Nigeria’s external reserves diminished by 2.8 per cent in one month to $23.948 billion as at October 27, 2016, compared with the $24.615 billion it was as at September 27, 2016.
The latest external reserves position released by the Central Bank of Nigeria (CBN) showed that the reserves derived mostly from the proceeds of crude oil sales fell by $667 million in the last one month, as the country’s earnings continued to shrink.
From N510.270 billion shared by the three tiers of government for August allocations, the sum of N420 billion was approved for sharing at the Federation Account Allocation Committee (FAAC) meeting in Abuja recently, indicating a decline of N90.2 billion.
The Permanent Secretary, Federal Ministry of Finance, Dr. Mahmoud Isa-Dutse had stated that there was a decrease of oil for export in the month of June by 1.15 million barrels due to attacks on oil assets.
President Muhammadu Buhari last week wrote the National Assembly seeking approval to borrow $29.96 billion under the External Borrowing (Rolling) Plan to address the infrastructure deficit in the health, education, water resources and other sectors.
The president’s letter, which was read at plenary by the Speaker of the House of Representatives, Yakubu Dogara, indicated that the $29.96 billion would be for proposed projects and programmes loan of $11.274 billion, $10.686 billion for special national infrastructure projects, Eurobonds of $4.5 billion, and federal government budget support of $3.5 billion.
The naira closed flat at 470 against the United States dollar on Monday, the same level it recorded on Friday.
The naira had plunged to 470 on Wednesday, down from 455 on Tuesday as fresh dollar shortage hit the official and parallel forex markets.
The local currency, which had been relatively stable against the greenback, fell last week as fresh scarcity hit the forex markets.
Travelex and First Bank of Nigeria Limited commenced sale of foreign exchange to Bureau De Change operators some weeks ago following the approval by the Central Bank of Nigeria.
Forex traders, however, said last week that the scheme had failed to ease the biting dollar shortage in the country.
“What we get from Travelex is not sufficient,” one trader told Reuters, referring to demand in the market.
At the official market, the naira closed at 305.50 per dollar, a level it had closed for more than two months, supported by the CBN interventions.
The President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, told our correspondent on Monday that the sale of dollars to the BDC operators had yet to get across the country.
This, he said, was partly responsible for the fresh dollar scarcity.
“There are still logistics problems in selling forex to all the BDC operators. This is what is causing this relative scarcity,” he said.
Earlier, the CBN asked the International Money Transfer Operators to sell dollars directly to the BDC operators to boost liquidity and narrow the gulf between the parallel market and the official market rates.
Travelex sells around $15,000 to 1,000 retail currency outlets weekly, but the amount is a fraction of what is required to cover demand from individuals and small businesses.
Dollar shortages have caused many companies to halt operations and lay off workers, compounding an economic crisis exacerbated by the fall in global prices of oil, which accounts for 70 per cent of Nigeria’s budget revenue.
The CBN has struggled to support the naira as the nation’s external reserves continue to fall.
Traders said the naira had been testing new lows as they tried to find thresholds where liquidity could begin to return.
Oando Plc monday announced a growth of 26 per cent in revenue to N330 billion for the nine months ended September 30, 2016, from N262 billion in the corresponding period of 2015. However, the company ended the period with a loss of N35.886 billion, which is lower than the loss of N47.631 billion in the corresponding period of 2015.
Commenting on the results, Group Chief Executive, Oando Plc, Mr. Wale Tinubu, said: “The third quarter witnessed the Federal Government of Nigeria establish a ceasefire with the militants responsible for production disruptions in the Niger Delta, leading to stabilised daily productions from our assets and expectations of imminent increases to our 2015 production highs of 56kbbls/day. We have also been proactive in our cost management initiative to ensure maximised value extraction for every barrel of oil produced as the global oil price still lingers below $50/bbl. We are pleased to have executed a sales and purchase agreement (SPA) with Helios Investment partners for $116 million, representing 49 per cent legal voting rights in the company’s midstream business, of which the proceeds of the divestment will be utilised towards the company’s debt restructuring initiative. Our trading business has grown significantly this year having exported over 11 cargoes of crude with volumes exceeding 11mmbbls and an additional 31 cargoes of other oil based products year to date.
Market analysts have said that the slump in global oil prices continues to have far-reaching implications on indigenous companies such as Oando. In Nigeria, oil companies are faced with an even more challenging environment including; production disruptions by militant activities in the Niger Delta. Oando witnessed a 22.7 per cent decrease in oil production from 53,169 boe/day in Q3, 2015 to 41,094 boe/day in Q3, 2016. Seplat Nigeria recorded a N24.1 billion loss in Q3, 2016 while Exxon Mobil reported a 38 per cent drop in quarterly profit and a three per cent fall in production as a result of production disruption by militants in the Niger Delta.
