The new management of First Bank of Nigeria Limited has allayed fears that its exposure to huge Non- Performing Loans (NPL) would impact negatively on the financial health of the bank, stressing that its strategic focus is the reduction in its recurrent expenditure and impairment charges as well as developing and positioning the bank as a topline revenue earner in the economy.
Speaking in an interactive session with the media in Lagos on Tuesday, the Managing Director, Dr. Adesola Adeduntan who led his management team at the session assured that with a customer base of 10million depositors, 7000 branch network across Nigeria and with over 3million Automatic Teller Machines (ATM) deployed across the country, “our bank is aiming to regain its number one regional spot and remains fully embedded in the Nigerian economy in terms of growth and development of the economy.”
He acknowledged that although the bank had challenges and had to contend with high running cost as well as impairment charges, he assured that new management had deployed technological know-how to reduce the trend adding that “the cost to income which was at 67% has been reduced to 57% and our target is to further achieved a reduction to 48% just as we are also looking at getting a better credit profile for our NPLs.”
Adeduntan said despite the bank’s huge NPL exposure, “our fundamentals remain strong because our liquidity ratio is above 15% as required by the regulator. We are currently dealing with the exposures in our books but lots of them are already secured and we have the Profit and Loss (P&L) account to deal with the NPL exposures which have arisen from our failed investment in the oil and gas sector.”
On what the new management is doing to ensure it returns the bank to its number one position, Adeduntan said “right now we are engaged in recoveries and remediation. But importantly, the entire credit system has been overhauled and we have adopted a new model driven by People, Policy, Process and Technology.”
He said the bank under the new management “has adopted the Oracle risk management system and has recruited an internationally certified Credit Risk Officer to ensure that our NPL never goes way near where it is today and we are not in the category of any bank the regulator is intervening because our capital adequacy ratio is above the required minimum. In addition, we have revoked lending authority from junior officers and centralized the approval process to forestall infraction.”
He said under the new management, the bank is changing its business culture and getting its staff to refocus on ‘the customer first’, adding that although there has been spates of retrenchment across banks in the country, he assured that “we have no immediate plans for retrenchment, our staff will continue to be utilised in viable areas so long as they remain useful.”
The African Development Bank (AfDB) and the African Securities Exchanges Association (ASEA) have signed a five-year Memorandum of Understanding (MoU) to amplify the impact of their strategically aligned joint efforts to promote resources mobilization to fund Africa’s economic growth.
The MoU would provide a collaborative framework for harmonizing and coordinating the efforts of AfDB, the premier international development financial institution for Africa, and ASEA, the premier body of African stock exchanges, towards deepening and connecting African financial markets.
The partnership will facilitate various projects of mutual interest to both the Association and the Bank, targeting areas such as financial markets infrastructure development, introduction of new products in the market, improving market liquidity and market participation, information sharing and capacity building amongst other programs.
The President of AfDB, Akinwumi Adesina argued that the strengthening and deepening of Africa’s financial markets, as a strong tool to mobilize domestic and international savings at an efficient cost, and channeling them towards funding Africa’s private sector, was critical to accelerating the pace to achieve the bank’s 10-year strategy from 2013-2022 all inclusive growth in Africa. “It is therefore integral to the Bank’s High 5s Priority Agenda to ‘Light up and Power Africa’ to ‘Feed Africa’, to ‘Integrate Africa’, to ‘Industrialize Africa’ and to ‘Improve the Quality of Life of Africans’, all of which embody core elements of the 2030 Agenda for Sustainable Development Goals (SDGs).”
According to the President, African Exchanges Linkage Project (AELP), Oscar Onyema explained that the maiden project to be undertaken under the cooperation initiative would be the AELP.
“Collaboration will extend to other joint projects or programs over time. Co-initiated by ASEA and the Bank, the AELP is aimed at addressing the lack of liquidity in African capital markets by creating linkages across markets. It is envisaged that the linkage would allow cross border visibility and open-up markets for investors to trade in any of the linked markets.”
He noted that the AELP would primarily commence with the four pilot Exchanges selected by ASEA as regional hubs during the incubation phase of the project, namely the Casablanca Stock Exchange (CSE), the Johannesburg Stock Exchange (JSE), the Nairobi Securities Exchange (NbSE) and the Nigerian Stock Exchange (NiSE), adding that it would eventually be extended to other ASEA Member Exchanges.
With regards to the AELP, according to Onyema, these linkages would support innovation, stimulating the creation of suitable products in relations to instruments listed on the various linked markets creating more investment opportunities for the investor community.
