The Nation Newspaper

Category: Money

  • Smaller banks beat big ones in credit facility

    Small banks, otherwise known as Tier-2 banks, have outpaced the big ones (Tier-1 banks) in advancing loans, a report from Renaissance Capital (RenCap), an investment and finance firm has shown.

    Loan growth index reviewed by the firm showed that United Bank for Africa (UBA) and Access Bank grew their loan portfolio by three per cent year-to-date. Diamond Bank, it said, grew its loans portfolio by 38 per cent, year-to-date.

    RenCap said for 2013, in the absence of significant progress in power sector reforms or upstream oil and gas projects, the Tier-1 banks are likely to repeat similar levels of loan growth to those they achieved this year.

    However, the non-performing loan (NPL) ratios at as at September, 2012, did not cause any stir. “In our opinion, most of the banks under our coverage cannot sustain NPL ratios of around five per cent without impairment expenses of around two per cent. Nevertheless, given the magnitude of the Asset Management Corporation of Nigeria (AMCON) clean-up in 2011, we would expect the banks to continue reporting below-average charges into fiscal year 2013, with normalisation likely to start coming through in fiscal year 2014,” it said.

    It said since the beginning of the year, most of the banks have been expecting lower tax rates on the back of their high holdings in fixed-income securities and, for some, tax credits from losses over the past few years.

    “We also highlight that, following the inclusion of tax exemptions on fixed-income securities in the federal government’s official gazette in December 2011, these multi-year exemptions effectively kicked in this year. All things being equal, we would expect the larger, more liquid banks with proportionately higher holdings of fixed-income securities to report relatively lower tax rates at year-end,” RenCap said.

    On share-price performance, the banks have been strong performers’ year to date, with all except First City Monument Bank in positive territory. However, on a two-year view, the price performances of most of the banks’ stocks are still negative, with only Guaranty Trust Bank, Zenith Bank and FirstBank in positive territory.

    RenCap has also revised its ratings and target prices for bank stocks to reflect these forecast changes. We have downgraded First Bank, Diamond Bank and Fidelity to hold ratings from buy, as it finds lower relative potential upside in these names following their strong share-price performance.

    RenCap recommended United Bank for Africa and Zenith Bank for buy among tier-1 banks and Skye Bank as buy among tier-2 banks.

  • Tight monetary stance, rising reserves strengthen naira

    Tight monetary stance, rising reserves strengthen naira

    The naira has appreciated 2.8 per cent this year over Central Bank of Nigeria (CBN’s) tight monetary stance and rising foreign reserves. The CBN aims to keep the naira at a rate of about three per cent above or below N155 a dollar.

    The local currency firmed on inflows for purchases of fixed-income securities after the CBN held its benchmark interest rate at a record high last Tuesday to check inflation and stabilize the local currency. The naira gained 0.1 per cent to N157.9 a dollar after weakening 0.1 per cent the last week.

    The naira’s appreciation could be traced to tight monetary conditions, improved supply of foreign exchange to the market by oil companies and increased inflows from portfolio investors, CBN Governor Sanusi Lamido Sanusi said.

    The nation’s foreign-currency reserves have risen 32 per cent this year to $43.45 billion as of November 16, according to data on the CBN’s website, an exercise that has further strengthened the naira.

    Inflation, which accelerated for the first time in four months to 11.7 per cent in October on widespread flooding of farms, is still above the bank’s target of less than 10 per cent. Also, Nigerian bond yields remain attractive to offshore investors, with the inflows boosting dollar supply.

    “An interest rate of 12 per cent will check excess money supply and demand for dollars,’’ Wale Abe, chief executive officer of the Financial Market Dealers Association, which groups lenders trading in the money market, said.

     

    Agency Banking

     

    Framework that would define the mode of operation for Agency Banking will be out by the middle of December this year, the Governor, Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi has said.

    Speaking at the Enhancing Financial Innovation and Access (EFInA) forum held in Lagos, he said that the CBN Committee of Governors is already fine-tuning the draft exposure the agency banking, which will be issued soon.

