The Nation Newspaper

Category: Money

  • Fidelity Bank issues $300m five-year Eurobond

    Fidelity Bank Plc has under taken a Eurobond issue to raise $300 million from the international market.

    A Eurobond issue is a debt instrument to raise money in foreign currency for strategic purposes and for a specified length of time, at a stated fixed cost.

    In a statement, the bank said the Eurobond is for a five-year period, at a coupon rate of 6.875 per cent, adding that it is efficient and enjoys efficient pricing. The Fidelity Issue was jointly managed by two leading international banks, Deutsche Bank and Citibank.

    The lender disclosed that the international market was obviously impressed its fundamentals, especially its Capital Adequacy Ratio (CAR), which was 29 per cent by December, 2012, compared to the regulatory base of 10 per cent. The bank also enjoys a strong Liquidity Ratio, which, at 47 per cent, is much higher than the regulatory base of 30 per cent, the statement said.

    Managing Director, Fidelity Bank Plc, Mr. Reginald Ihejiahi said the proceeds of the Eurobond will further enhance the capacity of the bank to support the critical sectors of the economy and meet the growing foreign currency needs of her clientele in oil & gas, power, infrastructure and manufacturing.

    The bank said availability of the bond proceeds necessarily stabilizes is dollar balance sheet, eases the pressure arising from demands from customers for tenured loans and enables the bank to target viable dollar-dominated transactions.

     

  • Diamond, Sterling, Stanbic, Wema to raise N209b capital

    Diamond, Sterling, Stanbic, Wema to raise N209b capital

    Four banks have unveiled plans to raise fresh funds to drive their operations and remain competitive.

    The lenders are Sterling Bank, Diamond Bank, Wema Bank and Stanbic IBTC Holding Company. They will be raising N209.2 billion in the coming months.

    Sterling Bank told its shareholders that it was planning to raise additional capital this quarter.

    Specifically, the bank will raise tier 1 capital through a rights issue of N12 billion and a private placement of N19.2 billion.

    The bank’s Group Managing Director, Mr Yemi Adeola, said the fund was necessary to implement medium to long term strategic objectives.

    Adeola, who spoke at the bank’s Annual General Meeting (AGM) in Lagos, said the process of raising the fund began in the first quarter of the year. He added that the lender would continue to drive growth strategies domestically, focusing on building long-term relationships and creating sustainable value for customers.

    Stanbic IBTC Holding Co, the Nigerian unit of South Africa’s Standard Bank Group, plans to raise N22.5 billion ($150 million) in new capital this year, its Chief Executive Officer Sola David-Borha had said.

    She said the bank plans to use the Tier 2 capital for investments in infrastructure and lending. “Loans and advances are planned to grow by 15 per cent by end of 2013, from six per cent in 2012,” she said.

    Stanbic’s net income for the three months through March rose to N3.6 billion from N2.5 billion a year earlier, it said. Revenue climbed to N26.6 billion from N20.4 billion. The lender is seeking to boost its deposit base by 25 per cent this year, David-Borha said.

    Diamond Bank will be raising N118 billion ($750 million) from an undisclosed source to expand its operations while Wema will secure N35 billion through special placing and listing of additional shares for same purpose. Already, Wema has therefore held a completion board meeting to issue 23,333,333,334 Ordinary shares of 50k each at N1.50 per share.

    Diamond Bank’s Chief Financial Officer (CFO) Abdulrahman Yinusa said the lender will raise the money through a share sale or debt offering this year. The bank’s shareholders have already approved the proposal.

    Wema Bank’s management also said it got regulatory approval to raise N35 billion through special placing and listing of additional shares. The fund raising comes a year after the lender raised its annual loan-growth target to 40 per cent from 20 per cent.

    In a statement, Wema said a regulatory approval from the Nigerian Stock Exchange (NSE) and Securities & Exchange Commission (SEC) had been secured. It said with this development, it is expected that the bank would complete the process of raising the required capital before April 30, 2013.

    Managing Director, Wema Bank, Segun Oloketuyi, said the lender was delighted at the development. He said it signifies a milestone in the entire process which began last December.

    “The completion of the placement process will further enable Wema Bank compete more effectively in the banking industry and also enhance the quality of products and services being offered to an increasing customer base. We will remain focused on efficient service delivery whilst scaling our business organically and strategically for superior returns to all stakeholders,” he said.

