The Nation Newspaper

Category: Equities

  • Japaul hits low as auditors raise concerns over future survival

    Japaul Oil & Maritime Services Plc hits a new low of 24 kobo per share at the weekend as investors review the risk-return prospects of the company after external auditors raised the red flag on the viability of the going concern status of the company.

    Japaul’s share price declined by 20 per cent to close weekend at 24 kobo, its lowest price ever.

    In the latest audit, external auditors to Japaul, PKF Professional Services, drew attention to the losing streak at the company and the resultant build up of deficits over the years.

    The external auditors noted that the Japaul Group has “been making persistent losses over the years and at 31 December 2017, the Group made a loss from continuing operation of N13.13 billion, while the company made a loss of N10.64 billion, and working capital deficiency of N8.8 billion” by the end of 2017 as against N7.5 billion in 2016.

    “The Group shareholders’ fund had been eroded to the tune of N27.62 billion, while the company shareholders’ fund was eroded to N25.27billion. The company suffered substantial losses from its operations in the year from curtailed activities, which had raised doubt about its ability to continue as a going concern,” the auditors pointed out.

    Directors of the marine services group however said improved activities in the current year and a capital injection programme are expected to keep the company going.

    According to the directors, one of the group’s vessels is returning to NLNG for continuation of existing contract early in the second quarter of 2018 while another vessel has been engaged by NNPC for a three -year contract effective March 2018.

    The board added that 300-man accommodation barge is being fixed for engagement with ExxonMobil through Checkmate Oil & Gas Ltd in a contract that is expected to commence by this quarter while the group looks to is secure a 15-year contract vessel chartering with NLNG by building a new vessel through a shipyard in South Africa.

    Other measures expected by the directors to improve the performance of the group include securing major shoreline protection dredging contracts and reclamation works presently at commercial stage, sustaining and growing recent efforts in retails and mining operations at various sites across the country, sustaining and expanding existing quarrying business and diversification into mechanized mining of solid minerals.

    “Upon due consideration of the uncertainties described above, the Directors have a reasonable expectation that the Group have adequate resources to continue in operation for the foreseeable future,” the board stated.

    Japaul recently confirmed that it has entered into a binding commitment with Milost Global Inc for injection of $350 million or N10.7 billion into its operations. Milost Global Inc is an American private equity firm.

    In a regulatory filing at the Nigerian Stock Exchange (NSE) signed by the Japaul Acting Managing Group Director, Mr. Akin Oladapo, Japaul stated that the $350 million new capital would be split into $250 million new equity injection and $100 million convertible notes. Convertible notes can also be converted to equities, subject to the terms of the issuance.

    Japaul noted that the new capital will help to reduce its precarious financial position.

    “Japaul therefore seeks the understanding and cooperation of its stakeholders, as it will soon commence the transaction by going through all the laid down rules and regulations of Securities & Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE), because the commitment is still subject to regulatory approvals,” Japaul stated.

    The enthusiasm that had built up and leapfrogged Japaul’s share price by more than 170 per cent appeared to have subsided as investors wait for the filing of the transaction documents for the $350 million capital injection. A similar proposed capital injection by Milost Global in Unity Bank had ended on a controversial note, with the bank denying any formal acceptance of a capital injection from the American private equity firm.

  • Shareholders approve Forte Oil’s assets sales

    Shareholders of Forte Oil Plc have approved the company’s plan to restructure its operations by divesting from its upstream services and power generating businesses and the sale of its downstream business in Ghana. Forte Oil plans to streamline its operations and focus on its Nigerian downstream marketing business.

    At the annual general meeting in Lagos, shareholders authorised the board of the company to sell its stakes in Forte Upstream Services Limited, Amperion Power Distribution Limited and AP Oil & Gas Ghana Limited.

    The meeting mandated the board of directors to invest the net proceeds from the divestments in the downstream marketing business.

    AP Oil & Gas Ghana Limited and Forte Upstream Services Limited are wholly owned subsidiaries while Forte Oil owns 57 per cent equity stake in Amperion Power Distribution Company Limited.

