Category: Equities

By Taofik Salako

More investors are opting for lending and borrowing of shares and bonds to unlock values in their investments by taking advantage of price movements and analysts’ farsightedness.

Securities lending is the process of lending and borrowing of shares and bonds by investors for a period of time under an agreed arrangement.

Traditionally, the borrower will provide acceptable collateral to the lender in the form of cash or other acceptable securities of equal but often greater value than the lent securities in order to protect the lender against any default by the borrower. The borrower must return the securities at the end of the agreed period.

Latest report on securities lending activities at the Nigerian stock market showed that volume of shares and bonds lent out under securities lending arrangement rose by 7,986 per cent in the first four months of this year, compared with entire transaction in 2019.

The report indicated that total volume of shares and bonds involved in securities lending had risen to 4.968 million this year, 7,986 per cent above 61,435 units recorded for the entire 2019. Total value so far this year stood at N47.295 million, 13,626 per cent above N0.345 million recorded for the entire 2019.

Altogether, the quantum of securities currently out on loan, otherwise known as net open position, stood at 4.40 million units valued at N40.95 million with average tenor of 58 days.

Stocks currently included in securities lending are CAP, Dangote Cement, Dangote Sugar Refinery, Flour Mills of Nigeria, Guaranty Trust Bank, MTN Nigeria Communications, Nigerian Breweries, Okomu Oil Palm, Presco, Union Bank of Nigeria, United Bank for Africa and Zenith Bank.

Under the securities lending arrangement, the lender temporarily loan its securities to the borrower. Borrowers seeking to borrow securities would typically do this through a security lending agent. The borrower would need to enter into a Global Securities Lending Agreement with the securities lending agent, who is typically the custodian of the securities.

The securities lending agent would need to have a Securities Lending Authorisation Agreement in place with the owner of the security before the security can be lent.

Once the security is lent, the legal title of the security passes from the lender to the borrower, but any benefits arising from corporate actions such as scrip issue or dividend payments are retained by the lender, the beneficial owner.

The lender regains title when the securities are returned by the borrower at the end of the loan tenor or when the lender calls for the stock if the agreement was a call tenor. The securities recall process is usually stipulated by the terms and conditions of the securities lending contract.

Borrowers typically include market makers, broker-dealer firms, investment banks and hedge funds while lenders include large institutional investors such as pension funds, insurance companies, mutual funds, sovereign wealth funds, investment companies, holding companies, high net-worth individuals and retail investors.

Securities lending enhances the liquidity and price discovery functions of the market while providing additional incomes to all parties.

By Collins Nweze

Wema Bank has introduced Earn From Home Scheme as part of the activities to celebrate its 75th Anniversary.

Celebrated as Nigeria’s most innovative financial institution, Wema Bank has achieved tremendous success over the years from its willingness to reinvent the narrative in the delivery of financial services and experiential banking to its customers.

In this light, the bank has launched the scheme to reward loyal customers with an opportunity to earn extra income. This is coming at a time the crippling effects of the COVID-19 pandemic are being felt by individuals and corporate organisations locally and globally.

This is in furtherance of the bank’s long history of socially responsible projects and is both timely and sensitive as it creates an alternative stream of income for its customers at a time when income channels are drying up.

Read Also: Zenith Bank posts N166.8b in Q1

According to the Head, Retail Banking, Wema Bank, Dotun Ifebogun, “we believe this will empower our transacting customers to effectively leverage the current lockdown situation and earn while at home by recommending the ALAT App to economically active family members and friends within their social network.”

In addition to the “Earn from Home” programme, the bank will also host Hackaholics 2.0, a two-day hackathon and a tech fair event. Set up to promote the development of technological solutions for financial and institutional need and other social issues, Hackaholics was postponed for a later date following the coronavirus pandemic.

Themed ‘Connecting Worlds’, the hackathon will bring developers, designers and creative thinkers together to develop products and discover new technologies.

“At 75, Wema Bank sees no limit to the magic she can create, no walls to the relationships she can forge, no barriers to the excellence of service, and no impossibilities in building the bank of the future,” Ifebogun added.

Taofik Salako

Access Bank Plc is set to splash millions of naira on lucky customers who will emerge winners in the forthcoming DiamondXtra monthly draw scheduled to take place next month.

Group Head, Retail Products and Segments, Access Bank Plc, Adaeze Ume said the bank has been encouraging its customers to stay safe and stay connected by using its various digital channels this period.

“We know these are trying times and our customers need funds to pay essential domestic bills, send money to their loved ones and also save up for unforeseen circumstances since we don’t know how long the lockdown will last. To deliver on our promise to continually reward our customers for their loyalty and savings culture, 10 lucky customers will be rewarded with N1million each in the May monthly draw. We are also going to feature a special Women’s draw – WXtra – where 27 Women will win N100,000 each and one Woman will win the WXtra star prize which is a monthly allowance of N100,000 for one year,” Adaeze said.