    Oloketuyi also expressed his appreciation to regulators who have supported the ongoing transformation process in the bank and also praised the painstaking efforts of all parties to the offer in ensuring strict compliance and adherence to all regulatory requirements by the bank that has made the approvals possible.

    The bank expects to use the funds realised from the special placing to grow its business, invest in information technology infrastructure and expand its operations.

    On seeking a National Banking Licence to enable it to expand its scope of physical operations beyond the geographical boundaries, Oloketuyi said the process of exploring available options to securing a National Banking Licence from the Central Bank will commence on completion of the special placing.

    In December last year, Wema Bank announced plans to raise capital by way of a special placing with commitment from investors already secured to the tune of the N35billion offer size. From all indications and with already high interest and demand, the placing will be fully subscribed.

    Analysts said the banks are returning to profitability after Central Bank of Nigeria (CBN) Governor Lamido Sanusi fired the CEOs of eight of the country’s 24 banks in 2009 and gave them a N620 billion ($3.9 billion) bailout, after lending to equity speculators and fuel importers pushed the industry to near collapse.

  • AMCON has added value to banks, say experts

    AMCON has added value to banks, say experts

    The intervention of the Assets Management Company of Nigeria (AMCON) in banks has impacted positively on their growth and earnings in the equities and fixed-income market, experts have said.

    According to them, the decision of the corporation to buy more than N5 trillion non-performing loans of banks has helped in cleansing the balance sheets of the lenders, improving their businesses, bottom lines, earnings and that of investors who traded in bonds and shares. They said the huge profit declared by the banks in the 2012 financial year was the lenders are no longer burdened by non-performing loans, which they have to make provisions for.

    The immediate past Chairman, Guaranty Trust Bank Plc, Mr Oluwole Oduyemi, said the growth in profits and earnings recorded by banks could be directly linked to AMCON’s intervention in the industry. He said the corporation’s intervention has also translated to good earnings for investors in equities among other traded instruments.

    He said: “The successful cleansing of bank’s balance sheets through the sale of non-performing loans to the AMCON gave most banks the wherewithal to refocus their energies on driving growth, engaging in stiff competition for deposit liabilities, and engendering a more competitive environment for all players.”

    Also, the Managing Director, BGL Securites Limited, Mr Sunday Adebola, said the capital gains investors are making are direct consequences of AMCON’s intervention. He said there was spontaneous and positive reactions from investors immediately the banks returned to profitability. This, he said, resulted in increased patronage and earnings from banking stocks.

    He said investors are focusing on banking stocks because that is where they can get capital appreciation.

    “Many investors have recorded an average 100 per cent gains from bank stocks in recent times. Few days to the release of the International Financial Reporting Standards (IFRS) complaint audited reports of banks, many investors entered the market and exited as the Annual General Meetings (AGM) are approaching. They are making money through capital appreciation and dividends. This is the period of picking of earnings. Investors would continue to pick earnings from stocks of banks as long as they are free of toxic assets. This could not have been possible if the banks are still weighted down by huge non-performing loans.”

    He said though extraneous factors, such as interest on domestic and foreign portfolio investors accounted for the growth of the banking subsector, the Central Bank of Nigeria (CBN) and AMCON-induced reforms played major roles.

    “Though the banking sector contributes over 50 per cent of market capitalisation, the fact is that investors are looking for safer and highly rewarding investment. The confidence engendered by AMCON made investors to buy banks-owned stocks in expectation of good returns,” he added.

    According to him, corporate bonds especially those issued by banks are embraced by investors because they derive values from them.

    “The rate of defaults in banks’ bond is zero. Investors know banks are making money and, therefore, cannot default by way of paying them interest on bonds. They are convinced that that they would get returns when they exit at the point of maturity. Had it been that the banks are still facing serious liquidity challenge as evident by the debts sighted in their accounts after the audited test of 2009, nobody would take a look at their products. But the reverse is the case as banks are increasing their deposits and lending to some sectors.

  • Banks’ foreign assets hit N9.3t

    Foreign assets of banks rose by 2.2 per cent to N9.3 trillion in January, the Central Bank of Nigeria (CBN) Economic Report has said.

    The increase was linked to the 2.6 per cent rise in the CBN’s holdings of foreign assets. However, other assets of the banking system, on a monthly basis, fell by 8.7 per cent to negative N8.6 trillion, compared with 5.4 and 2.1 per cent decline at the end of December and January last year.

