The Nation Newspaper

Category: Money

  • ‘Public Key Infrastructure will enhance banking reforms’

    When the Public Key Infrastructure (PKI) initiative of the National Information Technology Development Agency (NITDA) is implemented, it will add a new fillip to ongoing reforms of the Central Bank of Nigeria (CBN) to institutionalise a cashless society, an official of the apex bank, Segun Osunaike, has said.

    Speaking at the Civic Centre, Victoria Island, Lagos, venue of the public presentation of the Draft Public Key Infrastructure (PKI) to stakeholders, Osunride, who is an assistant director, Information Technology Department of the financial sector regulator, said the initiative will boost electronic payment platform being promoted by the apex bank. He spoke on The Experience of the CBN on PKI.

    He noted that the apex bank had earlier run a model framework on PKI, which recorded a huge success because it guarded against the perpetration of fraud.

    He said with the initiative, there was safety of transaction data. : “We are talking of fraud here. It will give authorisation and authentication (to transactions and all the data associated with such transactions). If you bypass the security, the abiility to prove that you did it will be there. So it will eliminate fraud,” he said.

    Speaking at the occasion, Director General, NITDA, Prof Cleopas O Angaye, said for the nation to achieve its vision contained in the Vision 20:2020, it must embrace the PKI initiative, which he said will be funded by both the public and private sectors of the economy. Angaye said PKI is the only technology that satisfies the privacy, authentication, integrity and non-repudiation (PAIN) principle of security.

     

     

     

     

     

  • Shareholders approve N81b new capital for Skye Bank

    •Shares rally N68b

    Shareholders of Skye Bank Plc yesterday overwhelmingly approved resolutions empowering the directors of the bank to raise more than N81 billion in new equity and debt capital as the bank seeks to consolidate its competitive edge within the industry.

    At the annual general meeting (AGM) of the bank in Lagos, shareholders approved a resolution to enable the board raise N50 billion in new equity funds and as much as $200 million in tier 2 capital, otherwise known as debt or quasi-debt issuance. Shareholders also empowered the board to absorb over-subscriptions, which implies the bank could access more than face target of N81 billion.

    Shareholders commended the performance of the bank citing impressive growths in all key indicators and increase in dividend payout. They approved the cash dividend of N6.6 billion, representing a dividend per share of 50 kobo.

    National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said the bank has been consistent in ensuring good returns to shareholders.

    He however lamented what he described as untidy regulatory practices, which have been militating against banks.

    President, Nigeria Shareholders Solidarity Association (NSSA), Chief Timothy Adesiyan, applauded the improved efficiency in the bank’s operations.

    In his address, chairman, Skye Bank Plc, Mr Olatunde Ayeni said the bank posted a remarkable performance in 2012 in spite of challenges encountered during the year.

    According to him, the cost management and efficiency initiatives which were introduced early in 2012 had evident positive impact on the performance of the bank.

    He said the bank would improve on its performance in the new business year citing expected improvement in the macro economy and ongoing growth initiatives by the bank as reasons.

    Managing director, Skye Bank Plc, Mr. Kehinde Durosinmi-Etti said the bank would explore several interesting opportunities in its chosen business segments across the major sectors of the economy to bolster performance.

    According to him, with the conclusion of the divestment from all non-bank subsidiaries, the bank would now be able to focus entirely on its core mandate of financial intermediation.

    “The bank will explore new business opportunities in the existing segments of focus, while seeking new frontiers in other available sectors within the vagaries of local and international conditions. We shall continue to maintain our commitment to corporate governance, due process and professionalism,” Durosinmi-Etti said.

    He said the bank would seek to rapidly grow its operations while it will continue to be guided by the goal of creating value for shareholders and maintaining its going concern status.

    Meanwhile, Skye Bank and other 38 stocks rallied N68 billion in capital gains yesterday as the bullish rally at the Nigerian Stock Exchange (NSE) gathered momentum.

    Aggregate market capitalisation of all equities rose from its opening value of N11.842 trillion to close at N11.910 trillion. The main index, the All Share Index (ASI), also trended upward from 37,046.63 points to 37,259.91 points.

