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  • 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.

     

  • Addressing the rate of disobedience to court orders

    Addressing the rate of disobedience to court orders

    In many occasions, concerned citizens in Nigeria have expressed worry about the spate of disobedience to court orders in spite of democratic governance.

    They observe that some elements saddled with the responsibility of protecting the law are somewhat found to be abetting disobedience to court orders in some cases.

    Justice Okon Abang of a Federal High Court, Lagos, in his opinion, said “disobedience to court order in the country has become an endemic disease which has eaten deep into the fabric of Nigerian society’’.

    According to him, the situation requires urgent attention to restore sanity in the Nigeria judicial system.

    Corroborating this viewpoint, Mr Femi Falana, Senior Advocate of Nigeria (SAN), recently called for the efforts of all stakeholders at checking the rate of disobedience to court orders.

    He insisted that the Bar has a great role to play in that regard, noting that in the past; it was the responsibility of lawyers to ensure that people complied with court orders.

    Falana recalled that when the late Mr Alao Aka-Bashorun was the president of the Bar, he directed Nigerian lawyers to protest the disobedience to a court order during a military regime.

    “Then, for the first time, Nigerian lawyers went on strike to protest the disobedience to court order; but this day, it has become part of our culture of impunity,’’ he said.

    Sharing similar opinion, Governor Adams Oshiomhole of Edo, challenged members of the Bar to fight against disobedience to court orders.

    He said at the opening ceremony of the 2014/2015 Edo Legal Year recently in Benin that disobedience to court orders constituted a threat to the rule of law.

    “Every lawyer must endeavour to uphold the law and those that live by the court must not be seen to aid and abet disobedience.

    “If senior advocates of Nigeria advise people to disobey court orders, it is a sad thing and if the Bar keeps quiet in the face of such disobedience, then it is a terrible thing for the rule of law.

    “If court bailiffs are assaulted in public view and senior advocates and other learned members of the community keep quiet, it is not the best.

    “This is because those who may not be affected today may be the people to be affected tomorrow, particularly where the rule of law operates on the basis of precedent.

    “The challenge of defending democracy demands that we have not just an independent judiciary, but a courageous judiciary with potent teeth to bite or  smile regardless of those appearing before us,’’ he said.

    Observers, however, note that Oshiomhole’s view represents the recent occurrence in Edo House of Assembly where members of the house refused to obey court order that barred them from entering the legislators’ quarters in Benin.

    They note that disobedience to court order by the members obviously escalated the crisis in the house.

    They recall that the crisis was preceded by the suspension of the Deputy Speaker of the house, Rep. Festus Ebea of All Progressives Congress (APC) and three other members who defected to the Peoples Democratic Party (PDP).

    They also observed that the house leadership secured a Benin High Court order, restraining the defected lawmakers from entering the assembly complex and legislative quarters in Benin but the orders was not obeyed.

    According to them, the fallout of the disobedience is that both parties are still in court, the House of Assembly has two speakers and the lawmakers are divided.

    Citing a similar example, observers recall that in spite of the order of Jos Federal High Court, barring the conduct of the election of the Nigeria Football Association (NFA), the association recently went ahead to conduct the election.

    They note that in disobeying the court order, the Aminu Maigari led faction of the association conducted the election that produced Mr Amaju Pinnick as the NFA chairman.

    Stakeholders insist that such practice is worrisome and can cause anarchy if not checked on time.

    Mr Sunday Ameh, Senior Advocate of Nigeria (SAN), stressed that court judgments should be obeyed always, until they are set aside, saying that “affected parties are under obligation to face the judgment being executed against them.’’

    Also, an Abuja-based lawyer, Mr Terkaa Aodoo, said there was no justification to disobey the orders of court.

    “ In fact, anybody or corporate organisations have no right to disobey court orders no matter how the order was given.

    “If the order was given in error, the only thing to do is to challenge the order in an appeal court to set it aside.

    “But to disobey court order amounts to contempt of court and the court can carry out contempt proceedings against the disobedient person or group.

    “ So, disobeying court order is a very fundamental issue that should not be encouraged in our judicial system,’’ he said.

    Observers, nonetheless, insist that court orders are disobeyed with impunity in connivance with some elements in the judiciary.

    They say that the NBA, as suggested by Falana, should address arbitrary disobedience to court orders.

     

    •Ukoh is of the News Agency of Nigeria (NAN)

  • Global stocks ease over rate scare

    Global equity markets eased on Wednesday on a few poor corporate results and the release of Bank of England minutes that hinted at an early interest rate hike, but minutes from the Federal Reserve showed no desire to bring forward plans to raise rates.