He stressed that the linkages would also afford issuers access to deeper pools of capital and a wider community of investors and analysts, adding that AfDB and ASEA are devoted to ensuring that the continent achieve its full economic potential through the AELP with a continuous robust relationship.
Union Dicon Salt Plc (UDS) has unveiled a $100 million expansion strategy, aimed at transforming the firm into an integrated food manufacturing and Agro – business to boost profitability.
Under the diversification scheme, which would be completed within 48 months, the firm plans to build production capacity in key food areas, become a national manufacturer and distributor of fast moving consumer goods and an integrated supply that would enable it become a processor of agricultural products and food ingredients.
Already, the company, had, last month, signed agreement with PNG Gas in Delta State to supply gas to its proposed starch processing plant in Umutu in Delta State, as continuation of its strategic plan to becoming a fully integrated firm.
Speaking during the company’s ‘Facts Behind the Restructuring’ in Lagos on Monday, the Managing Director of the company, Chuka Mordi explained that the firm has invested in an installation of a 10,000 MT PA starch processing plant for the conversion of cassava to starch. According to him, the company has also invested in Alape SCPZ investment to increase starch processing capacity to over 90,000 MT PA five years, with enzymatic conversion to maltose syrup.
He added that agreements have been signed with GEA Westfalia and Fortescan Ltd for plant installation and commissioning.Mordi pointed out that the strategy was to create an integrated processing business by controlling output from root to final product, in order to maintain strict quality and ensure feedstock supply that may arise from logistics.
Ite“Union Dicon Salt Plc. was a successful salt processing and distribution company, and a highly regarded brand, in Nigeria; The UDS brand retains significant potential: brand recognition, logistics, and goodwill.
“As a strategic investor in the company, CBO commenced plans in 2014, to revive UDS Plc, an opportunity to diversify the business (operations, & products) for increased competitiveness.
“UDS has the capacity to actively participate in the over USD 140bn food and consumer market in West Africa, that is forecast to rise to over USD 212bn by 2020. This market, which includes pre-processed, and processed consumer products, present a compelling entry opportunity to UDS Plc.
“Management has initiated a 48-month, USD100m strategy aimed at transforming UDS Plc. into an integrated FMCG & Agri – Business with an initial focus on food and agriculture.”
In view of the current state of UDS’s assets and infrastructure, he explained that investment is ongoing to scale up the new operations that the business has acquired.He noted that key investments under this basis are assets that guarantee quick gains, and that will ensure immediate cash flow generation.
He added that the company has commenced a clear-targeted marketing campaign aimed at renewing public consciousness of the UDS brand.
The Speaker, House of Representatives, Yakubu Dogara has said that the parliament would partner with the council of the Nigerian Stock Exchange (NSE) to ensure full implementation of the capital market 10-year masterplan.
Dogara, who identified lack of proper stakeholders’ engagement as one of major setback of the capital market, assured the council of NSE that the Legislation would work with the council and other relevant stakeholders in addressing issues bordering the market.
“Part of the problem we had in the past is because we did not have that kind of synergy with the council very well, they have worked in that direction. “There is positive synergy now between the legislative and the council and utilising that, we can achieve a lot.“The stakeholders conference that took place some weeks ago and there was a communique that came out at the end of that stakeholders forum.
“We promised that whatever outcome that was generated from that stakeholders summit, we will ensure that we implement it if it is related to what we can do as a parliament. He added that the parliament would address some of the issues raised at the just concluded stakeholders forum by giving considerations to some of the capital market bills in the National Assembly (NA).
“The Investment and Securities Act is there, the Companies and Allied Matters Act is there before the NA and I believe that public hearing will take place very soon. Notices of hearing in all cases is the fundamental requirement,” he added.
On the listing of multinationals, Dogara explained that the Parliament would look at the agreements of these companies with the Bureau for Public Enterprises (BPE), noting that the Parliament would compel them to list if it was stated on the agreement.
“Where there are clauses that require them to list and they have not done so through the power of oversight, we would ensure that it is done. They must be penalized in line with the agreement signed with BPE.
“There is an on-going discussions about strengthening those clauses in BPE to ensure that we emphasis that once a company is privatized you must list a reason part of the equity in the market and we must follow through to ensure that it is done,” he assured.
Dogara said that the house would ensure that this was done in respect of spectrum given out to telecommunication firms, which, according to him, would expire soon.
“We will ensure that this will be a cardinal requirement that will compel them to list some part of the equity in the market. If we do that, we would be sure that sooner or later, we would be sure of having some of these firms list on our market,” he said.