    Total Nigeria topped the gainers’ list with a gain of N11.10 to close at N170. Cadbury Nigeria followed with addition of N4.85 to close at N53.35. Mobil Oil Nigeria rose by N4 to close at N118. GlaxoSmithKline Consumer Nigeria added N3.90 to close at N52.90. Ashaka Cement gathered N2.45 to close at N27. Dangote Cement rose by N2 to close at N186 while PZ Cussons Nigeria added N1.85 to close at N54.50. Skye Bank’s share price improved by 1.39 per cent or 7.0 kobo to N5.09.

    On the downside, Nigerian Breweries led the decliners with a loss of N1.97 to close at N173.03. Julius Berger Nigeria followed with a loss of N1 to close at N55.

    Investors staked a total of N4.12 billion on 468.75 million shares in 6,224 deals. Banking stocks accounted for a turnover of 180.67 million shares worth N1.81 billion in 2111 deals. Insurance subsector recorded a turnover of 104.37 million shares worth N172.31 million in 208 deals.

  • CBN refutes report on criticism of emergency rule

    The Central Bank of Nigeria (CBN) yesterday refuted a report insinuating that the Monetary Policy Committee (MPC), under the chairmanship of the CBN Governor, Mallam Sanusi Lamido, at its meeting on Tuesday condemned the emergency rule recently declared in three Northern states of Yobe, Borno and Adamawa.

    In a statement signed by director, corporate communications, CBN, Mr Ugochukwu Okoroafor, the banking watchdog expressed concern over a news report purportedly emanating from the communiqué of the MPC claiming that “Sanusi Condemns Emergency Rule”.

    The apex bank stated that the lead story of the Abuja-based newspaper was a complete misrepresentation of the content of the MPC Communiqué No. 89, issued on May 21, 2013.

    “The said MPC communiqué never, in any form, condemned the state of emergency in the affected states. For the avoidance of doubt, and in reviewing the likely factors that could influence economic dynamics in the coming months, the MPC communiqué, cited the fiscal implication of the state of emergency, which is a likely increase in government spending, thus making it imprudent to embark on monetary easing at this time,” the apex bank stated.

     

     

     

     

     

  • Refinancing AMCON won’t have adverse effect, says Rewane

    The plan by the Asset Management Corporation of Nigeria (AMCON) to redeem and refinance N5.7 trillion of its bonds, equivalent to 37 per cent of money supply, in a bilateral agreement with Central Bank of Nigeria (CBN) may not necessarily lead to any potent inflationary or currency depreciation contrary to fears in some quarters.

    The Nigeria Economic Summit Group (NESG) had yesterday noted that theN5.7 trillion refinancing would triple money supply this year and could lead to negative consequences for the economy.

    According to NESG, the implications of the refinancing is that money supply could grow by three times the projected rate in 2013 while monetary policy would remain tight towards the first quarter of 2014. Besides, it said that the government would have an “actual” debt to GDP ratio of 27 per cent versus the limit of 30 per cent stated by the President.

    But some financial experts have allayed fears of any large unintended consequences. Managing Director, Financial Derivatives Company (FDC) Limited, Mr. Bismarck Rewane, said the fears of inflationary and currency declines were mostly misplaced and grossly exaggerated.

    The expert said while there is the orthodox correlation between money supply growth and inflation, the fact that a substantial portion of these bonds have already been monetised in repurchase agreements by some banks reduces the potency of this threat and any possible fallout.

    The national headline inflation rate is annually around 9.1 per cent and the Naira has been stable within a three-year range of N150 –N160. Some analysts had raised concerns that the refinancing could truncate the relative stability.

    Analysts had expressed fears that the plan will have the unintended consequence of the transmission effect usually associated with high powered money.

    But Rewane said the effect of the refinancing may be muted given the previous repurchase agreements that had substantially reduced the underlying size.

    In a report titled: “AMCON: The Cost of Financial Stability,” the NESG had stated that the debt refinancing was a major challenge for AMCON in the short-term. AMCON is billed to retire about N2 trillion of its bonds in 2013 and refinance approximately N3.6 trillion, which matures in 2014.