She explained that in order to join the winning train or stand a chance to win in the forth coming monthly draw, customers only need to simply fund their DiamondXtra account with N5000 or more for an opportunity to participate in the draw to win N1 million and a lot of other mouth-watering cash prizes.

According to her, those who do not have a DiamondXtra account can simply subscribe by dialing *901*5# from their phones to open a DiamondXtra account and fund it with a minimum of N5,000 or more to stand a chance to become a winner in the monthly draw.

“Now our customers can stay safe, stay connected and stay winning,” Ume said.

DiamondXtra is an interest yielding hybrid account which combines features of both savings and current accounts. It allows deposit of both cash and third party cheques. The DiamondXtra reward scheme was launched in 2008 and has been running till date.

Taofik Salako

Stanbic IBTC Holdings Plc has assured the investing public that the fundamentals of its businesses remain strong despite the envisaged impact of the Coronavirus pandemic.

In a regulatory filing at the Nigerian Stock Exchange (NSE), the board of directors of the holding company stated that stress tests conducted on the company to measure the impact of COVID-19 pandemic showed no real threat to the stability of the group.

“We also wish to emphasise that stress tests were conducted to measure the impact of the pandemic as well as foreign currency volatility on the group; and our results show that our capital and liquidity positions remain well above regulatory limits. This is being reviewed on an ongoing basis,” Stanbic IBTC Holdings stated.

According to the group, there is a sustainable business continuity management plan during the period of the COVID-19 pandemic that will ensure the company continues to maximise the potential of the operating environment, in spite of the disruptions caused by COVID-19.

The group reassured all stakeholders of its long-term stability, notwithstanding the impact of the COVID-19 pandemic across the country.

“Indeed, Fitch, a globally-renowned credit rating agency, recently retained the National Long-term Ratings of ‘AAA(nga)’ and ‘F1+(nga)’ of Stanbic IBTC and its banking subsidiary, Stanbic IBTC Bank Plc. Additionally, Stanbic IBTC Bank Plc is excluded from Fitch’s Rating Watch Negative (RWN) list of Nigerian banks, even in the midst of the Coronavirus pandemic’s impact on businesses,” Stanbic IBTC Holdings stated.

The group pointed out that the Fitch ‘AAA(nga)’ rating, signifies the highest score in its national rating scale for Nigeria and it is given to issuers with the lowest expectations of default risk, compared to other issuers. Furthermore, issuers or obligations that have the strongest capacity for timely payment of financial commitments relative to other issuers in the same country are rated F1+(nga).

“We remain hopeful that our country is on the path to recovery; and encourage you to please stay safe by avoiding unnecessary social contacts, ensuring continuous washing of hands and adhering to other basic rules of personal hygiene,” Stanbic IBTC Holdings stated.

In the statement signed by company secretary of Stanbic IBTC Holdings Plc, Chidi Okezie, the group outlined that it has implemented a number of measures in order to ensure that its business operations remain stable.

“We will continue to review the trends and share insights on the impact of COVID-19 on micro and macro-economic indices via tailored webinars and Instagram Live sessions delivered by subject matter experts, to enable our clients and other stakeholders make good business and personal decisions that may help them during and after the COVID-19 pandemic situation,” the group stated.

According to the group, from a business continuity perspective, it has continued to leverage technology to enhance how its customers carry out their daily transactions with it uninhibited while as a responsible corporate citizen and in keeping with global health protocols on social distancing, Stanbic IBTC Holdings had proactively activated remote working for the majority of its workforce, ahead of the current restriction of movement.

“We shall continue to monitor developments closely as they unfold, guided by our commitment to ensure the continued sustainability of the Stanbic IBTC Group, as well as delivering long term value to our shareholders,” the group stated.

It added that it has implemented safety protocols across all its locations, which entail the use of hand sanitisers and infra-red thermometers for screening staff, clients, contractors and visitors; before they are granted access to its locations while additional security measures have also been taken for the protection of staff members who are on essential duty this period; and for the protection of its assets.

To help manage mental health and wellbeing, it has also been engaging staff members and online community through online sessions while it has also been adhering to physical distancing requirements in its branches providing skeletal services, to reduce the risk of infections when one comes in contact with droplets from speech, sneezes and coughs.

As part of business continuity management procedures, teams providing essential services have been allocated to operate between their normal office locations and alternate work locations, adhering to the prescribed social distancing requirements. This is to ensure that the needs of its stakeholders – clients, shareholders, staff and others, are met regardless of the lockdown and restricted movement.

