Category: Equities

Investors have been advised to diversify their portfolios across asset segments in order to mitigate risks and enhance returns on investments.

Divisional Head, Capital Markets, Nigerian Exchange (NGX), Mr. Jude Chiemeka said diversification was a way of edging risk with the strategy that an investor deployed to manage his risk in a manner that will help him to meet his investment objectives.

Chiemeka, who spoke during a webinar on diversification, stressed the need for realignment and diversification of portfolios by investors to ensure enhanced return on investment.

“Diversification will in the long run help you smoothing out your return and also help to ensure that the whole various risk that will affect market being liquidity, political risk all those risk affecting investment are managed in a way that allow you to meet your long term objective with the saying, don’t put all your eggs in one basket,” Chiemeka said.

He added that investors had to weigh the risk when making a decision noting that the younger investors still have a long time and will be looking to invest in instruments that have the ability to turn around over a longer period of time should be invested in equities.

“In equities, we are looking at growth not necessarily the blue chips. Those who are closer to retirement should not take the same risk level like the younger ones. That the perimeter realigns heavily in investment objectives, income, age and return on investment.

“The high inflation environment is not necessarily affecting Nigeria alone. It is a global phenomenon that poses risk to return. You need to have an investment that you can hold over a period of time.

“You can also own bonds like fixed income securities in your portfolio that will help you move out high volatility that bedeviled probably see in some markets.

“Our market has grown over 20 per cent and you can see in the last three months there is some volatility as investors begin to look at all the rising rates.

“Sincerely, fixed income is the best approach at this time. Also think about commodity base products, and look at the products we have at NGX some have grown 65 per cent return year to date,” Chiemeka said.

He pointed out that as a multi-asset exchange, the NGX has various products for all investors regardless of what their investment goals, risk appetite or return expectations might be. These products include equities, fixed income, Exchange Traded Funds and recently launched derivatives.

Guaranty Trust Holding Company (GTCO) Plc recorded appreciable growths in the top-line and profitability in the first half with pre-tax profit rising by 11 per cent to N103.2 billion.

Key extracts of the audited report and accounts for the six-month period ended June 30, 2022 showed that gross earnings rose by 14.9 per cent from N220.28 billion in first half 2021 to N253.10 billion in first half 2022.

Interest income grew by 16.7 per cent to N147.20 billion in first half 2022 as against N126.09 billion in first half 2021. Profit before tax improved by 11 per cent from N93.06 billion to N103.25 billion. However, with taxes rising by 88.3 per cent from N13.64 billion to N25.69 billion; net profit stood at N77.56 billion in first half 2022 as against N79.41 billion in first half 2021.

The balance sheet of the group also improved during the period with group’s net loan and advances increasing by 1.8 per cent from N1.80 trillion recorded by December 2021 to N1.83 trillion in June 2022. Deposit liabilities increased by 6.4 per cent from N4.13 trillion in December 2021 to N4.39 trillion in June 2022. Total assets rose by 4.6 per cent from N5.43 trillion in December 2021 to N5.68 trillion by June 2022. Shareholders’ funds closed the period at N845.7 billion.

Underlying ratios remained positive. Full impact capital adequacy ratio (CAR) stood at 22 per cent. Asset quality was sustained as IFRS 9 Stage 3 Loans ratio and Cost of Risk (COR) closed at 6.2 per cent and 0.2 per cent in June from six per cent and 0.5 per cent last December. Pre-tax return on equity (ROAE) stood at 23.9 per cent. Pre-tax return on assets (ROAA) closed at 3.7 per cent while and cost to income ratio of 49.1 per cent.

The Board of Directors of the group has declared an interim dividend of 30 kobo per share, the same ration paid for the first half of 2021.

Group Chief Executive Officer, Guaranty Trust Holding Company Plc (GTCO Plc), Mr. Segun Agbaje, said the results showed an increase in key revenue lines and a strong performance in other financial metrics which reinforce the group’s growth prospects as a leading financial services company.