    The amount of money in supply is about N15 trillion, which has been growing annually at 13 per cent. The group noted that AMCON’s plan would liquidate 35 per cent – about N2 trillion of its bond liabilities on one hand, while the remainder 65 per cent – about N3.6 trillion would be refinanced through the CBN.

    The NESG said that on the surface, the plan would solve AMCON’s short term challenge but will also extend the associated risks into the medium to long-term.

    It said the three per cent narrow debt window left to explore would continue to crowd out the private sector. The NESG said that from a ‘fiscal risk’ perspective, a future write-off of AMCON’s debt could cost the economy about nine per cent of GDP, which is equal to the GDP contribution of the entire telecoms sector.

    “Overall, AMCON’s refinancing plan is a clear case of ‘Bailing out the Bailer.’ The morality and prudence of this bailout are both questionable,” it said.

    An Economist, who elected not to be quoted, said he cannot understand the logic behind the NESG’s conclusion that the amount of money in supply would triple.

    “I disagree entirely with the NESG. Don’t forget that neither its Director-General nor its Chairman is an Economist,” he said.

     

  • Why deposit, lending rates fell, by CBN

    Deposits and lending rates fell between January and March this year because of improved liquidity in the banking sector, the Central Bank of Nigeria (CBN) has said.

    The total Standing Lending Facility (SLF), an overnight fund provided by the CBN to support banks’ sliquidity, granted during the period was N1.1 trillion, compared with N6.5 trillion in the previous quarter.

    A CBN Economic Report for the quarter indicated mixed developments in the banks’ deposit and lending rates. With the headline inflation rate at nine per cent per cent in January ending, most rates, with the exception of the lending and the average interbank call rates were negative in real term.

    Deposit rates of various maturities fell from a range of 5.16 to 11.88 per cent to 5.14 to 11.67 per cent. However, the average savings and one-month deposit rates rose by 0.03 and 0.28 percentage point to 1.69 and 8.43 per cent.

    The average term deposit rate fell by 1.33 percentage point to 7.66 per cent while the average maximum lending rate fell by 0.07 percentage point to 24.54 per cent. However, the average prime lending rate rose by 0.03 percentage point to 16.57 per cent during the review period. The spread between the weighted average term deposit and Interest rates also fell.

    Maximum lending rates widened by 1.25 percentage point to 16.88 per cent while margin between the average savings deposit and maximum lending rates narrowed by 0.1 percentage point to 22.85 per cent.

    At the interbank, the weighted average rate, which stood at 11.88 per cent at end of December 2012, fell by 0.21 percentage point to 11.67 per cent. Similarly, the weighted average rate, at the open-buyback (OBB) segment, fell by 0.11 percentage point from 11.73 per cent to 11.62 per cent at.

    Mixed development was also observed at the interbank funds market, as the Nigerian interbank offered rate (NIBOR) for seven-day declined by 0.13 to close at 12.36 per cent, while the 30-day closed at 13.14 per cent.

    The SLF is given at 14 per cent in line with the Monetary Policy Rate (MPR). It is available only to banks and discount houses that have executed the Nigerian Master Repurchase Agreement (NMRA) with the banking watchdog. The CBN had stipulated that discount window operations in overnight facilities will be backed by borrower-holdings of government debt instruments and other eligible securities approved by the bank.

    The report showed that banks, while computing their cost of funds, should employ the weighted average cost of funds computation framework.

    The applicable cost items will include banks’interest cost on the different types of deposit liabilities, borrowings from the inter-bank funds market, payments in respect of deposit insurance premium and costs due to reserve requirements. These restrictions have affected banks’ access to SLF in the last quarter.

    The Net Open Position (NOP) was also retained at one per cent, while money market indicators, particularly short tenored instruments were relatively stable. The bank’s discount window also remained open to authorissed dealers to access both the standing deposit facility (SDF) and SLF.

    The value of money market assets outstanding stood at N6.2 trillion, an increase of 3.1 per cent, compared with 3.6 per cent recorded at the previous quarter. The development was attributed to the 5.2 per cent increase in government bonds outstanding.

    At N1.6 trillion, currency in circulation rose by 21 per cent, in contrast to a decline of 1.1 per cent at the end of the preceding quarter. The development was attributed, largely, to the 21.6 per cent rise in currency outside the banking system.

