In a bid to eliminate some bottlenecks in the nation’s capital market, the Securities and Exchange Commission, SEC, has commenced moves to ensure that the process of issuing new shares is completed within three to four weeks and at less cost to the issuers. The Director General of SEC, Mr. Mounir Gwarzo, revealed this to Financial Vanguard at the last Capital Market Committee, CMC, meeting, in Lagos. He said that in order to reduce the cost burden associated with issuing new shares, the SEC, the Nigerian Stock Exchange, NSE, and the issuing houses have agreed to cut their transaction cost using a formula that would be developed by the CMC later in the year.
He expressed optimism that with the various measures, progress would be made in attracting more issuers to the market, while time to market would be reduced. He said: “We also looked at the issue of transaction cost, which some issuers are complaining that is discouraging them from accessing the capital market. The issuing house, the NSE, the SEC and the receiving agents agreed based on the formula developed by the market that there must be hair cut. “Even though SEC has very limited resources, but because of our commitment to the market, we agreed to shed weigh. NSE has also agreed to shed weight and issuing houses have agreed to shed weight. So collectively, we agreed on a formula and it will be implemented very soon. We believe that with this, the processes will be made easier”.
He said that in order to stop the practice where issuers file separate application and document to the NSE and SEC, a portal would be developed where the issuers will upload the documents for assessment by the SEC and NSE. “We will try and harmonise some of the documents that are concurrently filed with SEC and NSE. We will also look at documents that are more related to SEC and those that are more related to NSE jobs and we harmonise them so that it will be more easier for issuers to file those documents,” Gwarzo asserted He warned that henceforth, incomplete application forms would be thrown out by the SEC, saying: “We informed operators that greater job is actually on them because if the application forms are incomplete, there is no way SEC will finish its review and revert back to them within five working days.
They have to do their own part. Any application filed with us that is incomplete will not be attended to again. So, issuing houses and operators must sit down and do their jobs very well so that within a maximum of three to four weeks, once application is filed, it is approved.” On direct cash settlement, Mr. Seyi Owotura, Managing Director, USL Registrar, explained that the important aspect of the initiative is that it is going to promote significant transparency and engender speed in capital market transactions. He added that the era of moving from one registrar and stockbroking firm to the other trying to validate dividend is gone. Gwarzo said that within the next six months, all registered operators would be required to have sponsored individual as required by SEC rules such that any operator that has less than the required number will not eligible to operate in the market.
The shares of Oando Plc and 24 other quoted companies appreciated at the close of trading on the floor of the Nigerian Stock Exchange on Wednesday, thus boosting the bourse’s capitalisation by N291bn.
The NSE market capitalisation appreciated to N9.644tn from N9.544tn, while the All-Share Index climbed to 27,900.44 basis points from 27,609.67 basis points.
A total of 371.455 shares valued at N3.49bn exchanged hands in 3,910 deals.
The Nigerian equities market continued its bullish run, which was punctuated by two consecutive days of decline. It advanced by 1.05 per cent to settle the year-to-date return at 3.82 per cent. There were 25 gainers and 13 losers.
Oando topped the gainers’ list, advancing by 9.90 per cent to close at N8.55.
May & Baker Nigeria Plc, Linkage Assurance Plc, Red-Star Express Plc and Glaxo Smithkline Consumer Nigeria Plc followed on the gainers’ table, appreciating by 9.84 per cent, 7.41 per cent, five per cent and 4.97 per cent, accordingly.
However, C & I Leasing Plc topped the losers’ chart, depreciating by 8.22 per cent to close at N0.67. This was followed by Law Union and Rock Insurance Plc, Livestock Feeds Plc, Union Bank of Nigeria Plc and Africa Prudential Registrars Plc, which depreciated by 4.76 per cent, 4.71 per cent, 2.91 per cent and 2.17 per cent, respectively.
At the close of trading, all sector indices recorded appreciations aside of the NSE industry index, whch traded flat. The NSE food/beverage index fared the best, with a gain of 1.99 per cent.
Commenting on the market outcome, analysts at Meristem Securities Limited, in a post, said, “We attribute the day’s gain to positive sentiments towards some large cap stocks such as Guaranty Trust Bank Plc, FBN Holdings Plc, Nestle Nigeria Plc and Nigerian Breweries Plc gained 4.07 per cent, 3.65 per cent, 3.12 per cent and 2.07 per cent, accordingly.
“We also note the improved sentiments towards healthcare stocks in recent weeks.”
In the Treasury bills space, bullish sentiments replaced the bearish sentiments witnessed in the last two trading days , as average yield declined, albeit marginally, by 0.06 per cent to close at 20.81 per cent. The one-month (0.02 per cent), 12-month (0.05 per cent) and six-month (0.21 per cent) instruments recorded yield advancements, while the six-month and three-month instruments declined by 0.03 per cent and 0.56 per cent, accordingly.
