The Nation Newspaper

Tag: T-Bills

  • CBN repays N293b T-Bills

    CBN repays N293b T-Bills

    • Interbank rate falls

    The overnight naira interbank lending rate fell to about 15 per cent on Friday from a peak of 35 per cent last Wednesday, after the Central Bank of Nigeria (CBN) injected N293 billion from matured treasury bills (T-Bills) into the banking system, traders said.

    The CBN repaid the matured bills to some commercial banks on Thursday, increasing liquidity and forcing down borrowing costs among banks.

    The cost of overnight borrowing among banks had reached 35 per cent on Wednesday after cash dried up. Some commercial lenders resorted to borrowing at the CBN discount window to help meet their immediate obligations, Reuters report said.

    The country has been selling dollars in the interbank forex market to support the ailing naira, and selling T-Bills to curb speculation against the local currency.

    The CBN sold N139.42 billion of T-Bills in open market operations on Thursday at 18.5 per cent, to reduce system liquidity. But the market cash balance remained up at N51.65 billion on Friday against an N87 billion deficit on Wednesday.

    “We expect the rate to be trading around the 15 to 18 per cent level next week if the CBN did not sell fresh treasury bills to mop up cash from the system,” one dealer said.

    The overnight lending rate had closed last week at 16 percent but gradually climbed to 35 percent on Wednesday, then eased marginally to 20 percent on Thursday after the cash from matured treasury bills reached the system. Nigeria’s financial market will be closed for a public holiday on Monday and Tuesday and will reopen on Wednesday.

    The T-bills’ maturities range between three months and a year and would be raised today, according to the CBN. T-bills are marketable short-term money market securities that serve the purpose of raising money for the government and also help in monetary policy management of the CBN.

    The main investors in government securities are mainly pension funds and commercial banks which control more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions.

    Yields on fixed income securities have been rising in recent months with the CBN mopping up naira liquidity to try to lure back foreign investors who sold naira assets following the plunge in the price of oil, Nigeria’s economic mainstay.

  • CBN to raise N213b in T-Bills at higher yields

    CBN to raise N213b in T-Bills at higher yields

    The Central Bank of Nigeria (CBN) plans to offer N212.85 billion ($675 million) in Treasury bills maturing between 91-days and one-year on August 31.

    The bank said it would sell N45.85 billion worth of the 91-day bills, N62 billion of the 182-day paper and N105 billion of the 1-year debt. Payment for the purchase will be effected on Thursday, the bank said in a public notice.

    The T-bills’ maturities range between three months and a year and would be raised today, according to the CBN. T-bills are marketable short-term money market securities that serve the purpose of raising money for the government and also help in monetary policy management of the CBN.

    The CBN issues treasury bills to raise cash to fund the government budget deficit, help manage banking system liquidity and curb rising inflation.

    The CBN had on August 3, raised N245.18 billion ($773.44 million) worth of T-bills to settle short-term obligations. The CBN issued N45.18 billion in three-month debt, N80 billion of six-month paper and N120 billion of one year bills in a Dutch auction, traders said. Indicative rates for the auction are 16 per cent for three-months, 18 per cent for six-months and 18.5 per cent for one-year bills. The auction’s results will be published the day after the sale.

    The main investors in government securities are mainly pension funds and commercial banks which control more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions.

    Yields on fixed income securities have been rising in recent months with the CBN mopping up naira liquidity to try to lure back foreign investors who sold naira assets following the plunge in the price of oil, Nigeria’s economic mainstay.

    The bank lifted interest rates by 200 basis points last week to 14 per cent to help fight inflation, which hit a 10-year high of 16.5 per cent in June.

  • CBN to raise N245b in T-bills at higher yields

    CBN to raise N245b in T-bills at higher yields

    The Central Bank of Nigeria (CBN) is planning to raise N245.18 billion ($773.44 million) worth of Treasury bills (T-bills) to settle short-term obligations.

    The T-bills’ maturities range between three months and a year and would be raised today, according to the CBN.

    T-bills are marketable short-term money market securities that serve the purpose of raising money for the government and also help in monetary policy management of the CBN.

    The CBN plans to issue N45.18 billion in three-month debt, N80 billion of six-month paper and N120 billion of one year bills in a Dutch auction, traders said.

    Indicative rates for the auction are 16 per cent for three-months, 18 per cent for six-months and 18.5 per cent for one-year bills. The auction’s results will be published the day after the sale.

    The main investors in government securities are mainly pension funds and commercial banks which control more than 60 per cent of the market, followed by insurance funds and a few micro-finance institutions.

    Yields on fixed income securities have been rising in recent months with the CBN mopping up naira liquidity to try to lure back foreign investors who sold naira assets following the plunge in the price of oil, Nigeria’s economic mainstay.

    The bank lifted interest rates by 200 basis points last week to 14 per cent to help fight inflation, which hit a 10-year high of 16.5 per cent in June.

    Also, the naira yesterday fell further in the parallel market to N384 to dollar from N382 on Monday as dollar scarcity continues to worsen.

    However, in the official market, naira closed at N310.50 against the dollar, firmer than previous close of 315.50, Thomson Reuters data showed. The local currency traded $23 million at 280.50 just after the interbank market opened at N316.50.

    One trader attributed the N280.50 rate to a dollar resale on the spot market of outright currency forwards sold by the CBN.

  • Interbank rates ease on N183b liquidity boost from T-bills

    Interbank rates ease on N183b liquidity boost from T-bills

    The interbank lending rates eased to 14 per cent last Friday from 40 per cent  after injections of liquidity from N183 billion matured Treasury bills and refunds by the Central Bank of Nigeria (CBN) cash set aside by banks to buy dollars.

