The Nation Newspaper

Category: Pension

  • ‘PFAs have only received part payment of PHCN workers’ pension’

    ‘PFAs have only received part payment of PHCN workers’ pension’

    Pension Fund Administrators (PFAs) have only received some part payments of the pension benefits of workers of the defunct Power Holding Company of Nigeria (PHCN) who were sacked, the new Chairman of Pension Fund Operators Association of Nigeria (PenOp), the umbrella body for the PFAs, Misbahu Umar Yola, has said.

    He spoke to reporters while outlining his plans for the association in Lagos.

    Yola, who said some PFAs have received payments of the PHCN pensioners from the Federal Government, could not, however, confirm how much they have received as at press time.

    He noted that certain details and information were still being worked out by the PFAs with the Office of the Accountant-General of the Federal Civil Service, the Bureau for Public Enterprises (BPE), and the PHCN management, adding that when the process is completed, their accounts will be credited.

    Meanwhile, the Minister of Power, Prof. Chinedu Nebo, has given reasons why some of the workers have not been paid their severance packages.

    He said the delay was as a result of inconsistent information submitted to his ministry and pension fund management companies by some of the workers.

    Nebo, who spoke at the opening of a new power transmission sub-station in Ibadan on Friday, said there was a provision for payment to the workers.

    “We are working hard to ensure that all members of staff of the former PHCN are paid their entitlements. There are about 7,000 left, whose biometrics were not perfect. The problem is that they were inconsistent in the information they gave to us. Some of them opened more than one bank account and submitted different names to the pension fund managers. We are trying to clear all these anomalies before making the payment,” the minister explained.

    “The handover of the successor firms was seamless and I appeal to the workers of the defunct PHCN and those with the new distribution and generation companies that the government will fulfil its obligation to them.”

    Speaking on his tenure just as he took over the mantle of leadership of the association from the Managing Director, Pension Alliance Limited, Mr. Dave Uduanu, Yola disclosed thatplans are ongoing to upgrade the association to an institute.

    He said a secretariat will be setup in the coming weeks to help coordinate its activities while the association awaits the regulator, the National Pension Commission’s approval to become an institute.

    The chairman said his administration would place more emphasis on educating members of the public on the contributory pension scheme noting he will work closely with the media to ensure proper dissemination of information about the sector.

    He said: “The Contributory Pension Scheme has a safe mechanism to ensure the security of pension funds and pension operators will continue to support the development of the scheme, to ensure protection for workers in retirement.

    “We are considering a law that will make the funds in the Retirement Savings Accounts of workers to be able to contribute more to the growth of the economy and meet some other needs of the workers even before retirement”.

    The chairman further said his team would collaborate with the National Pension Commission (PenCom) to encourage saving culture among young people and also ensure that the open window initiative is achieved.

    A framework has also been designed by Pen Com and in a few months, it would roll out the guidelines that would enable for the sector.

    He further disclosed that the PFAs have started engaging the informal sector and have started putting incentives that will attract the informal sector.

    The new members of PenOp Executive Committee are the Managing Director, Shell Nigeria Closed Pension Fund Administrator Limited, Mrs. YemisiAyeni, who is the vice-chairman; Managing Director, ARM Pension Managers Limited, Mr Sodiq Mohammed, is the Head, technical committee; Managing Director, Premium Pension Limited, Mr. Wilson Ideva, is the Head, Legal and Regional Committee; Managing Director, FUG Pension Limited, Mr Usman Suleiman, is the Head, Branding and Communication; Managing Director, Zenith Pension Fund Custodian, Mrs. Nkem Oni-Egboma, is the Treasurer and Mrs. Susan Oranye, is the Secretary.

  • Investors shun Fed Govt’s bonds for Lagos bonds

    Investors are shifting demand from the Federal Government’s bonds to the Lagos State Government Bond in preference for the relatively higher yield of the state bond.

    The seven-year N87.5 billion 2020 Lagos State Government Bond opened on Monday and it’s expected to end on November 19. It will be issued by a way of book building as from this week to qualified investors, including pension funds, banks, fund managers, insurance companies, other institutional investors and high net worth individuals. Chapel Hill Denham is the lead book runner.

    Other joint book runners included Afrinvest, Radix Capital, FBN Capital, FCMB Capital Markets, Marina Securities, Skye Financial Services, Stanbic IBTC Capital, Vetiva Capital Management and Zenith Capital.