     

  • Five banks’gross earnings hit N388b

    Gross earnings of Guaranty Trust Bank (GTB), Zenith Bank, Access Bank, Skye Bank and Enterprise Bank rose to N388.9 billion last year, according to data compiled by The Nation.

    GTB’s gross earnings were N221.9 billion and profit after tax was N87.3 billion, indicating 68.7 per cent leap from N51.7 billion in 2011. Further review shows that the bank recorded a slight growth in risk assets, with its loan book expanding by 11 per cent year on year – almost flat at 0.3 per cent quarter-on-quarter.

    The bank grew deposits by 11.9 per cent last year despite what is believed to be the restrictive monetary policy of the Central Bank of Nigeria (CBN).

    On a quarterly basis, growth in the GTB’s net interest income was on downward trend, slowing from 103.8 per cent in the second quarter to 50.1 per cent in third quarter and narrowed down to 36.4 per cent in the fourth quarter of 2012.

    Renaissance Capital (RenCap) said in an emailed report that it viewed GTB’s results as positive, reinforcing the best-in-class operating efficiency and profitability of the lender.

    “While noting that exceptional income from the sale of its last subsidiary, GT Homes in May 2012, may have also contributed to its earnings, however slight, we would like to highlight the bank’s rather strong operating performance,” it said.

    Zenith Bank’s net income rose to N100.68 billion in 2012 from N48.7 billion a year earlier, as its cost-to- income ratio fell to 54 per cent from 63 per cent. “Zenith’s operating efficiency showed material improvement” driving earnings higher, Muyiwa Oni and Rele Adesina, Lagos-based analysts at Stanbic IBTC Holding Co, wrote in an e-mailed note to Bloomberg.

    Zenith doesn’t expect Nigerian bank industry earnings this year to be “as aggressive” as in 2012, Chief Executive Officer Godwin Emefiele said during a March 21 interview.

    Access Bank Plc said full-year profit more than doubled as customer deposits increased. Net income advanced to N38.6 billion in 2012 from N14.5 billion a year earlier. Revenue rose 54 per cent to N208.3 billion as loans and advances to customers climbed five per cent to N604 billion. Deposits grew nine per cent to N1.2 trillion. Access Bank restrained its loan book following its purchase of Intercontinental Bank Plc in 2011, Chief Executive Officer Aigboje Aig-Imoukhuede said in October.

    Another lender, Skye Bank Plc announced N12.64 billion profit after tax for the year ended December 31, 2012. Key extracts of the lender’s audited report showed that the result represents an increase of 872.6 per cent on N1.30 billion recorded in 2011.

    Profit Before Tax (PBT) rose from N2.84 billion in 2011 to N16.51 billion in 2012. The bank maintained a steady top-line in 2012 with net interest income and net non-interest income of N44.50 billion and N22.60 billion.

    In a statement, the bank said its audited report and accounts for the year ended December 31, 2012 showed remarkable improvement in profitability as it harnessed its vast business base and increasingly efficient cost management to deliver impressive returns to shareholders.

    “On the basis of the impressive bottom-line, the board of the bank has recommended an increase in cash dividend per share from 25 kobo paid for 2011 business year to 50 kobo for 2012. This performance underlined Skye Bank as a return-driven bank. Earnings per share increased to N1.01 in 2012 as against 20 kobo in 2011,” it said.

    Enterprise Bank Limited also announced PBT of N11.3 billion for 2012. The bank was one of the bridge banks that emerged on August 5, 2011 following the takeover by the Nigeria Deposit Insurance Corporation (NDIC) of the defunct Spring Bank Plc. The new bank was recapitalised by the Asset Management Corporation of Nigeria (AMCON).

    In a statement, the bank said the profit is a marked improvement from the loss of N5.2 billion for the five-month period it operated as Enterprise Bank in 2011 (August to December 2011). The PBT represents a growth of 316.6 per cent. Other figures from the result show that gross earnings grew by 283.9 per cent to N40.4 billion as at year ended December 2012, from N10.5 billion achieved in the five-month period in 2011.

