The Nation Newspaper

Category: Money

  • Drop in petrodollars push naira to five-day decline

    The naira sustained a losing streak throughout last week as inflows from International Oil Companies (IOCs) investors’ portfolios waned. The currency slid 0.1 per cent to 157.80 per dollar bringing a five-day decline to 0.2 per cent.

    Oil companies remain the second-biggest source of dollars after the Central Bank of Nigeria (CBN), which offers foreign currency at auctions on Mondays and Wednesdays to maintain exchange-rate stability. The apex bank sold $600 million last week, the most in nine months. “The naira has been supported by dollar sales from oil companies earlier last week, but those have probably dried up now,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said.

    However, borrowing costs on local-currency debt due January 2022 rose six basis points, or 0.06 percentage point, to 11.08 per cent, according to prices compiled by Bloomberg. Yields on Nigeria’s $500 million of Eurobonds due January 2021 declined 10 basis points to 3.967 per cent on Friday.

     

    Eurobond yields

    Nigeria’s dollar-denominated borrowing costs fell to the lowest in more than nine weeks on expectations that central banks globally will provide more stimulus measures to boost their economies. Bloomberg said yields on the West African nation’s Eurobonds due January 2021 dropped 18 basis points to 4.04 per cent by, the lowest since January 31.

    “The market now expects the quantitative easing program in the United States to go on for longer and probably for rates to remain low for a more meaningful period. That should provide support for the Eurobond asset class,” Samir Gadio, an emerging- markets strategist at Standard Bank Group Ltd., said.

    Yields on Ghana’s $750 million Eurobonds, due October 2017, slipped 8 basis points to 4.76 per cent. Gabon’s $1 billion debt due December 2017 retreated 11 basis points to 3.12 per cent.

    The United States 10-year bond yields traded below two per cent for the third straight week as Federal Reserve Chairman Ben S. Bernanke signaled in a speech on Tuesday that there was room for improvement in the economy, spurring bets the central bank will maintain asset purchases. The Bank of Japan last week announced stimulus measures.

     

    IFC/SMEs

    The International Finance Corporation (IFC) is partnering with 10 local banks to de-risk lending to the Small and Medium Scale Enterprise (SMEs) in the country. Speaking at the SME Toolkit Global Partner conference held in Lagos, IFC, Nigeria Country Manager, Solomon Quaynor said the Corporation has realised that banks do not want high risk transactions, synonymous with lending to SMEs.

    He said the SME Toolkit launched in the country by IFC, IBM and EDC Pan-African University, will enable the entrepreneurs effectively manage their businesses.

    Consequently, he said the IFC has stepped in to derisk such loans by providing financial infrastructure and developing collateral registry that will assist banks in lending to the subsector.

    Quaynor said that since a lot of the SMEs do not have landed assets, except receivables. IFC he said is working with Corporate Affairs Commission (CAC), Ministry of Trade and Investment to build a registry system that should include the ability of SMEs to borrow from banks.

    “We are working on getting the SMEs to use toolkit, so that banks can be more comfortable lending to the subsector. Our focus is not about giving money to the banks to lend to SMEs. It is about building their confidence in the SMEs so that that subsector can easily obtain loans from lenders,” he said.

    He said the corporation spends a lot of time training the banks to understand SMEs, by designing products for the subsector among other things. It is not about the money we are providing for banks, but that we are getting them to be more careful in lending to SMEs.

    Director, Enterprise Development Centre, Pan African University, Peter Bankole, said that minimum 80 per cent of jobs created in Nigeria are from small businesses. “The National Bureau of Statistics survey conducted last year showed that SMEs sector will continue to play dominant role in job creation in the economy,” he said.

    Bankole said the challenge remains that majority of SMEs are micro, but government is trying to move as many as possible from micro to small because that will give better multiplier effects for the economy and job creation.

     

    ICAN

    The Institute of Chartered Accountants of Nigeria (ICAN) has called for improved accounting standards in the country. ICAN President, Adedoyin Owolabi disclosed this during the recognition of some of its newly accredited tertiary institutions, polytechnics and training centres in the country. He said the accreditation was meant to improve the standard of learning among students in the recognised institutions.

