impact investments and its strong credit profile.

According to him, despite  the  pandemic  and  commodity-driven  headwinds  impacting  AFC’s  operating environment, the corporation saw its yearly profits increase by 26.6 per cent to $209.7 million in 2021, passing the $200 million mark for the first time in its 15-year history, from $165.5 million in 2020.

He added that the  dramatic  increase  arose from AFC’s  investments  in  high- impact  assets  in targeted  sectors  across  Africa.

He said the corporation leveraged    its investment-grade  credit rating and reputation to mobilise finance from international markets to help reduce Africa’s infrastructure deficit.

He pointed out that the review period had been a year of solid progress in AFC’s core objectives of building value to Africa’s economies through instrumental infrastructure driving growth and job creation.

“We have proven over our 15-year history that you can successfully build a track record in infrastructure investment in Africa-and there has never been a better time to do so,” Zubairu said.

AFC’s reach on the continent is  larger than it has ever been, with investments expanding to 35 countries and cumulative disbursements rising by 14 per cent to $9.9 billion as against $8.7 billion in 2020, he added.

Zubairu listed some of the  projects handled during 2021 to include a $150 million for the development of cashew and cotton integrated industrial parks in Benin and Togo; a $200 million corporate facility to BUA Industries Limited for the construction of a sugar refinery and ethanol plant in Nigeria and a $175 million investment in the Baomahun Gold Project in Sierra Leone.

Zubairu said AFC broke into the  global debt markets by issuing $1.8 billion in new loans and bonds in 2021, including a $250 million tier-2 capital loan from the U.S. International Development Finance Corporation and $750 million seven-year Eurobond-Notes due 2028 that were priced at 175 basis points (bps) over US Treasuries to yield 2.991 per cent.

 

NPF Microfinance Bank Plc, a micro-lending financial institution promoted by the Nigeria Police Force (NPF), has  raised N4.66 billion in new equity funds from existing and new shareholders.

Regulatory filing at the weekend indicated that the combined rights issue and public offer were fully subscribed, with the bank raising more than N3.4 billion from existing shareholders.

A total of about 3.107 billion ordinary shares of 50 Kobo each arising from the new issues were listed at the weekend at the Nigerian Exchange (NGX). With the additional shares, the total issued and fully paid up shares of NPF Microfinance Bank increased from 2.287 billion to about 5.394 billion ordinary shares of 50 kobo each.

NPF Microfinance Bank had in last June launched a rights issue to raise about N3.4 billion from existing shareholders and a public offer to raise N1.07 billion from the general investing public.

Application lists for the hybrid offer, which opened on June 24, 2021, was initially scheduled to close on June 30, 2021 but with the approval of an extension by Securities and Exchange Commission (SEC), application lists for the two offers were extended to Friday, July 30, 2021.

The microfinance bank had offered 2.29 billion ordinary shares of 50 kobo each to shareholders on the register of the bank as at the close of business on May 17, 2021 at a price of N1.50 per share. The shares were pre-allotted on the basis of one new ordinary share of 50 kobo each for every one ordinary share of 50 kobo each held.

It also offered, by way of public offer for subscription, 713.34 million ordinary shares of 50 kobo each at N1.50 per share to the general investing public.

Formerly NPF Community Bank, the bank was incorporated on May 19, 1993 as a limited liability company under the provision of the Companies and Allied Matter Act cap c20LFN 2004. It provides banking services to both serving and retired officers and men of Nigeria Police Force, its ancillary institution and general banking public. The bank commenced business on August 20, 1993. NPF Microfinance was listed on the NGX on December 1, 2010.

 

The authorised capital of the bank at inception was N500, 000 made up of 500,000 ordinary shares of N1 each. This was increased to N2 billion made up of 4.0 billion ordinary shares of 50 kobo each of which 2.29 billion ordinary shares of 50 kobo each were issued and fully paid up.

Nigerian equities have suffered another market-wide decline as continuing selloffs overshadowed a new wave of dividend declarations. Share prices have been on the decline for three consecutive weeks.