    The cost of borrowing among banks jumped to 70 per cent during the week on tight liquidity after the Central Bank tightened liquidity to support the naira. The apex bank last week directed banks to pay for their dollar purchases 48 hours in advance, draining the market of liquidity.

    Reuters quoted traders saying about N183 billion ($920 million) in matured Treasury bills was injected into the money market by the apex bank causing rates to fall.

    Also, more funds from interest payment on bonds and refunds to banks from the CBN for their forex cash provision also raised liquidity, traders said. “Interbank lending rates swung as a result of tight liquidity arising from the provision for forex purchases and we expect the cycle to continue this week,” one dealer said.

    Traders said banks’ cash balances with the CBN stood at about 80 billion naira compared with a 25 billion naira cash surplus last week. The secured Open Buy Back (OBB) and overnight placement closed at 14 per cent from 40 per cent apiece for  OBB and overnight placement last week.

    “We expect  rates to trend up early this week on possible cash withdrawal by NNPC (state-owned energy firm) and could trade around the 30 per cent level until inflows of budgetary allocations to government agencies come in,” another trader said.

    Nigeria, Africa’s top crude exporter, distributes revenue from oil among its three tiers of government every month, injecting liquidity into the money markets.

    Meanwhile, the CBN Governor, Godwin Emefiele said he’s on a mission to transform the economy. That’s not what investors are seeking.

    While the collapse of oil revenue in Africa’s biggest crude producer has limited the bank’s ability to prop up the currency, Emefiele has resisted pressure to devalue the naira. Instead, he has imposed foreign-exchange restrictions on imports, risking growth in the continent’s largest economy as retailers and manufacturers struggle to source the funds needed to run their businesses.

    Emefiele has deflected criticism of his performance 14 months into the job by highlighting the CBN’s need for an expanded mandate on monetary policy. He wants the bank to play a more developmental role, including creating jobs and facilitating loans to “productive” industries. Investors say he’s neglecting his main job.

    “The tragedy is that over the past few years, the CBN built up credibility for reforming, for inflation targeting, establishing itself as one of the more orthodox central banks in Africa,” Holger Siebrecht, an associate portfolio manager at Acadian Asset Management LLC, said by phone from Boston. “Now it is at risk of gambling this reputation away.”

     

     

  • Interbank rates fall on N260b T-Bills’ refund

    •Bonds sell-off likely

    The interbank lending rate, last week, dropped to an average of 4.5 per cent from six per cent, as the impact of the N260 billion refunds in matured Treasury Bills hit the market.

    The cash high flow in the market was also boosted by net credit in Central Bank of Nigeria (CBN’s) cash reserves of about N45 billion which was ploughed back into the banking into the system based on the Cash Reserve Ratio (CRR) policy.

    The interbank rate is the lowest since the CBN raised its benchmark interest rate to 13 per cent last December.

    “Beside the mopping up of about N172.8 billion by the central bank through open market operation bills,  the injection of large matured Treasury bills helped counter the impact of the mop up, boost liquidity in the market and forced down the cost of borrowing in the interbank,” one dealer said.

    Traders said many banks were not taking money from the interbank market because most commercial lenders have cash to support their transactions. The banks’ credit balance with the central bank rose to N390 billion from N324 billion balance last week, traders said.

    “We see lending rates inching up gradually next week as liquidity thins out because of the likely effect of primary Treasury bills auction on Wednesday and outflows to other transactions,” another dealer said.

    Meanwhile, more investors could exit Nigeria’s bond market on concerns that new foreign exchange policy would hinder capital repatriation.

    The CBN restricted access to forex by importers in its bid to protect its reserves, but dealers say the measure is threatening the future of Nigeria’s bonds on JP Morgan government Bond Index. The rules curb access to forex to fund purchase of foreign shares and bonds, among others.

    Yields rose across maturities last week, spurred by the sell-off by some offshore investors cutting their risk in emerging markets and lack of interest from local pensions. “We have seen a number of offshore investors exiting their positions in the debt market in reaction to the new central bank foreign exchange measures and this trend will continue until we have a clear policy direction from the new government,” one dealer said.

    Traders said some banks are also exiting their positions in the long tenor debt market and switching to short-dated paper because of the fore control measures by the central bank. JP Morgan has threatened to eject Nigeria from its Government Bond Index (GBI-EM) by the end of the year unless it restores liquidity to currency markets in a way that allows foreign investors tracking the benchmark to conduct transactions with minimal hurdles.

    The yield on the benchmark debt maturing in 2024 rose to 14.87 per cent on Friday from 14.28 per cent a week ago. The 2022 paper yield rose to 14.82 per cent against 14.48 per cent, while the 2016 debt advanced to 14.61 per cent from 14.39 per cent last week.

    Subscription rates for Kenyan Treasury bills are expected to slip next week as banks put their money into more lucrative short-term paper, including term auction deposits (TADs). The Central Bank will sell Treasury bills of all maturities worth a total of 8 billion shillings at two separate auctions on Wednesday and Thursday.

    “I think the 91-day (yield) will stay where it is,” said Mathangani Kariuki of Kestrel Capital.

    “Subscriptions will be relatively low. Most banks will be looking at the term auction deposits rather than the Treasury bills.”

     

  • CBN sells N167b T-Bills, yields fall

    CBN sells N167b T-Bills, yields fall

    The Central Bank of Nigeria (CBN) said it sold a total of N167 billion of Treasury Bills (T-Bills), less than the N447.81 billion worth of bids submitted by investors.

