The Nation Newspaper

Category: Money

  • Banks get N5.7tr CBN loan to boost liquidity

    Banks get N5.7tr CBN loan to boost liquidity

    The Central Bank of Nigeria (CBN) has lent banks and discount houses N5.74 trillion to boost liquidity. The figure is an increase of 124.4 per cent compared to the N2.56 trillion in the preceding quarter.

    The fund, which came as Standing Lending Facility (SLF), was granted in the third quarter, which ended in September, at 14 per cent. The SLF is an overnight credit available on banking days between 2 pm and 3.30 pm, with settlement on the same day value.

    Also, the total Standing Deposit Facility (SDF) was N14.3 trillion during the third quarter, representing an increase of 135.1 per cent over the level in the preceding quarter.

    According to the CBN, banks’ deposits at the apex bank increased by 14.8 per cent to N7 trillion in contrast to the decline of 10.2 per cent at the end of the preceding quarter. The development reflected largely, the 75.4 per cent rise in banks deposit, which more than offset the 32.5 and eight per cent decline in the deposits of others’ and Federal Government, respectively.

    The CBN attributed the significant increase in activities in the standing facilities window mainly to the banks’ preference for depositing their overnight balances at the discount window rather than placing them at the interbank.

    It explained that money market rates were influenced by the liquidity condition in the banking system arising from the introduction of the 50 per cent Cash Reserve Ratio (CRR) on all public sector deposits, coupled with the delay in the release of fiscal allocation.

    The CBN had on November 19 Monetary Policy Committee (MPC) meeting maintained the Monetary Policy Rate (MPR) at 12 per cent, and kept the symmetric corridor of plus two per cent around the MPR for SLF. However, the SLFs are available only to banks and discount houses that have executed the Nigerian Master Repurchase Agreement (NMRA) with the regulator. The NMRA covers the operations of the SLF and addresses issues relating to pricing, duration, custodian as well as default resolution in lending.

    The Liquidity Ratio Cash Reserve Ratio (CRR) and the Net Open Position were also retained at their preceding quarter’s levels of 30, 12 and one per cent.

    It said discount window also remained open to authorised dealers to access both the standing deposit facility (SDF) and standing lending facility (SLF). Overall, developments in money market indicators were mixed in the review quarter.

    The CBN said that the value of money market assets outstanding at the end of the third quarter stood at N6.5 trillion, showing an increase of 0.34 per cent, compared with the increase of 5.96 per cent at the end of the preceding quarter.

    The development was attributed, to the 94.13 and 53.15 per cent increase in banks investments in Commercial Paper and Bankers Acceptances outstanding during the period under review.

    There were also mixed developments in banks’ deposit and lending rates during the third quarter. The average savings deposit rate, which rose to 2.44 per cent from 2.04 per cent in the second quarter, all other rates on deposits of various maturities fell from a range of 5.69 per cent to 7.72 per cent to a range of 4.92 to 7.55 per cent in the third quarter.

    The weighted average inter-bank call rate, which stood at 11.69 per cent at the end of the second quarter of 2013, rose by 2.34 percentage points to 14.03 per cent in the third quarter of 2013, reflecting the liquidity condition in the banking system.

    Similarly, the weighted average rate at the Open Buy Back (OBB) segment rose to 14.14 per cent at the end of the review quarter from 11.27 per cent in the preceding quarter. The Nigeria Inter-bank Offered Rate (NIBOR) for the seven-day and 30-day tenors rose to 13.79 and 13.95 per cent from 12.19 and 12.46 per cent, in the preceding quarter.

     

     

     

     

  • ‘Multiple tax hinders growth’

    Multiple taxation is a disincentive to foreign direct investment (FDI) which hinders economic development, President, Chartered Institute of Taxation of Nigeria (CITN) Mark Dike has said.

    Speaking during a CITN induction in Lagos, he said multiple taxation, under whatever guise is a major hindrance to economic development and social emancipation.

    “There is no doubting the fact that taxation is inevitable because it provides the resources for government to provide infrastructure for its citizens, but when taxes are severally replicated on the income of an individual, then there is a big cause for concern. For instance, some state and local governments request people to pay for registration of business premises and licence of business premises,” he said.