    He said issues relating to number of agents, type and nature of agents including considerations for super agents are critical areas being considered in the draft exposure. He said all the processes for this line of banking to become functional in the country will be finalised by this year-end.

    He said there have been a lot of improvements in the Nigerian payment system, including the drive for financial inclusion. The apex bank boss said lenders have to address the need for special products that consider women and the handicapped to ensure that everyone is carried along.

    He said that the agency banking provides financial services to the widely dispersed population at affordable price and has assisted some countries in decongesting existing customers from crowded branches, and will equally serve same purpose in Nigeria.

     

    Third quarter earnings

     

    The five biggest banks in the country earned $1.6 billion as at September 2012, four times the $400 million they achieved in 2005, the Managing Director, Access Bank Plc, Aigboje Aig-Imoukhuede, has said. This was contained in a report by the Oxford Business Group Update released at the weekend. “The Nigerian banking system is poised for a new era of competition,” he said.

    In a September report on the sector, Lagos-based Cordros Capital noted that the 12 banks it surveyed – including the top five – all posted revenue growth of more than 20 per cent in the first half of 2012.

    The United Bank for Africa (UBA), announced in unaudited results that its gross earnings grew to N168.2 billion, up 21.4 per cent on N138.5 billion in the same quarter of 2011. Total assets rose 11.1 per cent year-on-year to N1.95 trillion and profit before tax surged 376.25 per cent to N44.86 billion.

    The figures represent a turnaround after the prolonged effects of the 2008/09 crisis, when 10 banks accounting for 40 per cent of the system were signalled out by the CBN for auditing and were subsequently sold off, nationalised or recapitalised.

     

    LCCI

    The Lagos Chamber of Commerce and Industry (LCCI) has expressed concern over the implications of Monetary Policy Committee (MPC) retention of a tight monetary policy stance.

    LCCI Director-General, Muda Yusuf said the current economic and business conditions will escalate unemployment crisis, decline profit margins, weaken consumer demand and lead to prohibitive interest rates.

    He also said the MPC decision to retain Monetary Policy Rate at 12 per cent will decelerate economic growth and lead to high mortality rate of small businesses. “These conditions call for policy choices that would stimulate the economy, even at the risk of inflation. Boosting economic activities would increase output and invariably moderate inflation. The MPC decision to retain a regime of tightening is ill advised and insensitive,” he said.

    According to Yusuf, the apex bank’s concern about inflation, exchange rate stability and the preservation of foreign reserves are noted but given the present socio-economic conditions, stimulating the economy should be paramount at this time.

     

    Contracts

     

    The Federal Government must respect and fulfill terms and conditions it signed with both local and foreign investors that won power sector bids, Governor, Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi has said.

    Sanusi who spoke at the weekend during the 46th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, said investors will not take government seriously if by any reason, it reneges on keeping its own side of the contracts.

    “Government must respect contracts signed on power. Under no circumstance should these contracts be revoked and I am happy that the power reforms contracts have not been revoked,” he said.

    Data provided by the Bureau of Public Enterprises (BPE) showed the assets for privatisation include 11 distribution companies (Discos) and six generation companies (Gencos) from the unbundled Power Holding Company of Nigeria (PHCN).

     

    ATM Charges

     

    The Nigeria Deposit Insurance Corporation (NDIC) and CBN will be sending examiners to banks to see if the lenders are complying with N100 waiver on other banks’ Automated Teller Machines (ATMs).

    Managing Director, NDIC, Umaru Ibrahim, disclosed this during a media workshop held in Jigawa. He said the regulators are committed to ensuring that all banks comply with the directive to ensure that CBN’s policy on financial inclusion is achieved.

    The apex bank had early last week, finally agreed to put a stop to all charges associated with the use of ATMs. The agreement was the highpoint of a meeting between the Bankers Committee made up of chief executive officers of Deposit Money Banks, directors and top officials of the CBN and NDIC. Before now, account holders had been made to pay a flat rate of N100 per withdrawal any time they used other banks’ ATMs.

    He said the decision to stop the charge would help to increase the patronage of ATMs, thus deepening the financial inclusion strategy.