    The Nation’s checks indicated that investors had started withholding and shifting orders from the Federal Government’s bond since the approval of the Lagos Bond last week.

    Managing Director, Cowry Asset Management Limited, Mr Johnson Chukwu, said the shift in demand from the national bond to the sub-national bond was because of the higher returns on the sub-national bond.

    According to him, what is happening is that because Lagos bond is lucrative, it has good credit rating, investors will rather buy up the Lagos bond while it is still in the market instead of buying the Federal Government bonds.

    He noted that with the seven-year Lagos bond carrying a coupon of 13.5 per cent and the longer 18-year Federal Government bond with some 12.87 per cent, the higher yield of Lagos bond has redefined the yield curve in the bond market.

    Chukwu pointed out that though the rating of the Federal Government’s bonds are higher as sovereign issues, the good credit rating and liquidity of Lagos State and the fact that the state is an experienced issuer with unlikely risk of default provided enough comforts for investors to shift demand.

    “The yield for the FG Bond is now something like 12.87 per cent, that is the highest, that is for a long-term bond that will mature in 2030. Lagos Bond is a seven-year bond and it’s coming out with 13.5 per cent. It means investors will rather buy up Lagos bond while it is still in the market,” Chukwu said.

    Commissioner for Finance, Lagos State, Mr. Ayo Gbeleyi, said the bond, regarded as a record issue by a sub-national, was meant to fund critical infrastructure.

    According to him, the bond was part of the state’s policy thrust that focuses on poverty eradication and sustainable growth through infrastructure renewal and development.

    He said the bond would contribute to the completion of ongoing infrastructure project to enhance the provision of social services aimed at improving the living standards of Lagos residents.

    He outlined that the net proceeds of the bond issue would be use to finance the Lagos-Badagry Expressway, the Blue Line Metro Rail, the Adiyan Water Works, Ayinke House (Mother and Childcare Centre), acquisition of the entire shareholding of the LCC, the concessionaire of the Lekki-Epe Expressway and shoreline protection works.

     

     

    According to him, the bond, which was rated A+ by Augusto & Co and AA- by Global Credit Ratings, is the second and final tranche of the state government’s N167.5 billion 2nd debt issuance programme, launched in November 2012.

    Meanwhile, a total of 723 units of Federal Government bond valued at N0.750 million were traded in three deals at the Nigerian Stock Exchange (NSE) last week. Trading on the over-the-counter (OTC) market however showed stronger momentum with a turnover of 193.766 million units valued at N210.137 billion in 1,053 deals.

     

  • LASACO Assurance chairman is dead

    LASACO Assurance chairman is dead

    The Chairman, LASACO Assurance Plc, Edward Akin Leigh, is dead. He was 65.

    In a statement, the management of the underwriting firm said Leigh who died on Monday, November 4, was an administrator, oil and gas, and business management consultant.

    He attended the Methodist Boys’ High School and King’s College, Lagos from 1961 to 1967; and graduated from University of Ibadan, Oyo State in 1971.

    He also attended the Graduate School of Business Administration, University of Wisconsin, Madison, Wisconsin, United States where he obtained MBA in 1974.

    He was a recipient of several academic and professional honours and awards. He was a John F. Kennedy scholar at Ibadan from 1968 to 1971; a Fulbright-Hays scholar at Wisconsin from 1972 to 1974; and National Young Manager of the Year (1975), among others.

     

     

    His work experience spanned over 23 years with Mobil Nigeria including extensive tours of duty and several training developmental attachments with Mobil affiliates and companies in Africa, Europe and USA during which he held a variety of key management and senior executive positions in supply and distribution, planning, logistics, and coordination, downstream engineering and operations, and marketing.

    He voluntarily retired as General Manager, Operations, Mobil, in early 1994 to organise his own firm, Petroleigh O. G. C. International Limited, an Oil and Gas coastal bunkering and marine support services company with operational bases in Lagos, Warri and Port Harcourt.

    His other professional and business activities included Group Managing Directorship of Services and Materials Management Company Limited (SMMC Group), a multi-faceted business and project management consultancy and general services company, as well as directorships in Rotoy Private School, Lekki.

    He was a member of several professional, social and recreational clubs and associations: Institute of Directors, Nigeria; American Management Association; Rotary Club International (Paul Harris Fellow and Past Rotarian President); Lagos Motor Boat Club; Ikoyi Club 1938; Yoruba Tennis Club, Alumni Associations of the University of Ibadan and University of Wisconsin, U.S.A; Honorary Citizen – Sioux City, Iowa, U.S.A., Executive Officer, Lagos State Scouts Council etc.

