Banking stocks sank by 3.36 per cent week-to-date at the close of trading on the floor of the Nigerian Stock Exchange on Tuesday as the Exchange’s market capitalisation dropped by N162bn.
Bearish sentiments dominated the equities market for the third consecutive day, as the NSE All-Share Index declined by 1.10 per cent, to settle the year-to-date return at 20.60 per cent.
However, volume traded and market turnover advanced by 27 per cent and 12.19 per cent, respectively. There were only 10 gainers and 31 losers.
The banking shares were said to have fallen after regulators said they had intervened to save the country’s fourth largest telecoms firm, Etisalat Nigeria, from collapse as talks with local lenders to renegotiate a $1.2bn loan failed.
Etisalat Nigeria had been negotiating with its lenders for more than five months to restructure a $1.2bn loan it took four years ago, after missing several repayments.
The news sent the banking index lower, which caused the main index to fall by 1.1 per cent as investors sold shares on worries that lenders might be forced to take a haircut on Etisalat’s loan.
Half-year earnings season has started for companies listed on the Lagos bourse and lenders, under pressure to avoid loan-loss provisions, had been pushing to finalise restructuring talks before interim audits in June.
For the banking segment of the market, United Bank for Africa Plc topped the decliners with a fall of 5.75 per cent. Ecobank Transnational Incorporated shed 4.94 per cent, Diamond Bank Plc and FCMB Group Plc both lost 4.72 per cent each.
Overall, Neimeth International Pharmaceuticals Plc led the laggards to close at N0.75 after losing 8.54 per cent. This was followed by UBA.
Cornerstone Insurance has grown its gross premium by 25 per cent during the 2016 financial period.
The Group Chairman of the company, Mr. Segun Adebanji, stated this during its Annual General Meeting in Lagos.
“Despite the harsh economic climate the company has sustained its growth trajectory by growing gross premium written by 25 per cent to N9.1bn from N7.3bn in 2015,” he said.
He said that sales to retail customers accounted for 25 per cent of the premium while special risks products to the oil and gas as well as engineering sectors contributed the second highest proportion at 23 per cent.
The chairman said the increased financial strength from the conclusion of the acquisition of Fin Insurance and their growing reputation as a credible partner was opening opportunity for leadership position on major transactions.
Adebanji said this had also provided support for its retail expansion.
He, however, explained that high claims, inflation and the security challenges in the North East and South- South zones of the country led to a significant deterioration in the claims experienced during the year under review.
“Gross claims for the year was N4.5bn, representing an increase of 61 per cent from the previous year of N2.8bn, driven largely by death claims from the group life, credit life and third party motor classes of insurance,” he said.
He said the board of directors and the management of the company had also put in place additional cost management and revenue enhancement measures to ensure a quick return to profitability.
The World Bank committed a total of $215m to the execution of rural community development projects across the country under its Community and Social Development Programme. The National Coordinator, CSDP, Dr. Abdulkarim Obaje, disclosed this at the opening of a two-day retreat for supervising ministries and Board of Directors of the CSPD in Abuja on Thursday.
Acting President Yemi Osinbajo signed an Executive Order on the Voluntary Asset and Income Declaration Scheme, which was launched during the week. At the launch, Osinbajo stated that tax defaulters, who failed to pay up by March 31, 2018, would have their names published, adding that the VAIDS would be from July 1, 2017 to March 31, 2018 to give a window of opportunity to defaulters to regularise their tax affairs.
The Nigerian National Petroleum Corporation’s plan to grow the country’s crude oil reserves to 40 billion barrels by the year 2020 received a boost with the execution of a tripartite agreement between the NNPC/FIRST Exploration and Production Joint Venture and Schlumberger, which is meant for the development of the Anyalu and Madu fields in the Niger Delta under Oil Mining Licences 83 and 85, offshore Nigeria.