    He said the accreditation followed the need to initiate quality control and improve the level of pass rate of students in its various ICAN examinations.

    He said the major causes of students’ poor performance remain poor preparation by students, inadequate teaching personnel in terms of number and quality, decayed infrastructural and instructional facilities in many institutions, poorly articulated curricula for accounting related programmes and poor library facilities among others.

    “Therefore, in line with its statutory mandate of setting standards and regulating the practice of accountancy in the country, the council resolved to accredit centres where its’ potential registered students could receive appropriate and qualitative technical and academic training,” he said.

     

    IMF

    Economic growth in Nigeria is likely to rise above seven per cent in 2013 with inflation slowing below double digits, the International Monetary Fund (IMF) had said.

    In its 2012 review of Africa’s second largest economy, the IMF projected that the pace of growth would pick up to 7.2 percent this year from 6.3 per cent in 2012.

    It said Nigeria’s tightening of monetary policy was in line with the authorities’ efforts to contain inflation below 10 per cent. The IMF also estimated that Nigeria’s currency, the naira, was “broadly in line with fundamentals”.

    The Central Bank of Nigeria (CBN) held rates at 12 percent last week for the ninth consecutive time, citing concerns about ongoing external price pressures. Nigerian consumer inflation rose to 9.5 per cent in February from nine per cent in January, staying within the central bank’s single digit target. Food prices rose to 11 percent.

     

    West African Economic Union

    Growth in the eight-nation West African Economic and Monetary Union will hit 6.5 per cent this year thanks to a post-crisis recovery in regional powerhouse Ivory Coast but governments need to press ahead with reforms, the Central Bank chief said.

    Tiemoko Meyliet Kone said strong commodities demand from emerging economies such as China and India would help the currency bloc shrug off the effects of an economic slowdown in Europe, traditionally its main trading partner.

    The currency bloc’s $80 billion economy grew by 5.8 per cent last year as Ivory Coast – the world’s largest cocoa producer – bounced back from a brief civil war, growing by 9.8 per cent.

    “Faced with the current slowdown in global growth, Africa is an important region for both emerging and developed economies,” Kone said in an interview. “In 2013, the West African Monetary Union expects growth of 6.5 per cent despite the current difficulties in Mali and Guinea Bissau.”

    “In 2014, growth should reach seven per cent for the first time,” he said. “But despite this potential and the promising outlook, African economies are confronted by important challenges.” The central bank, which has its headquarters in Dakar, serves Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal, Togo and Guinea-Bissau.

     

    Deloitte Nigeria

    IASeminars, a UK-based company specialising in international accounting seminars around the world and Akintola Williams Deloitte have announced their collaboration in training courses on International Financial Reporting Standards (IFRS).

    “IASeminars is proud to be working with Deloitte to service the IFRS training needs of Nigeria and of the wider African market. Having provided IFRS and other financial training over the last 10 years to many clients in Europe and North America, we look forward to being of service to an African clientele,” said Marc Gardiner, CEO of IASeminars said in a statement.

    Also, Oduware Uwadiae, Partner – IFRS Services, Deloitte West & Central Africa said his firm is pleased to be working with IASeminars to provide a comprehensive range of IFRS training solutions. “Our technical IFRS knowledge added to the IASeminars international training expertise represents a premium IFRS education opportunity for the West African market,” he said.

    The statement explained that under this arrangement, a wide range of IFRS courses have been scheduled in a number of African locations, as well as abroad and also online. Topics available include IFRS Immersion, US GAAP to IFRS comparison, IFRS Updates, and industry-specific courses such as Oil and Gas, Financial Services, and Public Sector Accounting (IPSAS).

     

    Bank to bank report

    Stanbic IBTC Bank has announced the launch of Stanbic IBTC MobileMoney App for smartphones running on BlackBerry, iOS and Android operating systems. Stanbic IBTC’s Executive Director for Personal and Business Banking, Obinnia Abajue said the launch underlines the lender’s commitment to providing Nigerians with value-added products and services that suit their lifestyles, whilst giving them access to basic financial options via a secure mobile application wherever and whenever they want.