    Chairman, Forte Oil Plc, Mr Femi Otedola said the restructuring was aimed at ensuring sustainable growth and returns to shareholders.

    “We concluded on focusing our resources on our core competence, and streams of uninterrupted dividends for our shareholders,” Otedola said.

    Key extracts of the audited report and accounts for the year ended December 31, 2017 showed that group turnover dropped from N148.61 billion in 2016 to N129.44 billion in 2017. Gross profit increased from N20.58 billion to N24.12 billion. Operating profit rose from N9.62 billion to N14.26 billion. Profit before tax doubled from N5.34 billion in 2016 to N10.63 billion while profit after tax jumped from N2.89 billion in 2016 to N12.23 billion in 2017.

    Underlining the rationales for the strategic business change, Forte Oil had said its decision to divest from upstream services and power generating businesses will boost its distributable earnings for the benefit of shareholders.

    According to the company, following the significant changes in the oil and gas industry in recent years, only downstream operators with huge investments in both storage and distribution infrastructures can remain competitive and operationally efficient in the long run.

    Forte Oil noted that that although the power business profitable,  it has  huge receivables due from the Nigeria Bulk Electricity Trading Plc (NBET) and a significant portion of its distributed earnings is also utilized in servicing the acquisition debt finance.

    The company said despite the significant resources deployed  the upstream services business has consistently contributed less than  seven  to the Group earnings in the last three financial years.

    Similarly, its downstream subsidiary in Ghana has consistently declared losses after tax in the last three years and   has substantial bad and uncollectable trade debts in the business as a result of negative economic conditions and currency devaluation in prior years.

    “This divestment a will reduce finance cost in the Group significantly and increase distributable earnings for the benefit of the shareholders. The finance cost attributable to the businesses to be divested stood at N2.7 billion and N2.2 billion for the year ended 31st December 2016 and the year ended 31st December 2017 respectively. The proceeds of the divestment initiative will also enable your company to compete more favourably and achieve the planned expansion of the business for increased market share,” Forte Oil stated.

     

  • Nestle Nigeria optimistic of better returns

    •Shareholders get N33.7b dividend

    Nestle Nigeria Plc is optimistic the ongoing economic reforms and diversification agenda of the government will lead to better performance and returns to shareholders in the years ahead.

    Addressing shareholders at the annual general meeting yesterday in Lagos, Chairman, Nestle Nigeria Plc, Mr. David Ifezulike, said as the current economic recovery trend eases production constraints in manufacturing and agriculture and key government reforms continue to diversify the economy, an all-round improvement in the economy is expected.

    “In view of the foregoing and confident in the capacity of our people and the value of our brands, we look towards 2018 with optimism,” Ifezulike said.

    He assured shareholders of better returns in the years ahead noting that the increase of 34 per cent in the company’s sales in 2017 was evidence that consumers continue to trust its brands.

    He said the company will continue to work to retain consumer’s trust by responding to their needs and their preferences.

    According to him, Nestle Nigeria would continue to implement the policies that have contributed to the company’s growth in recent times.

    He added that Nestle brands remained the leaders in their categories by increasing the focus of the marketing efforts on driving penetration through the Popularly Positioned Products (PPP) strategy while continuing to educate consumers on the benefits of good nutrition delivered by high quality products.

    Shareholders at the meeting approved the payment of N33.7 billion as cash dividend for the 2017 business year. Shareholders commended the company’s performance noting that the company’s fundamentals remain strong.

    A breakdown of the dividend indicated that N21.8 billion will be distributed as final cash dividend to shareholders, representing a final dividend per share of N27.50. The final dividend will be paid on May 23, 2018 to shareholders on the register of the company as at the close of business on May 4, 2018. Nestle Nigeria had earlier paid interim dividend of N11.89 billion, representing a dividend per share of N15. Total dividend per share for 2017 now stands at N42.50.

    The significant increase in dividend payout underlined improvement in the performance of the company in 2017 as net profit rose by 326 per cent.