    It said bids at last week’s auction stood at N318.58 billion. The apex bank sold N33.87 billion worth of the 91-day note at 10.79 per cent, broadly flat against the 10.8 per cent fetched at the previous auction.

    The 182-day bond worth N50.27 billion was sold at 14.7 per cent, against 14.85 per cent previously, the CBN added.

    The T-Bill’s yields fell across the board during the auction, compared with a previous sale on March 4, the CBN said.

    The bank said a total of N83 billion worth of the 1-year note attracted 15.35 per cent compared with 15.89 per cent at the previous auction.

    Meanwhile, the Federal Government’s revenues fell two per cent to N401.5 billion in February, from N410 billion in January, on lower oil, gas and other revenues, the accountant general said yesterday.

    The excess crude oil savings account remains unchanged at $2.06 billion, Jonah Otunla said. The decline in oil price and a fall in the price of natural gas, as well as lower non-oil revenues in February contributed to the decline, he said.

    “The persistent shut down and shut in of trunks and pipelines at various terminals continued to impact negatively on the revenue performance. Nigeria will distribute N522 billion to its three tiers of government — federal, state and local — for the month of February, including revenues, cash from vat and gains on the exchange rate,” Otunla said.

  • Foreign investment in FGN Bonds, T-Bills hits $11.6b

    Foreign investment in FGN Bonds, T-Bills hits $11.6b

    •Investors to closely watch CBN succession plans

    Foreign investors have a combined $11.6 billion stake in Federal Government of Nigeria (FGN) bonds and Treasury Bills (T-Bills), Razia Khan, Head African Research at Standard Chartered Bank, has said.

    In a report released at the weekend, she said the five-year term of Central Bank of Nigeria (CBN) Governor Sanusi Lamido will end in June 2014 and that the CBN boss was seen as the architect of reforms that stabilised Nigeria’s banking sector.

    Sanusi, she said, removed the minimum one-year holding period for offshore investors in FGN bonds, and a more credible anti-inflation policy with a commitment to foreign exchange stability.

    Khan said given Sanusi’s close identification with factors that contributed to Nigeria’s 2012 Government Bond Index-Emerging Markets (GBI-EM) index inclusion, investors will closely watch CBN succession plans.

    She said the 2014 budget was not presented in November 2013, the typical timeframe. This, according to her, was ostensibly because of disagreement over the benchmark oil price. “The contentious political backdrop raises the risk that no budget will be passed by end-March 2014 , the deadline for approving the budget. In addition, the still-ambitious oil output assumption (2.39mmbd versus 2.53mmbd in 2013) is likely to require further augmentation of budget revenue using Excess Crude Account (ECA) proceeds,” she said.

    According to her, with ECA savings thought to have declined to close to $3.3 billion, this raises upside risks to borrowing projections. also, given revenue constraints, the capital expenditure budget will be cut according to the Medium Term Expenditure Framework, with the share of recurrent expenditure set to increase to 74 per cent. While the framework foresees a reduction in spending to N4.5 trillion in 2014 from N5 trillion in 2013, the rise of a stronger political opposition is likely to result in pressure for increased spending.

  • Interbank rate falls over N320b T-Bills’ refund

    Interbank rate falls over N320b T-Bills’ refund

    The interbank rate last week fell by 570 basis points to 13 per cent. This was caused by improved market liquidity from treasury bills (T-Bills) and bonds repayments worth N320 billion.

    The rate had risen following Central Bank of Nigeria’s hike of Cash Reserve Requirement (CRR) on public sector deposit from per 12 per cent to 50 per cent. The policy had quarantined banks’N520 billion with the CBN, which constitutes about 38 per cent of estimated N2.6 trillion public sector deposits in the system.

    The fall in call/overnight and seven-day money market rates, which stood at 13 per cent and 13.2 per cent respectively, supports the development. The three-month Nigeria Interbank Offered Rate (NIBOR) also traded on 14.58 per cent.

    The interbank secured lending (Open Buy Back) equally fell by 521 basis points to 12.6 per cent for commercial banks and 13.4 per cent for discount houses.

    The rate decline also impacted negatively on the naira, as it weakened 0.3 per cent against the dollar in the Inter-bank and has lost 3.6 per cent of its value year-to-date. The naira closed the week at N161.75 to a dollar. In addition to strong dollar demand, investors’ growing concerns on short term outlook continue to adversely affect the performance of the naira.

    Currency Analyst at Ecobank Nigeria, Olakunle Ezun, said though the naira remains under pressure due to structural imbalance between dollar supply and demand, the CBN’s liquidity management efforts and robust foreign exchange reserves of $46.9 billion will continue to support the currency.

    Money laundering compliance

    THE Committee of Chief Compliance Officers in Nigeria (CCCOBIN) has asked banks to provide adequate resources and empowerment for Chief Compliance Officers (CCOs) involved in money laundering control. This, they said, will ensure that Nigeria’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) risks are well managed.

    CCCOBIN Chairman Pattison Boleigha said during a meeting in Lagos that bank officers involved in driving the implementation of the money laundering laws and regulations need to be protected. He said there should be penalties against non-compliant staff.

    He said banks are already showing commitment to ensuring that the sector received positive response from Financial Action Task Force (FATF) during their next review on the country. Boleigha said there is need for banks to strengthen their processes and ensure that issues identified by FATF are addressed by their management and staff.

