The Guaranty Trust Bank Plc recorded a growth of 44 per cent in gross earnings in its unaudited financial results for the third quarter ended September 30, 2016.
The lender closed third quarter with gross earnings of N329.3bn, from N229.4bn reported in the corresponding period of September 30, 2015.
The result, which was released to the Nigerian and London Stock Exchanges, showed positive growth across all key financial metrics and improved strategic positioning of the brand.
The gross earnings growth, the bank explained, was driven by growth in fee and commission income as well as foreign exchange income.
Its profit before tax stood at N140.84bn, representing a growth of 53 per cent from N92.06bn recorded in the corresponding period of September 2015.
The bank said its loan book grew by 19.6 per cent from N1.372tn recorded in December 2015 to N1.640tn in September 2016.
It closed the third quarter with total assets of N3.093tn and shareholders’ funds of N483.4bn.
The bank’s non-performing loans remained at 4.13 per cent, with Return on Equity and Return on Assets closing at 35.31 per cent and 5.69 per cent, respectively. Commenting on the bank’s financial results, its Managing Director/CEO, Segun Agbaje, said, “The bank’s strong performance is a reflection of the continued support of our customers, hard work of our workers and the commitment of the management and board to manage the bank for long-term sustainable returns.”
Stanbic IBTC Bank Plc has clarified the responses given by its Chief Executive Officer, Olayinka Sani, at a Senate committee hearing on the alleged illegal repatriation of funds by MTN.
According to the bank, Sani who spoke on behalf of the bank at the hearing, reiterated the fact that Stanbic IBTC was ready to cooperate fully with the Senate (as it had been doing with the Department of State Services, DSS) in ensuring that the truth in respect of the transactions done on behalf of MTN was unearthed.
Sani told the committee that the investigations are welcomed and would help show that StanbicIBTC has done nothing wrong and has operated to the high governance and ethics standards.
He also noted that Stanbic IBTC had provided all the necessary documents requested for by the Senate, a statement from the bank explained.
Sani also mentioned that the bank had handled on behalf of MTN its private placement when the original shareholders of MTN divested part of their shares in MTN.
One of the senators at the hearing also asked a couple of questions on other issues that were not connected with the MTN transactions and Sani provided responses to those issues.
The Senate hearing was declared opened by the Chief Whip of the Senate, Senator Sola Adeyeye, who represented the Senate President.
The Chairman of the Senate Committee on Banking, Insurance and Other Financial Institutions (the Senate Committee investigating the allegations), Senator Rafiu Ibrahim, had in his opening remarks, stated that the essence of the Senate investigation was to enable the Senate understand how the transactions in questions were handled.
He assured all those who were invited to the investigation that the investigation was not a witch hunt but a fact finding exercise.
Ibrahim stated that the public hearing was the first stage of the investigation process; the second stage would involve a comprehensive review of the documents submitted by all parties and would involve the parties being invited on an individual basis to provide clarification on the documents submitted and answer necessary questions from members of the Senate committee and the consultants that had been employed for the exercise.
Afterwards, the senator who sponsored the motion that gave rise to the investigation, Senator Dino Melaye, gave an overview of the purported issues with the repatriations that were done by MTN and its bankers.
The first person that was called to speak in line with the order of the proceedings that was followed by the Senate committee was Mr. Jim Obaze of the Financial Reporting Council (FRC) and he spoke about the functions performed by the FRC.
He went on to add, at the prompting of the Chairman of the Senate Committee, that weak accountability of the regulatory agencies was what gave rise to some of the purported issues.
The acting CBN Director of the Trade and Exchange Department, Mr. Gotring, who represented the CBN Governor was next to speak.
He was questioned about the role of the CBN in approving some of the transactions and the oversight responsibility that the CBN played in respect of the MTN transactions.
The acting Director also shared with the Senate Committee a report that the CBN had previously prepared when an investigation was carried out on the MTN transactions which report he noted had also been given to the Department of State Services (DSS) as part of the DSS investigation.
Gotring also explained to the senators that where for one reason or the other, a bank could not comply with the 24 hour Certificate of Capital Importation (CCI) rule, the bank that was processing the CCI would apply to the CBN for approval to issue the CCI out of time
Nigeria has cut the price of every type of crude it sells in an effort to regain the share of the global oil market at a time when there’s a “huge” glut of cargoes.
The Nigerian National Petroleum Corporation (NNPC) lowered by at least $1 a barrel its official selling prices (OSPs) for 20 out of 26 oil grades monitored by Bloomberg, according to pricing lists.