    The bank’s deposit also grew from N162.6billion to N208.4 billion between the five months in 2011 and 2012 financial year. This represents a growth of about 28.2 per cent. Total assets also experienced a growth of 31 per cent between the periods from N198.5 billion as at end of 2011 to N261.1billion by the end of 2012.

    The Chairman of Enterprise Bank Limited, Mr Emeka Onwuka, attributed the achievement by the bank to a sustained growth in quality risk asset creation, which equally engendered growth in interest income.

    He stated that in addition, the bank’s other banking income items, such as commissions, fees, electronic banking income, significant improvements in trade-related transactions, facilitated through its strategic focus on Small and Medium scale Enterprises (SMEs) helped in boosting the bank’s fees and commission income.

  • MfBs shun N60b micro insurance market

    Despite its N60 billion potentials, microfinance banks (MfBs) are not showing interest in micro-finance insurance (MfI), it has been learnt.

    Last year, the National Insurance Commission (NAICOM) unveiled plans to exploit the MfI potentials using the MfBs.

    According to operators, the inability of underwriters to have well-defined and simple products may mar the success of the initiative.

    Managing Director, LAPO Microfinance Bank Limited, Mr Godwin Ehigiamusoe, said some operators were sceptical about the terms and conditions of various products offered by insurance firms and may not be obliged to patronise them.

    Ehigiamusoe said the products were too complex, adding that they are too high for a sub-sector that is struggling to make profit.

    Insurance firms, he said, had not done enough to convince the banks on the need to buy into the initiative.

    He said the insurers need to be providing innovative products and services before they can be accepted by the banks, advising them to work out plans on how to insure credit risks in the banks. He said the importance of micro insurance to the poor cannot be underestimated, stressing that they need it more than the rich people.

    Ehigiamusoe said: “The poor need insurance services than even the rich people. While a financially comfortable person can access medical care, the poor cannot and in the long run, may die from preventable services if he/she does not have a policy.”

    Managing Director Sapida Microfinance Bank, Mr Lukman Oyebamiji, said micro insurance scheme is a welcome development for the sub-sector, if properly structured and administered.

    Oyebamiji said if the initiative is well-administered, Mfbs will reduce cases of loan defaults generate more money.

    He urged insurers to come up with products that are simple and affordable to microfinance clients to make the scheme work.

    Similarly, the Chairman, National Association of Microfinance Banks (NAMBs), Mr Olufemi Babajide, appealed to underwriting firms to extend the services to the grassroots where microfinance clients reside to deepen the insurance market.

    Babajide said a well simplified and affordable product is what insurance firms need to make the scheme work, stressing that anything short of this would not augur well for the industry.

    He said the decision of insurance companies to continue to focus on the lucrative sectors only will affect penetration and the purpose for which the micro insurance initiative was mooted.

    “For instance, we always give loans to poor people and if their businesses suffer mishap, it will affect their repayment flow, hence making loan recovery difficult. But with micro insurance, we are rest assured that our money is safe because if our customers suffer fire-outbreak, theft, among other risks, the underwriting firm is there to compensate them and as a result, they can repay their loans,” he said.

     

  • FirstBank targets 10% loan growth this year

    FBN Holdings Plc aims to grow loans 10 per cent this year for its banking unit, down from 23 per cent growth in 2012, as it tries to balance its capital needs with creating risk assets.

    The CEO, FirstBank, Bisi Onasanya, told Bloomberg at the weekend that the lender had a capital adequacy ratio of 21 per cent and it wanted to balance its capital needs with loan growth, as it had no plan to raise fresh equity capital in the short term.

    FirstBank has deepened its retail dominance as demonstrated with the launch of key retail bank products such as Firstmonie, a mobile financial services solution that enables subscribers conveniently perform banking transactions. The lender said that with the establishment of a few credit bureaux, the industry is now headed towards credit cards and therefore, developed a naira credit card in the last quarter of 2012 and has been aggressively driving it this year.

    The bank said its retail business goals were achieved by further segmentation of the market into affluent, mass and Diaspora markets while providing affordable and segment specific products for each segment. The lender said it has also improved its level of service delivery across all delivery channels by investing in its people and deployment of state of the art Information Technology infrastructures to support the business.