Trading analysis at the weekend showed that despite declaration of dividends by nearly 30 companies during the week, pricing trend at the stock market was largely negative.There were more than two losses for every price gain during the week, a market sentiment that implied that most investors preferred to sell and take profit rather than wait for dividend payment.

Benchmark indices at the Nigerian Exchange (NGX) indicated average decline of 0.26 per cent for the week, equivalent to net capital depreciation of N58 billion. The average year-to-date return for Nigerian equities thus narrowed to 9.66 per cent at the weekend.

Most analysts expected the bears to remain in control at the stock market in the next few trading sessions as investors rebalance their portfolios in the light of dividend returns and regulatory mark-down of dividend-paying stocks.

“In the new week, we expect the domestic equities market index to close in negative territory as more companies share prices are marked-down for dividend qualification. However, we feel that investors would use this opportunity to accumulate stock with strong fundamentals,” Cowry Asset Management stated at the weekend.

Analysts at Cordros Securities said they expected “the weak sentiments” to persist in the week ahead as investors continue to scale down exposure to equities following the mark down of share prices for 2021 full-year dividends.

Analysts said expected increase in coupon rates for bond and interest rates for other fixed-income securities could trigger capital flight to the fixed-income market.

“Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings,” Cordros Securities stated.

The All Share Index (ASI) – the value-based common index that tracks all share prices at the NGX, dropped from its week’s opening index of 46,964.23 points to close at 46,842.86 points. Aggregate market value of all quoted equities also declined from its week’s opening value of N25.311 trillion to close weekend at N25.253 trillion.

 

Sectoral indices showed market-wide bearishness with no safe havens for investors.  All sectoral indices closed negative with the worst downtrend in the highly influential banking and oil and gas sectors. The NGX 30 Index, which tracks the 30 largest stocks, recorded average decline of 0.94 per cent. The NGX Corporate Governance Index, which tracks some of the best-run companies, declined by 2.36 per cent.

The NG Banking Index, which tracks the most active banking sector, recorded the highest depreciation of 7.13 per cent. The NGX Oil and Gas Index followed with average drop of 3.41 per cent. The NGX Consumer Goods Index dropped by 1.84 per cent. The NGX Insurance Index slipped by 0.24 per cent while the NGX Industrial Goods Index dipped by 0.07 per cent.

Companies that declared dividends during the week included Infinity Trust Mortgage Bank Plc, 5.0 kobo; NEM Insurance Plc, 22 kobo; BUA Cement Plc, N2.60; UAC Of Nigeria Plc, 65 kobo; SFS Real Estate Investment Trust, N7.25; Consolidated Hallmark Insurance Plc, 2.0 kobo; and AXA Mansard Insurance Plc, 22 kobo.

 

Livingtrust Mortgage Bank Plc, 6.0 kobo; Beta Glass, N1.10; Aluminium Extrusion Ind Plc, 50 kobo; Mcnichols Consolidated Plc, 3.0 kobo; AIICO Insurance Plc, 2.0 kobo; Chemical And Allied Products Plc, N1.25; MRS Oil Nigeria Plc, bonus of one new share for eight shares held; Jaiz Bank Plc, 4.0 kobo; Courteville Business Solutions Plc, 4.0 kobo; Wema Bank Plc, 24 kobo;  Julius Berger Nigeria Plc, N2.50 and Okomu Oil Palm Plc, which declared a dividend per share of N8.

Other new dividend-paying companies Sterling Bank Plc, 10 kobo; Stanbic IBTC Holdings Plc,N2; Fidson Healthcare Plc, 50 kobo; Industrial & Medical Gases Nigeria Plc, bonus shares of one share for five shares held; Nigerian Aviation Handling Company Plc, 41 kobo and bonus shares of one share for every five shares held; Berger Paints Nigeria Plc, 40 kobo; Totalenergies Marketing Nigeria Plc, N18.20; Fidelity Bank Plc, 35 kobo; Glaxo Smithkline Consumer Nigeria Plc, 45 kobo and NPF Microfinance Bank Plc, which declared 10 kobo cash dividend per share and bonus shares of one share for every nine shares held.