    The Fed said it has been surprised by how quickly the United States (US) labour market is healing yet the recovery has to be more convincing to change its view on when to increase rates.

    Stocks on Wall Street rebounded after the release of the Fed minutes, suggesting investors believe there will be no change in monetary policy, while US Treasuries prices fell.

    “The Fed remains dovish. However, one eye is looking towards improvements in labor markets. Potentially a rate increase might come slightly sooner or the increases might come faster than expected,” said Putri Pascualy, credit strategist For Pacific Alternative Asset Management Company, In Irving, California.

    Wall Street pushed higher, but MSCI’s all-country equity index was 0.04 percent lower. The Dow Jones industrial average rose 68.78 points, or 0.41 percent, to 16,988.37. The S&P 500 gained 5.71 points, or 0.29 percent, to 1,987.31 and the Nasdaq Composite added 3.167 points, or 0.07 percent, to 4,530.681.

    Earlier in Europe, the FTSEurofirst 300 index of leading European shares closed down 0.07 percent at 1,346.02.

    A warning from brewer Carlsberg that profits would fall this year due to deteriorating conditions in Russia rattled European investors.

    A cut in its full-year sales forecast by Lowe’s Companies also unnerved investors, though the world’s No. 2 home improvement products retailer also posted better-than-expected second-quarter results.

    Reuters reported that Sterling and UK bond yields rose after the surprise tilt toward higher British rates, while the U.S. dollar advanced to its highest against the euro since last September.

    The Fed minutes come ahead of Fed Chair Janet Yellen’s widely anticipated address to the annual gathering of central bankers in Jackson Hole, Wyoming, on Friday.

    With US and global stock indexes trading close to all-time highs, investors await a reaffirmation of the accommodative monetary policies that have helped spur a global rally.

    “The next leg up is going to come from what we hear on Friday from Yellen,” said Phil Orlando, chief equity market strategist at Federated Investors in New York. “The market has been a little bit on tenterhooks,” he said.

    The dollar broke through resistance at $1.3300 and last November’s high of $1.3295 per euro to trade as high as $1.3275. It also climbed to a 4-1/2-month high against the yen. It was last up 0.4 percent versus the euro at $1.3266.

  • ITF to cut down unemployment rate by 20%

    The Industrial Training Fund, ITF, has revealed on-going plans to slash the current rate of unemployment in the country which currently stands at about 23.9 per cent to around 3.5 per cent by training two million youths yearly under various strategic and collaborative platforms.

    The agency’s objective was disclosed to the media by its Director General, Dr. Juliet Chukkas Onaeko, in Lagos, where she noted that new strategies have been adopted to help deliver the agency’s mandate of generating an adequate pool of indigenous trained manpower to drive the nation’s economy.

    Onaeko pointed out that a situation where expatriates were invited to take up indigenous job positions because Nigerians lacked the requisite skills for those available jobs has become unacceptable and ITF was determined to bring an end to the negative trend.

    “We will first ascertain the specific gaps in the various sectors of industry to help us achieve 100 per cent job security for trainees. A lot of companies complain that our citizens lack requisite skills to be employed in their establishments we want to train and produce people who can fill these positions and at home and outside the country,” she said.

    According to her, Nigeria with a population of over 160 million basically made up of youths can afford to export professional labour in the soft skills sector after filling the available positions in existing industries in the country, however, for that to happen they must be trained, certified and equipped with relevant industrial and vocational skills.

    “With our universities graduating over one million youths every year, some of whom find it difficult to fit into the soft skills sector where most job opportunities are available, we have decided to provide the platform to further equip them with industry specific skills in collaboration with indigenous firms and international training partners to reduce the rate of unemployment to 3.5 per cent from where it is currently,” she said.

  • ‘No wage rise until jobless rate falls to 5%’

    The members of the Monetary Policy Committee voted unanimously to hold interest rates at 0.5 per cent.

    Average wages may not rise until the jobless rate has fallen to five per cent, a Bank of England policymaker has suggested.

    Martin Weale said there may be more spare capacity in the economy than policymakers had previously estimated.

    If so, it means employers have room to keep hiring for some time before they have to increase wages to attract scarce workers.

    He said low wage growth could also keep interest rates at 0.5 per cent for longer than currently expected.

    But he added policymakers should start to raise interest rates before any sustained rise in real wages occurred.