    Dike said these were one and the same as the only difference is the change of name. He regretted that governments, unfortunately, seemed not to have the wherewithal to enforce discipline and sanctity in the tax system as it is obvious that all levels of governments today are bent on collecting taxes, anyhow.

    He said clients and policy makers have continued to look up to us in their constant search for solutions to the various taxation and fiscal policy problems.

    “For instance, there had been several agitations from some quarters for an upward review of property tax. This call, though, seems good on the surface but definitely not the major solution or panacea to the problem of insufficiency of revenue or eradication of corruption which has eaten deep into the fabric of the Nigerian system,” he said.

    The CITN boss said the success of a unified tax system depends largely on the government’s use of tax professionals who are its members to handle their tax matters in order to eliminate quacks in the tax system.

    “The regulation of the tax practice and administration in any country is necessary to discourage sharp practices. This apart, the low level of tax education among the populace has made voluntary compliance quite difficult, hence, the need to consult members of a regulatory body like the CITN for professional tax advice and guidance,” he said.

     

  • Sterling Bank grows profit by 26% in Q3

    Sterling Bank grows profit by 26% in Q3

    Sterling Bank Plc grew its top-line by 31.4 per cent and pre-tax profit by 26.1 per cent in the third quarter, indicating continuous success of the bank’s growth and market penetration strategies.

    Interim report and accounts of Sterling Bank for third-quarter period ended September 30, 2013 showed that gross earnings rose to N65.1 billion in third quarter 2013 as against N49.6 billion in comparable period of 2012. Top-line analysis showed impressive growth in the core banking operations, which was underpinned by increased inflow as well as improved cost management. Net interest income grew by 43.3 per cent from N16.9 billion to N24.2 billion. Non-interest income also rose by 44.7 per cent from N10.9 billion to N15.7 billion. Profit before tax increased from N4.8 billion to N6.0 billion. After taxes, net profit increased from N4.49 billion to N5.07 billion.

    The report underscored the growing brand franchise and stability of the bank as customer deposits rose by 28.6 per cent while total assets increased by 23.6 per cent. With total assets at N717.2 billion, shareholders’ funds also increased to N48.3 billion.

    The nine-month report placed the bank on a higher pedestal in an industry where increasing costs had shaved top-line and bottom-line performances of most banks.

    Further analysis showed that the balance sheet of the bank emerged stronger and larger with customer deposits rising from N466.8 billion to N600.5 billion. Net loans and advances grew 36.4 per cent to N312.9 billion in September 2013 as against N229.4 billion recorded at the beginning of the year.

    In spite of the aggressive growth in loans portfolio, the proportion of non-performing loans to gross loans and advances dropped further to 2.0 per cent by September 2013 compared with 3.8 per cent recorded at the beginning of the year.

    Managing Director, Sterling Bank Plc, Mr. Yemi Adeola, said the third-quarter report underlined the steady and growing profile of the bank, in spite of operating challenges due to tighter monetary policy measures.

    He noted that growths in turnover and profit were in line with the bank’s targets and underscored the commitment of the management to fully optimize the intrinsic potential of the bank as well as emerging opportunities in the industry.

    “In the final quarter of the year, we will continue our rollout of conventional and alternative channels to bring our products and services nearer to our target markets and further diversify our income streams. Our capital plan remains on track and we expect to close 2013 with record customer numbers arising from gains made year-to-date in this respect,” Adeola said.

    He outlined ongoing efforts to further strengthen the capital base of the bank noting that it had successfully launched an equity issue through a N12.5 billion rights issue, which is currently awaiting final regulatory approval.

    He added that the bank is in the process of concluding a private placement of US$120 million to further strengthen its capital position.

  • Unity Bank’s capital raising plan advances

    Unity Bank’s capital raising plan advances

    Unity Bank Plc has said its plan to raise additional capital for its next stage of expansion has reached advanced stage.

    The bank’s Acting Executive Director, South, Mahmud Elems who disclosed this at the weekend during a briefing in Lagos, said investors have already signified interest in acquiring equity stakes in the bank adding that discussions were nearing conclusion.