    Leigh’s professional experience, special skills and areas of specialisation include Petroleum Economics and Financials; Transformational Strategy, Profit Optimisation, Change Management, Business Modeling Processes, Confidence Building, Business and Management Policies and Practices in Emerging Economies.

    His over three decades of the highlighted multidisciplinary professional experience and skills have frequently been called upon to work as a consultant, member, resource person, policy adviser and analysts on various government and private sector projects on indigenous participation in petroleum liquids transportation; managing in a regulated economy; crisis management; creative problem solving; building a winning team; strategy formulation; etc.

    He held traditional titles of “Baaloro of Itoku” and “AsiwajuGbadeniyi of Egba Land”.

  • Lagos pays 3, 884 retirees N21.3b under CPS

    Lagos pays 3, 884 retirees N21.3b under CPS

    The Lagos State Government has remitted a total of N21.3 billion into the Retirement Savings Accounts of 3,884 retirees under the Contributory Pension Scheme (CPS).

    It has presented Retirement Bond Certificates to 395 retirees worth N2.4 billion.

    The Director-General of the Lagos State Pension Commission (LASPEC), Mr Adekunle Hussain made this known while speaking during the presentation of Retirement Bond Certificates to the ninth batch of retirees in Lagos.

    He noted that part of the ninth batch of retirees numbering 185 were paid the sum of N943 million in September this year.

    He said: “Part of this ninth batch of retirees numbering 185, were paid the N943.1 million in September this year. We are gathered here to witness the presentation of Retirement Bond Certificates being the total accrued rights of N2.4 billion only to another set of 395 retirees.

    “These particular sets of 395 retirees form the second tranche of the ninth batch of our retirement bond presentation, thus bringing the total number of the ninth batch beneficiaries to 580 retirees.Therefore, with today’s presentation, the Lagos State Government has so far in the history of the CPS remitted a total of N21. 3b illion into the Retirement Savings Account of 3,884 retirees”.

    Hussain also said this was made possible through the commitment and support of the present administration in the state, which ensures that funds are made available for monthly remittances as well as the commitment of the board, management and staff members of the commission, who worked towards this success.

    He added that earlier, the state had paid total accrued rights of N18.9 billion of 3, 489 retirees, which include the N943 million being the first tranche of the nineth batch earlier paid to 185 retirees during a mini bond presentation in September.

    Clarifying issues on actual number of the state employees registered under the CPS, he said, the state had registered 135,000 employees.

    He stressed that the state remained steadfast in its commitment to sustaining full implementation of the pension scheme even beyond the administration and that solid and well-defined structures had been put in place to ensure that the statutory five per cent contribution that goes into the Redemption Fund Account created for redeeming the retirement bonds, is sustained.

    The LASPEC boss said the state also maintained a Pension Sinking Fund Account, which is funded monthly to ensure that funds were available to meet unforeseen pension liabilities that might arise in situations where more than those projected to leave the service voluntarily decide to do so.

    He urged the retirees to assess the situation before choosing either the programme withdrawal provided by the Pension Fund Administrators (PFAs) or the annuity provided by the insurance firms.

  • FRC holds summit on credible financial reporting

    TO promote credible financial reporting and good corporate governance system in Nigeria, experts and users of financial reports will brainstorm on the theme of financial reporting framework and governance at the 10th annual corporate financial reporting summit and dinner of the Financial Reporting Council of Nigeria (FRC).

    In a statement by the Executive Secretary and Chief Executive, Financial Reporting Council of Nigeria, Mr. Jim Obazee, the council indicated that the major objective of the summit, scheduled for December in Lagos, is to provide a opportunity for preparers, users and all stakeholders of published financial statements to meet annually and exchange views on issues affecting credible and reliable financial reporting.

    It noted that the summit will also create awareness on international best practices that will impact positively on corporate financial reporting in Nigeria.

    Major presentations at this year’s summit would include Conceptual Framework for Financial Reporting: Asset & Liability Definitions and Recognitions; Financial Reporting for Rate Regulated Activities; Financial Reporting & Valuation Standards in Nigeria: An Expository Analysis; National Code of Corporate Governance: A New Regulatory Benchmark for Nigeria; and Conceptual Framework for Financial Reporting: Measurements and other Comprehensive Income.

