Tag: FBN Capital

Development of the derivative products will enhance liquidity and increase funding solutions in the Nigerian capital market, Head, Structured Products, FBN Capital Limited, Mr. Michael Okon, has said.

Okon, who spoke at the maiden edition of the Nigerian Structured Product Summit in Lagos, said existing financial securities can be combined with derivatives to address the many needs of clients, including risk management, yield enhancements and funding purposes.

According to him, the development of the derivatives segment of the capital market would deepen the pool of investible assets and widen the assets choices for both investors and issuers.

He noted that the absence of a robust regulatory and legal framework to accommodate the peculiarities of derivatives in Nigeria has made majority of the derivative transactions bilateral.

“However, as the market evolves and we have more market participants, we should see increased liquidity and price discovery which will help develop the exchange traded market,” Okon said.

He assured that FBN Capital, the investment banking and asset management business of FBN Holdings Plc, would continue to explore innovative ways to contribute to the development of the derivatives market and the Nigerian capital market in general.

FBN Capital Limited, the investment banking and asset management subsidiary of FBN Holdings Plc, was awarded the ‘Best Local Investment Bank in Nigeria’ and ‘Best Asset Manager in Nigeria’ awards at the 9th EMEAFinance African Banking Awards 2016.

Deputy Director and head, advisory and capital markets, FBN Capital Limited, Mr Afolabi Olorode, who received the awards at a ceremony in London, said the achievements reaffirmed the company’s commitment to delivering value to its clients.

“We are motivated to constantly search for what comes next, and remain committed to our promise to be an inspirational partner,” Olorode said.

FBN Capital survived the industry headwinds and economic recession to close several innovative transactions in 2016.

During the year, FBN Capital executed the largest commercial paper to be established by a Nigerian corporation, with the Nigerian Breweries Plc’s Commercial Paper (CP) issuances in a transaction worth N12.23 billion. In the UACN Property Development Company Plc, Commercial Paper issuance worth N16.79 billion, the FBN Capital was a joint lead arranger in structuring the notes, advising on appropriate transaction structure, timing and pricing, guidance on investor appetite and distribution of the notes to investors. The issuance incorporated a first of its kind credit enhancement structure novel to domestic CP issuances, which influenced the 168 per cent subscription level recorded on the transaction.

FBN Capital was also mandated as financial adviser by Seven Energy International Limited (SEIL) to facilitate the restructuring of Accugas’ IV $385-million Term Facility; and in the last quarter of the year, successfully facilitated the refinancing of two transactions in the power sector.

FBN Capital Limited, the investment banking and asset management subsidiary of FBN Holdings Plc. has  emerged winner of the “Best Refinancing in Africa’ at the EMEAFinance Achievement Awards; the prestigious “Deal of the Year, Africa” at The Banker Awards; and the “Most Innovative Bank in Africa’ by Global Finance Awards for Accugas IV, Seven Energy’s senior secured term loan and revolving working capital facility.

Speaking on the winning transaction, Director and Head of Debt Solutions for FBN Capital, Patrick Mgbenwelu, said: “These awards reaffirm our ability to remain at the forefront of structuring and closing innovative financing solutions within the African Investment Banking industry. We are pleased to have upheld the trust our clients placed in FBN Capital to assist in heading, structuring and arranging the Accugas IV financing, and our team remains committed to launching similar robustly structured financings in the local market.”

FBN Capital was also awarded “Best Investment Bank in Nigeria’ by Global Finance Magazine for the fifth consecutive year. In his remark,  Head of Marketing and Corporate Communications for FBN Capital, Lolade Sasore,stated, “We are honored to receive the recognition as an acknowledgement of the high standards we deliver for our clients whom we truly see as partners. As a member of the FBN Holdings Group, FBN Capital is committed to raising the bar much higher and offering our clients the most innovative solutions, demonstrating unrivaled market expertise and reliable business values.

He said providing sound professional advice and execution capabilities in supporting the financing, investing, trading, securing and advisory needs of our clients, “is our singular focus, and our partners, remain confident that they can rely on us to look beyond today and create opportunities for their tomorrow.”

EMEA Finance is a leading bi-monthly global industry publication that reports on the major financial events and happenings initiated and influenced by the international financial industry in Europe, the Middle East and Africa. The award celebrates the Best Refinancing in Africa taking into consideration its market strength, profitability, growth and earnings, as well as the potential and quality of management of the financial institutions.

The Banker, a part of the Financial Times Group, has been providing global financial intelligence since 1926 and for the annual Awards, one winning bank is selected for each of the 120 countries judged; while the Global Finance awards uses a series of criteria, including market share, number and size of deals, service and advice, structuring capabilities, distribution network, efforts to address market conditions, innovation, pricing, after-market performance of underwritings and market reputation to score and select winners.