By pegging the price of Premium Motor Spirit (PMS) at N145 a litre, the Federal Government has in the last two months saved about N139 billion from subsidy removal.
Before the introduction of the current pricing template of the Petroleum Product Pricing Regulatory Agency (PPPRA), a litre of petrol was selling at N86.50, estimates showed that the government would have been subsidizing the product with about N58 per litre.
The country currently consumes about 40 million litres of PMS daily, which would have amounted to N69.6 billion in one month.
At a regulated price of N86.50, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu had said that government was paying about N16.4 billion monthly as subsidy. Kachikwu said that the there was no provision for subsidy in 2016 appropriation, therefore the need to remove fuel subsidy.
According to him, the Federal Government spent N1 trillion in subsidizing petrol in 2015 alone.
Listing the benefits of the new pricing template, Kachikwu said that the new framework solve fuel scarcity crisis by ensuring availability of products at all locations of the country.
He added that the new fuel-pricing regime would also ensure market stability and improve fuel supply situation through private sector participation.
He believed that it would reduce hoarding, smuggling and diversion substantially and stabilize price at the actual product price.
It is also expected to create labour market stability, which will potentially created additional 200,000 jobs through new investments and prevent potential loss of nearly 400,000 jobs in existing investment. The new system is expected to provide government more revenue to address social and infrastructural needs in the country.
Meanwhile, the International Energy Information Administration (IEA) said that fossil-fuel subsidies has reduced from $610 billion in 2014 to $490 billion in 2015.
IEA said in its July Energy report that recent changes prove that fossil-fuel subsidy reform is possible: low oil prices give net importers the room to reform, and reinforce the need for exporters to do so.
It stated: “Fossil fuels are reaping $550 billion a year in subsidies and holding back investment in cleaner forms of energy. Oil, coal and gas received more than four times the $120 billion paid out in incentives for renewables including wind, solar and biofuels.
“Fossil-fuel subsidies totalled $550 billion in 2013 – more than four-times those to renewable energy – and are holding back investment in efficiency and renewables. In the Middle East, nearly 2 mbpd of crude oil and oil products are used to generate electricity when, in the absence of subsidies, the main renewable energy technologies would be competitive with oil-fired power plants”.
According to the report, in Saudi Arabia, the additional upfront cost of a car twice as fuel-efficient as the current average would, at present, take about 16 years to recover through lower spending on fuel.
This payback period, it noted, would shrink to three years if gasoline were not subsidised. “Reforming energy subsidies is not easy and there is no single formula for success. However, as our case studies of Egypt, Indonesia and Nigeria show, clarity over the objectives and timetable for reform, careful assessment of the effects and how they can (if necessary) be mitigated, and thorough consultation and good communication at all stages of the process are essential”, the report said.
Shell Petroleum Development Company of Nigeria Limited on Monday shut the Trans Niger Pipeline, one of the two major pipelines transporting the nation’s reference crude oil grade, Bonny Light, for export.
This is coming one month after the oil major was forced to shut the pipeline, which was later reopened after repairs.
The TNP transports around 180,000 barrels of crude oil per day to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation at the Afam VI power plant, and liquefied gas exports, Shell said on its website.
The spokesperson for the SPDC, Mr. Bamidele Odugbesan, told our correspondent that the shutdown was as a result of a leak at Bio in Ogoniland, Rivers State.
Recalling that the TNP was shut in June after a leak was found, he said, “Investigation then established that it was a third-party interference and that was resolved.
“This is a fresh leak and we are working towards a joint investigation visit to determine the cause.”
Asked when the pipeline would likely come back on stream, Odugbesan, said, “We can’t determine that at this moment, because we still have to conduct a joint investigation visit.”
The 28-inch TNP, which is operated by the SPDC, was shut down on June 8 after a leak was found at Okolo Lunch near Bonny, according to the company.
Last week, Shell lifted the force majeure – a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances – it declared on Bonny Light exports in early May. The closure of the other major pipeline, the Nembe Creek Trunk Line, after the discovery of a leak, led to the force majeure.
Nigeria’s oil production has recovered to around 1.9 million barrels per day, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said on Friday. Attacks by the militant group, the Niger Delta Avengers, had pushed output to its lowest in over 20 years.
Exports of the Forcados crude blend, loaded from Shell’s Forcados terminal, have been down since February following an underwater pipeline attack.
Kachikwu said that repairs were expected to be completed at the end of this month.
The Speaker, House of Representatives, Yakubu Dogara has said that appropriate sanctions against operators who commit infractions would go a long way in restoring investor confidence in nation’s capital market
He therefore promised that the parliament would strengthen capital market laws to empower regulators to sanction errant operators appropriately.