Similar sentiments were recorded in the treasury bonds market as the average bond yield declined marginally by 0.04 per cent upturning Tuesday’s increase, to close at 16.87 per cent. Six instruments recorded yield advancements, two declined, while all others traded flat.
The naira closed flat at 386 against the United States dollar on the parallel market on Monday, the same rate it closed on Friday.
This was despite a $457.3m injection into various segments of the forex market by the Central Bank of Nigeria on Monday.
The central bank has continued to supply into the foreign exchange market. It had supplied over $380m into the forex market last Monday.
Before appreciating to 386/dollar on Friday, the local unit had closed at 390/dollar daily consecutively between last Tuesday and Friday.
According to financial and currency experts, the naira’s outlook remains stable in the near term as the regulator steps up efforts to improve dollar liquidity and achieve exchange rate convergence.
Critics of CBN policies have, however, said the regulator may not be able to sustain steady supply of forex into various segments of the market over a long time.
The naira closed at 305.60 to the dollar on the interbank market on Monday, same level it did on Friday.
The Global Economist, Renaissance Capital, Charles Robertson, described the official rate of the naira as a “fair value”.
He suggested that the value might need to be weaker to attract foreign investors into the country.
According to Robertson, exchange rate issues are making Nigeria to underperform its peers in East Africa.
He, however, said the country would make significant improvement in ease of doing business and corruption data over the next one year owing to recent positive steps by the Federal Government.
A currency expert at Ecobank Nigeria, Mr. Kunle Ezun, believes the CBN’s policies are yielding result. He said the foreign exchange window tagged ‘Investors/Exporters FX Window’’ recently created by the apex bank was a good development.
Ezun, however, said it was too early to determine the amount of forex inflows going through the window.
“We expect the naira to trade within the prevailing band in the coming days, but investors are still worried over the multiplicity of exchange rates in the market,” one senior currency trader told Reuters.
The CBN has been intervening aggressively since February to try to narrow the spread between the official and black market rates and has sold more than $4bn.
But the CBN said on Monday that the lull witnessed in the forex market last week had been terminated by the injection of $457.3m into various segments of the market.
In a statement, the regulator said a breakdown of the offer indicated that both spot and forwards garnered the sum of $267.3m while the wholesale segment got $100m.
The regulator said the SMEs and invisibles segments comprising of basic travel allowance, tuition fee and medical got $50m and $40m respectively.
Meanwhile, the volume of trading on the “Investors and Exporters FX Window” in the past three weeks on the FMDQ platform has reached the sum of $600m.
This includes the amount sold by both the CBN and autonomous sources.
The Acting Director, Corporate Communications, CBN, Isaac Okorafor, said the level of activities in the market was encouraging.
Okorafor said the Investors and Exporters FX Window segment had recorded significant volume of activities.
The naira’s outlook remains stable in the near term as the Central Bank of Nigeria’s efforts to improve dollar liquidity and achieve exchange rate convergence yield positive results.
But investors remain concerned over the lack of a flexible exchange rate.
The naira firmed to about 305.60 to the dollar on the interbank market on Thursday from 306.25/dollar last week and was quoted at 390/dollar on the black market, better than the 391 level where it traded last week, Reuters reported.
It was quoted at 382.63 per dollar in the period enabling foreign exchange trading at rates set by buyers and sellers, according to the market regulator, FMDQ OTC Securities Exchange.
“We expect the naira to trade within the prevailing band in the coming days, but investors are still worried over the multiplicity of exchange rate in the market,” one senior currency trader said referring to the multiple exchange rates.
The bank has been intervening aggressively since February to try to narrow the spread between the official and black market rates and has sold more than $4bn.
A currency expert at Ecobank Nigeria, Mr Kunle Ezun, believes the CBN’s policies are yielding result. He said the foreign exchange window tagged ‘Investors/Exporters FX Window’’ created by the apex bank recently was a good development.
Ezun, however, said it was too early to determine the amount of forex inflows through the window.
Meanwhile, Zambia’s kwacha is expected to firm next week on increased dollar supply in the market ahead of a government bond sale, while the Kenyan shilling is seen slipping on a dollar squeeze amid increased demand from oil importers and general merchants.
Ghana’s cedi is expected to remain firm against the dollar next week on central bank support and positive market sentiments that have led to improved interbank greenback inflows, Reuters reported quoting analysts.
Royal Dutch Shell has announced that it will invest around $25 billion this year in all of its oil and gas operation across the world, including Nigeria.
It also said it was expecting to generate $10 billion in cash flow from the delivery of some of its new projects by 2018.
The company stated this in its first quarter 2017 financial results released on Thursday. The report which THISDAY obtained in Houston Texas, United States, also showed that Shell netted an income of $2.2 billion.