    Growth in the key monetary aggregate was moderate in January. On monthly basis, broad money increased by 0.3 per cent, due largely to the 3.8 and 2.2 per cent growth in domestic credit and foreign asset of the banking system.

    However, there were mixed development in banks’deposit and lending rates during the review month. With the exception of the average savings and one month deposit rates, other bank deposit rates trended downward. Similarly, the prime lending rate trended upward, while the maximum lending rate declined during the review month. The spread between the weighted average term deposit and maximum lending rates widened by 1.25 percentage points to 16.88 per cent within the month.

    In contrast, the margin between the average savings deposit and maximum lending rates narrowed by 0.10 percentage point to 22.85 per cent. The weighted average interbank call rate fell to 11.67 per cent from 11.88 per cent in the preceding month, reflecting the liquidity condition in the interbank funds market during the month.

    Provisional data indicated that the value of money market assets outstanding was N6.2 trillion, showing an increase of 0.5 per cent, compared with growth of 20.9 per cent at the end of the preceding month. The development was attributed to the increase of 3.5 per cent in the value of Nigerian Treasury Bills.

    Federally-collected revenue was estimated at N774.75 billion, showing an increase of 1.8 per cent above the receipts in the preceding month, but fell below the provisional monthly budget estimate of N807.71.

    At N599 billion, oil receipts were above the provisional monthly budget estimate and the level in the preceding month. This was attributed largely to the increase in prices of crude oil in the international market.

    The CBN said non-oil receipts, at N175.75 billion was 31 per cent lower than the provisional monthly budget estimate, but 0.2 per cent higher than receipts in the preceding month. The decline relative to the provisional budget estimate reflected, largely, the fall in independent revenue of the Federal Government and corporate tax. Federal Government estimated retained revenue was N243.62 billion, while total estimated expenditure was N421.62 billion.

    The fiscal operations of the Federal Government resulted in an estimated deficit of N178 billion, compared with the estimated monthly budget deficit of N94.68 billion. The dominant agricultural activities in January 2013 included: irrigated cultivation of vegetables; harvesting of tree crops and clearing of land for 2013 cropping season.

    Crude oil production, including condensates and natural gas liquids in January was estimated at 2.09 million barrels per day (mbd) or 64.79 million barrels for the month. Crude oil export was estimated at 1.64 million barrels per day (mbd) or 50.84 million barrels during the month. The average price of Nigeria’s reference crude, the Bonny Light (370 API), was estimated at $115.15 per barrel, indicating an increase of 2.4 per cent above the level in the preceding month.

  • Why the rich don’t use ATM

    Visa International has carried out a survey showing that high net worth account holders do not own or use Automated Teller Machine (ATM) cards. The study revealed that the higher people earn, the less they own and use their debit cards. This, it attributed to possibility of online fraud as majority of the rich think that avoiding debit cards is the way to stay protected.

    The report revealed that people who earn below N500,000 per annum, which form 47 per cent of its respondents, own and are regular users of debit cards. It also showed that majority of Nigerians in urban centers have bank accounts with 99 per cent of respondents claiming ownership of bank account(s).

    However, less than a quarter of the public have both savings and current accounts. Seven per cent of the respondents own a current account while over 70 per cent have savings accounts.

    Over half of the respondents sampled claimed that having multiple accounts is not a function of how much one earns but mostly for different savings plan. Less than one fifth have multiple accounts because of the poor banking services of their previous banks. Only 16 per cent of respondents have multiple bank accounts due to pressure from banks marketing officers.

    It said people that earn less than 500,000 per annum have the habit of opening multiple accounts.

    “General knowledge and awareness of debit card is high in Nigeria but its usage is not commensurate. The majority of the respondents knew that ATM card is also a debit card. Basically, people with higher level of education have a better understanding of what a debit card is. People within the 18 – 45 years of age are the largest card holders in the country, they are active and more knowledgeable ones,” it said.

    The study revealed that over half of Nigerian debit cardholders have only one debit card while 34 per cent have more than one. Of the cardholders with multiple debit cards, over three quarter claimed that two or all the cards are active. Majority of Nigerians with multiple debit cards stated that this is because of their multiple accounts. Only four per cent have multiple cards because of the unreliability of the previous card they used.