    In a speech to business leaders at a Confederation of British Industry (CBI) conference in Northern Ireland Dr Weale said for every one percentage point that unemployment was “above its equilibrium,” quarterly pay growth was likely to be 0.3 per cent lower “than it would otherwise be”.

    He added: “If I put all of the weakness in wages over the past year down to the unemployment gap being larger than we currently believe, this points to extra spare capacity of over half a per cent of GDP.

    “This is consistent with a medium-term unemployment rate closer to five per cent than our current range of six per cent to 6.5 per cent (the Bank’s current consensus estimate of the point at which employers will have trouble recruiting suitable people).”

    In its February quarterly inflation report the Bank of England estimated there was between one per cent and 1.5 per cent of spare capacity in the UK economy, but Dr Weale’s remarks suggest that could be as high as two per cent.

  • How the Super Eagles rate

    How the Super Eagles rate

    MTNFOOTBALL.COM rates the performances of the Super Eagles in Saturday’s decisive 2013 Africa Cup of Nations qualifier against Liberia in Calabar:

    6 Vincent Enyeama

    The Nigeria stand-in skipper was not so busy but when called to duty by Sekou Oliseh, he dived at full stretch to touch the ball to safety in the 34th minute. He also cut out some moves by Liberians, one of which earned the Liberia skipper Gebro the marching order for diving.

    6 Efe Ambrose

    Getting the opener as early as the first minute to unsettle Liberia was a great one from the Celtic man. A few glitches here and there, but he managed to often stop the dangerous Oliseh from causing any serious damage. His tactical awareness meant his lack of pace did not really show at right back.

    7 Elderson Echiejile

    The Sporting Braga left back did well to curtail the Liberians. He was solid defensively, helped to organise the back four in the absence of skipper Joseph Yobo and attacked more in the second period when victory was assured.

    8 Mikel Obi

    A top-class performance from the Chelsea midfielder on his return to the national team after almost a year’s absence. He crowned a great individual display with a goal and an assist. He is back to stay, hopefully.

    7 Godfrey Oboabona

    The Sunshine Stars skipper formed a good partnership with fellow NPL star Egwuekwe in the heart of the defence in the absence of Yobo. He did creditably well to ensure Yobo was not sorely missed especially defensive wise.

    7 Azubuike Egwuekwe

    The second home-based player in the starting XI was superb in his marking and struck a good understanding with Oboabona. He made life difficult for Oliseh in particular. It is little wonder that he has remained a fixture of Keshi’s Eagles since December.9 Ahmed Musa

    A man-of-the-match performance for the CSKA Moscow man playing strangely on the left side of attack. His pace was too much for the Lone Star defenders to deal with and it was from one of the fouls against him that Victor Moses delivered the free kick for Ambrose to head Nigeria in front. He did well to deliver some good crosses and the goal he scored was top-draw. He could now throw a big 20th birthday party.

    6 Nosa Igiebor

    He did enough, threatening the Liberia goal on occasions but his finishing has to be better at this level.

    8 Victor Moses

    Arguably his best showing in a Nigeria shirt by the Chelsea man and he was rewarded with a brace and an assist. He has gradually integrated into the Eagles and will be handful for defences at South Africa 2013 with his dribbles and sharpness in front of goal.

    7 Obiora Nwankwo

    Again not spectacular but he did what was expected of him, combining well with Mikel in the heart of the midfield to ensure it did not collapse as was the case in Monrovia last month.

    7 Emmanuel Emenike

    His power was too much for Liberia to handle, though he did not get on the score board, he caused his markers all sorts of problems and delivered the assist for Ahmed Musa’s goal.

    7 Ikechukwu Uche

    He came off the bench for Emmanuel Emenike to score a goal and would have scored more. He will always be dangerous in a green-white-green shirt even though he now features in the Spanish lower league.

    4 Brown Ideye

    A late second-half substitute was denied a goal from point-blank range by Nathaniel Sherman. He needs more time to show what he is really capable of.

    4 Ogenyi Onazi

    The Lazio youngster saw about 10 minutes of action. He was busy from the moment he came on and even forced the Liberia goalkeeper to make a big save. Worth another look-in.

    How they played: 4-3-3 Eagles starting XI: Vincent Enyeama – Efe Ambrose, Godfrey Oboabona, Azubuike Egwuekwe, Elderson Echiejile – Mikel Obi, Nosa Igiebor (Brown Ideye 77), Obiora Nwankwo (Ogenyi Onazi 82) – Ahmed Musa, Emmanuel Emenike (Ike Uche 53), Victor Moses

    Unused subs: Joel Obi, Umar Zango, Austin Ejide, Ejike Uzoenyi