The Nation Newspaper

Category: Investors

  • Nigeria’s pioneer credit bureau to float N503m rights issues

    CR Services (Credit Bureau) Plc, Nigeria’s pioneer credit bureau operator, plans to raise N503.15 million in new equity funds to strengthen its operations.

    CR Services will be raising the new equity funds through a combined rights issue of ordinary and preference shares.

    A document obtained by The Nation indicated that the company will be offering 32.86 million ordinary shares of N1 each to existing shareholders at N1.05 per share. It will also simultaneously offer 72.86 million ordinary shares of N1 each with class A preference rights to existing shareholders at N1.11 per share. Also, a total of N352.87 million ordinary shares of N1 each with class B preference rights will be offered to existing shareholders at N1.09 per share.

    The qualification date for the rights issue was September 25, 2017 and the combined offer is expected to open for subscription in the next few days.

    The shares will be pre-allotted on the basis of five new ordinary shares for every seven ordinary shares of N1 each; five new ordinary shares with class A preference rights for every seven class A preference shares of N1 each and five new ordinary shares with class B preference rights for every seven class B preference shares of N1 each held as at the qualification date.

    Incorporated in Nigeria in January 2003 as Nigeria’s first private credit bureau operator, CR Services commenced full operations in December 2003 as the pioneer fully operational credit bureau. It has since set record as the first credit bureau in the world to integrate anti-fraud and biometric technologies into a credit bureau system.

    CR Services, with strategic technical partnership with CreditRegistry Corporation, has laid the foundation for fraud-proof, large-scale consumer and small business credit in Nigeria, providing information, innovation and practical know-how that set it apart.

    With biometric technology, CR Services identifies consumers based not only on their personal information, but through fingerprint and facial recognition, which are unique to every individual. CR Services enables creditors to know a customer’s true identity, preventing revenue loss and protecting consumers from identity theft fraud.

    After a successful private placement in 2007, the CR Services began a significant expansion of its services through the creation of the credit and risk management division. Through this division, CR Services has provided risk management solutions that have helped clients with new products touching every strategic and tactical element of the credit cycle model – planning, acquiring accounts, maintaining accounts, collections and remedial management and creating management information systems (MIS).

    CR Services is reputed to have the largest credit bureau database of over 30 million records and widest member coverage by industry, strengthening its trail-blazing efforts as the first credit bureau to record 100 per cent coverage of commercial banking industry in Nigeria and the first to introduce credit bureau scores into the Nigerian market.

  • OK Foods launches premium milk cookies

    OK Foods has launched its “Pure Bliss Premium Milk Cookies” as the food-manufacturing company continued to expand its operations and product portfolio to meet the tastes and needs of Nigerian consumers.

    The latest launch was the third launch in the Pure Bliss range after Pure Bliss Milk Cream Wafers and Pure Bliss Rich Cocoa Biscuits which were launched in 2016. The two initial launches have done phenomenally well in Nigerian market and have gained massive consumer acceptance.

    Consumer data showed that on the average, Nigerians are buying more than 100 packs of Pure Bliss every moment. The new product is available in an attractive 75g pack that is handy for people to carry anywhere.

    Speaking at the launch at Renaissance Hotel, Ikeja, Lagos, Brand Manager, Biscuits, Ok Foods, Miss Olaitan Osunbunmi, said the decision to launch a rich milk cookie in the Pure Bliss range came from the yearning of Nigerians, especially the youth for a rich milk cookie experience.

    According to her, the Pure Bliss premium milk cookies were produced with the needs of Nigerians in mind as the product delivers excellently on taste, packaging and premium.

    She noted that beyond the rich milk experience that the product offers, the brand is a companion that lights up the day and gives the indulgent comfort that Nigerians seek as they go through their daily hustle.

    Category Head, Biscuits & Confectionery, OK Foods, Mr Ashwin Prabhu, said the company has put in place a supportive marketing plan that will ensure that the product becomes a winner that consistently adds delight to the lives of all Nigerians.

    He said OK Foods is proud to be the pioneer in making premium indulgence biscuits that is on par with premium international offerings in the category.

    He added that Pure Bliss Premium Milk Cookies will be manufactured in the company’s facility in Lagos.

    Guests at the launch, who tasted the new Pure Bliss Premium Milk Cookies, testified to its irresistible taste and superior rich milky experience.

  • Coronation Asset Management eyes N50b mutual funds

    Coronation Asset Management, a subsidiary of Coronation Merchant Bank Limited, plans to build up its mutual funds to more than N50 billion within the next nine months as the investment management company seeks to open up bespoke opportunities to retail investors.