    The Board of Directors of Jaiz Bank Plc has appointment its General Manager in charge of the bank’s Business Development Group, Hassan Usman as the Acting Managing Director. This followed the resignation of the Managing Director, Muhammed Mustapha Bintube after almost 10 years of meritorious service, announced the

    The statement described Hassan as a chartered accountant and banker. He graduated with a first class in Accounting in 1985 from Ahmadu Bello University, Zaria, and became an Associate Member of Institute of Chartered Accountants of Nigeria (ICAN) in 1989. He obtained his Postgraduate Diploma in Management in 1995 from Maastricht School of Management. Hassan also attended the Oxford University Executive Management Programme in 2002.

    Six winners have emerged in Guaranty Trust Bank Plc’s (GTBank’s) ongoing ‘GTCrea8’ e-savers promo for undergraduates. The winners according to a statement, emerged from six regions namely – Lagos, Abuja, Southeast, Southwest, Port Harcourt and Northern region, at a draw in Lagos.

    Speaking during the draw held in Lagos, an official from the bank’s Communications and External Affairs Department, Oyinade Adegite said the winners were rewarded with bedside fridge, an ipod touch, a galaxy Samsung tab 2, Samsung notebook, blackberry phone and a LED television.

    She said the promo was designed to encourage students to save. According to her, all that is required to participate and benefit from the promo is for students in tertiary institutions to open a GTCrea8 e-savers account and conduct a minimum of three transactions monthly on alternate banking channels such as Automated Teller Machines (ATMs), Point of Sale (PoS) and internet banking.

    The Project Finance Magazine, a publication of the Euromoney Plc, UK adjudged Fidelity Bank Plc the winner of The African Oil & Gas Deal of the Year 2012. The bank said in a statement that the award recognises achievement and excellence in getting projects built, bought or refinanced.

    Fidelity alongside GTBank, Diamond Bank, Zenith Bank, and other International lenders and legal firms won the award with the $1.5 billion Syndicated Financing for the 2012 Drilling Programme of the Nigerian National Petroleum Corporation/ExxonMobil Joint Venture via their Special Purpose Vehicle RDP Funding Limited.

    This, the organisers said was the most interesting financing to emerge not only from Nigeria but also from the African upstream sector. “The $1.5 billion deal builds on the JVs earlier receivables-based deals, including the $600 million satellite field financing, which closed in 2005 and backed the development of live specified fields, and the $1.42 NGLII refinancing which closed in January 2011.”

  • Standard Bank’s costs weigh on profit

    Standard Bank will press ahead with expensive plans to open another 30 branches in sub-Saharan Africa this year, aiming to cash in on booming loan and deposit growth even as the costs of such investment hit its bottom line.

    Reuters said Africa’s biggest bank by assets, is 20 per cent owned by Industrial and Commercial Bank of China. It blamed a below-forecast nine per cent increase in first-half profit on costs of investment.

    “It really has been growing rapidly and we’ve continued to invest, which is part of the reason for the cost growth that you’ve seen,” Chief Executive Jacko Maree said, referring to its 16 operations across the continent.

    “But if you look at the profitability in Africa you saw the profits growing by some 80 per cent, just looking at the on-the-ground banks on the continent, which is a very big jump.”

    He pledged to do all he could to control spending after a 17 per cent rise in the six months to the end of June but said costs would continue to climb as the bank seeks to cash in on an estimated 30-40 per cent rise in loans and deposits across the continent.

  • Forensic expert wants Nigeria out of corrupt nations  

    Forensic expert, Mr Steven Powell, has urged accountants to work towards getting Nigeria out of the list of corrupt nations.