    Key extracts of the audited report and accounts of Nestle Nigeria for the year ended December 31, 2017 showed that turnover rose by 34.2 per cent from N181.9 billion in 2016 to N244.2 billion. Gross profit also grew by 33.9 per cent from N75.3 billion in 2016 to N100.9 billion in 2017. Profit before tax jumped by 117.3 per cent to N46.8 billion as against N21.5 billion recorded in the previous year. After taxes, net profit leapt from N7.9 billion in 2016 to N33.7 billion in 2017, representing an increase of 326 per cent.

     

  • Stock Exchange lifts suspension on Ikeja Hotel

    The Nigerian Stock Exchange (NSE) has lifted its one and a half years suspension on trading in the shares of Ikeja Hotel, paving the way for resumption of trading in the shares of the hospitality and tourism company.

    Ikeja Hotel’s share price rose by 4.49 per cent or 8.0 kobo to close at N1.86 per share during trading on Monday at the NSE.

    Head, Listings Regulation Department, Nigerian Stock Exchange (NSE), Godstime Iwenekhai, said the Quotations Committee of the National Council of the Exchange had on Friday May 11, 2018 approved the lifting of the full suspension.

    The board and management of Ikeja Hotel had also on Friday May 18, 2018 provided a status update to the market during an interactive session on the underlying facts behind the restructuring of the company. The interim board of the company indicated that it has undertaken considerable resolutions of the challenges facing the company.

    Iwenekhai stated that the Securities and Exchange Commission (NSE) has been notified of the lifting of suspension, in line with extant rules at the capital market.

    The NSE had in November 2016 suspended trading on the shares of Ikeja Hotel Plc in response to the high-stake dispute in the Ibru family. The Ibrus own the majority shareholdings in the hospitality and tourism company.

    The full suspension on Ikeja Hotel implied no trading whatsoever in the shares of the company. Unlike technical suspension where trading can take place without price movement, full suspension disallows both trading and price movement.

    The Exchange noted that the full suspension was taken “to safeguard the investments of shareholders of Ikeja Hotel Plc following the continued dispute between the major shareholders which has negatively impacted on the company’s governance structure”.

    The NSE stated that it acted pursuant to the provisions of rule 15.45: suspension on trading of securities, rulebook of the Exchange, 2015. The suspension took effect on November 10, 2016.

    In May 2017, SEC dissolved the board of directors of Ikeja Hotels Plc and ordered a forensic investigation into the affairs of the hospitality and tourism company. The Commission appointed Chief Anthony Idigbe (SAN) as the interim chairman for the company.

    The apex capital market regulator said it took the decision to sack the board due to unresolved internal crisis involving some majority shareholders of Ikeja Hotels Plc, in apparent reference to the squabbles within the Ibru family, which holds the largest shareholdings in the company.

     

  • Stock Exchange lifts suspension on Ikeja Hotel

    The Nigerian Stock Exchange (NSE) yesterday lifted its one and a half years suspension on trading in the shares of Ikeja Hotel, paving the way for resumption of trading in the shares of the hospitality and tourism company.

    Ikeja Hotel’s share price rose by 4.49 per cent or 8.0 kobo to close at N1.86 per share during trading yesterday at the NSE.

    Head, Listings Regulation Department, Nigerian Stock Exchange (NSE), Godstime Iwenekhai, said the Quotations Committee of the National Council of the Exchange had on Friday May 11, 2018 approved the lifting of the full suspension.

    The board and management of Ikeja Hotel had also on Friday May 18, 2018 provided a status update to the market during an interactive session on the underlying facts behind the restructuring of the company. The interim board of the company indicated that it has undertaken considerable resolutions of the challenges facing the company.

    Iwenekhai stated that the Securities and Exchange Commission (NSE) has been notified of the lifting of suspension, in line with extant rules at the capital market.

    The NSE had in November 2016 suspended trading on the shares of Ikeja Hotel Plc in response to the high-stake dispute in the Ibru family. The Ibrus own the majority shareholdings in the hospitality and tourism company.