Dogara stated this at a press briefing in Lagos last Friday after sounding the closing gong at the Nigerian Stock Exchange (NSE).
According to him, capital market regulators must be on top of their responsibilities in order to boost investor confidence in the market.
Dogara, who was a member of the House Committee that investigated the 2009 crash of the stock market, observed that most of the operators who contributed to the crash of the market went unpunished. He said investors would have more confidence in the market if they know that antiquate punish would be given to operators who commit infractions in the market.
“A lot of things are required to be put in place to return investors’ confidence. The regulators need to be at the top of their job. Sanctions must be imposed on operators who commit infractions so that investors would have confidence to participate in the market. Any person who abuses the market should be dealt with in accordance with the laws “he noted.
He stated that capital market regulators should be empowered to sanction operators that arbitrary abuse the market so as to regain investor confidence.
“I guess one of the issues that we must address is the issue of sanction. Even if I am going to lose my money, but seeing that those who perpetuated infractions being dealt with, maybe to some extent I will have the confidence that the market still retains. We need to deepen the market, we need to create and sustain confidence in the market and for confidence to come back we need to do more. When we start sanctioning, confidence will come back to the market,” Dogara said.
Meanwhile, the Speaker has reiterated the commitment of the legislators to compel multinationals oil and gas companies, telecommunication firms and privatised companies to list on the NSE to deepen the market.
Dogara stated that “the flow of resources from citizens to these companies are what make them rich. The only way majority of the citizens can enjoy part of that profit is by listing them on the Nigerian capital market,” he said.
He added that the country would engender economic prosperity through the listing of these companies.
According to him, the House will look at the agreements of some of these companies with the Bureau of Public Enterprises (BPE).
“Where there are clauses that require them to list and they have not done so through the power of oversight. We will ensure that is done or they must be penalised with the provisions of agreement they signed with BPE,” Dogara added.
He said that “there is ongoing discussion about strengthening those clauses in BPE henceforth to ensure that we emphasis that once a company is privatised you must list a reason part of the equity in the market.”
The Lagos State Government has paid the sum of N895.52bn to 256 retirees for the month of June, the state pension commission has said.
It said the beneficiaries, issued retirement bond certificates for the amount, were from the mainstream civil service, local governments, the state Universal Basic Education and other parastatals of government.
A statement by the commission on Sunday said the Director-General, Lagos State Pension Commission, Mrs. Folashade Onanuga, made the disclosure at the presentation of the 28th retirement benefit bond certificates to the beneficiaries in Lagos.
She said that the state government commenced the monthly payment of terminal entitlements in August, 2015, adding that in the last 11 months, a total of N15.44bn had been paid to 3,600 retirees.
She stated that the commission, on behalf of the Lagos State Government was working towards a pension structure that would ensure the commencement of pension payment not later than four weeks after retirement.
“Paying retirees from month to month is part of the agenda for a new Lagos,” she said.
Onanuga assured the retirees that the backlog of pensions and retirement benefits of the state’s retirees would be cleared.
She said the state government would still monitor the welfare of retirees from the state’s civil service despite the fact that payment of their monthly pension had become the responsibility of the Pension Fund Administrators or annuity service providers.
It stated that an interactive platform between the state and the retirees had been scheduled to take place in the third quarter of the year.
“Do not hesitate to report any PFA that is not treating you accordingly,” she stated.
Onanuga urgred the retirees to study carefully the flyers on the key features of the pension benefit options: programmed withdrawal and life annuity, under the Contributory Pension Scheme, before making their decisions.
She emphasised that the commission made the flyers available to enable them to have a full understanding of the two modes of receipt of pension entitlements.
The director-general urged the retirees to be wary of pension fraudsters who have devised various means of extorting retirees.
She advised them to spend wisely and should not engage in extravagant spending.
Trading by banks on behalf of their clients on the Nigerian Interbank Foreign Exchange (NIFEX) has shown increased foreign exchange (forex) allocation to the importation of raw materials and industrial machines by manufacturers. A review of the returns on forex utilisation and source of funds for the week ended July 1, 2016, which was published by some commercial banks last week, revealed an increase in the volume of forex allocations to the sector.