     

    NDIC seeks help for women

     

    The Nigeria Deposit Insurance Corporation (NDIC) called for improved roles for women in the workplace. NDIC Chief Executive Officer Umaru Ibrahim disclosed this at the corporation’s first management parley with its female staff.

    The interaction which has as theme: “It is Possible,” was held at the National Centre for Women Development, Abuja.

    Ibrahim said contemporary organisations and governments across the world are beginning to situate the importance of women in the achievement of their set objectives. He said that the era of seeing women as home-makers was fast giving way globally to the appreciation of their contributions and top positions being occupied by them in critical sectors of the economy both locally and internationally.

    He acknowledged the critical roles of its female staff in the achievement of NDIC’s objective as a risk minimiser with broad mandate of deposit guarantee, bank supervision distress resolution and bank liquidation.

     

    D-8

    THE Secretariat of Developing Eight countries (D8), has commended the efforts of the Central Bank of Nigeria Governor, Sanusi Lamido Sanusi, for his efforts in promoting the group. They said Sanusi, who received an award from the group, has ensured that members share and benefit from the experiences of respective countries.

    Presenting the award, the Secretary General of the D8 Dr. Sayed Ali Mohammad Mousavi noted that such efforts have assisted member countries in harnessing financial and economic opportunities, which is the objective of the cooperation among the Central Banks.

    At the ceremony were Nigeria’s Permanent Representative at the D8 Mission in Istanbul, Turkey, Ambassador Ibukun Olatidoye; Director, Multilateral Economic Affairs Division, Ministry of Foreign Affairs, Ambassador Hussein Abdullahi; Director, Monetary Policy Department of the CBN, Mr. Moses Tule, among others.

     

    Pension

     

    STANBIC IBTC Pension Managers, a member of Stanbic IBTC Holdings deployed an innovative mobile office to serve its existing and prospective customers. At the launch of the Stanbic IBTC Pension mobile office in Lagos, the firm said the move is in line with its commitment to ensure that clients experience excellent and convenient service at all times.

    The mobile office sited on a bus, has been deployed in Lagos and will be subsequently deployed in other cities, and will enhance access to customers. Head of Service, Lagos State Civil Service Commission, Mr. Adesegun Ogunlewe, represented by Executive Director, Technical, Lagos State Pension Commission, Mrs. Folashade Onanuga performed the unveiling ceremony.

    Chief Executive Officer Stanbic IBTC Pension Managers Dr. Demola Sogunle said the growing visibility will demystify the pensions subject and encourage more Nigerians to subscribe to the contributory pension scheme, thereby enhancing financial inclusion.

    “We believe that this initiative which speaks of convenience and accessibility is one of our key steps towards building a legacy of exceptional service delivery where the customer is the focal point of all our activities. This initiative will bring pension service to the doorsteps of our customers and prospective customers alike,” he said.

    MasterCard

    THE Central Bank of Nigeria (CBN) moderated cashless banking initiative will be boosted by planned issuance of 13 million cards by MasterCard, for the nation’s e-payment market.

    Ann Cairns, President of international markets for MasterCard told Bloomberg that the firm is working with Nigerian government on the issuance of the cards, which will also act as identity documents.

    Already, MasterCard, the second-biggest United States payments network, has distributed 10 million South African debit cards that replace cash for social grant recipients as it boosts market share across Africa’s fastest-growing economies.

    The company is also expanding in Angola and Mozambique and working with local partners such as Kenya’s Equity Bank Limited for growth, she said. MasterCard is counting on the continent’s expansion and rising levels of wealth to help it distribute financial products to the more than 200 million people in Africa still without access to banking services, according to McKinsey & Co.

     

    Bank to bank report

     

    Wema Bank Plc, which recently raised N40 billion ($247.4 million) for expansion across the country, said it is seeking an additional $200 million over the next two years to fund its loan book.

    “The sum of $100 million is planned to be raised in the first quarter of next year and the balance by 2015, when we would have improved on our return on equity. We’re looking at several options including bond, loan and debenture for funds,” Chief Financial Officer Tunde Mabawonku said.

    Wema Bank, which operates mainly in western Nigeria and the capital, Abuja, plans to seek regulatory approval for a national banking licence this year allowing it to operate in Nigeria’s six regions, he said.

    The lender plans to open an additional 20 branches in Africa’s second biggest economy to increase the number to 149, Mabawonku said. ‘Our loan book is planned to increase by 20 per cent this year and 60 per cent in 2014,” he said.

    Group Managing Director/ Chief Executive Officer, First Bank of Nigeria Limited Bisi Onasanya reiterated the lender’s commitment to promoting youth empowerment and building capacity for Nigeria Leadership Initiative (NLI) Fellows and emerging leaders.

    Speaking at the NLI Forum in Lagos, he said the initiative was meant to bridge the knowledge gap between NLI Fellows and the young associates of the Future Leaders programme. He said the forum is also meant to buttress a core focus area of FirstBank’s corporate responsibility programme, namely, youth empowerment.

    Guaranty Trust Bank Plc released its audited financial results for the half year ended June 30, this year, which saw its Profit Before Tax (PBT) soar to N57.36 billion. In a report to the Nigerian and London Stock Exchanges, the bank said the result is an improvement from N53.64 billion recorded in June last year. The lender also reported a 2013 half-year Profit After Tax (PAT) of N49.01 billion as against N45.55 billion reported in June, last year.

    Gross earnings stood at N124.20 billion, an increase of N10.68 billion from the N113.53 billion reported in the corresponding period last year.