Total turnover at the NGX last week stood at 1.289 billion shares worth N13.546 billion in 22,118 deals as against a total of 1.176 billion shares valued at N16.601 billion traded in 21,076 deals two weeks ago.

The financial services sector led the activity chart with 851.598 million shares valued at N7.516 billion in 11,930 deals; thus contributing 66.07 per cent and 55.49 per cent to the total equity turnover volume and value respectively. The conglomerates sector followed with 174.588 million shares worth N569.028 million in 1,095 deals while the information and communication technology (ICT) sector placed third with a turnover of 77.571 million shares worth N2.249 billion in 1,458 deals.

The three most active stocks were Fidelity Bank Plc, Transnational Corporation of Nigeria Plc, and Access Holdings Plc, which altogether accounted for 426.566 million shares worth N1.777 billion in 3,307 deals, contributing 33.10 per cent and 13.12 per cent to the total equity turnover volume and value respectively.

Also, a total of 4,448 units of Exchange Traded Products valued at N478,869 were traded last week in 23 deals compared with a total of 29,855 units valued at N3.456 million traded in 11 deals two weeks ago.

At the secondary bond market, a total of 35,517 units valued at N39.252 million were traded last week in 16 deals compared with a total of 10,273 units valued at N10.494 million swapped in five deals penultimate weekend.

Further price trend analysis indicated that there were 20 gainers to 50 losers last week as against 24 gainers and 44 losers recorded in the previous week. Meyer Plc recorded the highest gain, in percentage terms, of 30.91 per cent to close at 72 kobo. Cornerstone Insurance Plc followed with a gain of 13.79 per cent to close at N66 kobo while P Z Cussons Nigeria Plc placed third with a gain of 13.44 per cent to close at N10.55 per share.

On the negative side, Berger Paints Plc recorded the highest loss of 18 per cent to close at N6.15 per share. Zenith Bank Plc, which was adjusted for dividend payment, followed with a drop of 16.73 per cent to close at N22.40 while Regency Assurance Plc declined by 16.22 per cent to close at 31 kobo per share.

Nigerian equities traded mostly on the negative and closed hours ahead of the much-awaited convention of the ruling political party with a net loss of about N172 billion.

Turnover at the Nigerian stock market halved by 52 per cent while investors scrambled into safety of more resilient banking stocks.

Trading report at the Nigerian Exchange (NGX) at the weekend showed that the benchmark index for the Nigerian stock market, the All Share Index (ASI), depreciated by 0.67 per cent during the week, equivalent to net capital depreciation of N171.6 billion.There were nearly two decliners for every advancer during the week.

The ASI declined from its week’s opening index of 47,282.67 points to close weekend at 46,964.23 points. Aggregate market value of all quoted equities dropped simultaneously from its opening value of N25.483 trillion to close weekend at N25.311 trillion.This moderated the average year-to-date return to 9.94 per cent.

Total turnover at the NGX closed weekend at 1.176 billion shares worth N16.601 billion in 21,076 deals, showing a slowdown in momentum of activities when compared with turnover of 2.449 billion shares valued at N20.653 billion traded in 20,764 deals two weeks ago.

The bank-led financial services industry remained atop the activity chart with 954.472 million shares valued at N10.217 billion traded in 12,700 deals; thus contributing 81.14 per cent and 61.55 per cent to the total equity turnover volume and value respectively. Consumer goods industry followed with 63.728 million shares worth N3.439 billion in 2,720 deals while the conglomerates industry placed third with a turnover of 53.313 million shares worth N258.568 million in 711 deals.

Banking stocks dominated the top trades chart with the trio of Fidelity Bank Plc, United Bank For Africa Plc and Guaranty Trust Holding Company Plc emerging as the three most traded stocks. The three most active stocks accounted for 456.971 million shares worth N4.469 billion in 4,982 deals, representing 38.85 per cent and 26.92 per cent of the total equity turnover volume and value.

There were 24 gainers against 44 losers last week compared with 21 gainers and 45 losers recorded in the previous week. Eighty-eight equities were unchanged last week within the range of 90 unchanged prices recorded in the previous week.

Analysts at Afrinvest Securities said they expected the market to continue on the bearish level “in the absence of positive catalysts”.