    He also said existing shareholders have also made commitments to increasing their stake in the bank.

    According to Elems, the bank is perfecting its strategic plans, which would be unveiled to the public in the next few weeks adding that the lender has made a shift in focus, placing greater emphasis on the retail segment which would enable it serve more customers and add value to the economy.

    The bank, he added, would also be using the agency banking model to take banking services to the rural areas across the country.

    Head of Corporate Communications, Mrs. Theodora Amaechi said the bank is aiming to impact more on the economy with services that would reach the unbanked. She explained that the new focus was informed by CBN’s financial inclusion drive which seeks to reduce the percentage of the unbanked population.

    “We are strategising to ensure that Unity Bank becomes the retail bank of choice in Nigeria. To this end, the bank has developed new products that will suit its customers’ needs at a retail level and modified existing products to increase their competitiveness,” he said.

    The bank also plans to use the agency banking model and its branches in rural areas to create cheaper and easier access to financial services as part of the CBN Financial Inclusion Drive. The bank has already concluded plans for application of the model and has selected the agents who will take the service closer to the people.

    Amaechi said:“Unity Bank Plc stands a better chance of increasing its market share as a large number of the unbanked populace reside in the northern region of the country where the bank has a comparative advantage especially in terms of branch network.”

  • IFC seeks advisers for Cedi bond plan

    IFC seeks advisers for Cedi bond plan

    The International Finance Corporation (IFC) is seeking advisers for the sale of local-currency bonds in Ghana, expanding an African debt programme that started with an issue in Zambia that attracted demand five times the amount offered.

    The World Bank unit, which received approval from Ghana regulators in August to sell two billion cedis ($880 million) under its pan-Africa Domestic Medium-Term Note Programme, is studying proposals from local and international lenders, the IFC’s manager of Treasury Client Solutions for Africa, Andrew Cross, said.

    “We’re currently looking through a list of banks that are interested in playing a financial advisory role,” he said, without naming the lenders. “We’re in touch with the Securities and Exchange Commission, the Ghana Stock Exchange (GGSECI) and the Bank of Ghana to give us their support once we settle on the advisers.”

    The IFC is in talks with the governments of Botswana, Kenya, Namibia, Rwanda, South Africa, and Uganda about taking part in the program as it seeks to tap economic growth in sub-Saharan Africa that the International Monetary Fund estimates will reach five per cent this year, compared with 2.9 per cent globally. Africa may become the IFC’s biggest portfolio over the next three years, Chief Risk Officer Saadia Khairi said.

    The IFC’s plan to issue cedi debt comes as yields on Ghana’s benchmark 91-day Treasury bills drop to the lowest since June 2012, falling 410 basis points, or 4.1 percentage points, to 19 per cent from this year’s peak reached in February. In June, the IFC said Ghana’s high borrowing costs made it difficult for bond sales to begin. Cross declined to comment on whether yields were now low enough.

  • Global road traffic injuries cost $518b yearly, says Keystone Bank MD

    Global road traffic injuries cost $518b yearly, says Keystone Bank MD

    Managing Director/Chief Executive, Keystone Bank Limited, Mr. Philip Ikeazor has estimated the global yearly cost of road traffic injuries at $518 billion.

    The low and middle income countries accounted for $65 billion of the total figure.

    He made this known in Abuja at the launch of the bank’s CSR initiative tagged “ Eye and health screening for commercial bus drivers” in collaboration with the Federal Road Safety Corps (FRSC), The Eye Foundation and Public Health Partners.

    He said the bank had resolved to support the transport sector to help improve road safety and save lives.

    Justifying the bank’s intervention in the sector, Ikeazor, while quoting statistics from the International Federation of Red Cross and Red Crescent, said road crashes had become the leading cause of death for youths aged 15 to 29 years. He said Nigeria accounted for over 85 per cent of global deaths from road crashes.

    The Keystone Bank boss said the new initiative would provide free screening to interstate commercial transport drivers for diabetes, hypertension, cholesterol as well as ascertain their level of blood group.

    The scheme would also carry out tests for glaucoma, visual acuity, and automated refraction eye tests.