Other non-essential staff members have since been empowered with modern collaboration tools to work from their respective residences, in a bid to reduce the risk of contracting the virus. We are pleased to inform you that this move has greatly enabled business continuity and we are reaping the gains of investment in such office tools.

The group has also reviewed third-party dependencies and confirmed their readiness to continue to provide services to its organisation remotely, which gives the assurance that the financial services solutions that it offers will not be materially impacted.

“We have implemented a coordinated approach for the dissemination of information to employees, customers and contractors on precautionary hygiene measures and standards. These communications are being deployed via traditional media, emails, social media, posters, ATMs and other electronic channels,” Stanbic IBTC Holdings stated.

Taofik Salako

Ethical entrepreneurs have called on the Federal Government to exemplify its commitment to the development of alternative finance through inclusion of non-interest windows in its various loan and intervention funding programmes.

Ethical entrepreneurs and financial experts who participated in a webinar on financial inclusion in Nigeria and government’s intervention funds called on government to adopt inclusive approach that combines both conventional and ethical finances in order to ensure inclusive development of the economy.

They underscored the need for government to continue to deepen the non-interest alternative finance segment of the financial market through massive awareness campaign, inclusion within development finance initiatives and special purpose intervention to bolster the emerging segment.

In a communiqué issued at the end of the programme organised by Network of Muslimah Entrepreneurs, participants agreed that having discovered the knowledge gap on ethical finance, it becomes obligatory to bring the attention of the stakeholders in financial sector to the huge section of the citizens left uncovered by various government interventions in Nigeria.

The communiqué was signed by National President, Jumai Ajijola; General Secretary, Shakirat Animashaun and Financial Secretary, Saidat Shonoiki of the Network of Muslimah Entrepreneurs.

Participants noted that ethical investors and entrepreneurs, who shun interest because of faith and beliefs, have not been able to benefit from government’s developmental initiatives and intervention funding such as NIRSAL loan, Nigerian Export Import Bank (NEXIM) loan, Micro, Small and Medium Enterprises (MSME) fund, Bank of Industry (BOI) loans,  mortgage funds and the recent Covid-19 target fund.

“We, therefore, use this medium to call on the government at different levels, the Central Bank of Nigeria (CBN), and other stakeholders to take into consideration the interest-averse population so as to enhance financial inclusion and prevent poverty, especially among women in line with millennium goals,” the communiqué stated.

The Federal Government had adopted alternative finance as part of the national financial structure with the formulation of non-interest financial frameworks and rules by financial regulators.

By Taofik Salako

United Capital Plc started the 2020 business year with a well-rounded performance in the first quarter as the investment banking group recorded double-digit growths in all key performance indices.

Key extracts of the interim report and accounts of United Capital for the three-month period ended March 31, 2020 releasedy at the Nigerian Stock Exchange (NSE) showed that gross earnings rose by 32 per cent while pre and post tax profits grew by 53 per cent and 54 per cent respectively.

Gross earnings rose to N1.92 billion in first quarter 2020 compared with N1.45 billion in first quarter 2019. Operating income rose by 40 per cent from N1.35 billion in 2019 to N1.89 billion in 2020. Profit before tax increased from N766.87 million in first quarter 2019 to N1.18 billion in first quarter 2020. After taxes, net profit rose from N644.17 million in first quarter 2019 to N991.29 million in first quarter 2020. Earnings per share for the three-month period thus increased from 11 kobo in 2019 to 17 kobo in 2020.

The balance sheet also showed improved performance as total assets rose from N150.46 billion recorded by the year ended December 31, 2019 to N197.41 billion by March 2020. Total liabilities also rose from N130.88 billion in December 2019 to N176.69 billion by March 2020. Shareholders’ funds thus increased by six per cent from N19.59 billion in December 2019 to N20.72 billion in March 2020.

The company attributed its top-line growth to significant increases in fee and commission incomes and net interest margin. The company’s fee and commission income rose by 55 per cent while net interest margin improved by 223 per cent.

Cost to income ratio had improved significantly at 39 per cent in first quarter 2020 compared with 47 per cent in comparable period of 2019. With this, pre-tax profit margin improved to 61 per cent as the company continued to implement cost containment measures.

Group Chief Executive Officer, United Capital Plc, Mr. Peter Ashade said the group was able to endure the challenges in the first quarter of the year to post good results.

He noted that year 2020 has posed a lot of challenges to the Nigerian economy with decline in oil prices, operating environment impacted negatively, with the exchange rate becoming more volatile, continued fall in rates in the money market as well as bearish sentiments in the capital market.

“Our business was not immune to these challenges; however, the group was able to endure the first quarter of the year. Thanks to our well-articulated and diligent implementation of our plans set out last year, we were able to deliver a 32 per cent year on year increase in revenue and 53 per cent increase in profit before tax,” Ashade said.