“In the week ahead, we expect the market to trade sideways as the activities of bargain hunters in dividend-paying stocks fizzle out due to the winding down of the 2021 financial year earnings season. In addition, risk-averse investors will likely sustain profit-taking activities in anticipation of an uptick in fixed-income yields,” Cordros Securities stated.

Analysts, meanwhile, urged investors to take position only in fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.

Analysts at Cowry Asset Management said the market could recover in the days ahead as more results and dividend recommendations are announced. They however cautioned that regulatory adjustment of share price for dividend payment, known as price mark down, could moderate the expected bullish sentiment from new earnings releases.

All companies running the Gregorian 12-month calendar as their business year are mandatorily required to submit their audited results and accounts for the 2021 business year not later than March 31, 2022. Under the rules at the stock market, quoted companies are expected to submit their audited results and accounts not later than 90 days after the end of the year.

Further analysis showed that a total of 29,855 units of Exchange Traded Products (ETPs) valued at N3.456 million were traded last week in 11 deals compared with a total of 70,961 units valued at N9.123 million traded in 28 deals penultimate week.

At the bond market, a total of 10,273 units valued at N10.494 million were traded in five deals compared with a total of 60,695 units valued at N63.55 million swapped in 15 deals two weeks ago.

Price trend analysis showed that RT Briscoe recorded the highest drop, in percentage terms, dropping by 1750 per cent to close at 66 kobo. UPDC followed with a drop of 12 per cent to close at 88 kobo. Guaranty Trust Holding Company and United Bank for Africa, which were marked down dropped by 1164 per cent and 1156 per cent to close at N23.15 and N7.65 respectively.

On the positive side, CAP and Fidelity Bank led the gainers with 10 percent each to close at N19.80 and N3.30 respectively. Learn Africa rose by 9.60 per cent to close at N2.17 per share while Veritas Kapital Assurance added 9.52 per cent to close at 23 kobo per share.

 

 

Shareholders of United Capital Plc have been assured of improved returns in the years ahead as the company increased dividend payouts to shareholders by 114 per cent.

At the annual general meeting in Abuja, shareholders of United Capital approved the board’s recommendation to increase dividend payout for the 2021 business year by 114 per cent. Shareholders received total dividend payment of N9 billion for the 2021, representing dividend per share of N1.50 as against 70 kobo paid for the 2020 business year.

Shareholders, who spoke at the meeting, commended the company for its impressive performance over the years.

Chairman, United Capital Plc, Mr. Chika Mordi said in spite of macroeconomic pressure, the company has continued to record strong growths across key indicators.

He noted that the group’s total assets rose by 104 per cent to N453.60 billion by last December, driven by significant growth in managed funds while shareholders’ funds was up 25 per cent to N30.55 billion, largely due to the significant growth in profit after tax.

Group Chief Executive Officer, United Capital Plc, Mr. Peter Ashade, outlined that group’s projections and strategic intent for the 2022 financial year.

He noted that the company has again shown consistent growth and resilience in delivering on its commitment to shareholders and other stakeholders as evident in the strong positive financial metrics recorded in the year under review.

“Going into the 2022 business year, we will focus on our transformation agenda by deepening our value propositions to key market segments especially mass affluent and mass market clients and exploit new market opportunities. Our stakeholders can be assured of our commitment to keep delivering an exceptional result,” Ashade said.

He outlined that beyond its impressive financial figures, United Capital also recorded a number of remarkable feats in the previous year as it launched the United Capital Infrastructure Fund (UCIF) as a vehicle for infrastructure development in the country. The launch was sequel to the successful registration of the Fund with the Securities and Exchange Commission (SEC).

He added that the company’s shares were also reclassified by the Nigerian Exchange (NGX) from low price stock group to medium price stock group, driven by a steady growth in the company’s share price. Just recently, United Capital also obtained a score of 87.24 per cent from the recertification exercise conducted by the Corporate Governance Rating System (CGRS), retaining its status as one of the companies on the NGX Corporate Governance Index (CGI).