    The full suspension on Ikeja Hotel implied no trading whatsoever in the shares of the company. Unlike technical suspension where trading can take place without price movement, full suspension disallows both trading and price movement.

    The Exchange noted that the full suspension was taken “to safeguard the investments of shareholders of Ikeja Hotel Plc following the continued dispute between the major shareholders which has negatively impacted on the company’s governance structure”.

    The NSE stated that it acted pursuant to the provisions of rule 15.45: suspension on trading of securities, rulebook of the Exchange, 2015. The suspension took effect on November 10, 2016.

    In May 2017, SEC dissolved the board of directors of Ikeja Hotels Plc and ordered a forensic investigation into the affairs of the hospitality and tourism company. The Commission appointed Chief Anthony Idigbe (SAN) as the interim chairman for the company.

    The apex capital market regulator said it took the decision to sack the board due to unresolved internal crisis involving some majority shareholders of Ikeja Hotels Plc, in apparent reference to the squabbles within the Ibru family, which holds the largest shareholdings in the company.

    In a statement announcing the dissolution, SEC described the dissolution as proactive measure in order not to allow the warring parties to take certain actions that would give them an advantage over one another.

    Ikeja Hotel, incorporated in 1972 and quoted on the NSE in 2007, controls a chain of hotels directly and through other subsidiaries and affiliates including Tourist Company of Nigeria (TCN) Plc and Capital Hotel Plc. Ikeja Hotel owns Sheraton Hotel, Ikeja, Lagos. TCN owns Federal Palace Hotel while Capital Hotel owns Abuja Sheraton Hotel. The Ibru family owns the single largest individual shareholding.

    SEC noted that it had, in a bid to forestall chaos in the company, in conjunction with other distinguished personalities had previously held various meetings with the existing board towards resolving the crises but the company continues to be plagued with unhealthy corporate governance practices in disregard with the code of corporate governance for public companies.

    According to the Commission, as a public company, it is paramount that the activities of the company are conducted within the confines of existing corporate governance regulations in the Nigerian capital market, to ensure the protection of minority shareholders and other investors.

  • Nigerian equities lose N200b amid global slowdown

    Nigerian equities closed at the weekend with a net capital loss of N200 billion as investors reassessed portfolio compositions ahead of the meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN). The MPC is scheduled to have its second meeting this year between Monday, May 21 and Tuesday, May 22, 2018.

    Transactions at the Nigerian stock market were marked by considerable selloffs across the sectors, echoing a global slowdown that saw most global markets closing the week on a negative note. Average decline at the Nigerian equities market stood at 1.34 per cent for the week, representing net capital depreciation of N200 billion.

    The sustained decline cut the average return on Nigerian equities so far this year to 5.83 per cent, with banking stocks providing support to the overall performance with a sectoral above-average return of 7.93 per cent.

    Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) declined from its week’s opening value of N14.860 trillion to close at N14.660 trillion. The All Share Index (ASI)-the main price index for Nigerian equities and sovereign equities index for Nigeria, dropped to 40,472.45 points at the weekend as against its opening index of 41,022.31 points for the week.

    With nearly three losers for every gainer, the negative overall market position was due to sell pressure across the sectors as a combination of profit-taking and portfolio realignment overwhelmed demand for shares.

    All sectoral indices closed in the red, with the exception of the NSE Consumer Goods Index, which recorded a marginal gain of 0.03 per cent. The NSE 30 Index-which tracks the 30 most capitalised companies at the NSE, declined by 1.54 per cent. The NSE Banking Index recorded the highest week-on-week drop of 2.80 per cent. The NSE Oil and Gas Index followed with a drop of 2.64 per cent. The NSE Industrial Goods Index posted a negative return of -1.37 per cent while the NSE Insurance Index dipped by 0.80 per cent.