     

    Asset seizure

     

    The managing director, DataPro, Abimbola Adeseyoju, has called for the implementation of the asset seizure, confiscation and forfeiture policy of Economic and Financial Crimes Commission (EFCC) to check money laundering in the country.

    Speaking at the DataPro inaugural lecture series held in Lagos, he said that the anti-money laundering /combating the financial terrorism (AML/CFT) initiative was instituted by the Central Bank of Nigeria (CBN) to ensure that financial crime perpetrators were punished to ensure they do not benefit from their crimes.

    He advised that an acceptable framework that tallies with ‘Recommendations Four of the Financial Action Task Force 2012 Principles’ which is on asset seizure, confiscation and forfeiture as one of the deterrents to money laundering and terrorists financing.

    He said that government should ensure that competent authorities have powers to freeze or seize and laundered property or proceeds including instrumentalities used or intended to be used for money laundering or terrorism financing.

     

    World Bank

     

    World Bank report says the African continent would also generate an extra $20 billion in yearly earnings if its leaders can agree to dismantle trade barriers that blunt more regional dynamism. The report was released on the eve of an African Union (AU) ministerial summit in Addis Ababa on agriculture and trade.

    In a statement, the bank says that Africa’s farmers can potentially grow enough food to feed the continent and avert future food crises if countries remove cross-border restrictions on the food trade within the region.

    The report urges African leaders to improve trade so that food can move more freely between countries and from fertile areas to those where communities are suffering food shortages. “The World Bank expects demand for food in Africa to double by the year 2020 as people increasingly leave the countryside and move to the continent’s cities,” it said.

    According to the new report, Africa Can Help Feed Africa: Removing barriers to regional trade in food staples, rapid urbanization will challenge the ability of farmers to ship their cereals and other foods to consumers when the nearest trade market is just across a national border.

     

    Taxation

     

    The President of the Chartered Institute of Taxation of Nigeria (CITN), John Sunday Jegede, has said that taxation, and not oil, remains the engine-room for sustainable economic development in the country. He said oil and gas will in the very near future dry up but taxation will always remain a source of revenue for countries.

    Jegede disclosed this during CITN’s 27th induction ceremony in which 546 new members were inducted. According to him: “It is no longer news that what is needed to drive our economy and assist in the realisation of vision 20-2020 and the transformation agenda of the Federal Government is the diversification of the economy with emphasis on taxation”.

     

    Bank to bank report

     

    The Fidelity Helping Hands Programme (FHHP), a staff funded volunteer initiative, has renovated and handed over Sought After Foundation Orphanage Home in Lekki, Ajah to its management.

    The bank’s Executive Director, Shared Services, Mrs Ugochukwu Chijioke, who was represented by the General Manager of Operations, Mr Sam Obijiaku, said the renovation was done in the spirit of giving back to the society where it operates.

    As part of activities planned to mark 15 years of a rewarding partnership, UBA in conjunction with MoneyGram, has donated a fully branded crèche for the Oncology Pediatric ward of the Lagos University Teaching Hospital (LUTH) in Nigeria.

    The ward branch was handed over to senior management of LUTH at a colorful ceremony within the hospital premises.

    The Product Manager, Stella Okojie, said that as part of bank’s incentive to reward customers during the UBA/MoneyGram 15th Year Anniversary, the Bank plans to execute hospital-based corporate social responsibility (CSR) projects.

    Standard Chartered Bank Nigeria has officially opened its new branch located in Apapa, Lagos. In a statement, the lender said the opening of the branch is in line with its strong business growth and strategic expansion drive in the country.

    It said Lagos presents it with tremendous opportunities in a country which is central to its business footprint in Africa. “The strength of the Nigerian market has been reflected in our business growth which has been exponential,” it said.

    Regional Head for Consumer Banking in the Middle East, Pakistan and Africa, Raheel Ahmed said: “Lagos is an extremely important state in Nigeria. It has always played a pivotal role in the development of the country and whatever happens in Lagos usually gets replicated positively in other parts of the nation,” he said.

