The Nation Newspaper

Tag: RenCap

  • RenCap: Banks not supporting agric

    Balance sheets of banks are not being deployed to support the real sector of the economy, especially agriculture, Renaissance Capital (RenCap), has said.

    The investment and research firm, said agriculture is among the least contributors to the banks’balance sheet, while major contributors to the industry loan book are the manufacturing, telecoms and general commerce sectors. The report highlighted that agriculture accounts for only one to five per cent of credit, yet it accounts for 40 per cent of Nigeria’s Gross Domestic Product (GDP).

    The report tagged: ‘Nigerian banks – Loan books under the spotlight’, said the lesnders’ balance sheets bear little resemblance to the real economy.

    It said concentration risk remains high, although there are material differences between the banks. “We measure concentration as the weighting of the top four sectors in the total loan book. On this score, Zenith Bank has the lowest concentration, while Access Bank has the highest,” it said.

    RenCap said non-performing loans (NPL) ratios have fallen significantly post the Asset Management Corporation of Nigeria (AMCON) clean-up in 2010 and 2011. As a result, the firm raised fears that the current trend of below-average impairment charges could persist throughout 2013.

    This, it said, will boost earnings and returns considerably above their long-term averages in the short run, adding that the impairment charges may begin to normalise in 2014.

    RenCap, however, placed buy on Zenith Bank, GTBank while it highlighted that in tier 1 banks, Access Bank has been a recent laggard in terms of stock performance, but still placed a buy rating on the rating. Within the tier two banks, Skye Bank was picked as a preferred stock, and also got a buy rating.

     

     

     

     

     

  • Telecos base stations to hit 25,000, says RenCap

    Telecos base stations to hit 25,000, says RenCap

    Renaissance Capital has predicted a rise in the Base Transreceiver Stations (TBS) of Nigerian telecom operators from 22,000 to 25,000 by December 2012.

    In a report conducted by Renaissance Capital and titled: ‘Halfway through 2012: Time to reflect,’ the firm said the annual cost of buying diesel for running the base stations of the telecom operators would increase from its current N178billion when the telecom operators create an additional 3,000 base stations by December.

    It said: “Recent publications have made references to the N178billion spent on diesel annually by the Mobile Network Operators (MNOs) in Nigeria.

    We believe such a figure is too high if the reference is to diesel costs only, although we agree with reference to the N22, 400 required to maintain a diesel generator per site on a daily basis, which implies that $4,200 per base transreciever stations per month.

    The report indicated that the telecom companies would spend more money in maintaining the base stations, giving the current price of diesel and the increase in the number of base stations, adding that the telecom operators have stepped up investment levels in order to address problems such as network congestion and poor service quality.

    “ We are aware of major investment plans by all three GSM competitors ( for now we ignore M-Tel), and we expect the number of base transceiver stations to approach 25,000 by the end of 2012. We believe Glo will roll out over 2,000 BTS over the next year or so. In December 2011, Airtel announced its investment of more than N93billion ($600million) on the expansion of network capacity and the improvement of quality of service during 2011, in Nigeria.

    “ The MNO constructed more than 500 sites in 2011, and planned to finish 1,000 sites by March, 2012 when the total investment was due to reach $1billion,” it added.

    According to the report, Etisalat will increase its base stations to 5,000 in 2013 to boost its operations.

    “ Based on our analysis, Etisalat has 3,000 base stations by the end of 2011. As part of its strategy to boost its operations, Etisalat plans to build 1,000 more base stations in 2012 and another 1,000 in 2013. This will bring its total number of base stations to about 5,000 by the end of 2013,” the report added.