    The negative market situation at the Nigerian equities market largely mirrored global equities slowdown, with negative returns across America, Europe, Middle East, Asia and Africa. In Africa, South Africa’s FTSE All Share Index indicated a drop of 0.8 per cent. Kenya’s NSE 20 Index showed average loss of 3.0 per cent. Ghana’s GSE Composite Index dropped by 1.8 per cent while Egypt’s EGX 30 Index declined by 1.6 per cent.

    United States‘ twin indices-S & P 500 and NASDAQ dropped by 0.5 per cent and 0.6 per cent respectively. Hong Kong’s Hang Seng Index dropped by 0.2 per cent. Brazil’s Ibovespa Index slipped by 3.4 per cent. Russia’s RTS Index declined by 1.7 per cent while India’s BSE Sens Index dropped by 1.9 per cent.

    However, United Kingdom’s FTSE Index appreciated by 0.7 per cent. France’s CAC 40 Index rose by 1.4 per cent. Germany’s XETRA DAX appreciated by 0.7 per cent. Japan’s Nikkei 225 Index showed positive return of 0.8 per cent while China’s Shanghai Composite Index posted average return of 0.9 per cent.

    Turnover at the Nigerian equities market stood at 1.46 billion shares worth N23.67 billion in 19,674 deals last week compared with 1.59 billion shares valued at N25.99 billion traded in 21,115 deals in the previous week. The financial services sector was the most active with a turnover of 1.22 billion shares valued at N16.83 billion in 11,092 deals; thus contributing 83.98 per cent and 71.093 per cent to the total equity turnover volume and value respectively.

    The consumer goods sector followed on the activities chart with a turnover of 76.43 million shares worth N5.19 billion in 3,425 deals while the oil and gas sector placed third with a turnover of 57.193 million shares worth N527.880 million in 2,237 deals.

    The three most active stocks were Zenith Bank International Plc, Guaranty Trust Bank Plc and United Bank for Africa Plc, which altogether accounted for 491.649 million shares worth N14.159 billion in 3,265 deals, contributing 33.75 per cent and 59.83 per cent to the total equity turnover volume and value respectively.

    Also traded during the week were a total of 153,246 units of Exchange Traded Products (ETPs) valued at N4.009 million in 22 deals, compared with a total of 444,190 units valued at N2.514 million traded in 11 deals two weeks ago.

    In the sovereign debt segment, a total of 7,508 units of Federal Government valued at N7.506 million were traded in 12 deals compared with a total of 7,647 units valued at N8.047 million traded 30 deals penultimate week.

    There were 54 losers against 20 gainers for the week. Japaul Oil & Maritime Services Plc led the losers, in percentage terms, with a drop of 25 per cent to close at 30 kobo per share. Skye Bank followed with a loss of 19.2 per cent to close at 76 kobo while Diamond Bank declined by 18.4 per cent to close at N1.55 per share.

    On the positive side, Sovereign Trust Insurance led the gainers with a gain of 30 per cent to close at 26 kobo. Mutual Benefits Assurance-which declared a dividend per share of 2.0 kobo during the week, posted a gain of 17.9 per cent to close at 33 kobo while NPF Microfinance Bank rose by 10.2 per cent to close at N1.94 per share.

    Most analysts expected the CBN to retain its rates and maintain the current policy stance. However, improving macroeconomic outlook is expected to create bargains at the equities market.

    “We opine that sentiment on oil exporting economies could potentially be boosted in the coming week,” Afrinvest Securities stated in a weekend note.

    “Despite continued selloffs in the equities market, still-strengthening macroeconomic fundamentals remain suggestive of gains on the exchange,” Cordros Capital stated.

     

  • ‘Deutsche Bank committed to Nigeria’

    •Honours nation’s banks

    With four decades of operations in Nigeria, Deutsche Bank AG, a global banking and financial services company with headquarters in Frankfurt, has reiterated its commitment to the development of Nigerian businesses.

    Head of Deutsche Bank’s Representative Office in Nigeria, Andreas Voss, who spoke at the awards ceremony to honour leading cash management and trade finance institutions in Nigeria, said Deutsche Bank has a strong and long-standing relationship with Nigerian banking industry.