“Our priority at the start of the 2022 financial year was to bring the group’s new businesses on-stream, starting strong with a focus on long-term viability. At present, we have successfully expanded our financial services ecosystem to include HabariPay Ltd, Guaranty Trust Fund Managers Ltd, and Guaranty Trust Pension Managers Limited, and all of them are profit and loss positive,” Agbaje said.

He added that the new businesses would operate alongside the flagship banking franchise to offer increased value to the group’s growing customer base as well as other stakeholders.

He assured that the group would continue to build on its core strengths of service excellence, innovation, and flawless execution to deliver corporate objectives for the year in furtherance of the group’s vision of being Africa’s leading financial services institution.

Authorities at the Nigerian Exchange (NGX) have explained that they installed automatic shut-down devices on its automated trading engine in order to protect investors and allow for efficient decision making in the event of extremely volatile trading pattern.

The automatic shut-down devices, otherwise known as circuit breakers, are set to automatically halt trading at the Exchange when the pricing trend reaches pre-determined threshold, both on the upward and downside.

The NGX held a webinar yesterday to enlighten investors and stakeholders on the rationales and impact of its index circuit breaker. The webinar was themed, “Role and Impact of Index Circuit Breakers in the Capital Market”.

Divisional Head, Capital Markets, Nigerian Exchange (NGX) ,  Mr. Jude Chiemeka, said the circuit breakers play significant role in capital markets operations by helping to curb panic-selling on stock exchanges, halt trading in event of adverse volatility when prices of securities rapidly move outside of pre-determined bounds and instill investor confidence in the market.

He said the circuit breakers were part of Exchange’s commitment to positioning the capital market as a global investment destination for stakeholders.

According to him, as an agile exchange, NGX is committed to enhancing the competitiveness of the capital market as a global investment destination by continually educating market operators, investors and other stakeholders about the design and benefits of its systems such as the index circuit breakers.

He pointed at the unprecedented event of November 12, 2020 when the NGX Index Circuit Breaker was triggered for the first time since its introduction in 2016.

Financial Economists, World Federation of Exchanges (WFE), Kaitao Lin, in his presentation, said circuit breakers can achieve an improvement in market quality, such as a reduction in volatility, an increase in liquidity, or a more efficient price discovery.

“However, circuit breakers often do not have any significant impact on prices as they do not stop a fall in prices,” Lin said.

Kelvin Piccoli of the Office of International Affairs, Commodity Futures Trading Commission, USA, said questions about the circuit breaker and market quality can be addressed using a theoretical market approach and econometrics event studies.

According to him, the theoretical market microstructure model examines how information shocks affect liquidity, price formation or agent behaviour in the presence of circuit breakers while the econometric event studies test the impact of circuit breakers on trading patterns and market variables.

Former Vice President, Research CBOE Holdings Inc,Chicago, William Speth while making presentations during the webinar, showed data investigating the four market-wide trading halts in USA during March 2020 and provided model recommendations to NGX.

The AfriCaribbean Trade and Investment Forum (ACTIF2022) being held at the Lloyd Erskine Sandiford Centre in Bridgetown, Barbados, opens today.

The three-day event include addresses from Barbados’ Prime Minister Hon. Mia Amor Mottley; President Chandrikapersad Santokhi of Suriname,Chairman of CARICOM; and Hon. Amadou Hott, Minister of Economy, Planning and International Cooperation, Republic of Senegal.

They will be joined by high-level speakers including President and Chairman,  African Export-Import Bank (Afreximbank), Prof. Benedict Oramah; African Union Commissioner, Economic Development, Trade, Industry and Mining, Albert Muchanga; Secretary-General, AfCFTA Secretariat, Wamkele Mene; United Nations Under-Secretary-General and Executive Secretary, Economic Commission for Africa, Vera Songwe; Secretary-General, CARICOM Secretariat, Dr. Carla Natalie Barnett; and  Executive Director, International Trade Centre, Pamela Coke-Hamilton.

ACTIF2022 was structured to provide an important opportunity for the Caribbean and African business communities to establish new commercial and strategic relationships to expand trade between the two regions and to source necessary inputs for the design and manufacture of high-value products.