    Its Chairman, Mr. Abubakar Jimoh, who spoke on the background of the recent listing of three mutual funds at the Nigerian Stock Exchange (NSE), said the company will bring its experience in asset management and the pedigree of the Coronation Merchant Bank Group to bear on its mutual funds to make them attractive to investors.

    He noted that while the initial listing value of the three mutual funds was about N2.2 billion, the company plans to  grow the funds to N50 billion by the middle of next year.

    “Our target is to get these funds to like N50 billion by latest the middle of next year and to be able to do that, we need to ensure that there are activities on the funds. So, we started with the introduction of about N2.2 billion, that is about N48 billion to go; that means significant things have to happen to get to that volume  since our target is to ensure that there is massive activity on the funds. We need to make it happen, it will happen,” Jimoh said.

    He said the launch of the collective investment schemes and their listing on the stock market provided opportunity for retail investors to get better returns and take advantage of the pool of capital to take advantage of benefits that usually accrue to large high networth investors.

    “It is an investment opportunity for retail investors. The fact that these are listed also means that there is also going to be liquidity and pricing is going to be transparent. Demand and supply will drive the price and the performance of the funds will also be in line with the best international practice. The fact that we can bring retail investors together to have the same kind of benefits like institutional investors means that you don’t have to be afraid to invest your small funds in the market because ordinarily if a retail person invests, you don’t get the benefits of mass investment,” Jimoh said.

    According to him, the company also plans to combine its bespoke funds for retail investors with other exotic products such as electronic traded funds and real estate funds among others.

    “Before the end of the first quarter of next year we will bring additional funds to the market. Because we are a part of a group, Coronation Merchant Bank, we are going to push and work hard to ensure that we operate with the highest level of probity to ensure that investors have confidence and then investment will definitely increase,” Jimoh said.

    Jimoh, who is also the Managing Director of Coronation Merchant Bank, assured that the group has a strong pedigree in financial management noting that Coronation Merchant Bank has more than 24 years experience in financial management.

    “The history of Coronation Merchant Bank is that we have been in business since 1993. This is not a short-run kind of business, the company is in with long-term in mind, we have been doing it for a long time and we will continue to do it,” Jimoh said.

    He urged retail investors to embrace collective investment schemes, noting that mutual funds provide small and medium scale investors opportunity to earn higher returns and minimise their risks.

    “Collective investment scheme ensures that you are able to get similar benefit that an institutional investor will get. If you have N2 billion total fund for instance compared to someone who invest N10,000, you discover that you stand in a position of strength  than when you are investing small amounts. For instance, the returns, on the average, in the money market fund in the last few years is about 16 to 17 per cent, if you are investing N10,000 to N20,000 as a small investor, you would be getting between two to three per cent. That’s how massive the increase in the rate can be. This should encourage other investors to come into the market and get the same kind of benefits. When you invest collectively, you will get benefits that individually you cannot get,” Jimoh said.

    The three funds recently listed by Coronation Asset Management include Coronation Money Market Fund; Coronation Fixed Income Fund and Coronation Balanced Fund. The listing followed the success of the company’s initial public offerings for the mutual funds.

    Within its first year of commencement of business, Coronation Asset Management successfully pooled 479 subscribers with N1.65 billion through the Coronation Money Market fund, Coronation Fixed Income had 39 subscribers and yielded N315.205 million while Coronation Balanced Fund with 64 subscribers achieved N198.615 million.

  • UBA: Outperforming

    UBA: Outperforming

    United Bank for Africa (UBA) Plc is on the top list of companies with well-rounded performance. UBA’s top-of-the-chart performance at the stock market combines with considerable growth in all key fundamental indicators to make the bank the best performing banking stock in recent period. Capital Market Editor Taofik Salako, in this report, reviews the interplay of fundamental earnings and share price appreciation

    United Bank for Africa (UBA) Plc outperformed all banking stocks in the first quarter of 2017 with a share price appreciation of 28.22 per cent. It had recorded the second highest price gain of 33.1 per cent in 2016, just slightly under three points behind Guaranty Trust Bank (GTB), which led the sector with 35.9 per cent.

    Altogether, UBA’s share price had grown by more than 60 per cent in the past 15 months, the highest by any bank and one of the few bright spots in the long-running depression at the stock market. Average return at the Nigerian Stock Exchange (NSE) in the first quarter of 2017 was negative at -5.05 per cent.