    “Deutsche Bank remains a reliable partner, which is committed to assist its Nigerian clients facilitate trade business not only to Europe but across the globe,” Voss said.

    He noted that the 2017 Awards for Excellence in Cash Management and Trade Finance in Nigeria was meant to showcase the capability of the Nigerian banking industry.

    According to him, the winning banks have evidenced their strong capability to offer finance solutions in terms of payments efficiency and trade finance for the benefit of the Nigerian economy.

    The first award, titled: “Straight-Through Processing (STP) Excellence Award”, which has been a feature of Nigeria’s financial markets for seven years, went to Stanbic IBTC Bank. Ecobank Nigeria occupied the second position.

    The STP Excellence Award recognises those institutions that deliver outstanding quality in payment efficiency. The nominated banks successfully implemented an STP rate of over 99 per cent throughout 2017, serving to greatly reduce the administrative impact of payment processing, increasing efficiency and ensuring strict compliance with globally recognised payment standards.

    The second award category, now in its third year, the “Global Reach Trade Finance Award”, recognises those institutions that have successfully grown their trade finance processing capabilities across international borders by both volume and quantum of transaction size. Access Bank Plc led the table under this category, followed by Zenith Bank Plc and Ecobank Nigeria Ltd.

    Voss commended the winning financial institutions and reassured on the commitment of Deutsche Bank to the development of the Sub-Saharan Africa region’s financial markets.

  • Nigeria’s economic outlook bullish, needs more investments, says Renaissance Capital

    Nigeria’s economy has the potential to double its current performance within the next 12 months, but the government needs to support economic growth with more investments in basic infrastructure, especially electricity.

    In its latest primary macro outlook for frontier and emerging markets, Global Chief Economist, Renaissance Capital, Charles Robertson, said improving macro-economic fundamentals place Nigeria on a vantage point to significantly grow its economic performance in the period ahead.

    According to him, with good growth, currency stability and falling interest rates, Nigeria is an attractive frontier investment market.

    “We still think emerging markets (EM) and frontier markets (FM) are less than half-way through a structural bull market. The big shift in our thinking is on the oil exporters. Middle East and North Africa (MENA) is looking much healthier, from Egypt to the UAE in EM. We think Russia and SA can beat IMF GDP forecasts in 2018/2019. Nigeria is a big beneficiary in Africa,” he said in the report.

    The report, however, underscored the need for Nigeria and other African countries to invest substantially in infrastructural development to unlock growth.

    According to the report, with investment of about a quarter of Gross Domestic Product (GDP) in infrastructure, especially electricity, Nigeria can re-enact sustainable high growth that had been achieved by countries such as Bangladesh and Ethiopia.

    “But we need to see electricity supply at least double or treble per capita in East Africa and the rest of West Africa before industrialisation is realistic. Our base case is that countries that can’t industrialise or shift from subsistence agriculture into higher valued-added services can’t grow much above four to five per cent or one to two per cent in per capita terms,” Renaissance Capital stated.

    The report noted that “Africa is on the rise again, but to really take off, needs more investment and electricity in many of the countries”.

    The report pointed out that while there has been dramatic improvement in adult literacy in Sub-Saharan Africa (SSA), there are still acute shortfalls on electricity supply in East African and most of West African countries. Renaissance Capital holds that countries need between 70 to 80 per cent adult literacy to grow fast. The global investment banking firm also holds that countries must also have at least 300 to 500 kWh of electricity per capita to grow sustainably at a fast rate. To put that into perspective, one LCD TV requires about 240 kWh pa.

    While most EM countries meet both targets, including for the first time this decade Egypt and India, the situation is far more mixed in FM. Argentina and Vietnam meet the targets along with the countries in Emerging Europe. Morocco and Tunisia have joined them recently and so has Sri Lanka.

    “There appears to be one exception to this though. If you invest 25 per cent of GDP or more, then Bangladesh, Ethiopia and others demonstrate sustainable high growth can still happen. This is good news for Tanzania and perhaps Uganda but sends a clear message to Kenya, Nigeria, Egypt and Pakistan about their urgent need for electricity and investment,” Renaissance Capital stated.