Key extracts of the audited report and accounts of United Capital for the year ended December 31, 2021 showed that gross earnings grew by 40 per cent to N18.07 billion in 2021 as against N12.87 billion in 2020. Operating income increased by 30 per cent to N16.24 billion as against N12.49 billion. Operating expenses rose from N4.93 billion to N5.94 billion. With this, operating profit before tax jumped by 53 per cent to N12.12 billion in 2021 compared with N7.95 billion in 2020. After taxes, net profit grew by 44 per cent from N7.81 billion to N11.26 billion. With these, earnings per share rose by 44 per cent from N1.30 in 2020 to N1.88 in 2021.

The balance sheet also emerged stronger with a double in total assets from N222.75 billion in 2020 to N453.60 billion in 2021. Total liabilities leapt by 113 per cent to N423.05 billion in 2021 as against N198.32 billion in 2020. Shareholders’ fund grew by 25 per cent from N24.43 billion in 2020 to N30.55 billion in 2021.

Key underlying ratios underlined that the overall performance was driven by intrinsic business growth and efficient cost management. Return on equity increased from 31.98 per cent to 36.86 per cent. Operating pre-tax profit margin improved from 61.73 per cent to 67.11 per cent. Net profit margin increased from 60.67 per cent to 62.32 per cent. Cost-to-income ratio improved from 38.27 per cent to 32.89 per cent.

 

 

Nigerian Exchange Group (NGX Group) Plc has assured that it has well-defined strategies to sustain market dominance.

Group Chief Executive, Nigerian Exchange Group (NGX Group) Plc, Oscar Onyema, made this known during the virtual presentation of the company’s 2021 results to investors and analysts.

Onyema explained that the NGX Group went through a restructuring of its business to refine its business model and become active along the entire capital market value chain.

He said the group focused on formulating and executing the strategy of the holding company by building a multi-exchange business with diversified revenue, raising capital and optimising corporate governance structure, and eliminating redundancy through shared services that are used by multiple divisions across the group.

According to him, the revenue of the non-operating holdco is made up of dividends and treasury investment income adding that the holding company is working with its various subsidiaries and associate companies to optimise their strategy and increase profitability, which will support the upstreaming of dividends.

“Nigerian Exchange (NGX) Limited in collaboration with the Group, continues to focus on four pillars of community, marketplace, workplace, and environment to drive sustainability. Furthermore, NGX has digitised its ecosystem to promote more retail participation, and it is leveraging and investing in global market-driven technology, improving the listing universe, and working closely with regulators to enhance ease of doing transactions for issuers. At NGX Group, we have clear and well-defined strategies and are equipped to sustain market dominance,” Onyema said.

Chief Financial Officer, NGX Group, Cyril Eigbobo, said the company’s gross earnings grew to N6.78 billion from N6.02 billion, resulting in a 13 per cent increase.

He added that the group’s profit before tax increased by 25.4 per cent to N2.39 billion while its profit after tax rose by 22.2 per cent to N2.25 billion from N1.84 billion recorded in the corresponding period of 2020.

According to him, the jump in the group’s revenue which rose by 14.9 per cent from N5 billion recorded in 2020 to N5.8 billion in 2021, was driven by a 24.8 per cent growth in listing fees which grew to N757.4 million as against N606.9 million in 2020, 4.9 per cent growth in its treasury investment income and a 2.1 per cent growth in the transaction fees which rose to N2.9 billion from N2.8 billion recorded in 2020.

 

First City Monument Bank (FCMB) Limited has listed its N30 billion commercial paper on the FMDQ Securities Exchange Limited (FMDQ Exchange).

The FCMB N30 billion Series 1 Commercial Paper (CP) was issued under the bank’s N100 billion CP issuance programme on its platform.

The net proceeds of the issuance will be used by FCMB to support its short-term financing requirements.

FMDQ Exchange reiterated its commitment to the development of the debt capital market by driving initiatives that are targeted at improving liquidity of securities listed and quoted on its platform, thereby supporting the aspirations of businesses.

“The Exchange will remain unyielding in its support for the development of the Nigerian debt capital market through its highly efficient platform for the registration, listing, quotation and trading of securities, thereby providing access to capital,” FMDQ Exchange stated.