    The lender’s total assets and contingents stood at N2.50 trillion, customer deposits was N1.25 trillion and shareholders’ funds N296.95 billion. The bank’s non-performing loans remained low at 3.32 per cent.

    The appointment of Citigroup and Vetiva Capital Management Limited as financial advisers in the sale of Enterprise Bank Limited will be beneficial to all stakeholders, Managing Director, Enterprise Bank Limited, Ahmed Kuru, has said. The financial advisers were appointed by the Asset Management Corporation of Nigeria (AMCON).

    Speaking in Lagos, Kuru, said he was happy leaving behind a better Enterprise Bank and a happier workforce. He added that he was convinced that customers will have the best deal at the conclusion of the process. “I am convinced our customers expect the best deal at the end of the day. So their expectation should be high,” he said.

    Commenting further on the appointment of financial and legal advisers for the sale by AMCON on August 5, 2013, Kuru said: “in line with the plan of AMCON, this is obviously the last lap of the entire process”.

    Union Bank of Nigeria Plc has partnered with Samsung Electronics West Africa, to develop a ‘Bank of The Future’ prototype. The project is aimed at providing superior experience in financial services to both existing and potential customers of the bank.

    In a statement, the bank said the initiative called ‘UnionBank’ is a prototype e-branch that would completely re-design the banking hall as it is today, transforming it into a 100 per cent self-service, electronic branch. The ‘Bank of The Future’ initiative fits into the bank’s strategy to retain existing customers and attract new ones, especially the young and technologically savvy. It is being test-run at the bank’s Silverbird Galleria branch, Victoria Island, Lagos.

    At the unveiling of the initiative, Group Managing Director of Union Bank Mr Emeka Emuwa re-affirmed that the focus of the lender was to serve its teeming customers well, and added that it would seek to leverage on the Samsung technology platforms to deliver consistent and reliable service to its customers.

     

  • Inter-bank rate falls on N230b T-Bills, OMO refund NIBOR as at June 14, 2013

    The inter-bank rate last week fell by 516 basis points to 10.5 per cent, largely due to improved market liquidity from treasury bills (T-Bills) and Open Market Operation  (OMO) bills repayment worth N230 billion.

    The call and seven-day money market rates fell to 10.54 per cent and 10.94 per cent respectively while the three-month Nigeria Interbank Offered Rate (NIBOR) also fell to 11.7 per cent.

    The inter-bank secured lending fell to 10.3 per cent for commercial banks and 10.5 per cent for discount houses. The naira depreciated 0.7 per cent against the dollar in the Inter-bank on 13 June. The depreciation partly reflected strong corporate demand for dollar, and to a lesser extent upward trending bond yields that signals likely foreign divestment out of the bond market.

    However on Friday, the local currency fell for a fourth day against the dollar, extending its worst weekly performance in 18 months. The naira fell 0.8 per cent to N162.60 a dollar taking its weekly decline to 1.8 per cent. It’s the worst performance since the five days through December 23, 2011 based on data compiled by Bloomberg.

     

    Credit bureau

     

    The Central Bank of Nigeria (CBN) has been advised to fully enforce its policy mandating financial institutions to obtain credit report from at least two credit bureaux operators before giving out loans.

    This was part of the resolutions reached at the credit reporting forum held in Lagos. Considering the critical role that a Credit Reporting system plays as an enabler in developing a stable and inclusive financial system, especially in emerging markets, the Federal Government was also advised by participants drawn from different sectors of the economy to take the development of the Credit Reporting system in the country as a national project.

    This, participants said, should boost usage by financial institutions and ensure an inclusive system. Over 180 delegates representing key drivers of the nation’s financial system including the CBN, credit bureau operators, deposit money banks, microfinance banks, insurance, pension administration, payment systems, financial training institutions, discount houses, trading and finance companies, industry associations among others attended the conference.

    It also registered representations from the Bank of Tanzania and credit bureau operators from South Africa and Tanzania, while the International Finance Corporation (IFC) also attended and made presentations.

     

    Inflation

     

    Analysts at Financial Derivatives Company (FDC) Limited have forecast May inflation to decline to 8.98 per cent from 9.1 per cent recorded in April. They also see the Monetary Policy Committee (MPC) retaining the benchmark interest rate at 12 per cent when the committee members meet in July.

    The Managing Director of FDC, Bismark Rewane, said in a report that the May projection is supported by the slight moderation in the food index of the  firm’s Lagos urban inflation and associated high prices in the base period of May 2012.

    He explained that FDC’s Lagos urban price index moderated for the third consecutive month by 0.46 per cent to 10.83 per cent, from 11.29 per cent in April.

    Also, the urban index eased as a result of the decline in both the food and non-food indexes while prices of items such as rice, guinea corn, wheat, salt, cereals, and vegetable leaves declined leading to a 0.08 per cent moderation in food index.

     

    ICAN/NDIC

     

    The Institute of Chartered Accountants of Nigeria (ICAN), Abuja District Society has acknowledged roles played by the Nigeria Deposit Insurance Corporation (NDIC) in bringing sanity to the Nigeria financial system especially in the course of the ongoing banking reforms.

    ICAN Chairman, Abuja District, Shehu Usman Aladire, said NDIC’s role in the reforms inspired depositors’ confidence in the nation’s banking system. Aladire spoke at a gala night held in Abuja to honour the Managing Director/ Chief Executive Officer, NDIC, Umaru Ibrahim.