Diamond Bank Plc last Friday reported a profit after tax of N3.511 billion for the nine months ended September 30, 2016, showing a decline of 78 per cent from N15.967 billion in the corresponding of 2015. The decline in bottom-line resulted from high impairment charges that soared by 106 per cent to N40.261 billion, from N19.5 billion in 2015.
The bank said it opted for prudent provisioning by cleansing its books of assets with poor quality, thus paving the way for operational efficiency and improved earnings for the business years ahead.
However, the bank recorded a growth of 16.9 per cent in total assets to N2.05 trillion, from N1.753 trillion in 2015. This was driven mainly by the value of the local currency and growth in customer deposits, which surged 13.6 per cent from N1.233 billion, demonstrating the bank’s strong ability and network to generate cheap deposits from the retail and middle market segments.
Similarly, the bank grew its loan portfolio from N763.634 billion to N1.041 trillion, representing 36.4 per cent increase.
Commenting on the results, Chief Executive Officer of Diamond Bank, Mr. Uzoma Dozie, said the stable performance despite the inclement operating environment, stemmed from management’s focus on key strategic projections across the three core segments of retail, business and corporate banking.
He noted that bank will continue to passionately pursue its technology-driven retail strategy to optimise cost and reap predictable bountiful results in the medium to long term.
“We believe the macro conditions and other external factors will remain challenging for the rest of the year and well into 2017. However, by pursuing our technology-led retail strategy and with our focus on innovation and scalability, we believe the Bank is well-placed to benefit in the medium to long term from the favourable fundamentals in Nigeria, namely a large population, many of which remain unbanked. This strategy stands to benefit all stakeholders, including our shareholders and customers in the long run,” he said.
Dozie explained that the economic environment has also impacted business and industry as a whole, particularly those in the oil and gas sector.
“For Diamond Bank, this has translated to elevated impairment charges for the third quarter, as we push for a healthier loan book and to comply with regulations,” he said.
Despite the fall in profit, the bank maintained very stable and modest growth in its capital adequacy and liquidity ratios, with 15.6 per cent and 39.4 per cent, which is above the regulatory requirements of 15 per cent and 30 per cent respectively.
Access Bank Plc has reported a 19 per cent growth in its profit before tax to N72bn from N60.4bn for the nine months ended September 30, 2016.
The result, according to the bank, was based on enhanced business efficiency as a result of the effective execution of its long-term strategy.
Its profit after tax grew by a similar margin from N48.1bn in 2015 to N57.1bn in 2016.
Access Bank Group’s unaudited nine-month results released to the Nigerian Stock Exchange also showed gross earnings of N274.5bn, up by seven per cent from N257.6bn in the corresponding period of 2015.
The growth in gross earnings was driven by 17 per cent increase in interest income on the back of continued growth in the bank’s core business, according to a statement from the bank.
Similarly, the bank posted 12 per cent growth in income to N199.3bn from N178.1bn in 2015.
Customer deposits grew by 25 per cent to N2.10tn from N1.68tn in December 2015, it added.
Its Capital Adequacy Ratio remained strong at 19 per cent as of September 2016, well above the regulatory minimum.
Commenting on the result, the Group Managing Director/Chief Executive Officer, Herbert Wigwe, said, “Access Bank’s performance in the first three quarters of this year remained strong and consistent, reflecting stable business with the capacity to deliver sustainable returns, particularly during a period underlined by significant macro headwinds.”
The move by Conoil Plc, a petroleum downstream player, to pay N2bn dividend for the 2015 financial year, has been approved by shareholders of the company as well as other stakeholders.
The shareholders of the company commended the company’s resolve to pay such dividend despite the prevailing economic challenges in the country.
The final dividend payout ratified at the Annual General Meeting of the company held in Uyo, Akwa Ibom State, translates to N3.00 on every 50 kobo ordinary share for the 2015 financial year, compared to N1.00 paid the previous year.
The President, Renaisssance Shareholders’ Association, Olufemi Timothy, expressed surprise at the performance, amid tight liquidity, rising cost of funds and the general tough operating environment in the downstream oil sector.
In the same vein, the Founder, Independent Shareholders Association of Nigeria, Sunny Nwosu, appreciated the board and management of the company for growing profits and increasing dividend payment, despite the harsh economic environment.