 

Access Bank Plc will  conclude its transition from

a commercial banking group to a holding company (holdco) with the listing of the shares of the new holdco on the Nigerian Exchange (NGX) this week.

The NGX had last March 24, 2022 placed the shares of Access Bank on full suspension, halting trading and price movement of the stock.

The NGX stated that the full suspension was necessary to prevent trading in the shares of the bank in preparation for the eventual delisting of Access Bank from the Daily Official List of NGX and listing of the new holdco, Access Holdings Plc, on the Exchange.

Sources said the delisting and listing of the old company and new company will take effect this week as the bank has concluded arrangements for the transfer of shares.

Access Bank had recently received Federal High Court’s (FHC) endorsement for the scheme of arrangement for the transition. The sanctioning of the scheme by the court rounded off the approving phase of the scheme, allowing the bank to conclude the transaction.

The transition to holdco had earlier been approved by shareholders of Access Bank at a combined physical and virtual court-ordered meeting. The bank had also secured the “no-objection” approval of the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN).

The transition will enable the group to invest in non-banking subsidiaries, a move that places the first tier bank in a pillar position to expand into a global one-stop financial services group.

Under the transition arrangement, the entire issued share capital of Access Bank comprising of 35.545 billion ordinary shares of 50 Kobo each will be converted into same shares of holdco and distribute to all shareholders of Access Bank on the basis of one share of Access Bank in exchange for one share of the new Access Holdings Plc.

Thereafter, Access Bank Plc will be delisted and Access Holdings Plc will be listed on the Nigerian Exchange (NGX). The immediate members of the holdco will be Access Bank and its subsidiaries including Access Bank (Gambia) Limited; Access Bank (Sierra Leone) Limited; Access Bank (Rwanda) Plc; Access Bank (Zambia) Limited; Access Bank (R.D Congo) S.A.R.L; Access Bank (Ghana) Plc; Access Bank (Guinea) S.A; The Access Bank (UK )Limited; Access Bank (Mozambique) S.A; Access Bank Kenya Plc; Access Bank (South Africa) Limited; and African Banking Corporation of Botswana Limited.

The holdco is however expected to make new major investment moves in the next few months, according to insiders with knowledge of board and management strategies.

Chairman, Access Bank Plc, Dr. Ajoritsedere Awosika, said the restructuring of the banking group into a holdco will enable the group to have a structure like that of some major global financial institutions, including those that Access Bank considers to be its peers and competitors.

According to her, the board expects that the restructured group will have greater flexibility to adapt to future business opportunities, market and regulatory changes than is currently the case.

She outlined that the restructuring was necessitated by several rationales including the need to comply with regulatory requirements, growth and expansion, diversification, risk management, ease of funding, capital allocation, and speed of decision making.

According to her, the holdco structure ensures full compliance with CBN’s Regulation on the Scope of Banking Activities and Ancillary Matters (Regulation 3), 2010, which repealed the Universal Banking Guidelines and limited the ability of banks to undertake non-banking business, as well as Guidelines for Licensing and Regulation of Financial Holding Companies in Nigeria, 2014.

“Due to its oversight function, the holdco structure will facilitate the business growth of the banking group and expansion of services into underpenetrated regions in Nigeria, Africa and beyond.

“The holdco structure will enable Access Bank to diversify its business portfolios into new areas within the financial service industry that are permissible by the CBN holdco regulation.

“The holdco structure would ring fences each business from the risks of the other, by preventing the business performance of one business from affecting the performance and valuation of another, Accordingly, under the holdco structure, the assets of the bank are ring-fenced from the non-banking businesses,” Awosika said.

She added that the new structure will facilitate a consolidated financial strength of the group, which will improve access and ability to raise capital with benefits including lower transactions costs, amidst others.

According to her, the holdco structure will also expedite capital and liquidity, and provide flexibility to accommodate leverage with minimal risk to regulatory ratios.

She pointed out that the new structure would unburden the bank from oversight functions and responsibilities of managing the subsidiaries and ensure the bank is solely focused on its core operations. This fosters faster decision-making and business growth.

“The board considers the restructure to be the most appropriate approach to create greater strategic flexibility and diversification of the group’s revenues.