    Powell, who is the Managing Director of ENS Forensics Limited, South Africa, spoke at the Fifth Convocation Lecture of the Nigerian College of Accountancy (NCA), Jos, a Post Graduate Accountancy College established by the Association of National Accountants of Nigeria (ANAN). “My challenge to you is to get Nigeria away from the list. Accountants have practical roles to play in the future of the country as Nigeria is being perceived as a highly-corrupt nation,” he said.

    Powell said the association is happy about the upcoming whistle blowing legislation in Nigeria. “In Nigeria, people are so scared to come forward and blow the whistle. Staff should be courageous to come forward with information without fear. When dealing with organised crime syndicates, if the whistle blower’s identity is disclosed, his life is in danger. But if the identity is not disclosed, it is hard to get the whistle blower and his life is safer,’’ the forensic expert said.

    He urged accountants to report fraudulent practices to the law enforcement agencies, adding that accountants should also be vigilant. “Make sure your organisation adopts the necessary control measures as an auditor. Do not look the other way, act with honesty and integrity. Nigeria is rated at the bottom by Transparency International. We want to see Nigeria scoring at least 50 per cent mark by Transparency International,’’ he said.

    The International Adviser to ANAN, David Hunt said the association had been a very ethical and professional.

     

     

  • Foreign capital inflows hit $9b

    The aggregate foreign capital inflows were $9.1 billion in fourth quarter of 2012, External Sector Development Report released by the Central Bank of Nigeria (CBN) has stated.

    The report published on the CBN website at the weekend, said the figure rose by $3.4 billion in the fourth quarter when compared with $6.6 billion recorded in third quarter of last year.

    Further analysis showed that both Foreign Direct Investment (FDI) and portfolio investment inflows increased over their levels in the third quarter by 110.9 while investment inflows remained dominant in the aggregate foreign capital inflows. However, its share declined from 78.1 per cent in the third quarter to 66.2 per cent.

    However, the outward foreign capital flows increased from $0.91 billion in third quarter to $1.08 billion in fourth quarter due to the activities of the subsidiaries of domestic money banks in the West African sub-region.

    The CBN said foreign exchange inflows to the economy in fourth quarter stood at $32.24 billion compared with $31.23 billion in third quarter, representing an increase of 3.2 per cent. Total outflows amounted to $8.15 billion as against $8.67 billion. Consequently, a net inflow of $24.09 billion was recorded in 2012 compared with $22.56 million in third quarter.

    External reserves also increased from $40.64 billion to $43.83 billion during the review period, while the exchange rate remained relatively stable.

    “Despite these positive developments, the persistent deficit in the services account calls for proactive policy actions targeted at the development of services sub-sector and investment in human capital through vocational and technical education. The current attention being given to the agricultural sector should be sustained in order to reduce high import bills on food items. The major threats to external sector stability in the medium term are; the volatile nature of the short-term capital inflows, slowly rising external debts and non-diversification of the economy,” it said.

    The estimated current account position showed a lower surplus of $7.2 billion or 10.6 per cent of gross domestic product (GDP) in fourth quarter compared with $7.7 billion recorded in third quarter of 2011. It attributed the development to the increased out-payments on services while the widened services out-payments suggest the need to enhance the development of the sub-sector through adequate government support and development in human capital, tourism and health.

    “Relative to the level recorded in fourth quarter of 2011, the surplus in the current account in fourth quarter of 2012 increased by 188.2 per cent. Further analysis revealed that exports of goods declined by 0.8 per cent from its level in third quarter of 2012 as against an increase of 3.5 per cent over fourth quarter 2011,” it said.

     

  • Skye Bank offers $500m loan to maritime sector

    Skye Bank Plc has granted facilities amounting to $500 million to operators in the maritime industry in recent times and has reaffirmed its commitment into funding projects in the subsector.

    The bank’s General Manager, Corporate Banking (Maritime and Aviation sector), Mr. Segun Opeke, explained that the loan was part of its commitment to the development of the maritime industry in the country.

    He said the amount represents money provided to indigenous ship owners and other stakeholders for the acquisition of ships and other critical work tools needed to strengthen operation o the sector.

    Speaking at a forum of maritime stakeholders, Opeke said the bank was prepared to expand its credit lines to the operators to further develop the industry.