Equity market – Listed securities on NSE
The Nigerian equity market witnessed a bullish run in the first two trading sessions post-Eid-el-Fitr holidays even though the last trading day recorded a downward movement in the market indices. Despite this trend, the week still closed on a net positive trend.
Consequently, NSE ASI and market capitalisation appreciated significantly by 3.70 per cent (370 basis points) week-on-week to close at 33,117.48 points and N11.107tn, respectively. With this, the NSE ASI has now delivered a positive YTD year-to-date return of 23.23 per cent.
In the last trading, being the last day for the half-year, the market turnover closed on a negative note compared to the previous session by -21.26 as against the uptick of +13.72 the previous day.
The market breadth also closed negative as Eterna led 18 gainers as against 33 losers topped by Unilever at the end of the day’s session.
This week, we expect a mix of profit-taking and bargain hunting activities amidst improved investor confidence and preparations for the release of half-year results.
NASD unlisted securities
The northward trek previously recorded in the key performance indicators of the NASD OTC market reversed as the twin market indicators closed on a negative note. Consequently, the Unlisted Securities Index and market capitalisation depreciated significantly by 1.79 per cent to close the week at 631.52 points and N427.37bn, respectively.
Money market
The OBB and Overnight rates appreciated by 1.33 per cent and 1.17 per cent to close the week at 5.33 per cent and 5.75 per cent, respectively
The Nigeria interbank offer rates declined for the one month, two months and three months offer by -0.05 per cent, -0.02 per cent and -0.39 per cent to close at 19.37 per cent, 21.40 per cent and 23.31 per cent, respectively.
This week, rates may nosedive slightly as FAAC inflow of approximately N462.359bn is expected to hit the system. We also expect the Central Bank of Nigeria to mop excess liquidity by way of OMO auction.
Treasury bills market
The CBN sold N31.94bn ($104.76m) in Treasury bills on Friday, June 30, 2017 in a bid to tighten liquidity in the money market, while the overnight lending rate fell.
The bank also sold N31.52bn of the 349-day Treasury bill at 18.59 per cent and N440m of the 160-day Treasury bill at 17.98 per cent at an auction on the same day.
It was also reported that cash balance in commercial lenders’ accounts with the central bank stood at N320.35bn, boosted by the repayment of N287.39bn in matured Treasury bills on Thursday.
Rates are expected to remain flat in the current week unless the central bank decides to take advantage of the low rates to mop up excess liquidity from the banking system.
The planned public listing of the shares of MTN Nigeria on the Nigerian Stock Exchange offers both institutional and individual investors the opportunity to get a slice of the telecommunications firm that has 62 million subscribers, the company has said.
The Deputy Head, Mergers and Acquisitions, MTN Group, Kholekile Ndamese, who led a team from Nigeria and South Africa, said this when they met with Minister of Science and Technology, Dr. Ogbonnaya Onu, in Abuja on Friday.
Ndamese said he was in Nigeria as part of the company’s consultation and engagement with stakeholders prior to the listing of its shares on the floor of the Exchange.
He explained that the listing of the stock would be one of the largest listings undertaken in the continent as well as by the company.
According to him, the venture will also showcase Nigeria to the world as well as attract other investors to the country.
Through the listing, he added that subscribers to the MTN network and other investors would have the opportunity to own part of the company.
Ndamese stated, “We will like to do the transaction process through digital form to enable Nigerian people apply online in a manner that will be safe. It will be the first in Africa to use the digital format unlike paper process used in other African countries.
“It is a kind of Nigeria showing leadership to the rest of Africa. We have been engaging the regulators and key stakeholders. That is why we are consulting all the ministries.”
Responding, Onu challenged MTN Nigeria to invest in local research and innovation in order to remain globally competitive.
The minister regretted that the economies of African countries were still hinged on the production of raw materials, adding that it was through research and innovation that the continent could break away from the shackles of underdevelopment.
He said, “I want a situation where MTN Nigeria will start investing in research and come up with innovations to support the MTN Group in order to be competitive in the world, because it will have difficulties to compete without research.