    The bank said it has been successful in growing its consumer/retail loan portfolio and considerably reducing incidence of loan loss often associated with retail lending. These successes, it said, were recorded due to the availability of a vast array of products for each retail segment, superior branch network/support system and improved credit monitoring culture.

     

     

  • Naira retreats on falling oil price, rising import demand

    Forex utilisation in percentage

     

    Weakening oil price and rising import demand have been threatening the naira’s stability in recent weeks. The local currency weakened 0.4 per cent against the dollar in the Inter-bank and has lost 1.3 per cent of its value since January based on data compiled last Friday. The depreciation reflected increased dollar demand to cover import bills and other foreign exchange obligations. The naira closed at N158.20 to a dollar.

    Ecobank Nigeria Currencies Analyst, Olakunle Ezun said that aware of the risks posed by changes in global oil prices, the Central Bank of Nigeria (CBN) is targeting smooth exchange rate changes. He added that since the CBN has several policy objectives, it is not always possible to reduce naira volatility.

    “Recent movements in oil prices pose risks to the short term outlook given Nigeria’s oil dependency. Lower oil prices have also raised concerns over Nigeria’s fiscal prospects given the high dependence on oil,” he explained.

    Ezun said given the close link between exchange rate and monetary policies, primary market yields will continue to remain strongly influenced by the monetary policy stance, CBN liquidity management efforts, and the value of the naira.

    “Yields are not expected to change significantly in the short term, as the CBN is likely to continue with its tight monetary policy stance in order to tackle accelerating inflation and underpin the naira. However, there are risks to this largely stable short term outlook. The key risk is a significant drop in oil prices, which would have a widespread, adverse effect on the economy,” he said. He said the naira depreciation was further driven by speculation that there could be a reversal of foreign portfolio inflows and falling oil prices.

     

    Return on Equity

    Guaranty Trust Bank led Zenith Bank Plc and First Bank of Nigeria Limited on delivering returns to investors in 2012, a report by Renaissance Capital (RenCap), revealed. GTBank outperformed its peers delivering Return on Equity (RoE) of 34 per cent against Zenith’s 24 per cent and FirstBank’s 18 per cent.

    In an e-mailed report obtained by The Nation, the investment and research firm, said that GTBank created N41 billion of value in 2012 against Zenith’s N25 billion and FirstBank’s N1.4 billion.

    The report also showed that that although all the three lenders showed improvement in operational performance from previous year’s levels, the underlying earnings drivers varied significantly, with GTBank having the most favourable mix.

    RenCap said GTBank’s superior returns were driven by better gross yields, a lower-than-peers impairment charge and a lower cost base.

    “We calculate that all three banks created value in 2012, although FirstBank only marginally so. We analysed last year’s result to estimate the absolute naira value creation by each bank. We measure value created as the excess return over the Cost on Equity as a percentage of the average equity for the bank. GTBank produced the highest excess return – at 16 per cent against Zenith at six per cent and FirstBank at a marginal 0.3 per cent,” it said.

    RenCap noted that in some years back, the trio created no value, and in fact, destroyed value. In 2009, GTBank had negative value creation when its RoE fell to 13 per cent about five per cent below its Cost on Equity (CoE). Aside from that year, GTB generated value each year. Zenith Bank and FirstBank fared worse, it said.

     

    Reforms

    Nigeria’s slow implementation of structural economic reforms is limiting its chances of a credit-rating upgrade, Moody’s Investors Service told Bloomberg. It said while economic growth is “resilient,” any chance of an update from its Ba3 rating, three levels below investment grade, is hindered by corruption, weak institutions and its vulnerability to oil price drops, Edward Al-Hussainy and Dietmar Hornung, credit analysts at Moody’s said.

    Nigeria’s economy expanded an estimated 6.6 per cent in the first quarter of the year, compared with 6.9 per cent in the previous three months, data from the Central Bank of Nigeria (CBN) showed.

    Oil contributes as much as 70 per cent of the government’s fiscal revenue, leaving it sensitive to a downturn in global prices, Moody’s said.