    On card usage, the report said three out of four Nigerians use their cards for both cash withdrawals and checking of account balances. The percentage of Nigerians that use their cards at Point of Sale (PoS), for online purchase is still very low.

    “It said Nigerians in the Southeast make cash withdrawals with their cards more than other parts of the country. While Nigerians in Northeast make the least withdrawals with their cards. Nigerians in the Northcentral region are the highest when it comes to checking their account balances with their debit cards in the country while people in Southwest like to shop online with their cards. They constitute the highest percentage of online shoppers. On the contrary, people in the Southeast are more cash-based, therefore, they rarely use their cards for online purchase,” it said.

    This study also revealed that the more Nigerians earn, the less they use their cards for online purchase. The group of people that earns less than N500,000 per annum use their cards more for online purchase.

    It said the knowledge of Point of Sale (PoS) among Nigerians is slightly above average while people within the ages of 18 to 45 know more about the product than people outside this age bracket. Also, seven out of 10 Nigerians are yet to use their debit cards at the PoS terminals.

    The research also showed that 29 per cent of Nigerians have prefer cards when they want to pay for large quantity of goods and services while 22 per cent would use their cards for spontaneous buying. Less than a quarter would use their cards for online purchases.

  • Registrar assesses ANAN ‘s performance

    The Registrar and Chief Executive Officer, Association of National Accountants of Nigeria (ANAN), Terkaa Gemade, has said the last two years were periods of actualisation for the body.

    According to a statement made available to The Nation, Gemade spoke while presenting the achievements of the immediate past president of ANAN, Hajia Maryam Ladi, at the association’s pre-annual general meeting dinner in Abuja.

    “Today, we are celebrating the actualiser of ANAN vision. The vision that started in 1979 with ANAN not being known, not being wanted and today, the vision has been actualised,’’ he said.

    The former registrar praised the strategies pursued by Ibrahim to put ANAN on a right footing. He recalled the tortuous road the association passed through to become the most articulate and most liquid asset-based professional association in the country.

    Gemade also recalled the achievements of the founding fathers of the association and their numerous contributions toward the growth of the association.

    He also said that in the last two years, the association got the membership of international bodies such as the International Federation of Accountants (IFAC); Pan-African Federation of Accountants (PAFA); as well as Association of Accounting bodies of West Africa (ABWA).

    He said ANAN is also a member of the International Association of Accounting Education and Research.

    He said the Ibrahim led the council to more than 100 Vice -Chancellors and placed before them what the professional body should be doing with the National Universities Commission (NUC). Gemade said the former administration should be praised for the development of the Nigerian College of Accountancy, (NCA), Jos.

    The ex-registrar said the association had donated a post-graduate research centre at the University of Jos to take care of master and doctoral degree students.

    He said the Ladi Centre at the Kogi State University deals on leadership and accounting development matters, adding that the association had contributed immensely to the development of accounting laboratories in several institutions of higher learning.

    The former registrar said ANAN had donated books to research centres in some universities and polytechnics.

  • Angola plans simple taxation

    Angola, Africa’s second-biggest oil producer, plans to simplify taxation and more than double revenue from sources other than petroleum to curb the government’s reliance on crude.

    Bloomberg said the target is to pass three tax codes this year that will cut fees and modernise laws, some which date from 1948, Gilberto Luther, director of the reform project, said.

    The changes will increase receipts from industries, including manufacturing and retail to about 20 per cent of gross domestic product by 2017 from eight per cent in 2011, he said.

    In Nigeria, Africa’s largest crude producer, non-oil tax was 6.3 per cent of Gross Domestic Product (GDP) in 2011.

     

     

  • Why banks fail, by NDIC

    The Nigeria Deposit Insurance Corporation (NDIC) has blamed bank failures in the country on insider abuses, weak internal control system, poor corporate governance in many lenders.

    Its Deputy Director, Research, Usman Wali, disclosed this when members of the National Association of Banking and Finance Students (NABAFS) of the Federal Polytechnic, Nasarawa visited the corporation in Abuja.

    In a statement, he said the role of the corporation in protecting depositors’ interest is key to the nation’s financial stability and economic development.

    Wali emphasised that the visit was crucial to the enhancement of the NDIC’s public awareness on its mandate and activities.