It would also enhance government-business relationships between Africa and the Caribbean and increase inter-regional trade and investment leads through effective business matchmaking.

The organisers said there was high level support for ACTIF2022’s intent to bolster bilateral cooperation and increase engagement in trade, investment, technology transfer, innovation, tourism, culture and other sectors.

ACTIF2022 is also expected to contribute to the implementation of the African Continental Free Trade Agreement (AfCFTA) and the Caribbean trade development agenda, further reflecting the deep-rooted ties between Africa and the Caribbean based on their shared history, culture, common identity and destiny.

The theme for ACTIF2022 is ‘One People, One Destiny: Uniting and Reimagining Our Future’.  Presentations and panel sessions will address key topics around deepening the trade and investment linkages between Africa and the Caribbean. These include accelerating industrialisation and manufacturing in Special Economic Zones and Industrial Parks; financing trade and investments; opportunities across the cultural and creative industries; leveraging the power of the African Continental Free Trade Area; improving logistics to promote tourism, trade and telecommunications; improving agricultural productivity, agribusiness and food security; healthcare and life sciences; accelerating private sector trade and investment; creating opportunities for youth and SMEs; and building Africa-Caribbean value chains.

ACTIF2022 attendees will also witness the launch of the African Caribbean Trade and Investment Report

With over 1,500 delegates from 93 countries-comprising 48 African countries; 12 Caribbean countries; and 33 other countrie; already registered for ACTIF2022, participants will include senior government representatives, business leaders, representatives of business associations, prospective investors and buyers, project promoters, development agencies, multilateral finance institutions, think-tanks and research institutions from Africa and the Caribbean.

ACTIF2022 is being convened by the Government of Barbados and Afreximbank, in collaboration with the African Union Commission, the AfCFTA Secretariat, the Africa Business Council, the CARICOM Secretariat and the Caribbean Export Development Agency. The Forum is being co-managed by Invest Barbados and Export Barbados. The CEOs of both agencies are keen to facilitate the Forum and have high expectations for the outcome of the three-day event.

The idea for ACTIF2022 resulted from an official Afreximbank visit to Barbados in September 2021, which followed that month’s inaugural Africa-CARICOM Summit. During the visit, the government of Barbados and Afreximbank identified the 2022 AfriCaribbean Trade and Investment Forum as a key strategic activity towards institutionalising the engagement between both regions’ private sectors to advance trade and investment relations.

Fidelity Bank Plc yesterday declared interim dividend of 10 kobo per share as the bank recorded double-digit growths across key performance indicators in the first half of 2022.

The audited half-year results and dividend recommendation as Fidelity Bank explained the rationale behind its bid to acquire 100 per cent equity stake in Union Bank UK Plc; a spin-off and former subsidiary of Union Bank of Nigeria (UBN) Plc.

The Board of Directors of Fidelity Bank indicated yesterday that shareholders on the register of the bank as at the close of business on September 12, 2022 would receive interim dividend per share of 10 kobo; payable on September 20.

Key extracts of the audited report for the six-month period ended June 30, 2022 showed that gross earnings rose by 37.9 per cent from N112.30 billion in first half 2021 to N154.84 billion in first half 2022.

Profit before tax grew by 21.6 per cent to N25.08 billion in first half 2022 as against N20.6 billion in first half 2021. After taxes, net profit rose by 20.7 per cent from N19.31 billion to N23.31 billion. Earnings per share thus stood at 80 kobo in first half 2022 as against 67 kobo in first half 2021.

The Central Bank of Nigeria (CBN) had given preliminary approval to Fidelity Bank Plc in its bid to acquire 100 per cent equity stake in Union Bank UK.

Fidelity Bank had entered into a binding agreement to acquire 100 per cent in Union Bank UK Plc, a transaction that will make the London-based retail and wholesale banker a subsidiary of a subsidiary of Fidelity Bank.

The transaction is however still subject to the approval of the UK’s Prudential Regulatory Authority (PRA).