•Share price can rise by 105%

Access Bank’s share price can rise by about 105 per cent over the next 12 months given the improvements in the bank’s fundamentals and ongoing strategic initiatives which are expected to further leapfrog performance going forward.

An analysts’ report by FBN Capital, the investment banking subsidiary of FBN Holdings, indicated that Access Bank has strong upside potential to reach a share price of N8.30, 104.9 per cent above the bank’s opening price of N4.05 today at the Nigerian Stock Exchange (NSE).

The analysts’ report, signed by Olubunmi Asaolu, a chartered financial analyst, marked up the forecast price for Access Bank based on the bank’s “better-than-expected fourth quarter 2015 results.

“The main drivers behind our earnings upgrade are increased funding income and a reduction to our operating expenses forecasts,” FBN Capital, also known as FBN Quest, stated.

The investment firm said Access Bank’s 2015 performance was well ahead of forecast noting that the strong growth in pre-tax profit was driven by growths in both revenue lines as funding income grew by 23 per cent while non-interest income grew by 45 per cent.

The report noted that in addition to revenue growth, Access Bank also reported a marked fall in loan loss provisions; the provisions charge implies a cost of risk in the quarter of around one per cent.

“Nonetheless, compared with our estimates, the overall picture across the board was very strong. Profit before tax and profit after tax beat our forecasts by 54 per cent and 92 per cent respectively. Both revenue lines surpassed our expectations and loan loss provisions were half of what we had modeled,” FBN Quest stated.

Access Bank recorded a well-rounded performance in 2015 as pre-tax profit rose by 44 per cent to N75.04 billion. Key extracts of the audited report and accounts of Access Bank for the year ended December 31, 2015 showed considerable growth across the key indices. Gross earnings rose by 37.5 per cent from N245.38 billion in 2014 to close at N337.40 billion in 2015. Interest income and non-interest income contributed 62 per cent and 38 per cent respectively to the group top-line. Interest income had grown by 17 per cent N207.8 billion in 2015 as against N176.9 billion in 2014, underlining improved income from lending activities and increased yield on investment securities. Non-interest income jumped by 89 per cent to N129.4 billion as against N68.4 billion, a jump that that was attributed largely to strong gains on foreign exchange trading income, which reflects management’s ability to diversify the bank’s revenue sources.

The bank’s bottom-line showed impressive growth. Operating income rose by 39 per cent to N234.8 billion in 2015 as against N168.4 billion in 2014. Profit before tax grew by 44 per cent from N52.02 billion to N75.04 billion. Profit after tax improved by 53.3 per cent to N65.9 billion in 2015 as against N42.98 billion in 2014. Earnings per share thus improved from N1.85 in 2014 to N2.62 in 2015. Return on average equity (ROAE) improved to 20.4 per cent in 2015 as against 16.5 per cent in 2014.

Balance sheet analysis equally showed resilient and steady growth. Loans and advances grew by a quarter to N1.41 trillion as against N1.12 trillion. Customer deposits closed 2015 at N1.68 trillion, 16 per cent above N1.45 trillion recorded in 2014. Total assets also rose by 23 per cent to N2.59 trillion in 2015 compared with N2.10 trillion in 2014. The bank’s capital adequacy ratio (CAR) improved by 110 basis points to 19.5 per cent in 2015 as against 18.4 per cent in 2014, driven by a successful equity raising during the year.

Against the negative industry trend on assets quality, Access Bank bucked the trend and improved its asset quality as the percentage of non-performing loans to total gross loans improved to 1.7 per cent in 2015 as against 2.2 per cent in 2014.

The board of the bank has recommended payment of a final dividend of N8.68 billion in addition to earlier interim dividend of N7.23 billion, bringing total dividend for the 2015 business year to N15.9 billion.

The breakdown of the dividend recommendation indicates that shareholders will receive a final dividend per share of 30 kobo, in addition to interim dividend per share of 25 kobo, bringing total dividend per share to 55 kobo.

Group managing director, Access Bank Plc, Mr. Herbert Wigwe, said the 2015 performance reinforces the bank’s resolve to generate sustainable returns despite challenging market conditions.

He noted that with a robust risk management framework, the bank diversified business model yielded positive results as it grew the business cautiously and recorded sound prudential ratios.

“In the coming year, we will remain resilient in the execution of our bold strategy for increased growth and profitability. Though market conditions will remain challenging, we will focus on innovation, proactive risk management and data analytics as catalysts for diversifying income streams and enhancing retail expansion, so as to maximize shareholder value in 2016 and beyond,” Wigwe said.

He pointed out that the recent upgrade of the bank’s national scale credit rating to ‘A’ by Fitch Ratings in an extremely difficult environment will enable growth in the market share of its customers’ businesses and solidify its position as a top player in the industry.