Qua Iboe, Nigeria’s largest export crude under normal circumstances, was reduced by the most since 2014. The price reductions are due to a “huge cargo overhang” as the country attempts to regain market share, Mele Kyari, Group General Manager for the Oil Marketing Division at NNPC, said by phone.
Like every other producer country, Nigeria is grappling with prices that are less than half what they were in July 2014. What makes the African nation’s situation more acute is a militant campaign that resulted in export flows falling to the lowest in at least nine years earlier this year. Shipments are gradually resuming, and lower prices are a sign Nigeria is seeking to become more competitive in an already oversupplied global market.
“It is a bearish signal for the light, sweet market,” Eshan Ul-Haq, principal consultant at KBC Process Technology Ltd., said in an e-mail, referencing the types of crude Nigeria mostly pumps. “In order to capture a higher share of the market, OSPs have to come down.”
Brent crude futures slumped as much as 2.1 per cent yesterday to $51.57 a barrel, the largest intraday decline since October 7. They were down 2 per cent at $51.64 at 2:17 p.m. on the ICE Futures Europe exchange in London.
NNPC cut the selling price of Qua Iboe for November to a 17 cent premium to the benchmark dated Brent, according to the price list, from $1.07. It reduced the price of Bonny Light to a 7 cent premium and Forcados to a 41 cent discount to dated Brent.
Five companies that market the nation’s crude have raised the issue of high official selling prices, Kyari said earlier this week. But he said yesterday that the pricing decisions were unrelated to those “complaints.”
The reductions take place as the Organisation of Petroleum Exporting Countries (OPEC) — of which Nigeria is a member — attempts to cut its combined output to 32.5 million to 33 million barrels a day in an effort to steady oil markets.
Nigeria has said it will be exempted from any production cuts, though final details of such an agreement have yet to be worked out.
Because an OPEC output cut would primarily affect medium and heavy crude grades, lower prices from Nigeria are likely to reduce the price differential between light and heavier oil, according to Ul-Haq.
Meanwhile, the World Bank yesterday raised its 2017 forecast for crude oil prices to $55 per barrel from $53 per barrel as members of OPEC prepare to limit production after a long period of unrestrained output. The benchmark Brent crude price was down by 2.4 per cent to $51.38 per barrel yesterday.
But the World Bank estimated that energy prices, which include oil, natural gas and coal, were projected to jump almost 25 per cent overall next year, a larger increase than anticipated in July.
The revised forecast appeared in the World Bank’s latest Commodity Markets Outlook. According to the World Bank, oil prices are expected to average $43 per barrel in 2016, unchanged from the July report. “We expect a solid rise in energy prices, led by oil, next year,” Senior Economist and lead author of the Commodity Markets Outlook John Baffes said.
“However, there is considerable uncertainty around the outlook as we await the details and the implementation of the OPEC agreement, which, if carried through, will undoubtedly impact oil markets.” A modest recovery was projected for most commodities in 2017 as demand strengthens and supplies tighten. Metals and minerals prices are expected to rise 4.1 per cent next year, a 0.5 percentage point upward revision due to increasing supply tightness.
Zinc prices are forecast to rise more than 20 per cent following the closure of some large zinc mines and production cuts in earlier years. Gold is projected to decline slightly next year to $1,219 per ounce as interest rates are likely to rise and safe haven buying ebbs.
The naira is expected to be stable at the official interbank and parallel markets next week following the sale of $313m by the Central Bank of Nigeria to clear a backlog of dollar demand from airlines and other firms.
The local currency was quoted at 455 to the dollar at the parallel market on Thursday, against 458 to the dollar last week, while there was no quote on the official window more than two hours after the market opened, Reuters reported.
The naira has consistently closed around 305.5 to the dollar at the interbank market since August due to daily intervention in the market by the CBN.
The International Money Transfer Operators have also been providing dollar liquidity to support the local currency at the Bureau De Change window.
The Kenyan shilling is expected to trade in a tight band next week with support from foreign exchange inflows from investors chasing government debt offset by dollar demand from importers as the month draws to an end, according to traders
On Wednesday, commercial banks were quoting shilling at 101.25/35, and it barely moved from 101.20/30 last week. Markets were closed on Thursday for a public holiday.
The Tanzanian shilling is expected to strengthen modestly next week, helped by firms selling dollars to meet end-of-month payments and foreign exchange inflows from agriculture export earnings.
Commercial banks quoted the shilling at 2,184/2,189 to the dollar on Thursday, weaker than 2,178/2,188 a week ago.
“We expect the shilling to appreciate slightly next week due to dollar sales by companies to meet end-of-month obligations and inflows from the agriculture sector, particularly cashew nut exports,” a trader at CRDB Bank, Moses Kawiche, said.