    “Momentum for addressing challenging structural reforms has slowed. Most critically, legislation to revise the fiscal regime in the petroleum industry and to deregulate the downstream oil and gas sector has stalled, holding up significant foreign investment while the sector’s productivity declines,” Al-Hussainy and Hornung said.

     

    Eurobond

    The Federal Government has appointed Citi Bank and Deutsche Bank to manage a $1 billion planned Eurobond, the head of the debt management office (DMO) told Reuters. “The Federal Executive Council approved the appointment of Citi and Deutsche as joint book-runners for the planned $1 billion Eurobond,” DMO Abraham Nwankwo said.

    Minister of Finance and Coordinating Minster of the Economy Dr. Ngozi Okonjo-Iweala, had said at the recently concluded World Bank/International Monetary Fund (IMF) Meetings in Washington D.C, United States, that the Eurobond will be used to finance the power sector and gas development.

    The Minister said the Federal Government will float a Eurobond before the end of this year, stressing that a time table had been put together. The minister said: “The Ministry of Finance will undertake road shows in Europe and America to attract investors to subscribe to the bond. This will be our second Eurobond on offer, the yields on Nigeria bonds are good, this is an auspicious time for us to go and launch the Eurobond and so we are continuing.”

     

    Cash-less

    The planned extension of the cash-less policy to five states as well as the Federal Capital Territory (FCT) from July 1, is sacrosanct, Deputy Governor, Operations, Central Bank of Nigeria (CBN), Mr. Tunde Lemo said.

    The cash-less policy, which began in Lagos in January last year is billed to be extended to six more states ( Rivers, Kano, Anambra, Ogun and Abia as well as the FCT) in July 1.

    Lemo, who is responsible for driving the policy, said the additional states were chosen because of the large volume of cash transactions in some of their major cities.

    He said: “Recall that we started this programme actually in January last year and we are only just continuing. We are only just moving to phase two, so we have learnt all the ropes in phase one in cash-less Lagos and we believe we are ready to roll out to other six locations in Nigeria.

    He said the previous challenge of the cash-less policy was connectivity. “We have over 150,000 Point of Sales (PoS) machines in Lagos area where we had the cash-less Lagos. However, only 25 per cent of them are active largely because we don’t have General packet radio service (GPRS) and connectivity alive in some of the clusters and because of that, it has affected the rate at which those machines are used,” he said.

    Lemo however, said these challenges are being overcome. He said: “We believe very much that it is getting better because we monitor the transactions on daily basis and we are beginning to record large volume and value of transactions done under the Point of Sales (PoS). We are not even looking only at the PoS as a major of channel for cashless; we are now looking at all the other major channels for cashless. We have the mobile telephone, which we will use to drive the cashless policy.

    The cash-less policy is aimed at reducing the dominance of cash in the system. It specifies penal charges for individuals and corporate organisations that want to withdraw or lodge cash above the prescribed limits.

     

    Bank to bank report

    Fidelity Bank Plc last week inaugurated ‘Managed SMEs’ business meant to address the rising mortality ratio of Small and Medium Enterprises (SMEs) in the country.

    Speaking at the launch of the scheme in Lagos, the Managing Director of Fidelity Bank Plc, Reginald Ihejiahi said the move to create the ‘Fidelity Managed SMEs’ was necessitated by the need to address the challenges affecting small businesses, especially in the Nigerian business environment.

    He explained that many small businesses find it difficult to sustain their operations due to inadequate information on how to harness the opportunities in the market. He said the scheme would help to guide small businesses in their efforts to penetrate the market by providing advisory support and enhancing capacity building programmes that support the survival of such businesses.

    Skye Bank last week inaugurated its business account named: Skye Business Account.The product is to cater for the banking needs of small business units, traders and other market people who otherwise may have been left out of the financial inclusion drive, which seeks to integrate the informal sector into the banking world.

    In a statement, the bank said the Skye Business Account is a current account with an affordable opening balance for traders and small business owners for whom the product was specifically created. The product also has the complement of the inscription of the customer’s name on the MasterCard issued to account holders.

    The bank’s Head of the Small Business Group, Mr Wole Aderinkomi, said that the Skye Business Account offers full internet access to the account holders in addition to the MasterCard debit card, which enables customers to carry out business internationally.