Also commenting, the President, Nigerian Shareholders Solidarity Association, Timothy Adesiyan, said, “Conoil has shown that it is not only concerned about making profits but that it has the interest of shareholders at heart.”
It posted a rise in profit after tax from N834m in 2014 to N2.3bn in 2015. Its profit before tax also increased by 125 per cent, from N1.5bn to N3.4bn. Its earnings per share rose by 177 per cent, from 120 kobo in 2014, to 333 kobo in 2015.
In his address to the shareholders, the Chairman of the company, Dr. Mike Adenuga Jr., promised that Conoil would further consolidate on the gains recorded so far, and ensure better returns in the coming years.
The Board of Directors of Nigerian Breweries (NB) Plc has recommended an interim dividend of N7.929 billion, which translates to N1.00 per share for the nine months ended September 30, 2016. This interim dividend is being recommended despite a decline in the company’s profit for the period occasioned by the current challenging environment.
The company said in a statement signed by NB Plc’s Company Secretary/Legal Adviser, Mr. Uaboi Agbebaku, that revenue rose from N214. 918 billion recorded at the end of September 2015 to N222.716 billion in the same period in 2016.
However, operating profit fell by 11 per cent from N42.766 billion in 2015 to N37.962 billion in 2015. The company’s profit after tax (PAT) declined by 23 per cent from N26.175 billion in the period under review in 2015 to N20.100 billion in 2016.
According to the company, the decline in operating profit was due to higher input costs as a result of rising inflation combined with the devaluation of the naira. The negative impact of scarcity of foreign exchange combined with the naira devaluation more than offset the lower interest costs resulting in a 94 per cent increase in net finance costs.
“The company’s PAT declined by 23 per cent from N26.175 billion in the period under review in 2015 to N20. 100 billion in the same period in 2016. The macro-economic environment deteriorated further in the third quarter compared to the first half with continuous down-trading by consumers,” the company said.
NB Plc said that although, the operating environment is expected to remain challenging for the rest of the year, it would “continue to focus on our twin agenda of Cost and Market Leadership supported by innovation.” The expressed confidence that it is well positioned to take advantage of any upswing in the market.
The Federal Government has $500m commitment for the $1bn Eurobond it intends to issue before the end of the year and any decision to increase the size of the offer will depend on pricing, the Minister of Finance, Mrs. Kemi Adeosun, has said.
The Federal Government is planning to borrow $1bn via Eurobond issuance by the end of the year.
As of Thursday, however, no bank has been appointed to arrange the issue, according to a Reuters report.
“At the moment I’m focused on the $1bn,” Adeosun said in a video recording to an investors’ conference in Lagos.
The country slipped into recession for the first time in 25 years in the second quarter of this year, largely due to low global oil prices. Crude oil sales account for about two-thirds of government revenues.
President Muhammadu Buhari has laid out plans to spend N6.866tn to help pull the country out of recession in a draft 2017 budget sent to the National Assembly.
The Federal Government has struggled to fund the N6.06tn budget set for 2016.
Analysts are sceptical that the government will meet the targets for external borrowing that it has set for the next few years.
Adeosun said the country was moving “further along” with the African Development Bank for a $1bn budget support loan than the World Bank due to scheduling issues.
“We have pushed the World Bank funding into next year’s budget,” she said.
President Muhammadu Buhari had on Monday sent a letter to the National Assembly, seeking to get approval for $30bn external borrowing.
According to the President, the fund is to be spent on infrastructure projects until 2018.
The proposed borrowing includes the sale of Eurobonds worth $4.5bn and budget support of $3.5bn, according to the letter.
The Finance ministry said on Thursday the $30bn borrowing was going to be phased over a three-year period to cover proposed projects between 2016-2018.
Adeosun said Nigeria was interested in tapping funds at concessionary rates to develop infrastructure and that most of the funding it was seeking would carry concessionary terms.
The funding is being sought from multilateral agencies such as the World Bank, Africa Development Bank, Islamic Development Bank, Japan International Co-operation Agency and China Eximbank, according to a statement by the ministry.
Adeosun said expected taxes collection as a percentage of the Gross Domestic Product currently at five per cent would hit seven per cent within three-years and 10 per cent within five years.
The Debt Management Office has said the country can borrow up to $22bn in 2017 from both local and foreign sources without breaching the debt threshold that the government has set for itself.
The Nigerian Stock Exchange All-Share Index advanced by 0.43 per cent on Thursday as 15 stock recorded gains in the course of trading. The positive close at the Nigerian equities market brings the year-to-date return to 4.91 per cent negative.