    The ICAN chairman cited the increase of deposit insurance coverage levels from N50,000 to N200,000 per depositor of deposit money banks (DMBs) and the extension of insurance coverage to depositors of microfinance banks (MfBs) and primary mortgage banks (PMBs) at N100,000 per depositor of the MfBs and PMBs and the second upward review to N500,000 and N200,000 per depositor of DMBs and MfBs/PMBs. This, he said, had met the current economic realities and promoted public confidence in the financial system.

     

    Foreign inflows

     

    The foreign exchange reserves, which was $48.4 billion a month ago, comprised $12 billion portfolio flows, about a quarter of the reserves, FBN Capital has said.

    The investment and research firm said the tapering off of quantitative easing in the United States and other advanced economies could result in the exit of offshore funds as other emerging markets have experienced recently, and further pressure on the naira.

    A reduction in demand for Nigerian crude by the United States following its increased production of shale oil has resulted in a minus seven per cent year to date softening in the price of the Bonny Light, Nigeria’s benchmark crude.

    Consequently, the research firm hinted that easing of the Central Bank of Nigeria’s (CBN’s) tight monetary stance is likely to be pushed out that bit further given conditions in the external environment and the apex bank’s determination to hold the line on the exchange rate. “We see an exchange rate of N159 to a dollar by year end 2013,” it said.

    Data from the CBN shows that forex sales at the Bank’s bi-weekly foreign exchange auction increased from an average of $162 million per session in the first quarter to $285 million from April to date.

    However, the slight weakening of the naira in recent weeks would suggest that forex demand has increased, and a reduction in dollar sales by the multinational oil companies. Although increased dollar sales by the CBN have kept the naira trading within the plus or minus three per cent of N155 band, external sector developments are testing the limit of that band.

     

    BoI

     

    The Bank of Industry (BoI) said it had disbursed a combined N437.39 billion out of the N535 billion funds it secured from the Federal Government for financing projects in the power and manufacturing sectors of the economy as at March this year.

    Speaking during the media workshop organised by the bank in Lagos, its General Manager, Operations, Joseph Babatunde disclosed that the managed funds comprise of CBN’s N235 billion Refinancing/Restructuring Fund (RRF) of commercial banks loans to the manufacturing sector and N300 billion Power and Aviation Fund (PAIF). Both funds were approved in 2011.

    He said of the RRF, N229.18 billion had been disbursed as at March and is targeted at refinancing commercial banks’ loans to Small and Medium Scale Enterprises (SMEs) in the manufacturing sector. The fund, he explained, is expected to enhance the liquidity of commercial banks and facilitate more credits to the real sector.

     

    Reserves

     

    The Nigerian foreign reserves have stabilised in the past two months after $12 billion inflows over eight months to $48.6 billion, FBN Capital research has shown. The rally ended at the end of March, this year.

    It explained in an emailed report that the increase can be traced directly to the tightening measures taken by the Monetary Policy Committee (MPC) in July 2012 and the announcement the following month by JP Morgan that it was to include Nigeria in its indices of local currency government bonds.

    “The level of reserves, which are reported by the CBN as 30-day moving averages, has stabilised not because the offshore investors have rushed for the exit but because of drawings on the excess crude account (ECA),” it hinted.

    The balance in the ECA, which forms part of the reserves, has declined this year by $4 billion, to about $5 billion, as a result of withdrawals announced by the Federation Account Allocation Committee (FAAC).

     

    MfB

     

    Lovonus Microfinance Bank Limited has launched salary advance scheme for employees of small to medium size companies to ease financial difficulties often faced before the monthly remuneration is due for payment by the employer.

    The scheme provides salary advance or instant loan to the employee, with a flexible repayment plan of one to three months, Usman Onoja, chief executive of the Lagos-based microfinance bank (MfB) said.

    He explained that to ensure the convenience of the employee, the salary advance is processed within 48 hours from the application or documentation, with delivery almost immediately, stressing that interest rate on the product is negotiable.

    To further deepen its customer service, the microfinance bank launched three new products recently, branded lovflex, lovflexplus and lovflexpremium. According to Onoja, lovflex is targeted at micro traders in need of N5,000 to N30,000. He said that interest rate on the facility was cut to seven per cent per month for a maximum four months tenure while the repayment plan could be by daily or weekly contributions.

    “Lovflexplus is for traders in need of N40,000 to N70,000 credit, for a four-month tenor with interest rate of seven per cent, while Lovflexpremium is for 80,000 to 100,000 loan, on four months maximum tenure, with interest rate of seven per cent monthly and repayment scheduled daily or weekly,” said Onoja.

     

    Bank to bank report

     

    Unity Bank Plc has been rewarded with a Special Recognition award for its unwavering “Excellence in banking” and unmatched commitment to the economic development of Nigeria, particularly Northern states.

    The bank received the award from Business Day newspaper at the just concluded Maiden BusinessDay Banking Awards.

    A statement from the bank said the awards were instituted to “…recognise Nigerian banks that have been outstanding in supporting economic growth in Nigeria. They have been instituted as a credible way of rewarding banks that are supporting economic growth in Nigeria without putting at risk the financial system.”

    Diamond Bank will today break its new campaign to, undoubtedly, claim its position as one of the leading financial institutions in Nigeria- providing customers with tangible financial solutions tailored specifically to suit their lifestyle.

    In a statement, the bank said the launch follows a successful brand refresh in November 2012 where the brand saw changes in its colours moving away from the monosyllabic greys and dark tones to more vibrant colours. The motive according to the bank, was to make the brand more approachable in line with its’ positioning as a leading retail bank in Nigeria.