    FBN Capital Limited, the investment banking and asset management subsidiary of FBN Holdings Plc, has launched Nigeria’s manufacturing Purchasing Managers’ Index (PMI).

    In a statement, the bank said the product was done in collaboration with NOI Polls Limited. This adds Nigeria to the list of countries, which makes use of this economic indicator that gauges the performance of the sector at monthly intervals.

    The FBN Capital Limited PMI will join some existing surveys of business and consumer expectations and it is expected that this will develop into a core forward economic indicator for analysts, policymakers and financial market players as it is the only sector specific, monthly index.

     

  • Industrial stocks lead equities with 56% returns

    Companies that engage in manufacturing of industrial goods such as cement and paints have generated the highest returns for investors, according to the latest return analysis from the Nigerian Stock Exchange (NSE).

    Investors in industrial goods stocks have earned twice the returns in the banking, oil and gas, insurance and consumer goods sectors and they are leading the market’s average return by some 25 percentage points.

    The NSE Industrial Goods Index opens today with a year-to-date return of 55.85 per cent, the highest return among the several groups being tracked by the NSE. The NSE Industrial Goods Index is the benchmark for four subgroups including building materials, electronic and electrical products, packaging and containers and tools and machinery.

    However, it is dominated by building material stocks, especially cement and paints manufacturing companies.

    The NSE Industrial Goods Index consisted of 10 lead stocks out of the 26 companies listed in the sector. The representative stocks were selected based on their market capitalisation and liquidity. The benchmarked stocks included Ashaka Cement, Lafarge Wapco Cement Nigeria, Dangote Cement, CAP, Cement Company of Northern Nigeria, Berger Paints, Cutix, DN Meyer and Portland Paints & Products Nigeria.

    With some 28 per cent of total market capitalisation, industrial goods stocks contribute substantially to the market turnover. The All Share Index (ASI), the common value-based index that tracks all equities on the NSE, opens with a year-to-date return of 31.44 per cent. Drawing from the bullishness of several industrial goods stocks, most of which are ethical stocks, the NSE-Lotus Islamic Index opens with second highest return of 44.02 per cent. The NSE 30 Index, which tracks the 30 most capitalised stocks, has returned 31.79 per cent so far this year.

    The market generally showed robust returns, with inflation-adjusted returns in double digits. The NSE Consumer Goods Index shows average return of 27.54 points 27.54 points. Banking index shows year-to-date return of 24.46 per cent while insurance index and oil and gas index open today at 23.13 per cent and 22.43 per cent respectively. The benchmark index for the newly reactivated Alternative Securities Market (ASeM) indicates a year-to-date return of 2.58 per cent.

    The year-to-date position of the market was boosted by strong bullish rally recorded last week. The ASI appreciated by 2.49 per cent last week to open today at 36,907.81 points. It had opened the week at 36,010.28 points.

    Aggregate market capita-lisation of all listed equities increased by 2.47 per cent or N285 billion to close at N11.798 trillion as against its week opening’s value of N11.513 trillion. Industrial stocks index outperformed other indices with a weekly gain of 7.93 per cent. The NSE 30 Index appreciated by 2.50 per cent.

    The NSE Consumer Goods, NSE Banking, NSE Oil and Gas, NSE-Lotus II and NSE-ASeM Index recorded gains of 2.75 per cent, 1.48 per cent, 1.0 per cent, 4.18 per cent and 3.33 per cent respectively. However, NSE Insurance Index depreciated last week by 2.05 per cent.

    Total turnover stood at 2.29 billion shares worth of N24.03 billion in 29,048 deals. The financial services sector topped the activity chart with a turnover of 1.76 billion shares valued at N14.80 billion in 16,292 deals. The banking sub-sector was the most active with a turnover of 1.276 billion shares valued at N12.072 billion in 11,622 deals.

    Meanwhile, Crusader (Nigeria) Plc was delisted last week following the conclusion of the merger with Custodian and Allied Insurance Plc. A total of 781.02 million ordinary shares resulting from the merger exercise between Custodian and Allied Insurance Plc and Crusader (Nigeria) Plc were added to the outstanding shares of Custodian and Allied Insurance simultaneously.