Last December, Union Bank’s core investors – Union Global Partners Limited and Atlas Mara – had reached a Share Sale and Purchase Agreement (SSPA) with Titan Trust Bank (TTB) for the sale of 89.39 per cent of Union Bank’s issued share capital. The agreement came a decade after the initial investment by the core investors in 2012.

Consequently, the transaction also triggered the hive-out of Union Bank UK (UBUK) which was approved by shareholders in an extra-ordinary general meeting on March 29, 2022. This allowed Union Bank of Nigeria’s transition from an international to a national focus.

Managing Director, Fidelity Bank Plc, Mrs. Nneka Onyeali-Ikpe said the acquisition aligned with the bank’s strategic plan of expanding its service touchpoints beyond the Nigerian market as well as providing straight-through services that meet and exceed the needs of its growing clients.

“The diverse service bouquet and business model of Union Bank UK offered a compelling strategy and we hope to build on the existing capacity to create a scalable and more sustaining service franchise that will support the wider ecosystem of our trade businesses and diaspora banking services,” Onyeali-Ikpe said.

Union Bank UK commenced operations in London in 1983. Its banking services include personal banking, trade finance, treasury management and structured trade and commodity finance.

The latest agreement is the second attempt to sell the Union Bank UK. Union Bank of Nigeria had in early 2020 entered into a share sale and purchase agreement to divest its 100 per cent equity stake in the UK subsidiary to MBU BidCo Limited (MBU), an acquisition vehicle wholly owned by MBU Capital Limited (MBU Capital). MBU was selected as the preferred bidder after a competitive bidding process. However, the completion of the sale then was subject to regulatory approvals from the relevant regulatory authorities in Nigeria and the UK.

MBU Capital is an investment management firm founded in 2013 and based in Mayfair, London. MBU Capital has active interests in financial services, healthcare, education, real estate and technology. MBU Capital (UK) LLP is authorised and regulated by the Financial Conduct Authority.

Founder and Chief Executive Officer, MBU Capital, Mohammed Iqbal  had then said the investment group was delighted with the acquisition of UBUK, describing it as a huge opportunity to build on UBUK’s strengths in international markets to create a new-style bank which is focused on the needs of UK and international SMEs and entrepreneurs.

According to him, many customers are seeking a bank which truly understands the needs of entrepreneurial, fast-growing businesses.

UBN subsequently hive-out Union Bank UK under a scheme that distributed its entire shareholdings in its United Kingdom’s subsidiary to its shareholders.

At the extra-ordinary general meeting of Union Bank’s shareholders; the meeting considered and approved the proposed divestment of the bank’s entire shareholdings-direct and indirect, in Union Bank UK to all the shareholders of UBN.

In a regulatory filing at the Nigerian Exchange (NGX), UBN indicated that all its equities in UBUK would be distributed to its shareholders pro rata to their existing shareholding interests in UBN, subject to obtaining any required contractual consents and regulatory approvals.

Under thedivestment and distribution, the shares to be held in UBUK by shareholders of the UBN who each hold less than 0.2546 per cent of UBN’s issued share capital shall be placed under a trust to be established with Stanbic IBTC Trustees Limited (SITL). SITL shall be the legal shareholder of record in UBUK’s register, acting as trustee of the beneficial interests of the relevant UBN shareholders.

Shareholders then approved and authorised  SITL to, on behalf of the shareholders, enter into and execute all such agreements and documents, appoint such professional advisers and other parties as may be required, take all such actions and steps and do all such other lawful things as may be necessary for and incidental to, administering the trust in such manner as SITL, acting reasonably, considers appropriate in its capacity as trustee and for giving effect to the trust and or divestment.

Ecobank Nigeria has unveiled a special scheme on Back2School loans and remittances for all its customers.

Head, Consumer Banking, Ecobank Nigeria, Korede Demola-Adeniyi said the loan offerings have been developed based on the bank’s understanding of the importance of education and to further support customers with the financial freedom they deserve.

She stated that as part of the scheme, Ecobank will also be providing Back2School gifts to customers when they receive inflows for school fees payment into their Domiciliary account, stressing that the bank has consistently shown its commitment and support across various customer segments.