     

  • Taxation key to economic devt, says CITN

    The President of the Chartered Institute of Taxation of Nigeria (CITN), John Sunday Jegede, has said taxation, and not oil, remains the engine-room for sustainable economic development in the country. He said oil and gas will in the very near future dry up but taxation will always remain a source of revenue for countries.

    Jegede disclosed these during CITN’s 27th induction in which 546 new members were inducted.

    According to him, “It is no longer news that what is needed to drive our economy and assist in the realisation of vision 20-2020 and the transformation agenda of the Federal Government is the diversification of the economy with emphasis on taxation”.

    He said the Institute is determined to collaborate with various stakeholders to enhance manpower capacity of tax experts through training and retraining.

    Lagos State Attorney General and Commissioner of Justice, Mr Ade Ipaye, who was represented by Mr Gabriel Fashoto, said that tax reforms have assisted in ensuring that funds meant for development are channeled rightly for such projects.

  • Bearish mood persists as index falls 0.13%

    The key market indicators at the Nigerian Stock Exchange slipped further by 0.13 per cent yesterday. The All-Share-Index shed 33.80 points to close at 26,269.61 points while the market capitalisation dropped N11 billion to close at N8.371 trillion.

    Sentiments skewed further to the sell side in the banking sector with more losses than gains. Five companies appreciated in the sector recording slim gains ranging from 0.24 per cent to 2.74 per cent.

    On the flip side, Unity Bank dropped additional 1.96 per cent while UBA and Skye Bank lost 0.87 per cent and 0.50 per cent.

    Top-tier banks such as Zenith Bank, FirstBank and GTBank were not spared either with losses of 1.66 per cent, 0.33 per cent, and 1.0 per cent.

    Guinness dropped full points, closing at N231.00. However, the recent correction could spur demand and halt the bearish trend. Nigerian Breweries and International Breweries on the other hand, closed flat with no change recorded.

    On the price movement tables, a total of 40 equities recorded price change with 17, appreciating while the remaining 23 reduced in value. Dangote Flour led the gainers’ table with an increase of N0.47 to close at N8. It was followed by Julius Berger with a gain of N1.50 to close N31.50.

    Others on the table include Fidson, UPL, Unilever, ChampionBreweries, Dangote Sugar, Union Bank, Wapic and NASCON.

    On the losers’ side, Custodian and Allied Insurance led with a drop of N0.08 to close at N1.17. It was followed by Presco with a drop of N0.87 to close at N14.50. Also on the list were UAC-Property, Learn Africa, FO, Livestock, RT Briscoe, Neimeth, Guinness and Bagco.

    Investors traded 159.951 million shares worth N1.391 billion across 3,185 deals. The Financial Services sector recorded the largest chuck with 100.959 million shares worth N696.352 million across 1,857 deals.

    Other actively traded sectors were consumer goods, oil and gas, industrial goods, conglomerates and services with 33.053 million shares, 11.513 million shares, 6.640 million shares, 2.931 million shares and 2.917 million.

  • FIRS boss tasks ANAN on professionalism

    FIRS boss tasks ANAN on professionalism

    The Acting Executive Chairman, Federal Inland Revenue Service (FIRS) Alhaji Kabir Mashi has called on members of the Association of National Accountants of Nigeria (ANAN) to ensure that due diligence and professionalism are entrenched in the course of their works.

    Mashi, who made the call when executive of the Abuja chapter of ANAN visited him in his office, said accounting profession required such virtue in order to align with the global best practices.

    He said the association should not only seek members but ensure appropriate training programme that would enhance skill acquisition that would in turn put members on vantage position in the accounting profession.

    Mashi pledged continued support in the area of training both local and international for more than 350 ANAN members who are staff of the FIRS and urged them to encourage other staff to join the professional body.

    He also pledged support to ANAN as a body as part of an effort to deepen knowledge of Nigerian accountants that would assist the Service in its core mandate of tax revenue collection and accounting for the country.

    Earlier, the Chairman of Abuja branch of ANAN, Mrs. Rakiya Yusuf, who commended Mashi for sustaining reforms in the Nigeria tax system, solicited support for ANAN members and the association.

    She noted that the sustenance of the nation’s tax reform had resulted in increase tax revenue collection, focus on taxpayers services and gradual shift from a sole dependence on oil revenue.