    FRC reiterated its commitment to strengthen financial reporting in Nigeria, noting that it had initiated series of programmes aimed at enhancing compliance with the Accounting and Financial Reporting Standards as stipulated in the FRC Act 2011.

    The guest speakers at the event include Obazee, Mr Ayo Othihiwa, chairman, Association of Reporting Accountants in the Capital Market; Mr. Atalor Abel, Partner, Muhtari Dangana & Co; Mr. Bode Adediji, President, Nigerian Institution of Estate Surveyors and Valuers and Mr. Victor Odiase, Chairman, Steering Committee, National Code of Corporate Governance.

    Discussants include Mr Uwadiae Oduware, Partner, Deloitte; Mr. Henry Egbiki, Regional Managing Partner, Ernst & Young (West Africa); Mr. Igho Dafinone, Senior Partner, Horwath Dafinone; Mr. Uyi Akpata, Partner, PriceWaterhouseCoopers and Dr. Fabian Ajogwu, Principal, Kenna Partners; while some distinguished business leaders, including Chief Olusegun Osunkeye, President, Society for Good Corporate Governance Nigeria, would chair the business sessions.

  • Foreign portfolios hit N801b in Q3

    Foreign portfolios hit N801b in Q3

    Foreign investors staked N801.25 billion and dominated transactions on Nigerian equities within the nine-month period ended September 30, 2013.

    The latest report on the foreign portfolio investment flow by the Nigerian Stock Exchange (NSE) obtained by The Nation showed that foreign investors dominated transactions during the nine-month period, accounting for 50.81 per cent of total transactions during the period.

    The report indicated that total transactions at the NSE within the period stood at about N1.58 trillion, with foreign portfolio investors accounting for N801.25 billion while domestic investors accounted for N775.77 billion. Domestic investors thus accounted for 49.19 per cent within the nine-month period.

    However, while foreign investors flowed in more funds than they took out in the first half, they took more money out than they invested since the beginning of the second half, showing a sustained trend of profit-taking in the second half.

    But with the significant inflows in the first half, net position by the third quarter still remained positive. Total foreign inflow closed September at N416.73 billion as against total outflow of N384.52 billion. Investment flow so far in the second half has followed the same pattern, with more outflow than inflow. Besides, the foreign portfolio investment report showed month-on-month slowdown in both the total foreign transactions and foreign portfolio inflow while there was an increase in outflow during the period.

    In September, total foreign inflow was N26.14 billion as against outflow of N27.88 billion, bringing total foreign transactions to N54.02 billion. Total transactions at the stock market during the month stood at N108.19 billion, out of which domestic investors contributed N54.17 billion or 50.07 per cent.

    In August, foreign inflow had stood at N31.12 billion as against outflow of N39.76 billion. Total foreign transactions thus stood at N70.88 billion, 52.26 per cent of the total turnover of N135.63 billion recorded for the month.

    Foreign investors had took out nearly a double of every penny they invested in the Nigerian stock market in July, unusually high disparity between foreign portfolio inflow and outflow, which led to significant decline in net foreign investment in the Nigerian stock market.

    The seven-month report for the period ended July 2013 had indicated that total foreign inflow stood at N31.81 billion as against outflow of N61.90 billion in July, showing the widest divergence between inflow and outflow so far this year.

    Total foreign transactions thus slowed to N93.71 billion in July as against N150.24 billion in the previous month. However, foreign investors remained dominant in stock market’s transactions with 62.53 per cent of the aggregate foreign-domestic transactions in July, an increase on 51.13 per cent recorded by foreign investors in June.

    With the outflow in July, net foreign investment declined from about N73 billion by June to N42.59 billion by July.

    Total foreign inflow had risen to N90.15 billion while outflow stood at N60.09 billion as total foreign transactions increased to N150.24 billion in June.

    Total foreign transactions in the Nigerian market for the seven-month period stood at N676.25 billion, 50.73 per cent of aggregate transactions of N1.33 trillion by foreign and domestic investors during the period. Breakdown of foreign transactions during the seven-month period showed inflow of N359.47 billion as against outflow of N316.88 billion. Nigerian investors accounted for N656.85 billion over the seven months.