    The Deputy Director said the corporation’s operation is focused on its core mandate of deposit guarantee, banking supervision, distress resolution and liquidation.

    He said the NDIC insured deposit liabilities of deposit money banks (DMBs), microfinance banks (MfBs) and licenced primary mortgage banks (PMBs) licensed depositor of insured banks are entitled to up to N500,000 for DMBs and N200,000 for MfBs and PMBs in the event of failure.

    Representatives of Bank Examination Unit (BEU) Shehu Aladire said on-site and off-site activities of the corporation are aimed at operational efficiency and compliance with banking rules and regulations in the system. He identified the four types of on-site bank examination as maiden, routine, target and special examinations.

  • NSE acquires equity stakes in OTC platforms

    •N623b gained in 4 days

    THE Nigerian Stock Exchange (NSE) has acquired substantial equity stakes in the two over-the-counter (OTC) platforms, which will give the Exchange access and control on the platforms that will trade unlisted securities.

    Its President, Alhaji Aliko Dangote, at the Annual General Meeting (AGM)) of the Exchange at the weekend, said the NSE acquired 6.86 per cent equity stake in the Nigerian Association of Securities Dealers (NASD) Limited and 7.79 per cent equity stake of FMDQ Plc.

    According to him, NSE invested N40 million in the NASD and N50 million in FMDQ as part of efforts to boost the securities market and diversify the income stream of the Exchange.

    NASD and FMDQ are formal OTC platforms for the trading in unlisted equities, bonds and money market instruments. Securities and Exchange Commission (SEC) had in December 2012 approved the NASD application to establish the OTC platform.

    “We made a strategic decision to invest in FMDQ to broaden our market reach, diversify revenue stream and to remain at the forefront of an evolving globally competitive financial market,” Dangote said.

    He reiterated the commitment of the Exchange to achieving $1 trillion market capitalisation by 2016 while introducing five products.

    He said NSE will achieve the trillion-dollar target by continuous alignment of the NSE objectives and facilitating the development of the economy through driving capital market formation.

    He outlined the growth objectives to include continuous progression of the transformation agenda, with emphasis on new quality listings, product development and penetration and a transparent market structure.

    Meanwhile, the stock market was extremely bullish last week as investors responded positively to earnings reports by several highly capitalised stocks. With three-day consecutive rally, aggregate market value of all equities increased by N623 billion, underlining 5.88 per cent increase in average return at the stock market.

    Average year-to-date return opened today at 25.04 per cent, signposting equities as the best-return instrument among other securities.

    The All Share Index (ASI), the main index at the NSE, rallied 5.88 per cent to close the week at 35,109.33 points as against its week’s opening index of 33,159.08 points. Total market capitalisation of all quoted equities similarly rose from N10.602 trillion to close at N11.225 trillion.

    Total turnover during the four-day trading week stood at 1.511 billion shares worth of N15.867 billion in 20,965 deals. Financial services sector accounted for 1.261 billion shares valued at N10.855 billion in 12,786 deals.

     

  • ‘Banks prefer lending to oil firms’

    THE Group Managing Director/Chief Executive Officer, Skye Bank Plc, Mr Kehinde Durosinmi-Etti, said banks are more favourably disposed to lending to oil producing firms if such firm’s oil reserves are confirmed.

    Speaking during the United Kingdom-Nigeria Investment Partnership forum in Lagos, he said oil exploration is capital intensive and it only makes sense to ensure that funds being availed the oil companies are paid back so that the banks will not suffer monumental losses and put shareholders capital at risk.

    Speaking on Sustainable oil and gas sector reforms, he said the consolidation in the industry has strengthened banks’ ability to fund the oil and gas sector. He added that his bank has contributed in strengthening players in the local exploration market.

    He said since banks do not want to lose money, they would rather lend to oil exploratory companies after reserves have been confirmed.

    On the marginal oil fields which were given to indigenous companies and investors, he said the challenge banks face in lending to indigenous oil firms is that some of the companies have one dominant individual as the promoter which is not in tandem with good corporate governance.

    According to him, where the money needed by the oil companies is huge, loan syndication or club arrangement is preferred as it shifts the burden of providing the capital from one financial institution.

    He said out of the 29 marginal oil blocks granted sometime ago, only nine are operating, noting that sustainability of operations is hampered by communal unrest, environmental factors and corporate social responsibility.