  • Framework on Agency Banking out in December

    Framework that will define the mode of operation for Agency Banking will be out by the middle of next month, the Governor, Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi has said.

    Speaking yesterday at the Enhancing Financial Innovation and Access (EFInA) forum in Lagos, he said that the CBN Committee of Governors is already fine-tuning the draft exposure of the agency banking.

    He said issues relating to number of agents, type and nature of agents including considerations for super agents are critical areas being considered in the draft exposure. He said all the processes for this line of banking to become functional in the country will be finalised by this year-end.

    Sanusi said there have been a lot of improvements in the Nigerian payment system, including the drive for financial inclusion. He said lenders have to address the need for special products that consider women and the handicapped to ensure that everyone is carried along.

    The CBN Governor said that Agency Banking provides financial services to the widely dispersed population at affordable price and has assisted some countries in decongesting existing customers from crowded branches. He added that it will equally serve same purpose in Nigeria.

    According to him, agency banking provides financial services by a third-party agent to customers on behalf of a licenced , prudentially-regulated financial institution.

  • Lagos targets N80b from bond issuance

    Lagos targets N80b from bond issuance

    Lagos State Government yesterday signed a financial deal with Chapel Hill Limited, lead issuing house, with the aim of raising N80 billion through bond, which will be channeled towards infrastructural renewal in the state.

    The sum is the highest ever by any state government through bond issuance and represents the first tranche of the total N167.5 billion the state is sourcing under its second bond series (by way of a book build) between now and 2019.

    It is also the fourth time the state is raising funds via bond issuance to drive its infrastructural development.

    The total sum is to be invested in infrastructural development which the Governor Babatunde Fashola led administration intends to focus on in the 2013 fiscal year.

    Amongst the ongoing projects to which the Bond will be channeled to include the expansion and reconstruction of the Lagos-Badagry Expressway, Blue line rail corridor, ferry terminals in parts of the state to boost water transportation, construction and completion of health institutions such as Ayinke House within the Lagos State University Teaching Hospital (LASUTH), Maternal Healthcare Centres among others.

    State Governor, Mr. Babatunde Fashola who addressed State House Correspondents shortly after the completion of the board meeting for the deal at Lagos House, Ikeja, which attracted financial houses and stock broking firms, assured stakeholders that the money would be tied to specific projects that add value to the state economy.

  • CBN to sponsor SOS children for five years

    The Central Bank of Nigeria(CBN) has promised to sponsor the children of the SOS Children’s Village in the next five years.

    CBN Governor, Sanusi Lamido Sanusi, disclosed this at the inauguration of the CBN House at the SOS Children’s Village Gwagwalada, Abuja.

    He said the apex bank has “a long standing commitment to humanitarian support and educational development, which is carried out without prejudice to race, creed, gender or religion.”

    The CBN governor promised to finance the water project for the SOS Children Village as his own contribution to orphans.

    Sanusi said: “Children are our future and we must do all in our power to prepare them for that future”.

    He assured the children of the CBN’s support, and urged them to face their studies seriously, and be of good behaviour.

    He reminded them that they would be judged by what they become tomorrow not where they are today.

    Earlier, the National Director of the SOS Children’s Village Mr. Eghosa Erhumwunse disclosed that 17 million children are orphaned and vulnerable worldwide.

    He used the opportunity offered by the event to appeal to the public to support the village to salvage the situation.

    He lamented that the village, which caters for many children were suffering the lack of potable water, caused by the absence of a water treatment plant for its borehole.

    He appealed to the government to assist the village by providing pipe-borne water channel to the village from the water board, the construction and equipping of a school library, school funding and subsidy for children in the community.

  • Why Stanbic was picked to sell bonds, by govt

    Stanbic/IBTC was selected on merit as the government stockbroker to sell bonds in the retail market, the Debt Management Office (DMO) has said.

    Its Director, Market Development Department, Mrs Patience Oniha, told The Nation that the bank was selected out of the 17 institutions that applied for the job, after a rigorous screening.