    For more than 20 years, Diamond Bank said it has built equity as a strong reliable salient bank.

    Union Bank of Nigeria Plc’s first quarter pre-tax profit rose 40.33 per cent to N7.69 billion compared with N5.48 billion in the same period last year. The lender, which gave the detail to Reuters did not give any reason for the rise.

    However, its gross earnings dropped marginally to N29.79 billion from N29.84 billion the same period last year, the bank said in a statement.

    Also, Guaranty Trust Bank (GTBank) disclosed that it expected its pretax profit for the third quarter to hit N20.7 billion, compared with N21.9 billion in the same period last year. The lender said gross earnings will be N41.25 billion in the three-months to September 2013, down 42 per cent from N70.52 billion in the same period a year ago, it said in a filing with the Nigerian Stock Exchange (NSE). GT Bank also did not give reasons for the falls earnings and profit.

  • CBN mops up N190b via T-bills

    CBN mops up N190b via T-bills

    The Central Bank (CBN) last week issued treasury bills (TBs) worth N190 billion as part of monetary control measures to help banks manage their liquidity. The apex bank said it plans to raise N917.76 billion from TBs in the second quarter of the year. The is N40 billion more than it had initially offered at the auction, data from the CBN showed.

    The demand for Nigeria’s local debt since the beginning of the year has been high due to attractive yields. Yields on the 91-day and 182-day notes were broadly unchanged while the returns on 364-day paper edged up marginally compared with the previous auction on February 20.

    The bank sold N32.97 billion in 91-day paper at 9.2 per cent, same as at the previous auction on February 20, N40 billion in the 182-day bill at 9.44 per cent, compared with 9.45 per cent at the previous auction.

    A total of N117.12 billion of the 364-day bond was sold at 9.98 per cent, higher than the 9.45 per cent at the previous auction on February 20. Nigeria had originally planned to sell N50 billion in 182-day notes and N67.12 billion in 364-day paper at the auction.

     

    Interbank rate

     

    The inter-bank rate remained steady on March 7, reflecting CBN’s effective/aggressive liquidity management efforts. Call overnight rate remained steady on 10.25 per cent, the seven-day money market rate fell slightly to 10.6 per cent. The three-month Nigeria Interbank Offered Rate (NIBOR) fell to 11.66 per cent though fewer activities are done on the tenor.

    The CBN liquidity management remained active and supported by the circular issued on 1 August, which reviewed guidelines on how banks access its Standing Lending Facility and forex auction.

    Naira

    The naira depreciated for the third time in four days after the CBN paid out maturing Treasury bills, boosting money supply and freeing up local currency for buyers to seek dollars. The currency of Africa’s biggest oil producer declined 0.1 per cent to 157.85 per dollar, paring a weekly gain to 0.1 per cent, according to data compiled by Bloomberg.

    CBN settled maturing bills amounting to N263.93 billion ($1.7 billion), the Financial Markets Dealers Association, said on its website. The institution sells bills to help manage currency supply within the market. “The maturities boosted money supply as they hit the market, making dealers more able to seek dollars,” Sewa Wusu, an analyst at Lagos-based Sterling Capital Ltd., said.

    The regulator held the benchmark interest rate at a record high 12 per cent for an eighth time on January 21 to control inflation and stabilize the naira. The nation’s inflation rate fell to 9 per cent in January from 12 per cent in December the statistics bureau said February 18.

    Yields on Nigeria’s $500 million of Eurobonds due January 2021 fell 20 basis points to 4.08 per cent. The yield on the country’s 16.39 per cent domestic bonds due January 2022 rose 24 basis points to 11.1 per cent, according to data compiled on the FMDA website.

     

    Forex inflows

     

    Provisional data on foreign exchange (Forex) flows through the CBN showed that inflow during the fourth quarter of 2012 amounted to $11.17 billion, representing a decline of 16.9 from preceding quarter, according to data obtained from the CBN website.

    Outflow amounted to $7.82 billion, showing a decline of 3.3 per cent in the preceding quarter and resulted in a net inflow of $3.35 billion, compared with a net inflow of $5.36 billion in the preceding quarter.

    The report said decline in inflow relative to the preceding quarter was attributed largely to the 9.6 per cent fall in crude oil sales, while the fall in outflow was attributed to the 35.2 per cent decline in Wholesale Dutch Auction System (WDAS) utilisation.

    Meanwhile, the invisible sector accounted for the bulk (32.9 per cent) of total forex disbursed in the fourth quarter of 2012, followed by mineral and oil sector (18.7 per cent). Other beneficiary sectors in a descending order included industrial sector (18.2 per cent), food products (15.5 per cent), manufactured products (10.1 per cent), transport sector (10 per cent) and agricultural products (0.2 per cent).

    Estimated forex demand by the authorised dealers in the fourth quarter stood at $4.28 billion, indicating a decline of 35.2 in the preceding quarter. The sum of $4.27 billion was sold by the CBN during the review period, indicating a decrease of 36 in the preceding quarter.

     

    Microfinance banks

     

    The CBN said that the National Microfinance Development Strategy will soon be released. The document is expected to outline modalities for developing the subsector and rules that operators will follow to achieve improved performance s well s sector’s stability.

    The apex bank is also working on consolidating on the achievements recorded so far by the country in the development of MfBs by strengthening the regulatory frameworks and other guidelines. This also includes formation of National Microfinance development Strategy with the United Nations Development Programme (UNDP) and the recent signing of a major agreement with the Alliance for a Green Revolution in Africa (AGRA).