Zambia’s kwacha is likely to remain stable against the dollar next week with corporate demand for the currency to meet end-of-month payments balanced by rising dollar demand to buy imports.
At 0937 GMT, commercial banks quoted the currency of Africa’s second-largest copper producer at 9.8000 per dollar from 9.9150 a week ago.
“Although companies will be converting dollars to pay salaries and other month-end obligations, demand for hard currency is also rising because of imports ahead of Christmas,” independent financial analyst, Maambo Hamaundu, said.
The Ugandan shilling is forecast to make slim gains next week, supported by foreign exchange inflows from coffee exports and commercial banks paring long dollar positions.
At 0900 GMT, commercial banks quoted the shilling at 3,430/3,440, stronger than last Thursday’s close of 3,445/3,455.
A trader at Diamond Trust Bank, David Bagambe, said a central bank liquidity mop-up of excess shilling liquidity would also help.
The equities market rebounded on Thursday as the Nigerian Stock Exchange market capitalisation appreciated by N41bn.
A total of 111.898 million shares valued at N4.012bn were traded in 2,699 deals.
The NSE market capitalisation rose to N9.479tn from N9.438tn, while the NSE All-Share Index closed at 27,598.34 basis points from 27,478.04 basis points.
The Nigerian bourse recovered from a three-day downward trend, up by 0.44 per cent from the last close on ample gains in the banking sector.
After receding to a negative year-to-date return in the previous session, the financial services sector recovered from its brief year-to-date loss position and was at the heart of the ASI turnaround, after investors received the nine-month 2016 earnings of Guaranty Trust Bank Plc, which appreciated by 5.11 per cent, coupled with advances in FCMB Group Plc by 3.67 per cent and Access Bank Plc by 1.44 per cent.
The oil and gas sector snapped a five-day rout following gains in Seplat Petroleum Development Company by 1.94 per cent and Oando Plc by 1.39 per cent. Mobil Oil Nigeria Plc also inched higher by 0.54 per cent amid news of Exxon Mobil’s (majority shareholder) decision to sell its 60 per cent equity stake to NIPCO Investments Limited.
The consumer goods sector rose by 0.12 per cent with mixed performances across International Brewery Plc by five per cent, Guinness Nigeria Plc by 1.38 per cent, while Dangote Sugar Refinery Plc lost by 2.19 per cent.
Stocks in the industrial goods sector closed flat.
Market breadth turned positive with 20 advances and 14 declines.
On the global scene, while Asian stocks closed higher, European markets traded slightly lower ahead of the European Central Bank meeting later today and as investors digested a raft of disappointing earnings. The United States futures pointed to a higher open.
On what will shape today’s trading session, analysts at Vetiva Capital Management Plc, said, “We highlight that market sentiment turned around, particularly within the banking sector following earnings release from GTB – a pointer of what to expect from other banks.
“We think this underscores our erstwhile view that investors currently maintain a wait-and-see approach to Q3 earnings and believe this approach will persist in the sessions ahead.”
Meanwhile, the interbank call rate dropped further by 409 basis points to 14.83 per cent on the back of improved liquidity. At the foreign exchange interbank market, the naira remained unchanged against the dollar at N304.75 while the one-year forward rate fell to N348.14 (previous: N355).
The Central Bank of Nigeria held a Primary Market Auction in Wednesday’s session, selling N21bn, N28bn, and N32bn on the 91-day, 182-day, and 364-day bills at stop rates of 14 per cent, 17.09 per cent, and 18.30 per cent respectively (effective yields: 14.51 per cent, 18.68 per cent, and 22.39 per cent).
In Thursday’s session, the Treasury bills market extended its bullish run as yields declined 28 basis points on average. With the 182-day bill settling at a lower rate than secondary market levels, buying was weighted around the mid end of the space with yields on the 105 day-to-maturity, 203DTM, and 266DTM bills dropping to 17.53 per cent, 18.08 per cent, and 18.56 per cent respectively.
Meanwhile, the bond market traded nearly flat as large advances on the 16.39 per cent FGN January 2022 bond (up 13 basis point to 14.88 per cent) offset moderations on the 14.20 per cent FGN March 2024 and 12.50 per cent FGN January 2026 bonds which moved three basis points and four basis points to 15.01 per cent and 15.29 per cent respectively.