    She said the bank’s strong position in the industry, performance in the stock market and capacity to maintain investors’confidence, among others, were some of the qualities that got it the job.

    She said: “We received 17 applications, following the placement of advertisements for the position of government’s stockbroker for retail bond trading. What we did was that we reviewed all the applicants’ vis-à-vis their ability to meet the requirements stated in the prospectus. In all these, the bank is the only institution that met the requirements.”

    Vice-Chairman, Anchoria Securities and Investments Limited,Dr Olusola Dada, said DMO’s decision to unveil the broker did not come as a surprise.

    Dada said the financial market operators, especially stockbrokers had been looking forward to the announcement, adding that the development has further buoyed confidence in the financial market.

    He said the management of the Nigerian Stock Exchange (NSE) last month ordered stockbroking firms wishing to engage in retail trading of bonds at the secondary market to provide a minimum shareholders’fund of N500 million.

    “The announcement has since generated interest in the market. You know that it is not every firm that trade in bonds, but the issue has elicited joy among some brokers who have the capacity to meet the threshold of N500million as directed by the NSE and, subsequently, play at the secondary end of the bond market. Before bonds were traded only on wholesales, but bonds would henceforth be trading on both wholesale and retail. This means that brokers can buy and sell bonds on behalf of the clients, after getting approval from NSE.” he said.

    Also, the Managing Director, BGL Securities Limited, Mr Sunday Adebola said the market had long expected the commencement of retail bond trading, adding that some brokers have shown interest on the issue.

    Adebola said the announcement did not come as a surprise because a meeting of capital market committee, the Securities and Exchange Commission (SEC) was held on the issue among others last month.

    He said DMO was not only represented at the meeting, but told  the participants that it was finalising the appointment of a  government stockbroker that would engage in retail bond trading.

    He said the market operators still need to meet the DMO on the frameworks for trading on retail segment of the bonds market.

    “Certain issues need to be resolved before the trading commences. How are bonds going to be traded at the retail segment?  What is the minimum size or units that can be traded in the primary market? What is the minimum size to be traded at the secondary market? Is it 1,000 or 10,000 units at each section of the market? I think DMO, NSE and the operators still need to meet on the issue,” he added.

  • ‘Assets seizure ’ll check money laundering’

    The Managing Director, DataPro, Abimbola Adeseyoju, has called for the implementation of the asset seizure, confiscation and forfeiture policy of the Economic and Financial Crimes Commission (EFCC) to check money laundering.

    Speaking at the DataPro Inaugural Lectures in Lagos, he said the anti-money laundering/combating the financial terrorism (AML/CFT) initiative was instituted by the Central Bank of Nigeria (CBN) to ensure that financial crime perpetrators are punished to ensure they do not benefit from their crimes.

    He advised that an acceptable framework that tallies with ‘Recommendations Four of the Financial Action Task Force 2012 Principles’, which is on asset seizure, confiscation and forfeiture be implemented as one of the deterrents to money laundering and terrorists financing.

    He said the government should ensure that competent authorities have powers to freeze or seize laundered property or proceeds including instrumentalities used or intended to be used for money laundering or terrorism financing.

    Besides, he said there is also need to allow such proceeds to be confiscated without requiring criminal prosecution otherwise called a Non conviction based confiscation approach.

    According to him, it is no longer required for an offender to demonstrate the legal ownership of the property before it is confiscated. For him, once the offender’s known source of income cannot provide the basis for such property, it should be enough room for confiscation and conviction.

    He said DataPro is committed to supporting banks, regulators and other stakeholders in fighting money laundering in the country, adding that the firm was established to supply information and data on individuals, entities, agencies central authorities and institutions in the country to the relevant authorities.

    The firm had also partnered with Dun & Bradstreet International to offer services to banks, manufacturers and other conglomerates around the world.

    Meanwhile, the apex bank has started full implementation of its anti-money laundering/combating the financial terrorism (AML/CFT) risk-based supervision framework, it issued in 2011.

    The CBN said the measure was further supported by the importance the Financial Action Task Force (FATF) attached to the risk-based approach to AML/CFT supervision in its revised recommendations issued last February.