The volume of transactions declined by 2.75 per cent; market turnover advanced by 1.04 per cent; while a total of 19 stocks declined. A total of 155.591 million shares worth N1.759bn were traded in 2,648 deals.
The NSE market capitalisation appreciated to N9.355tn from N9.315tn, while the ASI closed at 27,236.78 basis points from 27,120.39 basis points.
Total Nigeria Plc topped the gainers’ list following a 10.25 per cent increase in share price. Other top gainers were Airline Services and Logistics Plc, which recorded a 10 per cent gain; Cadbury Nigeria Plc, which appreciated by 9.43 per cent; Lafarge Africa Plc, which rose by 9.23 per cent and Livestock Feeds Plc, which rose by 6.41 per cent.
On the other hand, May and Baker Nigeria Plc, Africa Prudential Registrars Plc, UAC Property Development Company Plc and Forte Oil Plc recorded 8.89 per cent, five per cent, 4.99 per cent and 4.90 per cent loss, respectively, at the close of trade to become the top losers.
Analysts at Meristem Securities Limited commented on the state of the market, saying, “We attribute the day’s market performance to investor’s reactions to the released positive Q3 2016 scorecards.
“However, given the magnitude of losses recorded at the beginning of the week, we expect the market to record a marginal loss week-on-week.”
On the other hand, in line with the trend seen since the start of the week, the Central Bank of Nigeria held an Open Market Option auction with N20bn on offer on each of the 203-day and 364-day bills.
The apex bank eventually sold N17.8bn and N76.3bn on the 203-day and 364-day bills at respective stop rates of 18 per cent and 18.5bper cent (effective yields: 20 per cent and 22.69 per cent).
Despite this, the interbank call rate moderated 167 basis points to 8.83 per cent supported by liquidity from maturity.
At the foreign exchange interbank market, the naira appreciated by N1.78 against the dollar to settle at N305 at the spot market whilst the one year forward rate remained unchanged at N348.14.
Fixed income markets turned mixed as investors cherry-picked across the curve. Yields in the Treasury bills market moderated 6bps on average with the largest declines seen at the short end of the space – the 49 day-to-maturity and 98DTM bills retreating to 15.56 per cent and 16.38 per cent even as most long-dated bills recorded advances.
Similarly, the bond market traded mixed amidst a slightly tepid trading session. Buying momentum was concentrated on short-dated bonds such as the 15.54 per cent FGN February 2020, which shed eight basis points to close at 14.91 per cent with investor appetite fading further down the curve as the 12.50 per cent FGN January 2026 bond advanced four basis points to 15.38 per cent.
The profit after tax of Dangote Cement Plc dropped by N24.47bn in the nine month, ended September 30, 2016.
The company attributed the drop from N157.993bn recorded in the Q3 2015 to N133.521bn in the Q3 2016 to enormous money spent on cost of sales for the period.
The firm, however, recorded increased revenue of N442.09bn in the last nine months, according to the report filed at the Nigerian Stock Exchange.
The revenue for the Q3 2016 was 20.97 per cent higher than the figure recorded during the same period in 2015, despite the harsh operating environment, the company said. It attributed the development to the management’s strategy to leverage its pan-African status.
The report indicated that Dangote Cement increased the revenue by N76.642bn from N365.450bn it made during the same period in 2015.
The crisis of foreign exchange gulped a huge amount of its revenue, as it spent N231.684bn on the cost of sales during the review period of nine months 2016 as against N138.694bn spent on the same purpose last year, the report indicated.
Reflecting on its outlook, the Managing Director of the company, Onne Van der Weijde said the management was confident of delivering strong growth this year despite the challenging economic conditions facing Nigeria and the rest of Africa.
He said, “This price increase will have an immediate and positive impact on margins in the Q4, as will the elimination of Low Pour Fuel Oil from our fuel mix, as we increase our use of coal and higher gas levels return.
“We do not expect to use the LPFO again this year. From January 2017, our use of own-mined coal, sourced in Nigeria and paid for in naira, will further improve margins and significantly reduce our need for foreign currency.
“As we have previously made clear, our focus will be to improve margins through cost controls and the adjustment of prices. We have new capacity coming onstream in Congo and Sierra Leone and expect Tanzania to increase its market share in the coming months.
“Foreign exchange constraints in Nigeria have made us reconsider the pace of our expansion and we now believe that a longer-term building programme will enable a more measured approach that balances our ambition for growth with the realities of obtaining foreign currency in this difficult environment.”