    The NSE Banking Index was down by 0.03 per cent while the NSE 30 Index, which tracks large-cap stocks, was almost on the average with a three-month return of -4.93 per cent. In  2016, the stock market had recorded a full-year average return of -6.17 per cent, equivalent to net capital loss of N604 billion.

    Only 19 companies, including three banks, recorded a capital gain of 20 per cent and above in 2016, underlining the general downtrend that marked price changes during the period. A long-running depression had seen quoted equities losing N4 trillion in the past three years, including N1.75 trillion and N1.63 trillion in 2014 and 2015 respectively.

    UBA’s share price appears to be riding on the crest of positive analysts’ reviews. There is almost analysts’ consensus on the attractiveness of the UBA. Investment research and rating firms such as Renaissance Capital, CSL Stockbrokers, Fitch and Augusto among others had maintained that UBA has strong fundamentals to support substantial price appreciation. UBA Group’s audited report and accounts for the year ended December 31, 2016 supported the positive view of its earnings potential, in spite of the Nigerian economic recession.

    Improving earnings

    Key extracts of the Group’s audited report showed impressive growths in the top-line and the bottom-line as it continued to expand its assets base. Group;s gross earnings rose by 21.9 per cent from N314.84 billion in 2015 to N383.65 billion in 2016. Interest income had grown by 15 per cent from N229.63 billion in 2015 to N263.97 billion.

    With 2.9 per cent increase in interest expense from N96.03 billion to N98.77 billion, net interest income rose by 23.7 per cent to N165.2 billion in 2016 compared with N133.6 billion in 2015. This underlined the profitability of the group’s core banking business. Group profit before tax grew by 32.4 per cent to N90.64 billion in 2016 as against N68.45 billion in 2015. After taxes, net profit rose by 21.1 per cent from N59.65 billion to N72.26 billion. With these, earnings per share increased from N1.79 in 2015 to N2.04 in 2016.

    UBA Group’s balance sheet also emerged stronger with total assets rising by 27.3 per cent from N2.75 trillion in 2015 to N3.5 trillion in 2016. Customers’ deposit rose by 19.7 per cent from N2.08 trillion to N2.49 trillion. Loans and advances recorded above average growth of 44.2 per cent to N1.50 trillion in 2016 as against N1.04 trillion in 2015, underlining  the bank’s commitment to economic development. Shareholders’ funds also increased by 33.5 per cent from N325.83 billion in 2015 to N434.85 billion in 2016.

    Key underlying ratios showed that the growth in 2016 was driven by improvements in the intrinsic operational performance and management. Net interest margin, which underlines the profitability of the core banking business, improved to 62.6 per cent in 2016 as against 58.2 per cent in 2015. This corroborated the reduction in cost of fund. Pre-tax profit margin, which measures the underlining profitability of the group’s businesses, also improved from 21.7 per cent in 2015 to 23.6 per cent in 2016.

    On the back of improved earnings, the bank increased dividend payout to shareholders by 25 per cent, further enhancing the total real return on investment built up significantly by capital appreciation. Shareholders received final dividend payment of N19.9 billion for the 2016 business year, in addition to N7.3 billion interim dividend paid after the audit of its 2016 half-year results. With this, shareholders received a final dividend per share of 55 kobo in addition to interim dividend of 20 kobo, bringing total dividend for the 2016 business year to 75 kobo as against 60 kobo paid for the 2015 business year. A dividend yield of more than 14 per cent further placed UBA within the top yields at the stock market. This surpassed the 13.01 per cent coupon on the two-year tenored Federal Government National Savings Bonds.

    Sustained growth

    The latest audit report confirmed UBA Group’s steady performance over the years. A five-year medium term review showed that total assets have grown steadily from N2.27 trillion in 2012 to N3.50 trillion in 2016. Net loans and advances more than doubled from N658.9 billion in 2012 to N1.50 trillion in 2016. Customers’ deposits also followed the uptrend, jumping from N1.72 trillion in 2012 to N2.49 trillion in 2016. Shareholders’ funds rose consecutively from N189.11 billion in 2012 to N434.85 billion in 2016. Profit before tax, which stood at N52.01 billion in 2012, had defied recession to rise to N90.64 billion in 2016 while profit after tax rose from N54.77 billion in 2012 to N72.26 billion in 2016.

