The Nation Newspaper

Tag: payout

  • ‘Why FAAC payout dropped to N345b’

    •IMF seeks VAT review

    Analysts at FBN Quest, an investment and research firm,have explained why the monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government in March from February revenues declined to N345 billion.

    A report by the firm said the decline from N370 billion the previous month was due to oil and gas pipeline vandalisation. It said the payout for last month fell below the projected pro rata monthly average of N477 billion.

    The report titled: ‘Another low payout by FAAC’ released at the weekend, blamed the vandalisation at Escravos terminal and force majeure declared at Brass terminal, which led to the shutdown of pipelines at other terminals for repairs and maintenance for the revenue shortfall.

    Other reasons adduced  are the substantial drop in revenue from oil and gas royalty, companies’ income tax and import duty.

    According to the 2016 to 2018 expenditure framework, the net distribution from the federation account and the Value Added Tax (VAT) pool combined is projected at N5.72 billion this year.

    However, the Federal Ministry of Finance announced after the FAAC meeting that the balance in the excess crude account increased very marginally to $2.259 billion from $2.258 previously recorded.

    The crude oil price averaged $34.2/barrel in February, compared with $33.7/barrel the previous month.

    “There are initiatives that are currently in the pipeline to boost non-oil revenue collection. Lagos, the model state, recently announced plans to extend its tax remittance to include domestic workers and artisans. The Lagos State Internal Revenue Service is currently working on how to engage the informal sector to ensure voluntary compliance,” it said.

    Meanwhile, the International Monetary Fund (IMF) at the weekend cut its growth forecast for Nigeria as the economy faces “substantial challenges” from low crude prices.

    In its yearly review of Nigeria’s economic situation by the Executive Board of the International Monetary Fund (IMF), concluded the Article IV Consultation with Nigeria, the Fund said gross domestic product growth would slow to 2.3 per cent in 2016 from an estimated 2.7 per cent in 2015. In February, after IMF officials visited the country, the Fund had forecast 3.2 per cent growth for Nigeria in 2016.

    They urged a gradual increase in the Value Added Tax (VAT) rate, further improvements in revenue administration, and a broadening of the tax base.

    Discussions between Nigeria and the World Bank are continuing on a possible loan or credit facility that is tied to policy reforms in the West African oil exporter, a spokesman for the Washington-based multilateral lender said.

  • PenCom advises retirees against huge lump sum payout

    The National Pension Commission (PenCom) have advised retirees against huge withdrawal as lump sum payout after retirement from their Retirement Benefits Account balance to avoid little amount as monthly pension.

    PenCom Head, Research & Corporate Strategy PenCom, Farouk Aminu gave the advice while speaking with journalists in Lagos.

    He noted that many retirees have burnt their fingers with such decisions, adding that the quest to withdraw fabulous amounts at retirement, leaving little in the account is responsible for the little monthly pension some retirees receive.

    He called on retirees to take less lump-sum payout if they don’t have need for much financial needs, stressing that less lump-sum will help them keep more money in their accounts.

    “People should take less lump sum unless they need it. If they do not need it, they should not take it. It is important people really understand this. The more lump sum you take the less money you leave in your RSA and the lower your pension.

    “People take much of their money and blow it and expect the little they left to perform wonders. People should leave a lot of money behind so that they can have huge pension,” he said.

    He urge retirees to take less lump-sum payout if they don’t have need for it, adding that less lump-sum will help them keep more money in the Retirement Savings Account (RSA).

     

     

    “You must assume responsibility for how the money is invested and how much you can afford to spend each month. One danger with a lump sum is that you may be tempted to spend too much today, leaving you short of money down the line. By choosing a steady monthly payout, you’ll avoid the temptation to run through your pension stash.

  • Banks may cut dividend payout rate

    Banks may cut dividend payout rate

    Banks may again cut their dividend payout rate in the year as  banks seek to manage credit risks and liquidity amid constraints orchestrated by the policies of the Central Bank of Nigeria (CBN).

    The latest update on the banking sector by the global finance and investment firm, Exotix, indicated that banks may cut dividend payout rate for the second consecutive year this year. Exotix has significant imprints in Africa. It coordinates its global operations through five major offices in London, New York, Lagos, Dubai and Nairobi.

    According to Exotix, it is expected that Nigerian banks would cut their average dividend payout ratio to 26.3 per cent in the 2015 financial year as against an estimated payout rate of 32.5 per cent for the 2014 financial year and 43 per cent for 2013.

    The report noted that some banks may have to raise additional capital to sustain minimum regulatory capital adequacy and liquidity ratios.