Guaranty Trust Bank Plc yesterday reported a jump of 59 per cent in profit after tax (PAT) to N119.9 billion, following a major boost from foreign exchange (FX) revaluation gains. The unaudited results made available to market operators by the Nigerian Stock Exchange (NSE), showed gross earnings of N329.284 billion, up by 43.5 per cent compared with N229.4 billion in the corresponding period of 2015. Net interest income rose by 10.5 per cent from N120.13 billion to N132.7 billion, while net fees and commission income grew by 28.2 billion to N37.5 billion, up from N48.13 billion. However, net impairment loss on financial assets soared by 570 per cent to N57 billion, from N8.5 billion in 2015. Other income, from FX revaluation gains, jumped up from N6.957 billion to N93.95 billion.
PBT improved to N141 billion, up from N92.1 billion, while PAT rose by 59.6 per cent to N119.92 billion, compared from N75.2 billion in 2015. Assessing the result for the third quarter(Q3), analysts at FBN Quest said the performance showed strong PAT of N46 billion, up 97 per cent, off the back of a PBT result of N49 billion, up 71 per cent. FBN Quest said: “PAT growth was stronger due to other comprehensive income of N4.3 billion, which was up 172 per cent. Other comprehensive income was boosted by FX translation gains. The market had been expecting tangible fx gains in GTBank’s results in recent weeks. Similar to Q2, although the FX revaluation gain will be welcomed by the market, the scale of the provisions, though down quarter/quarter, will likely concern investors. Nonetheless, the underlying numbers were quite strong enough to provide an offset, with both funding income and non-interest income up, by 34 per cent and 184 per cent to N53.6 billion and N46.3 billion respectively.”
According to the analysts, , Q3 PBT beat by 18 per cent on the back of positive surprises on both income lines while PAT was ahead by 22 per cent. “Funding income and non-interest income were both ahead by 29 per cent and 53 per cent respectively to more than offset negatives on both the operation expenses (opex) and provision lines. Provisions negatively surprised by around 230 per cent. On an annualised basis, GTBank’s nine months 2016 PBT tracks ahead of both full year consensus estimate of N151 billion and management guidance of N125 billion,” they said.
FMDQ OTC Securities Exchange has introduced short-term bonds to the Nigerian fixed income market.
The Exchange, on Wednesday, said this was achieved through its various engagements and the subsequent approval of the action by the Securities and Exchange Commission.
As an innovation-driven Exchange focused on powering growth, through product and market development, the FMDQ confirmed that it carried out extensive consultations with stakeholders in the Nigerian financial market space before introducing the STBs.
The STBs are short-term debt instruments issued by corporate entities for tenors of between one year and three years.
In addition to bridging the funding gap between short- and medium- to long-term debt instruments, the STBs are designed to serve the liquidity needs of the medium to large creditworthy corporates and commercial entities by providing an alternative/competitive source of financing to bank loans.
“The STBs are beneficial to the debt capital market as they will serve to boost the investment product bouquet for the buy-side (which comprises, amongst others, the Pension Fund Administrators), offshore investors and other market participants,” the statement added.
Furthermore, SEC also approved the FMDQ short-term bonds registration process and listing rules, which were developed in furtherance of the FMDQ’s commitment to provide effective market regulation and governance for the markets under its purview.
The STB rules served as a guide to issuers, the STB sponsors and the investing public, among others, the statement said.
It also stated, “The rules outline the governance structure for the STB issuances as well as the procedure for the registration of prospective STB issuances.
“As a consequence of SEC’s approval of the STB rules, the FMDQ will serve as the Exchange through which the primary due diligence for all the STB issuances, consequently ensuring an expedited time to market, shall be conducted and also provide its efficient platform for the registration and listing of all STBs.”
With the recently launched naira-settled OTC Foreign Exchange Futures product in its 4th successful trading month and about $4bn worth of contracts traded on the FMDQ, the Exchange said it had continued to articulate ways to improve the performance of the market.
“The importance of a fully functional and efficient DCM in powering the growth and development of Nigeria cannot be overemphasised. Even in the light of the present economic climate, the FMDQ remains keen and unrelenting in its efforts to actively work with relevant stakeholders to deliver on its agenda of making the Nigerian financial market globally competitive, operationally excellent, liquid and diverse,” the statement noted.
As the global crude oil benchmark continued to trade above the $50 per barrel mark on Tuesday, economic and energy experts said the price rally would help soften the recession rocking the country and support economic recovery.
They, however, described as more important the need to ramp up the nation’s crude oil production, which has been significantly disrupted by the recent upsurge in militant attacks in the Niger Delta.
The militant attacks on oil and gas facilities pushed oil shipments to as low as 1.38 million barrels per day in August from a high of 2.1 million bpd in January.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said late last month that production had risen to 1.7 million bpd.
Brent crude, against which Nigeria’s oil is measured, had jumped to a one-year high of $53.73 per barrel last week. It traded around $52 per barrel on Tuesday.