    According to him, the bank was responsible for the provision of credit facilities to indigenous ship owners for the acquisition of an estimated 50 per cent of the entire fleet in the country.

     

     

     

     

     

  • e-clearing of cheques may begin in third quarter

    e-clearing of cheques may begin in third quarter

    Electronic clearing (e-clearing), which is being implemented only at banks’ headquarters, will be extended to the branches between July and September.

    The extension is subject to the approval of the Central Bank of Nigeria (CBN), The Nation has learnt.

    The policy, which became effective last August, could not be decentralised to all the banks’ networks because of technical hitches and infrastructure needed for its seamless take-off.

    An executive of Sybrin Systems Limited, Daniel Parreira, said provision of sophisticated payment solutions, adoption of fully integrated management systems and anti-fraud mechanisms by banks would enable them to achieve the feat.

    Decentralisation to branches, he said, would further reduce the pressure on clearing centres at banks’ headquarters. Sybrin Limited, a software technology firm based in South Africa, provides e-clearing services and other payment solutions among Africa’s leading banks, clearing houses and corporations.

    e-clearing involves stopping the physical movement of the cheque and replacing the physical instrument with the image of the instrument and the corresponding data contained in the Magnetic Character Ink Character Reader (MICR) line.

    The cheque details are captured, typically by the bank presenting the cheque or its clearing agent and electronically presented in an agreed format to the clearing house for onward delivery to the paying bank for payment. Unlike the more common form of presentation where a cheque is physically presented to the paying bank, a truncated cheque is typically stored by the presenting bank electronically.

    Clearing period under the new rule would allow cheques clear on a T+1 basis such that customers receive value in the morning of T+2 even as the clearing house is also expected to operate three sessions.

    Besides, the images of all the instruments in a batch/file shall be duly captured along with MICR data using scanners set up for the purpose. The amount needs to be captured/keyed in to complete the data record.

    “The incoming images are subjected to validations. The images, which fail validations are rejected with an appropriate response file. The bank may rescan the instrument and present in line with bank’s internal processes/control procedures. The member banks have to maintain control over such re-presentments,” it said.

    Besides, banks are expected to plan transmission of their outward presentation by taking into account presentation volume, the bandwidth of network with the clearing house, and the session window. In the event of an exchange file being received at the clearing house within a session time but not passed to the clearing house, the clearing house would unbundle the exchange file, and reattach to a new session.

    In case validation of digital signature of presenting bank fails, paying bank may return such items with appropriate return reason codes. The introduction of the truncation process changes the roles and the responsibilities of the various participants in the clearing system and may lead to introduction of certain risks.

  • No shortage of exam resources, says CIBN

    No shortage of exam resources, says CIBN

    The Chartered Institute of Bankers of Nigeria (CIBN) has refuted the claims that it does not have enough resources to conduct examination for current and prospective bankers in the country.

    The refutal is coming amid allegations that the body cannot conduct examination for its students, because of lack of resources.

    The immediate past Chairman, CIBN, Lagos Chapter, Mr Bayo Olugbemi, said the body had started conducting examination for students in The Gambia to improve banking practice in the country.

    He said the institute would soon open a branch in Ghana, as part of efforts to make banking more professional in the region and Africa in particular.

    He said: “If it is training, it is easier for CIBN to do. We just finished our examination last week. We are the current President of the African Association of Institute of Bankers. This has given us the opportunities to conduct examinations in different countries and help in making the industry better and stronger.”

    He said Nigerians were once certified by London Institute of Bankers, noting that one cannot become a banker unless he/she was trained by the institute.

    “What the London Institute of Bankers was to Nigeria before, is what we are trying to be to other countries in Africa. We want to help in improving the practice of banking in other countries. To achieve this objective, we register their bankers,” he added.

    Olugbemi, also the Managing Director, First Registrar, said efforts are being made to make banking a highly professional job in the country. He said various courses have been introduced to enable students to choose from and further improve themselves.