    Most analysts have rated UBA Group high on its fundamentals. “We note improvement in profitability and the bank’s good asset quality. The rating takes into cognizance the weak macroeconomic climate on the banking industry’s asset quality, in which we do not expect UBA to be excluded. Nonetheless, we note positively its diversified geographical reach, which will cushion to an extent the impact of the weak Nigerian economic climate,” Agusto & Co stated in its recent credit rating report.

    Nigeria’s foremost local rating agency, Agusto & Co,  had upgraded UBA’s rating from “A+” to “Aa-”, with a stable outlook, citing the bank’s improved capitalisation, good liquidity and large pool of stable deposits, strong domestic presence supported by the bank’s extensive branch network and growing alternative banking channels.

    Also, Fitch International, one of the foremost global rating agencies, in its latest report affirmed and upgraded its ratings for the bank citing strong earnings and asset quality. Fitch affirmed UBA’s viability rating at “B” as the pan-African banking group continues to sustain its benchmark asset quality and strong profitability amidst industry and macroeconomic challenges. UBA is one of the few banks with strong risk management framework, which has helped kept non-performing loans ratio at a moderate level of 1.74 per cent as at the end of March 2016.

    Strength in diversity

    Other African subsidiaries contributed about one hird of the group’s profit in 2016, reflecting the increasing market share of the group outside its Nigerian home. UBA operates in 18 other African countries including Ghana, Republic of Benin, Liberia, Cote d’Ivoire, Burkina Faso, Guinea, Senegal, Sierra Leone, Mozambique, Zambia, Uganda, Tanzania, Kenya, Congo DR, Congo Brazzaville, Cameroon, Chad and Gabon. UBA also has presence in United Kingdom, United States and France.

    Geographical segment analysis showed the group performance was buoyed by above average growths in its foreign subsidiaries. The other 18 African subsidiaries recorded pre and post tax profit of N31.4 billion and N24.32 billion respectively on total earnings of N121.9 billion in 2016, considerable growths on pre-tax profit of N18.8 billion and post-tax profit of N14.14 billion recorded on total incomes of N67.72 billion in 2015. Other non-African global operations also improved in 2016 with total income of N9.8 billion and pre and post tax profits of N3.4 billion and N3.37 billion respectively. Other non-African global subsidiaries had recorded gross earnings of N6.01 billion and pre and post tax profit of N1.95 billion each in 2015.

    Operating segment analysis also showed that the overall performance rested on evenly spread improvements across the key business segments. Corporate banking recorded gross earnings of N116.63 billion, profit before tax of N43.46 billion and profit after tax of N37.69 billion in 2016 compared with N101.07 billion, N29.04 billion and N25.31 billion recorded respectively in 2015. Retail and commercial banking segment, the largest segment, grew top-line to N227.57 billion in 2016 with profits before and after  tax of N29.44 billion and N20.05 billion respectively. Total revenue in the segment had stood at N185.19 billion in 2015 with profit before tax of N26.52 billion and profit after tax of N23.11 billion.

    Outlook

    The board and management of UBA said the banking group is well-positioned for sustainable long-term growth that will continue to ensure commensurate returns to shareholders. Chairman, United Bank for Africa (UBA) Plc, Mr. Tony Elumelu, noted that most African countries were implementing policy measures that should help stimulate inclusive economic growth, ease macro pressures and lower the cost of doing business. According to him, while Africa has experienced a difficult period; the UBA group welcomed 2017 with renewed optimism as it truly believes that “Africa is Rising”.

    “Our pan- Africa operations have delivered on the promises we made at the outset of our growth strategy and we are beginning to reap the benefits of one the largest network in Africa. As we navigate the fast changing market place, we are increasingly digitalising our core business, as we explore new markets and means of embracing customers experience, gain increased share of customers’ wallet and offer new services. I am very optimistic that we will sustain the strong growth trajectory, as we continue to gain market share, leveraging our core values of enterprise, excellence and execution,” Elumelu outlined.

    Group managing director, United Bank for Africa (UBA) Plc, Mr. Kennedy Uzoka also assured that the bank is optimistic of continuing growth in the years ahead.

    “The 2017 outlook remains positive in most of our markets. We are not aware unaware of the macro challenges, competition and constantly changing customer preferences.  We will further sweat our unique Pan Africa platform to improve productivity, extract efficiency gains and grow our share of customers’ wallet across all business lines and markets,” Uzoka said.

    According to him, as the banking group continues with its customer first philosophy, shareholders can look forward to better performance, especially with the outlook remaining positive in most of the group’s markets.

    “We will build on our strong governance culture, zero-tolerance for infractions and transparency in furthering our frontiers of leadership in the African market,” Uzoka said.