    Besides, the CBN is considering the establishment of a Microfinance Development Fund (MDF) as a further step to deepen the financial market. The MDF when established would assist in addressing teething challenges of underfunding for microfinance institutions in the country.

    It will further complement past and current efforts aimed at strengthening the microfinance sub-sector of the financial system, improve financial inclusion and by implication, improve the nation’s Gross Domestic Product (GDP) rate significantly, the statement indicated.

     

    MSMEs

     

    The Federal Government disclosed plans to launch a new policy on Micro, Small and Medium Enterprises (MSMEs) in the country. The proposed draft policy document-the National Enterprise Development Programme (NEDEP) is expected to be formally inaugurated by the presidency after inputs by various stakeholders have been accommodated.

    Minister of Trade and Investment, Mr. Olusegun Aganga said the programme, which is aimed at creating a more robust and stronger SMEs sector is estimated to cost N10 billion annually and targets to create about 3.5 million direct jobs in 2013 as well as 5 million indirect jobs by 2015.

    Speaking in Abuja at a stakeholders’ meeting on the NEDEP, which was being spearheaded hosted the Federal Ministry of Trade and Investment and the Bank of Industry (BoI) in collaboration with the Small and Medium Enterprises Development Agency of Nigeria (SMEADAN), and the Industrial training Fund, the Minister said NEDEP was the solution to the currently loose and uncoordinated relationships among the various SMEs initiatives in the country.

     

    GDR

     

    The admission of Zenith Bank’s Global Depositary Receipts (GDR) to the official list of the London Stock Exchange (LSE) and trading same on the LSE is expected to take place within the month, Renaissance Capital (RenCap), an investment and research firm has said. “Our understanding from management is that the listing of the instruments should happen in March 2013,” it said in an emailed report obtained by The Nation.

    It said the objectives of the GDR issuance are to increase the bank’s visibility and trading in its securities, as well as to expand and diversify its investor base. “Given that Zenith Bank is the most highly capitalised Nigerian bank with a capital-adequacy ratio of 29 per cent as at last September, and does not require any capital injection, it makes sense to us that the GDRs are non-capital-raising,” RenCap said.

    The GDR issuance, it added, simply gives existing shareholders the option to convert to an LSE-traded instrument. The conversion ratio is 50 common shares to one GDR.

     

    Economic growth

     

    Nigeria economy grew 7.1 per cent in the fourth quarter, the CBN has said. Growth was 6.9 per cent in the previous three months and 7.7 per cent in the same period the previous year, the bank said in a report on its website, citing figures from the National Bureau of Statistics.

    The pickup was largely driven by industrial growth, with the non-oil sector expanding 8.2 per cent and accounting for 87 per cent of all output, the bank said. Agricultural “areas adversely affected by the floods during the second half of 2012 were yet to recover fully from the impact.”

    The fiscal deficit of the country rose to N420.8 billion or 3.9 per cent of economic output, in the fourth quarter. That compares with a targeted deficit of N284.1 billion for the period and a gap of N489.5 billion in the previous three months, the bank said. “The deficit was financed mainly from domestic sources, particularly through the issuance of additional Federal Government of Nigeria Bonds,” it said.

     

    Bank to bank report

     

    Ecobank Transnational Incorporated (ETI) revenue growth forecast for fiscal year 2013 has been pulled down to 16 per cent, from initial 19 per cent by Renaissance Capital (RenCap), an investment and research firm. The forecast is higher than management 15 per cent revenue growth target for the year.

    RenCap, in an emailed report obtained by The Nation, said that even if there is little improvement in the bank’s Net Interest Margin (NIM), management’s revenue-growth target implies a slower progression in non-interest revenues than it had previously assumed.

    Leaders of the African Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, International Monetary Fund, and the World Bank Group have pledged close collaboration to support development and growth.

    In a statement, the institutions said there is need for coordinated efforts to achieve the Millennium Development Goals by 2015, which aim to end poverty and hunger, increase access to education and health care, improve gender equality, and ensure environmental sustainability.

    “Nothing could be more important than ensuring young people get the right start in life. We aim to make 2015 the year in which children no longer negotiate access to basic education, mothers to the most basic health care, households to water and sanitation, or girls to the most fundamental opportunities for schooling, work, or voice in their communities. And we aim to ensure these gains are permanently sustained in the post-2015 era” Donald Kaberuka, President of the African Development Bank said.

    A one story building comprising six classrooms, a multipurpose hall and other facilities financed by First City Monument Bank (FCMB) Plc at Baptist Model High School in Ikola-Ipaja, Lagos State has been commissioned. The construction, which began in middle of the year 2012, was financed by the bank to the tune of N20 million.

    Speaking at the commissioning of the school building, FCMB’s Zonal Head for Ojo-Alaba in Lagos, Mr. Endwell Brown, explained that, “FCMB is committed to supporting developmental projects and programmes that will benefit the larger society”.

    Skye Bank Plc said it had granted facilities amounting to $500 million to operators in the maritime industry in recent times. The bank’s General Manager, Corporate Banking (Maritime and Aviation sector), Mr. Segun Opeke, explained that the loan was part of its commitment to the development of the maritime industry in the country.

    He said the amount represents money provided to indigenous ship owners and other stakeholders for the acquisition of ships and other critical work tools needed to strengthen operation o the sector. Speaking at a forum of maritime stakeholders, Opeke said the bank was prepared to expand its credit lines to the operators to further develop the industry. According to him, the bank was responsible for the provision of credit facilities to indigenous ship owners for the acquisition of an estimated 50 per cent of the entire fleet in the country.