    Also, the Chairman, CIBN Lagos state branch, Mr Bolade Agboola, said everything humanly possible is being done to rid fake or non-charlants out of the industry.

    He said efforts are being made to ensure that bankers have knowledge of critical components of banking in Nigeria.

    Agboola said risk management is vital to the growth of banking industry, arguing that bankers that are bereft of risk management skills are going to perform badly.

    He urged Nigerians to take advantage of courses handled by the institute, adding that they can only practice well when they have the prerequisite skills.

    According to him, banking has entered a new dispensation globally where only the ‘fit and good personnel can cope with the pressure in the industry.

  • Pension funds may be invested in mortgage banks

    The Central Bank of Nigeria (CBN) will soon adopt a comprehensive reforms package for mortgage banking to reposition the sector for growth, spokesman Ugochukwu Okoroafor has said.

    Okoroafor said the reforms would not only be all-inclusive, but would transform the practice of mortgage banking.

    The reforms, he said, would address risks management, funding system, capacity of the mortgage firms to use another investment outlay for growth and corporate governance structures.

    He said: “Through the reforms, we will provide a refinancing package for the mortgage banks. We will create a strong secondary market for mortgage banks soon so that they would seek and explore other means of growth. Most pension assets are idle because there is no alternative window or destination through which they can be utilised. We are trying to see how mortgage institutions can tap into the opportunities.”

    The discovery of illiquidity, low profitability, and weak corporate governance in the balance sheets of the banks necessitated the reforms, he said, adding that other short comings include loss of confidence and gradual extinction of some of the firms.

    He said various regulatory bodies are coalescing to see how the mortgage industry can become a panacea for economic growth, adding that as many options as possible would be explored to improve the growth of the sub-sector.

    Okoroafor said: “We are working with the World Bank, Securities and Exchange Commission (SEC), Federal Mortgage Bankers of Nigeria (FMBN), National Pension Commission (PenCOM), and Debt Management Office (DMO) to revive the mortgage operations. These regulators are coming together to provide their input on how the operations of mortgage bankers can be made stronger and competitive.”

    He said the CBN was not concerned with recapitalisation of the banks alone, arguing that there are others issues that they are of importance to the growth of the mortgage companies. Okoroafor said the apex bank is awaiting for the deadline to expire at the end of this month before taking the next step.

    “Let’s wait till the end of April before we can talk about the issues of companies that would meet the recapitalisation deadline or not. When we get to the bridge, we would know how to cross it,” he said.

    Meanwhile, operators are upbeat about the April 31 recapitalisation deadline for them to shore up their base to N2.5billion and N5billion for those that want to play at the state and the national levels.

    The Managing Director, Skyfield Savings and Loans Limited, Mr Kola Abdul, said the mortgage firms are eager to raise the capital because of its benefits to them. Abdul said the deadline is sacrosanct because CBN has promised not to change it. He said the major issue facing the companies is how to get the required capital and make good returns.

    He said banks that are able to recapitalise will be able to compete favourably for business, expand their operations and improve their profitability. He said the recapitalisation signals a good omen for the sector that is struggling to survive.

    In a related development, the President, Mortgage Bankers Association of Nigeria(FMBN), Mr Abimbola Olayinka, had predicted that 25 mortgage companies would scale the deadline, stressing that there would not be any need for extension. He added that the recapitalised banks would have capacity to absorb shocks.

  • How Nigeria’s economy can overtake S’Africa’s

    Huge investment in infrastructure and entrenchment of sound corporate governance in the execution of Public-Private Partnership (PPP) must be achieved for Nigeria’s economy to overtake South Africa’s in 2020, Bode Augusto, Founder Augusto & Co, has said.

    He spoke during the launch of EPIC Learning & Development Limited in Lagos. The Augusto & Co boss said although economic development is expected to improve in Nigeria in the next decade, an investment in infrastructure and proper implementation of PPP projects in Nigeria will place her ahead of South Africa.

    He said such practice will also put Nigeria’s Gross Domestic Product (GDP) ahead of that of South Africa.