He pointed out that the growth was generated basically from the group’s margin on investments and the 55 per cent increase achieved on its fees and commission income as well as a 149 per cent growth in net trading income.

He  however added that the group’s investment income shrank during the quarter due to the drop in returns in the money market.

“As we work into the coming quarters, we are constantly reviewing our strategy in light of the current global pandemic in the wake of COVID-19. As a group, we were able to invoke our business continue framework which has worked immensely well over the past few weeks as we have been able to stay afloat with our work-force working remotely to ensure the continued operations of our business,” Ashade said.

He assured that in line with the group’s initial strategy for the 2020 business year, it shall continue to push further its market diversification and cost-optimisation initiatives as well as implement phased automation of its business processes whilst upholding commitment to ensuring a significant improvement in its value delivery to all stakeholders.

The board of directors of United Capital had recently recommended distribution of N3 billion to shareholders as cash dividends for the 2019 business year. Shareholders will receive a dividend per share of 50 kobo.

Key extracts of the audited report and accounts of the group for the year ended December 31, 2019 had shown that turnover dropped from N9.26 billion in 2018 to N8.59 billion in 2019. Net operating income also declined from N7.21 billion to N7.05 billion. Profit before tax stood at N4.95 billion in 2019 compared with N6.22 billion in 2018. After taxes, net profit rose by 15 per cent from N4.34 billion to N4.97 billion. Earnings per share thus improved from 72 kobo in 2018 to 83 kobo in 2019.

The balance sheet of the investment banking group also improved marginally from N148.7 billion in 2018 to N150.46 billion in 2019. Total liabilities stood at N130.88 billion as against N132.86 billion in 2018 while shareholders’ fund rose by 23.7 per cent from N15.83 billion in 2018 to N19.59 billion in 2019.

By Collins Nweze 

The Association of Bureaux De Operators of Nigeria (ABCON) has advised the Central Bank of Nigeria (CBN) to establish a Voluntary Offshore Asset Repatriation Window to allow more foreign capital inflows into the economy.

ABCON President, Aminu Gwadabe said the proposed policy plan will be a monetary instrument of the CBN  backed by an  Act of the National Assembly for non-disclosure of the sources or basis of proceeds  of the funds to be repatriated.

He said there was need for tougher measures to keep the forex market and economy going by fiscal and monetary policy makers at this extraordinary time ignited by the COVID-19 pandemic. He said the COVID-19 pandemic has led to drop in crude oil prices and drastic cut in Nigeria’s foreign exchange earnings.

Gwadabe in a statement, said the proposed window will  boost liquidity in the Bureaux De Change (BDCs)  sub-sector, Investors’ and Exporters’ (I&E) forex window and help the CBN sustain stability of the exchange rate.

He said the forex window,  which differs from the previous Voluntary Offshore Asset Regularisation  Scheme backed by executive order 008 and tied to taxation, will be an incentive for owners  of stashed funds abroad to be given an amnesty to repatriate their foreign cash holding into the window and to be traded at the prevailing rates in those windows.

Besides, owners of such funds should have one year amnesty to participate in the market and should be liable to pay a reduced corporate income tax of 20 per cent.

Gwadabe also advised that naira proceeds from the transactions in that window should be invested in the economy for a maximum of 10 years before it can be allowed to be repatriated back if the need arises.

According to him, the window will boost foreign exchange liquidity and stem the volatility in the market. It will also help in diversifying Nigeria’s foreign exchange earnings, support national planning, enhance backward integration and import substitution policies.

Continuing, Gwadabe said it will lead to reduction in the size of black and informal economy, boost sovereign credit ratings, improve living standards for the people and promote good corporate governance in institutions.

“Going by the dire consequences of COVID-19 on our economic indicators- decline in oil revenue, low tax to Gross Domestic Product (GDP) ratio, increasing budget deficit, declining fiscal buffers and debt servicing challenges, among others, poor revenue problem and falling oil prices despite OPEC oil supply cut and debt rescheduling. These will  trigger other macro  economic challenges such as high interest rate, low level of investors confidence, shrinking Diaspora remittances inflows and increasing livelihood agitations,” he said.

He said the economy outlook, when compared to  global economic trends does not look positive, hence the need to find a turning point or face dire consequences of inaction.

He said that Nigeria is seen by other countries as an oil rich country, and a large part of the budget, exchange rate stability, balance of trade are determined by dwindling oil revenue, hence the need to diversify the economy.

Gwadabe said there was need for both the monetary and fiscal authorities to act fast in ensuring that the impact of COVID-19 pandemic in the economy and businesses is reduced by attracting more foreign capital into the economy through the Voluntary Offshore Asset Repatriation Window which will benefit all players in the economy.