    Foreign investors had capitalised on general market optimism in July ahead of the release of the first half earnings reports of quoted companies to monetize and rebalance their portfolios. Nigerian equities had consolidated their bullish rally in July with capital gains of some N581 billion. Aggregate market value of all equities closed July at N12.007 trillion as against its opening value of N11.426 trillion for the month. The All Share Index (ASI), which doubles as benchmark index for all equities on the Nigerian Stock Exchange (NSE) and country index for Nigeria, also rose from month’s opening index of 36,164.31 points to close at 37,914.33 points, a month-month average positive return of 5.08 per cent.

    First-half report on foreign portfolio investment flow had shown that total transactions-including buy and sell deals, by foreign investors totaled N582.64 billion, accounting for 49.24 per cent of total turnover at the NSE during the period.

    The report had indicated that in most instances, foreign investors flowed in more funds than they took out, leaving the stock market with a positive net foreign investment of about N73 billion within the period. Foreign portfolio inflow stood at N327.66 billion as against outflow of N254.98 billion.

    Total turnover value at the NSE during the first half was N1.18 trillion with both foreign investors and domestic investors dominating transactions in three months each. But while foreign investors had maintained gradual and steady increase and decline in portfolio adjustments, Nigerian investors showed large fluctuations.

    Nigerian investors dominated the market within the first two months and were supplanted by foreign investors in March and April. Nigerian investors regained dominance in May and were equally displaced by foreign investors in June.

    Foreign investors accounted for 36.89 per cent, 39.65 per cent, 52.78 per cent, 64.48 per cent, 48.68 per cent and 51.13 per cent in January, February, March, April, May and June respectively.

    Portfolio transactions by foreign investors totaled N61.46 billion, N75.97 billion, N80.14 billion, N122.97 billion, N91.86 billion and N150.24 billion in January, February, March, April, May and June.

    The report underlined the structural outline of Nigerian investors, which was skewed in favour of institutional investors. For instance, institutional Nigerian investors accounted for 66.7 per cent or N95.78 billion of domestic investors’ turnover in June 2013 while retail investors contributed 33.3 per cent or N47.81 billion.

    The report had shown stronger momentum in foreign portfolio investments in the stock market as the 2013 first half report was substantially above six-month average over the past five years.

    Foreign investors staked about N4.08 trillion on quoted shares on the NSE between 2007 and last year. Foreign investors had gradually and consecutively increased their investments in Nigerian equities from about 15 per cent of total market turnover in 2007 all through till a high of about 67 per cent in 2011.

    Foreign portfolios were particularly the main drivers of transactions on the NSE in the past two years, with foreign investors accounting for average of two-thirds of equity transactions between 2011 and 2012.

    The report underlined the early positioning of the foreign investors, who had saw through the prospects of Nigerian equities amidst the downtrend and the rampant herd instinct of the domestic investors, who mostly usually look at recovering market.

    Foreign portfolio transactions increased from N615.6 billion in 2007 to N787.4 billion in 2008. These trimmed down to N424.6 billion in 2009 before rising consecutively to N577.3 billion and N847.9 billion in 2010 and 2011 respectively. Foreign portfolio trades stood at N808.4 billion in 2012. With these, the two-way flow of foreign portfolio investments showed that while foreign investors flowed in about N2.01 trillion during the period, they equally took away about N2.17 trillion.

    Market pundits said the investment flows at the stock market might underline concerns over the future earnings of banks, following a relatively low fundamental performance in the third quarter. Most banks reported marginal growth in profit in the third quarter as they struggled with reduced income streams and high cost of funds and operations induced by new regulations by the Central Bank of Nigeria (CBN).

    Banks remain the dominant subsector at the NSE, although reduction in number of quoted banks and increased capitalisation of non-bank multinationals have reduced the hitherto overbearing influence of banking stocks on overall market situation.

     

  • How far will UBA go?

    How far will UBA go?

    Financial services stocks have generally been the low-performers this year. With the exception of a handful of stocks, financial services stocks-from core banking to insurance, mortgage, microfinance, financial services holding groups and asset management, are trailing significantly below average market performance.

    The benchmark index at the Nigerian stock market, the All Share Index (ASI), opened this week a 10 months and 10 days average return of 34.87 per cent. The ASI tracks values of all equities on the Nigerian Stock Exchange (NSE) and thus serves as the realistic barometer of the Nigerian stock market. With the NSE as the only stock exchange, the ASI doubles as Nigeria’s country index.