Demola-Adeniyi noted that both new and existing individual customers of the Bank can benefit from the scheme, highlighting that this is the perfect time to open an Ecobank account or reactivate dormant ones, in both local currency (LCY) and foreign Currency (FCY) to enjoy all the benefits of the  Back2School Scheme.

“According to her, “we are aware that our customers are diverse with different needs and belong to different segments of the society hence we are always coming up with initiatives like this to cater to our various target markets” . In the same vein, the bank is offering competitive rates on FCY inflows whether as fixed deposits or as cash collateral for loans.

Speaking on the dynamics of the scheme, Mrs Daberechi Effiong, Head, Consumer Products, mentioned that loan offerings are available to all categories of customers in paid and self-employment.

“Customers can either opt for the Employee Credit or Cash backed Back2School scheme based on their cashflow.

The Cash backed scheme gives customers access to competitive interest rates on their funds while accessing the Back2School loan. For the Employee Loan, customers can access up to N20 million for the purpose of school fees payment. The low-cost loan also comes with flexible tenors.

Mrs. Effiong  listed the benefits of the Back2School scheme as follows: convenient repayment with flexible tenors to match customers’ cashflow, competitive interest rate on loans, competitive interest rate on deposits for cash backed loans and FCY inflow, exciting Back2School gifts, additional  N5 per dollar on remittance inflows received and easy access to other loan products including the Buy Now Pay Later scheme with SPAR.

Sundry Foods Limited has floated its N2 billion Series 1 Commercial Paper (CP), offering investors up to 16.5 per cent on the 270-day investment.

The N2 billion CP is being issued under the firm’s  N10 billion CP programme.

The offer is scheduled to close on  Wednesday, September 7, 2022.

Sundry Foods is a food services company operating in the quick service restaurant, bakery and catering segments.

The company owns and operates  141 locations, which houses its array of brands such as Kilimanjaro (the most popular brand), Nibbles, Suncrust, Kiligrill and Pizza Jungle.

The company has been in operation for over 17 years and employs over 3,000 workers across its branches.

Sundry Foods’ rating was recently upgraded from Bbb+ to A- by Agusto & Co. and the A- by GCR was reaffirmed, which is reflective of the Company’s good financial condition and sustainable cash flow position. Sundry Foods has strong earnings potential as evidenced in its five-year revenue and profit before tax CAGR of 35 per cent and 36 per cent.

Access Holdings PLC has received full regulatory nod for the acquisition of majority equity stake in First Guarantee Pension Limited (FGPL).

With the approval, FGPL becomes the latest subsidiary of the financial series holding group.

Group Chief Executive, Access Holdings Plc, Mr. Herbert Wigwe said the acquisition of the new subsidiary would provide the springboard for the group to execute its ecosystem strategy for the pension industry.

He said the acquisition was in line with the group’s vision to create a globally connected community and ecosystem; inspired by Africa for the world.

“We will deploy our renowned culture of strong risk management; innovative technology and best practice corporate governance to deliver high standards of management and returns on pension assets to the benefit of our stakeholders,” Wigwe said.

Access Bank had in March, this year  completed its transition from a commercial banking group to a holding company (holdco).

The new status gives Access Holdings, which already has well-established subsidiaries in not less than 12 African markets and also in United Kingdom, the opportunity to expand into other financial services and non-finance businesses, in addition to its known commercial banking franchise.

The members of Access Holdings  are the flagship Access Bank Plc and its former subsidiaries, which include 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.

Wigwe had explained that the transition to holdco was in order to realign the group for growth and create strategic flexibility and diversification of its revenues.

According to him, the non-operating financial holding company would enable the group to hold investment in banking and non-banking subsidiaries as well as benefit from available market opportunities and grow scale in the regulated consumer lending market, African electronic payments industry and Nigerian retail insurance market.

Wigwe expressed optimism that the group would do well as its planned strategies in 2022 are intended to unlock opportunities for its stakeholders as well as its shareholders.

“We plan to do this by building a dynamic, efficient and agile bank with a digital-first mindset, capable of providing best in class service with strong returns,” Wigwe said.