  • FCMB’s anniversary promo draws in December

    FCMB’s anniversary promo draws in December

    The first draw marking First City Monument Bank’s (FCMB) 30th anniversary promo would take place in December, the bank has said.

    In a statement at the weekend, the Senior Vice President/Divisional Head of Retail, FCMB Limited, Olu Akanmu, said eligibility to participate in the monthly regional and zonal draws is based on incremental balance, where customers are expected to save more than they withdraw from their accounts in the bank.

    He said those who emerge winners in the savings promo, stand a chance to take away Hyundai SUVs, refrigerators, freezers, generators, LCD televisions, DVD Players, N1million cash prizes and several consolation prizes, adding that the promo is open to current FCMB account holders, as well as new customers.

    He said the promo which has attracted thousands of new customers to FCMB, has brought about increased customer engagement activities, in all regions of the Federation. He said customer fora have also been organised where the general public has been educated on the ease of account opening at FCMB and the series of the Central Bank of Nigeria (CBN) new policies, including the Cash-less programmes and reduced KYC (know your customer) documentation requirements for small savers.

    New customers have been seen besieging various branches of FCMB, making enquiries about the anniversary promo, opening new accounts, while the existing customers have responded positively in growing their savings and activities with the bank.

  • Etisalat chief advises CBN, banks, NCC on Mobile Money

    The Central Bank of Nigeria (CBN), Nigerian Communication Commission (NCC), telecommunication operators and banks need to build efficient mobile money structure that guarantees the project’s success, Acting Chief Executive Officer (CEO) Etisalat Nigeria, Matthew Willsher has said.

    Mobile Money is a convenient, secure and affordable way to send money to friends and family using mobile phone.

    Speaking yesterday at the Etisalat GEM (Going the Extra Mile) media briefing in Lagos, he said mobile money remains a huge business opportunity for stakeholders, but there is need to get the fundamentals right.

    He explained that the GEM project was developed to enable the firm reward high value customers for their loyalty to the brand over the years. He said the customers are rewarded according to how much they spend monthly, as a way of encouraging more people to choose its network.

    He said his firm now has 16 million subscribers base, five years after it started operation, adding that travelers still remain the biggest GSM spenders in the country.

    Willsher said big spenders also have greater loyalty to the brand, adding that the company wants to continue to serve these set of customers better and also reward them. “We want to be stronger with customers that spend more,” he said.

    He said as part of the reward, customers that spend from N10, 000 to N29, 999 monthly will be able to receive calls for free when roaming in the United Kingdom, United States of America, United Arab Emirates and South Africa, among other countries, adding that they will also get free calls and texts on ther birthdays, among other benefits.

    Equally, subscribers that spend between N30, 000 to N49, 999 monthly, will receive calls for free when roaming, get free VIP box Tickets to watch FC Barcelona and special invites to exclusive events among other benefits.

    He added that customers that spend N50, 000 and above monthly, will receive calls for free when roaming, get free medical checkups abroad and free shopping voucher abroad, among other benefits, adding that the gifts are ways of thanking these customers for their loyalty.

    “We thank our customers for keeping us in business for five wonderful years. We celebrate, not just Etisalat, but each and every unique customer,” he said.

    He said number portability is not yet a huge success, but operators can find ways to ensure that the process works better. He said the firm is also interested in corporate and small businesses as well as the higher spending consumer market, while ensuring that these customers get the best quality service.

    Willsher also said the number portability plan introduced by the NCC still needs to be improved on to get the desired result, adding that telecom is about innovation and exhibition of high level of trust.

    He said these qualities have assisted Etisalat in achieving the level of success recorded in the last five years of operation in Nigeria. He however said that telcos have a lot of contributions to make to the CBN-driven cash-less banking initiative, adding that providing quality service is one way to achieve this objective.

    “We track everyday our quality of service and I get a report summarizing each day’s service quality,” he said.

  • Nedbank seeks 20% share of Ecobank for $500m

    Nedbank Group Limited, the South African lender controlled by Old Mutual Plc (OML), plans to exercise an option it has from next month to buy a fifth of Ecobank Transnational Inc. (ETI) in a deal valued at more than $500 million.