    The average year-to-date return of 34.87 per cent highlighted the attractiveness of the equities as hedging instruments. Adjusted for inflation at 8.0 per cent, investors in equities still have average return of about 27 per cent. This compares with unadjusted return of 10.8 per cent on 91-day Nigerian Treasury Bills (NTB) and 7.41 per cent rate on three-month tenured deposit in the banking sector. Ironically, returns on most banking stocks were on the same trend with the rates in the sector. Average return in the banking sub-sector opened this week at 17.42 per cent. This was mainly driven by substantial gains by UBA, Diamond Bank, Sterling Bank and Ecobank Transnational Incorporated (ETI). Year-to-date return in the banking subsector indicated average return of 2.43 per cent for Access Bank and 4.0 per cent for Unity Bank. Skye Bank was the only stock with a negative return in the core banking subgroup with -5.81 per cent. Others included Diamond Bank, 43.72 per cent; ETI, 23.12 per cent; Fidelity Bank, 12.66 per cent; Guaranty Trust Bank (GTB), 12.83 per cent; Sterling Bank, 31.79 per cent; Union Bank of Nigeria, 38.10 per cent; Zenith Bank, 9.24 per cent while the government-assisted Wema Bank carried a return of 126.92 per cent. With the exception of Wema Bank, which recently secured lifelines from new investors including the Asset Management Corporation of Nigeria, UBA retained the highest return in the banking subsector at 67.98 per cent. Within the extended financial services sector, Stanbic IBTC Holdings recorded a return of 76.36 per cent. FBN Holdings carried a return of 2.54 per cent while FCMB Group struggled with a negative return of -5.33 per cent.

     

    Facts of the pricing trend

    Amidst rising costs and constrained incomes occasioned by regulatory policies, operational earnings in the banking sector have largely been muted. Interim reports and accounts of banks for the third quarter ended September 30, 2013 generally showed banks struggling with declining margins. However, the nine-month report showed that UBA was able to expand its market share as gross earnings rose to N188.02 billion by the third quarter, indicating an increase of 12.5 per cent on N167.07 billion recorded in the comparable period of 2012. Net interest income also increased from N68.56 billion to N78.16 billion. The top-line performance partly reflected significant expansion in the loan portfolio of the bank, as it positions to take advantage of emerging opportunities. The bank’s new loan portfolio position stood at N870.4 billion as at September 2013, representing a 26.7 per cent increase on N687.4 billion on the bank’s loan portfolio for full year of 2012. Further analysis of the report showed that profit before tax improved marginally to N43.43 billion in 2013 as against N42.24 billion in comparable period of 2012. Net profit stood at N37.37 billion as against N39.12 billion. Total assets rose by 13.5 per cent to N2.58 trillion from N2.27 trillion while total equity rose by 17.2 per cent to N225.6 billion as against N192.5billion.

    Group managing director, United Bank for Africa (UBA) Plc, Mr. Phillips Oduoza believed that the third quarter performance rather laid the ground for future performance of the bank as it had increased its loan exposures to the power, upstream oil and gas and telecoms sectors. According to him, UBA had recently played active roles in the financing of big ticket deals, especially in the power sector recently, with potential long term impact on the bank’s future profitability. Some of the major deals UBA actively participated in include taking up $120 million, about N19.44 billion, of the financing in respect of Transcorp Ughelli Power Plant. He outlined other deals to include underwriting of the entire facility of $122 million, about N20 billion, for Kann Utilities’ acquisition of the Abuja Electricity Distribution Company, financing the payment of 75 per cent acquisition of 60 per cent equity stake in Ikeja Electricity Distribution Company and Aura Energy’s acquisition of Jos Electricity Distribution Company, as the lead arranger for N9.6 billion loan to finance the payment of 75 per cent of Aura’s 60 per cent equity stake in Jos Electricity Distribution Company. “We firmly believe that the effect of the asset creation decisions we have taken this quarter will have a sustained impact on our revenue growth,” Oduoza said.

     

    Analysts’ perspectives

    Analysts at the global investment banking giant, JP Morgan, said the return to real banking, as exemplified by loan growth, especially to the real sector, stands UBA in stronger position to outperform its peers. In its equity research for Central and Eastern Europe, Middle East and Africa (CEEMEA) titled Nigerian Banks: Return to Real Banking, the United States of America (USA)-based investment powerhouse indicated that UBA currently has an upside potential of 45 per cent. Simply, it implies that investors that take position on UBA shares now have the chance of making as much as 45 per cent return over the next 12 months. For existing shareholders carrying return of 67.98 per cent, their investments would more than doubled within the next 12 months. JP Morgan stated that it expected that the Nigerian government’s reforms agenda in oil and gas, power, agriculture and infrastructure sectors will drive the future banking growth, the sector which UBA has recently been highly bullish on with new loan growth targeted at these sectors.