Shell, with operations in more than 70 countries, is Nigeria’s oldest oil producing partner, holding various joint venture and production sharing arrangements with the Nigerian National Petroleum Corporation (NNPC) and other foreign oil companies.
The company only recently announced the resumption of oil production at its 225,000 barrels per day (bd) Bonga Floating Production Storage and Offloading (FPSO) field in Nigeria’s deep-waters.
The Nigerian capital market apex regulator, the Securities and Exchange Commission, has dissolved the Board of Directors of Ikeja Hotels Plc due to unresolved internal crisis involving some majority shareholders of the company.
The move, the commission said, became necessary in order not to allow the warring parties take certain actions that would give them an advantage over one another.
SEC, in a report on Thursday, said it hoped to forestall chaos in the organisation, stressing that the commission and other distinguished personalities, had previously held various meetings with the existing board towards resolving the crises but the company continued to be plagued with unhealthy corporate governance practices in disregard to the Code of Corporate Governance for public companies.
As a public company, the regulator said it was paramount that the activities of the company were conducted within the confines of existing corporate governance regulations in the Nigerian capital market, to ensure the protection of minority shareholders and other investors.
“Having failed to resolve its lingering crisis, the commission in exercise of the powers conferred on it by the Investment and Securities Act, 2007 to protect investors and the integrity of the securities market, hereby approves the appointment of an interim board for the company with Chief Anthony Idigbe, SAN as interim chairman,” SEC stated.
The interim board among others is mandated to oversee the conduct of a forensic investigation into the affairs of the company, according to SEC.
“It is the commission’s expectation that the shareholders and key management staff of the company will work with the new team to ensure that the fortunes of the company are restored in the shortest possible time,” it stressed.
The Japanese Deputy Minister for Foreign Affairs, Mr. Shunsuke Takei, on Thursday said businessmen from his country would be investing about $30bn in Nigeria and other African nations.
He stated this when he led a delegation of 32 Japanese investors to meet separately with the Minister of Finance, Mrs. Kemi Adeosun, and the Minister of Budget and National Planning, Senator Udo Udoma.
Takei said the delegation to Nigeria was part of efforts by the Japanese government to actualise the $30bn public-private investment pledge made in August 2016 during the sixth Tokyo International Conference on African Development in Nairobi, Kenya, which was attended by President Muhammadu Buhari.
Given the size of the Nigerian population and market, as well as its economic recovery and potential for growth, he said Japanese investors were desirous of investing in the country.
While noting the challenges in the areas of security, ease of doing business and the power sector, he stated that Japanese businessmen would invest in Nigeria’s manufacturing, banking, insurance and agriculture sectors.
Takei commended the Federal Government for formulating the Economic Recovery and Growth Plan, and expressed optimism that the foreign exchange situation would improve soon despite the current challenges.
Adeosun said that the country was open and ready to do business with the rest of the world.
She urged the big Japanese companies to invest in Nigeria by setting up manufacturing plants, instead of shipping-in finished products.
Adeosun stated, “We will assist you to do well. Many companies came into Nigeria and are doing very well, and there is nothing to stop Japanese firms from doing very well.
“Specific reforms by removing lots of impediments, fiscal incentives to facilitate your coming into Nigeria to invest and drive your businesses are being put in place.”
Udoma, in his comments during the meeting with him, said the ERGP was designed to stabilise the economy and propel it to growth, adding that investors should take advantage of the plan by investing in priority areas such as agriculture, infrastructure and manufacturing.
He said the plan would stabilise the macroeconomic environment, boost agricultural production for food security, ensure energy sufficiency, improve infrastructure and drive industrialisation through manufacturing.
Udoma stated that there were opportunities for the Japanese investors in the area of the agriculture value chain, adding that the government would be building industrial parks in each of the six geo-political zones of the country.
Shareholders of Fidelity Bank Plc thursday unanimously approved the dividend payout the bank’s management had earlier declared.
The approval was given at the bank’s 29th annual general meeting held in Lagos. Shareholders of Fidelity Bank Plc are to receive a dividend of N3.9 billion for the year ended December 31, 2016. The dividend translates to 14 kobo per 50 kobo share.
Commenting on the bank’s performance, the National Coordinator Emeritus, Independent shareholders Association of Nigeria, Mr. Sunny Nwosu, commended the performance of the bank, just as he projected an improved performance this year.
‘‘We are happy that Fidelity Bank is delivering value to shareholders despite the challenges in the environment. I am sure that with the new chairman, there would continue to be innovation from the bank,” he said.
Reacting to the comments by the shareholders, the Chairman of Fidelity Bank, Mr. Ernest Ebi, pledged that the bank would continue on the path of growth. He also expressed optimism that with positive developments in the economy, the bank would perform better this year. Ebi assured the shareholders that the bank would consolidate on its retail banking business.