    Bloomberg report said Nedbank intends to take up its right to convert a $285 million loan made to Ecobank in 2011 into an estimated 11 per cent stake, said Mike Brown, Chief Executive Officer of the Johannesburg-based lender.

    A second subscription right allows Nedbank to increase its holding in Togo-based Ecobank to as much as 20 per cent, he said, without giving a timeframe for the plan.

    “It is our current intention to exercise our rights,” Brown said adding that the bank hasn’t taken a formal decision to proceed. “We have always anticipated that the total cost to get to a 20 per cent shareholding will be greater than the original loan.”

    Ecobank, which trades on three African exchanges and operates in 33 nations on the continent, reported last month that profit increased 65 per cent to $250 million in the nine months through September as its business in Nigeria and Ghana expanded.

    While Ecobank has the reciprocal right to buy a stake in Nedbank, CEO Thierry Tanoh said in May that the lender may delay taking this option to focus on its African businesses.

    Nedbank has a 12-month window, starting in December, to convert the loan into Ecobank shares. Nedbank formed an alliance in 2008 with Ecobank. The Togolese lender, founded in 1985, also operates in France and has representative offices in Beijing, Dubai and London.

    The Public Investment Corporation, which manages more than 1 trillion rand ($99 billion) mostly on behalf of South African government workers, bought almost 20 percent of Ecobank in April last year, making it the lender’s biggest shareholder.

  • Banks mull cut in contributions to Sinking Fund

    Banks mull cut in contributions to Sinking Fund

    Deposit Money Banks(DMBs) are working be-hind the scenes to ensure that the Asset Management Corporation of Nigeria (AMCON) Banking Sector Resolution Cost Fund (Sinking Fund) levy is slashed, The Nation has learnt.

    The Central Bank of Nigeria (CBN), banks and AMCON established the fund to absorb the cost of banking crises. The banks have been contributing 0.3 per cent of their total assets to it since 2010, but the levy was raised to 0.5 per cent earlier in the year. The contributions represent about three to four per cent increase in banks’ total operating costs.

    The CBN contributes N50 billion yearly to the fund which stands at N500 billion after this year’s remittances were credited in September.

    Managing Director, Afrinvest West Africa Plc, Ike Chioke, said in a report titled: ‘Nigerian banking league – The fate of small players,’there is a likelihood of renegotiation of this levy in the near term, as banks continue to effectively use their assets to ameliorate their rising cost-to-income ratio (CIR).

    He said banks’ rising CIR was, particularly, obvious in Access Bank and Ecobank Transnational Incorporated (ETI) among the tier-1 (bigger) banks as at September. Union Bank had the highest CIR in the tier-2 (smaller) banks while Diamond Bank was the only tier-2 bank that reported a significant decline.

    He said a further review revealed that the average CIR increased from 57.3 per cent in June to 64.8 per cent in September, highlighting the impact of the recent policies, including hike in the levy from 0.3 per cent to 0.5 per cent.

    “This presents the need for banks to come up with more innovative way of taming costs especially through the use of technology. In addition, the payment of the 0.5 per cent AMCON levy will constitute further pressure on the banks earnings, due to the increasing rate of the absolute amount in fees paid to the AMCON sinking fund,” he said.

    He explained that on a regional basis, a peer comparison among African countries revealed that Nigerian banks have a higher average CIR of 64.8 per cent while Middle and East African countries reported an average 42.97 per cent CIR.

    “This highlights the ‘uphill climb’ the industry might encounter with the consistent liquidity tightening policies. The dilemma, however, is how the CBN can continue to maintain its price stability objective and equally ease liquidity required to stimulate growth in 2014,” he said.

    According to Renaissance Capital (RenCap), an investment and research firm, the levy’s collection may worsen the liquidity condition in the sector. Its Associate, Africa Equity International Sales, Akintola, Akinbamidele, said the levy is placing additional pressure on more illiquid banks.

    The AMCON was setup to revive and stabilise Nigeria’s banking industry through the purchase of non-performing loans (NPLs) from banks.

    AMCON Chief Executive Officer, Mustafa Chilke-Obi said the corporation has so far acquired over 10,000 NPLs.