“The restructure will result in shareholders holding shares in the holdco in the same proportion as their current holdings in the bank and the bank’s shares being held wholly by the holdco, which will be a regulated entity for CBN purposes.

“The bank will continue to be subject to the full suite of CBN banking regulations and, in all other material respects. The banking subsidiaries will continue to be subject to the oversight of the respective prudential regulatory authorities in their jurisdictions. The group’s firm-wide risk management framework will continue to apply across the entire restructured group,” Awosika said.

She urged the shareholders to approve the scheme document noting that the board considers the terms of the scheme to be fair, reasonable and in the best interests of the shareholders.

 

 

 

 

 

Bankers and other operators in the Nigerian financial markets have identified deployment of commodities ecosystem as a catalyst for the achievement of Central Bank of Nigeria (CBN)’s plan to generate N200 billion in the next three to five years.

The CBN RT 200 FX Programme plans to generate N200 billion in foreign exchange (forex) through the non-oil exports. By the set of  policy, plan and programme, the proposed forex injection into the system shall be exclusively from non-oil exports. The sources of inflow of forex into Nigeria have been adversely affected by COVID -19 apart from inadequacy and unreliability of some of the sources.

Bankers and other financial market operators who converged at a breakfast meeting, hosted by Lagos Commodities and Futures Exchange (LCFE) at the weekend agreed that effective utilisation of Nigeria’s commodities ecosystem presents an ample opportunities for the apex bank to achieve mobilize forex through  non- oil exports.

The meeting deliberated on commodities products, structure of the market, funding mechanism, accessing the global market, size of the market and imperative of collaboration among operators.

In his presentation, Divisional Head, Agribusiness, Natural Resources and Project Development, Heritage Bank, Mr  Olugbenga Awe explained that the Nigerian economy had been well diversified, going by statistics except the sources of forex.

Awe, who spoke on “The Opportunities for financial Institutions in the CBN RT 200 FX Programme” stated that a commodity exchange was a risk management platform. According to him, the biggest challenge to exportation of non-oil products in Nigeria is the standardization to meet global demand.

He explained that though Nigerian non-oil products could boost forex earnings, the products must meet global standards.

“This is where commodities exchanges come in. Any product whose electronic receipt is traded on a commodities exchange must be of global standard. Banks are willing to support exporters provided they meet certain criteria, including history of performance, export volume and frequency, payment methods, products sourcing strategy, risk mitigants and seasonality among others,” Awe said.

Managing Director, Agvest Nigeria, Mr Bode Abikoye noted that commodities prices offer protection from the effects of inflation.

“Investing some of your portfolio in commodities is recommended by many experts as it is seen as a diversifier asset class. Moreover, some commodities tend to be a good hedge against inflation, such as precious metals and energy products. Investors break down commodities into two categories: hard and soft.”

Hard commodities require mining or drilling, such as metals like gold, copper, and aluminum, and energy products like crude oil, natural gas, and unleaded gasoline. Soft commodities refer to things that are grown or ranched, such as corn, wheat, soybeans, and cattle.

“Commodities tend to bear a low to negative correlation to traditional asset classes like stocks and bonds. Supply-and-demand dynamics are the main reason commodity prices change. When there’s a big harvest of a certain crop, its price usually goes down, while drought conditions can make prices rise from fears that future supplies will be smaller than expected,” Abikoye said.

Chief Executive Officer, Lotus Capital, Mrs Hajara Adeola, who spoke on “ The Potentials of Non- Interest Financial Instruments to Finance Commodities Ecosystem “ explained that on non- interest financial instruments were based on managing businesses on moral principles and they offered many benefits to investors.

Other speakers articulated how the apex bank could leverage commodities ecosystem to develop potential sources of forex through exportation of non-oil products of global standards.

Managing Director, Lagos Commodities and Futures Exchange (LCFE), Mr Akin Akeredolu-Ale explained that a commodities exchange would always come in by catalysing enabling environment, alignment of relevant stakeholders, transparent trading platform, certification and standardisation, data and price discovery, enabling environment for price discovery and regulatory framework.