    The report pointed out that sovereign outlook for the continent is positive, noting that the credit rating downgrade cycle in Africa has basically finished; and sovereign upgrades in 2019 is the story to start thinking about.

  • Ecobank promotes financial inclusion on campuses

    Ecobank Nigeria has commenced a youth engagement programme in tertiary institutions across Nigeria as part of efforts to deepen financial inclusion by banking the youth.

    The initiative, themed: “Ecobank Xpress Campus Storm” will avail students of tertiary institutions the opportunity to open the Ecobank Xpress account, a digital account that requires no documentation, minimum balance or paperwork, simply by downloading the Ecobank Mobile app.

    With the Ecobank Xpress account, students will be able to access financial services such as airtime top up, funds transfer and bill payment from their mobile devices. Parents and Guardians will also be able to transfer money to their children or wards‘ Xpress accounts which they can withdraw without a card at any Ecobank ATM or Xpress Point.

    The first phase of this initiative will cover 24 universities, polytechnics and colleagues of education across the country.

    Flagging off the programme, Executive Director Consumer Banking, Ecobank Nigeria, Carol Oyedeji, said the activation is to empower young people by offering them convenient, affordable and accessible financial services anytime, anywhere from their mobile. She reiterated that it was in line with the bank’s strategy to make banking available to the hitherto unbanked and under-banked in support of the Central Bank of Nigeria’s financial inclusive drive.

     

     

  • Sterling Bank mulls holding company structure

    •Shareholders laud performance

    Sterling Bank Plc is considering changing from its current operating structure to a holding company structure, which will group the commercial bank and its other subsidiaries under a parent company.

    Addressing shareholders yesterday at the annual general meeting in Lagos, Chairman, Sterling Bank Plc, Mr. Asue Ighodalo, said the bank is considering a change to a holding company structure.

    According to him, the board of the bank decided to retain most of its net earnings for the previous business year because of additional capital required to finance the bank’s growth ambition and its proposed holding company structure.

    Under the banking regulatory regime introduced by the Central Bank of Nigeria (CBN) in 2010, banks were required to concentrate fully on core banking functions. The model required banks to either sell all non-core banking businesses or form a holding company to hold such non-core banking businesses including activities such as insurance, asset management and capital market operations. Most banks opted to sell or divest from non-core commercial banking businesses.

    Three banks currently operate under holding company structure including First City Monument Bank (FCMB) Plc, First Bank of Nigeria (FBN) Plc and Stanbic IBTC Bank Plc. Ecobank Transnational Incorporated-a pan-African holding company, is the parent company for Ecobank brand.

    Ighodalo assured shareholders of the bank’s commitment to delivering tailor-made solutions in line with the Global Sustainable Development Goals (SGDs) and Central Bank of Nigeria’s Sustainable Banking Principle.

    “As a business, we will continue to innovate with focus on key growth sectors of the Nigerian economy that will enrich lives and grow the bottom-line. We will also continue to leverage on our areas of strength to drive sustainable growth and deliver superior returns to our esteemed shareholders,” Ighodalo said.

    According to him, the bank remains committed to delivering solutions that satisfy stakeholders’ needs and objectives while also providing adequate financial returns to shareholders.

    He pointed out that retaining a substantial amount of profit generated to strengthen available capital will be in the long-term best interest of shareholders.

    Managing Director, Sterling Bank Plc, Mr. Abubakar Suleiman, said the bank’s 2017 financial year performance highlighted its underlying institutional strength despite delicate operating conditions.

    “We will continue to execute the plans to drive efficiency across the business under the three pillars of agility, digitization and specialization in the new financial year. These pillars will propel us toward sustainable growth by enhancing our ability to innovate; solidify our retail funding base; strengthen our enterprise-wide risk management framework and drive excellent service delivery across all channels to enhance customer experience,” Suleiman said.