    The report outlined that most banks would likely de-risk their balance sheets this year by reducing their loan to deposit ratios.

    “Although the primary motivation for the rebalancing is to improve balance sheet liquidity and take advantage of rising government bond yields, we believe it should have the added benefit of reducing banks’ risk weighted assets to total assets ratios and thus reduce the pressure on capital adequacy. We estimate the average risk-weighted assets to total asset ratio could decline to 66.9 per cent from 71.6 per cent as the gross loan to deposit ratio reduces by 440 basis points year-on-year to 59.6 per cent,” the report stated.

    Exotix added that the lower proportion of higher risk-weighted assets and greater earnings retention should enable the banks to sustain an average capital adequacy ratio of 19.9 per cent.

    The report outlined that the profitability in the Nigerian banking industry would be driven by increased asset growth and better margins on bonds.

    The report noted that while loan growth may decline in 2015, this will be accompanied by banks reducing their loan to deposit ratios in order to reduce risk exposure as well as improve balance sheet liquidity.

    “We, therefore, estimate deposit growth will accelerate to 19.8 per cent in 2015 from 8.4 per cent in 2014, with banks investing a greater proportion of their deposits in government securities. The stronger deposit growth should also translate to asset growth accelerating to 16.9 per cent in 2015 from 12.0 per cent in 2014,” Exotix stated.

    According to the report, banks’ net interest margins (NIMs) have persistently declined over the past three years from an average of 6.9 per cent in 2011 to an estimated 5.6 per cent in 2014 due to decline in asset yields and increase in funding costs. The decline in asset yields was driven by decline in government bond yields on the back of declining inflation expectations, increase in lower-yielding foreign currency lending and a significant increase in cash reserve requirements resulting in increased asset allocation towards lower-yielding assets. Also, the increase in funding costs is attributable primarily to tightening system liquidity on the back of a significant increase in CRR.

    The report, however, expected an upswing in assets yield this year. According to the report, higher asset yields will be driven by three factors, including banks increasing lending rates on their loan portfolio by 100 to 200 basis points following the 100 basis points increase in monetary policy rate in November, last year, increasing yields on government securities and conversion of low-yielding foreign-denominated loans to naira loans.

     

  • Allianz raises payout, confirms target amid Pimco trouble

    Allianz raises payout, confirms target amid Pimco trouble

    Allianz SE has pledged to pay a higher share of profit to shareholders and confirmed its full-year profit target as the Pimco asset management unit struggles to contain outflows following the departure of Bill Gross.

    “Starting with the financial year 2014, the intention is to propose an increased regular payout to Allianz shareholders of 50 percent of net income,” the Munich-based company said in a statement. That compares with a pay-out ratio of 40 per cent at Europe’s biggest insurer in the past.

    Investors have pulled billions of dollars from Pacific Investment Management Company’s funds since the September 26 announcement that Gross, who was chief investment officer and co-founded Pimco more than four decades ago, was joining Denver-based Janus Capital Group Inc.

    Pimco, based in Newport Beach, California, suffered 49.2 billion euros ($60.9 billion) in client redemptions in the third quarter, Allianz said. Most of the outflows occurred in the last week of September.

    The asset manager said clients pulled $27.5 billion in October from its biggest mutual fund. “Net outflow development after the resignation of Bill Gross is within our expectation,” Chief Financial Officer Dieter Wemmer said in the statement. “Our unchanged outlook for the full year 2014 and the newly established multi-year dividend policy are visible demonstration of management confidence about the future of Allianz.”

    Allianz’s net income climbed 11 per cent to 1.61 billion euros in the third quarter. That compared with an average estimate of 1.57 billion euros in a Bloomberg survey of 13 analysts. Operating profit at the asset-management unit, which includes Pimco and Allianz Global Investors, fell five per cent to 694 million euros.

    The insurer had been expected to pay 6.20 euros a share for this year, according to the Bloomberg Dividend Forecast. Allianz has promised investors to update them on payouts before year-end. It paid 5.30 euros a share as dividend for 2013, or 40 percent of profit.

    Allianz said it will “evaluate and pay out the unused budget earmarked for external growth every three years.” The first such evaluation will take place at the end of 2016. Payouts won’t be allowed to push the insurer’s Solvency II ratio, a measure of financial stability, below 160 per cent, Allianz said.

    Allianz shares have declined 2.8 percent this year, valuing the company at about 58 billion euros. The Bloomberg Europe 500 Insurance Index has risen 4.3 percent during the same period.