    According to the report, UBA offers an attractive 45 per cent upside potential over 12 months, among the highest in CEEMEA banks. “We think UBA’s valuation, despite a strong rally since the beginning of the year, offers an opportunity to buy into probably the deepest valuation discount in CEEMEA banks at current levels,” the report stated.

    The report outlined that investors may be missing out on the opportunity presented by UBA shares despite improving fundamentals of the bank. “We see UBA’s valuation, on the other hand, as an opportunity to buy into what may be the most attractive risk-reward in CEEMEA banks,” the report stated noting that the “consensus is catching up fast – UBA has the best buy, or hold, or sell ratio on Bloomberg consensus.” The JP Morgan report also explained that UBA benefits from significant balance sheet liquidity noting that the bank’s loan to deposit ratio of 37 per cent as at half year 2013 was the lowest among CEEMEA banks covered by the investment bank. JP Morgan however forecast that UBA’s loan to deposit ratio is conservatively expected to rise gradually to 45 per cent by 2016 year end.

    According to the report, UBA’s loan to deposit ratio is reflected in UBA’s market shares where it is second in Nigeria in deposits with 13 per cent market share, but has lowest lending market share at 8.0 per cent among the four biggest banks tracked by JP Morgan in Nigeria .

    UBA pan-African presence is also seen as strength in the bank’s operations. JP Morgan noted that UBA has the highest number of subsidiaries in Africa among the top-tier Nigerian banks with positions in 18 African countries outside Nigeria and potential to drive future revenues on rising intra-Africa trade. “This pan-African presence and valuation discount increases the attractiveness of UBA as a potential take-out story, in our view, given our understanding on larger regional banks (e.g. South African banks) for pan-African franchises such as UBA’s,” the report stated.

    According to analysts, UBA has the lowest mix of Commission on Turnover (COT) growth in its overall fee income mix when compared with peers. Excluding fee income, average Net Interest Income (NII) growth of is expected at 15 per cent every year from this year to 2016.

    “UBA’s valuation is an opportunity to buy into what may be the most attractive risk-reward in CEEMEA banks; for a 33 per cent valuation discount versus peers, we estimate UBA offers 23 per cent 2014 year -end premium on return on equity (ROE) and significantly higher dividend yield of 10 per cent by 2014 year end,” the report stated.

    With its large geographic spread and cross-jurisdiction market as well as deep products and services portfolios, UBA appears to be in better stead to find supports to mitigate adverse impact of operating changes in its domestic market. The potential for the market consideration to rise further is strong, though the extent of capital appreciation may be subjective.

     

  • Lagos to give 580 retirees bond certificates

    Lagos to give 580 retirees bond certificates

    Five hundred and eighty-five workers who retired from the Lagos State Public Service under the Contributory Pension Scheme (CPS) will receive their Retirement Bond Certificates on Friday.

    Director-General, Lagos State Pension Commission, Mr. Rotimi Adekunle Hussain, who made this known in Lagos, said Governor Babatunde Raji Fashola (SAN) will present the Retirement Bond Certificates at the Nigeria Employers’ Consultative Association’s (NECA) secretariat.

    He said the ceremony, which is the ninth, is consistent with the tradition of Fashola’s administration to appreciate its retirees for serving the state meritoriously.

    He said before now, the government had paid accrued pension rights of over N18.9 billion into the Retirement Savings Account (RSA) of 3,489 retirees.

    He said the retirement bond, which represents pension obligations made up of actuarially determined gratuity and pension benefits up to March 31, 2007 under the Pay As You Go scheme, will be credited into the RSA of each retiree before the bond certificates presentation ceremony.

    He assured employees that the Lagos State Pension Reform Act 2007 was aimed at protecting the retirement benefits of workers.

    It is also meant to promote good pension administration and reduceto the barest minimum the risk associated with the previous pension laws, he added.

    The Acting Director-General of the National Pension Commission (PenCom), Mrs. Chinelo Anohu-Amazu, said many states have benefited from the funds generated by the CPS through the development bonds.

    As at June, this year, the value of pension funds investment in state government bonds was N169.73 billion. Most of the states have used proceeds from these investments to provide vital infrastructure for their citizens.