The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, in a telephone interview with our correspondent, said the rise in oil price would go a long way in getting the country out of recession, stressing the need for production to increase.
He said, “I am more optimistic now about the prospect of getting out of the recession. One, the price is good; two, the production is up; and three, the Nigerian President and the economic management team are not in denial as to the fact that we have an economic crisis. Therefore, they are unlikely to take it lightly; they will use every resource that comes their way and apply it diligently towards economic recovery and stimulus package.
“So, it is a positive news. But it is not exogenous variables like oil price that will do the trick; the game changer is the tenacity of the Nigerian leadership to stay the course. Variables within our control are the things that are going to get us of the recession.”
Rewane does not expect the oil price to reach $70 or $100, saying, “It is going to stay within the range of $50 and $55.”
“The budget benchmark for 2017 is $42 a barrel; so, at $52, we are $10 above, and $10 is about 25 per cent of $40. So, we are about 20 per cent above the budget benchmark. As long as we are investing it, then we will be on the route to recovery,” he added.
The Chairman and Chief Executive Officer, International Energy Services Limited, Dr. Diran Fawibe, said, “As a matter of fact, if ever the price is $45 and our production can reach two million or 2.2 million barrels per day, obviously, it will help us tremendously.”
According to him, two key things that the government needs to have to be able to turn the economy around are the increase in revenue generation and foreign exchange earnings, and these are anchored on the increase in crude oil production.
“Of course, if the price of oil can stay at $50 and above, it will help. But one is not too sure whether the over $50 price is sustainable given the current situation with regards to production by members of the Organisation of Petroleum Exporting Countries,” Fawibe said.
Nigeria’s overnight interbank rate was quoted at a record high of 150 per cent on Tuesday, two days after lenders placed funds with the central bank to participate in last Friday’s currency forward auction, traders said.
Reuters revealed that few deals were done on Tuesday due to a shortage of naira on the money market, with lenders loath to place funds among themselves until the result of Friday’s currency auction was published.
The central bank last week held a two-month dollar forward auction to clear a backlog of demand from airlines, manufacturers and other companies, as the currency crisis deepened. It later directed lenders to re-submit bids again on Monday, traders said.
Traders said rates spiked because lenders were barred from central bank’s repo window before any currency auction and they had naira funds locked away with the regulator on the day of the auction to pay for the dollars which they expect to receive in two months’ time. The central bank was yet to announce result of the auction.
“Most banks are not quoting rates because they are still waiting for the result of the FX auction,” one trader said. The regulator has been tightening liquidity and intervening directly with dollar sales to commercial lenders to support the ailing naira, hit by the fall in oil prices, Nigeria’s economic mainstay.
Overnight rates closed at 128 per cent on Monday after they opened at 100 percent, up from 14 per cent on Thursday. The money market ended with no deals on Friday as lenders held onto naira to be able to participate at the auction.
Meanwhile, the naira sustained its appreciation on the parallel FX market as it closed yesterday at N453 to the dollar yesterday, stronger than the N455 to the dollar it closed the previous day.
The Bank of Industry (Bol) and the Benue State government have launched a N2billion-Micro Small and Medium Enterprises (MSMEs) development fund to boost the entrepreneurial potentials of citizens in the state.
Under the financing model, both parties will contribute N1billion each for on lending to mainly businesses that have high employment generating potentials and value addition to local raw materials.
Benue State Governor, Dr. Samuel Ortom expressed satisfaction over the initiative and commended leadership of the bank under the acting Managing Director/Chief Executive, Mr. Waheed Olagunju for his foresight and remarkable strides since assuming office.
He urged President Muhammadu Buhari to appoint the acting BoI boss as substantive MD, noting that having worked in the bank for over two decades, he is more than qualified to lead the develop finance institution.
Nevertheless, Ortom appealed to entrepreneurs in the state to take advantage of the loan facilities, insisting that it would not be disbursed along party lines.
He said only those who have viable business proposals in the areas where the state currently has comparative advantage would be given the financing support.
Meanwhile, Olagunju said the intention in the state brought the volume of MSME Funds being managed on behalf of 21 state governments to N18.3 billion.
Four out of the 21 states that had enrolled in the scheme, joined in the last eight months when the MD took over office.
He added that the fund would help entrepreneurs in the state add values to their agricultural produce and boost employment generation potentials. He urged the governor to create industrial parks where beneficiaries of the loans would be able to leverage on infrastructure facilities to reduce operation cost.
According to him, “I suggest the governor establish industrial parks, at least, one in each senatorial district where amenities will be provided and where other infrastructure will be provided. They will share the facilities.”