“The headwinds are gradually going away and we can see light at the end of the tunnel. With the government now having an Economic Recovery and Growth Plan (ERGP), I think that is good news for businesses. Consequently, our priority remains to de-risk the business by way of very disciplined risk managemen. Using our technology, we would drive effective service delivery for our customers in 2017,” he added.
Also, the Chief Executive Officer, Fidelity Bank, Mr. Nnamdi Okonkwo, described 2016 as a very tough year.
“We remain solidly aware of the opportunity areas in 2017 and will work to grab the lion share. As we do that, we Wil not relent on the plan to redesign our systems and processes to boost service delivery, intensify strategic efforts to reduce operating expenses and cost-to-serve, as well as improve our retail risk monitoring capacities to ensure both internal and external risks are promptly recognises and swiftly purged,” Okonkwo added.
The stock market appreciated further on Wednesday as investors continued to react to impressive first quarter financial results of companies. The Nigerian Stock Exchange (NSE) All-Share Index, which opened the week on positive note on Tuesday, appreciated by 0.58 per cent to close at 26,116.79, while market capitalisation ended higher at N 9.03 trillion.
The bulls were in total control as 27 stocks appreciated, compared with 13 that declined. Fidson Healthcare led the gainers with 10 per cent, trailed by Oando Plc with 7.9 per cent, while United Bank for Africa Plc went up by 6.2 per cent. Unilever Nigeria Plc and Ashaka Cement Plc also made the top price gainers for the day.
Investors have continued to take positions in most of the stocks following impressive Q1 performance. Most of the companies grew their profit significantly. For instance, UBA’s profit after tax rose by 32 per cent from N17 billion in 2017 to N22.4 billion in 2017. The group sustained its strong profitability recording an annualised 19.4 per cent Return on Average equity (RoAE).
Driven by an unprecedented 43 per cent year-on-year growth in interest income, UBA Group recorded a 38 per cent per cent year-on-year growth in gross earnings to close at N101.2 billion in 2017, compared to N73.7 billion recorded in the corresponding period of the year 2016.
The Group Managing Director/CEO of the United Bank for Africa, Mr. Kennedy Uzoka, expressed satisfaction with the bank’s impressive performance in 2017, despite intensifying competition and a very challenging business environment.
“Our performance in the first quarter of the year strengthens our optimism on economic and business recovery in Nigeria and many of our markets across Africa. More importantly, this result is evidence of efficiency gains in our pricing, balance sheet management and operations,” Uzoka said.
“Driven by our balance sheet liquidity, we grew interest income by 43% to an unprecedented quarterly run-rate of N77 billion. Buoyed by improving foreign currency supply in Nigeria, remittance and trade services fees almost doubled and foreign currency trading income grew by 148 per cent year-on-year, as we leveraged our Customer First initiatives to gain market share in these offerings. More so, it is my pleasure to report that we made further progress in our consistent retail penetration, as reflected in the 12 per cent year-to-date growth in retail savings and current account deposits. Notwithstanding the tight interest rate environment, we recorded a 30bps reduction in cost of funds to 3.4 per cent, a positive result of our customer service-led approach to low cost deposit mobilisation. As at Q1, low cost savings and current accounts (CASA) represent 80 per cent of our deposit funding,” Uzoka explained.
The Bank of Industry (BoI) has said it recorded a Profit Before Tax of N17 billion in 2016, which represented a 44 per cent increase over the N11.9 billion that was posted in 2015. The Bank’s loans and advances also rose by 10 per cent to N171 billion in 2016, from N156 billion in 2015.
Similarly, BoI’s 2016 results obtained on Wednesday showed that disbursements to Small and Medium Enterprises went up by 42 per cent within the same period to N8 billion, compared with N5.64 billion in 2015.
The quality of BoI’s risk assets as well improved phenomenally with a reduction in the ratio of non-performing loans (NPL) to 3.72 per cent in 2016 from 5.87 per cent in 2015. This feat was achieved in a year when the average ratio of non-performing loans in the nation’s banking industry rose sharply to 14 per cent which is beyond the Central Bank of Nigeria’s (CBN) threshold of 5 per cent.
While commenting on BoI’s outstanding performance 2016, which has been described as the best in the bank’s history despite last year’s economic head winds, the institution’s acting Managing Director and CEO, Mr Waheed Olagunju, attributed it to strong commitment to professionalism and strict adherence to global best practices by the bank’s competent, dedicated as well as passionate management team and staff.
He added that these achievements also culminated in BoI’s consistently high ratings by international and domestic rating agencies being upgraded and affirmed. While Moody’s assigned BoI Aa1 in 2016 up from Ba3 of 2015, Agusto’s rating of AA- in 2016 was higher than A+ of 2015. AA+ assigned by Fitch in 2015 was affirmed in 2016.