    “There is need for significant investment in infrastructure. There is a lot of work to be done in infrastructure investment to enable Nigeria to realise its potential,” he said. He said in PPP, the government does not have any business in business, except by acting as a regulator to the system.

    Augusto said PPP projects typically involve the delivery of infrastructure to the people and needs regular budgetary allocations for repairs and maintenance after completion.

    He said because political considerations outweigh economic considerations when planning and executing these projects, competitive users fees are not charged and used for the maintenance of these assets.

    He insisted that the key to improving the governance of major projects in Nigeria’s public sector lies in reforming the operating model for the executing, managing and delivering these projects.

    He advised that when executing major projects, particularly infrastructure projects, the government should partner with the private sector because by doing so, economic and social considerations will outweigh political considerations.

    It also makes funds available to the project to improve while reporting will be more open and transparent he added. “There is also tendency that projects will be subject to timely independent audits annually while government will be able to act as a truly independent regulator,” he said.

    Augusto said the biggest PPPs in the country are found in the oil and gas sector, telecoms and Internet and electric power sectors. He said the PPPs that work in Nigeria are usually modelled as ownership structure, the government does not own majority stake in the equity, but can be largest single shareholder.

    “Government acts as independent regulator and encourages fair trading, including competition. Contract Includes clause to sell down and list on the stock exchange at a later date in licensing agreement while taxation, government provides fiscal incentives to the project to improve project economics,” he said.

    The expert said that when these steps are taken, the sector would attract new investment from both local and international and the output of the industry will grow significantly. Such would create a lot of new jobs, the sector pays more taxes to the government, corporate, spending and personal.

  • Banks’profits may fall over revised charges, AMCON levy

    Banks’ earnings may fall this year following the implementation of the revised Guide to Bank charges by the Central Bank of Nigeria (CBN).

    The implementation of the policy, which has been in the pipeline since 2004, began last week.

    The policy slashed Commission on Turnover (COT) from N5 to N3; by 2016, no COT will be charged. It also reduced some of the high charges collected by banks. The offshore Automated Teller Machine (ATM) fees was cut from N1,000 to N240, among others. These are expected to eat into the banks’ profits.

    Also likely to affect banks’ earnings is the increase in the levy paid to the Asset Management Corporation of Nigeria (AMCON). The raise from 0.3 per cent to 0.5 per cent represents about three to four per cent increase in banks’ total operating costs. These factors, analysts said, will make it difficult for interest rates to be reduced from current 12 per cent within the year.

    Renaissance Capital (RenCap), an investment and research firm, in a report, said despite these hitches, the year started off on a strong note for banks, especially in terms of share-price performance. It projected a stronger Gross Domestic Product (GDP) growth of 7.1 per cent in 2013, from an estimated 6.6 per cent in 2012. It said inflation will moderate to 10 to 11 per cent this year.

    The firm also forecast a relatively stable naira, with an average exchange rate of N158 to a dollar, owing to a stronger external sector. However, it expects the cash reserve requirement (CRR) for the banks to be maintained at 12 per cent, which could continue to hold back loan growth. This, according to the firm, is also another minus for increased earnings.

    On loan growth, it said in the absence of developments in the power sector or upstream oil and gas projects, Tier-one banks are likely to see similar levels of loan growth to those they achieved last year. However, it said power projects could propel growth into the 15 to 20 per cent range, and with expectation that the Tier-two banks could grow faster.

    RenCap said analysis on Net interest margins (NIM) showed that, as yields doubled between 2011 and 2012 and have retreated about halfway, banks are unlikely to give up all their NIM gains.

    Meanwhile, Guaranty Trust Bank full-year 2012 profit jumped 69 per cent as loans and deposits grew. Profit after tax and income from discontinued operations, rose to N87.2 billion through December from N51.7 billion a year earlier. Revenue advanced 22 per cent to N221.9 billion as loans and advances increased 11 per cent to N783.9 billion. Deposits grew 10 per cent to N1.17 trillion.

    Also, Zenith Bank Plc’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 said.

    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.