For instance, Zenith Bank Plc’s returns on forex utilisation which put the volume of its transactions at $115,066,665.95 showed that it transacted business with a total of 434 customers. Most of them were corporate customers who bought the greenback from the bank for the importation of industrial raw materials and spare parts, among others. Also, Diamond Bank Plc sold the $42,158,753 it purchased from the NIFEX to 184 of its customers, mainly for the importation of pharmaceutical raw materials, raw materials for construction, agricultural machinery, cement silos for stationary block making, and importation of motorcycles in completely knocked down (CKD) parts, among others. Diamond Bank’s returns on source of funds also showed that it purchased $42,210,497 from the market. Similarly, Union Bank Plc’s returns put the volume of forex transactions by the bank at $142,118,110.69. The bank transacted business with 238 customers and details of the transactions showed that forex was sold for raw material imports, personal income remittances and payment of school fees, among others.
Stanbic IBTC Limited’s returns on forex utilisation also showed that it transacted business with 315 customers who bought dollars to import raw materials and for divestments, among others, just as the bank’s returns on source of funds put the amount of dollars it purchased at $51,761,247.42. Also, FirstBank Nigeria Limited’s returns on forex utilisation showed that its Secondary Market Intervention Sales (SMIS), which was from the Central Bank of Nigeria’s (CBN) special intervention was $26,601,760.48. The bank sold dollars to 139 customers, most of whom were importers of industrial raw materials as well as for petroleum products importers.
While First City Monument Bank Limited’s returns showed that it sold the greenback to 515 customers, its returns on sources of funds put the total amount the bank purchased from the market at $24,140,048. Meanwhile, in furtherance of its efforts to engender transparency and professionalism in the forex market, the CBN at the weekend directed that all forex-related trades by authorised dealers (banks) and corporate institutions in the forex market, with effect from August 1, 2016, must be executed through the FMDQ-advised forex trading auction and surveillance system. The central bank gave the directive in a one-page circular that was signed by its Director, Financial Markets Department, Dr. Alvan E. Ikoku, a copy of which was posted on its website. “All authorised dealers (banks) are expected to execute all forex-related trades among themselves and with their clients (corporate institutions) through the FMDQ-advised forex systems. “The deployment of the FMDQ-advised FX systems will only be to those corporate clients that have been screened and pre-approved by the FMDQ in line with its on-boarding eligibility criteria,” it explained. The central bank also instructed all authorised dealers and corporate institutions in the forex market to ensure strict compliance.
Despite the economic crunch of 2015, the total advertising spend in the country rose to N97.9bn last year, according to the 2015 Mediafacts, which was released on Thursday.
Mediafacts is a key media resource for marketing professionals in West and Central Africa, which is produced annually by mediaReach OMD, a specialist company that provides media planning, buying, control and inventory management services.
The report revealed that the total advertising expenditure for 2015 represented an increase of N4.8bn above the N93.1bn documented in 2014.
According to the report, last year’s electioneering and the successful change of government may have positively impacted on the advertising spend in 2015, as it recorded a positive growth of about 4.8 per cent over the 2014 total media spend.
Mediafacts stated that television stations attracted the highest advertising expenditure of N39bn last year, while the print media, outdoor and radio stations attracted N23.7bn, N20.1bn and N15.1bn, respectively.
It stated that the advertising expenditure that went to the print media last year declined marginally by four per cent, from N25.8bn in 2014 to N23.7bn in 2015.
In addition, the outdoor performed better the previous year when it attracted N20.5bn advertising spend against N20.1bn in 2015.
However, the TV and radio stations in Nigeria attracted more advertising spend of N39.0bn and N15.1bn in 2015, compared to N34.6bn and N12.1bn the previous year.
Mediafacts put the advertising expenditure in the first and second quarters of 2015 at N23bn each, while the third and fourth quarters of the year recorded N29.8bn and N22.1bn, respectively.
“The highest spend for 2015 was recorded in quarter three (N29.8bn), which represents 30 per cent of the total spend,” the report stated.
On regional basis, Lagos State attracted the highest advertising expenditure of N53.1bn, followed by the North-Central (N12.1bn), South-West (N10.2bn) and South-South (N10bn).
“The highest spend for 2015 was recorded in Lagos (54 per cent); followed by the North-Central zone (12 per cent), while the North-East took the rear position. The paltry spend, less than one per cent in the North East, was traceable to the spate of insurgency in the region,” the report stated.
The Managing Director/Chief Executive Officer, mediaReach OMD, Mr. Tolu Ogunkoya, said, “Nigeria’s media is one of the most vibrant in Africa. State radio and TV stations have near-national coverage and operate at federal and regional levels.
“All 36 states run at least one radio network and a TV station. There are hundreds of radio stations and terrestrial TV networks, as well as cable and direct-to-home satellite offerings.”
According to him, television viewing in Nigeria is concentrated in urban areas, adding, “There are more than 100 national and local press titles, some of them are state-owned. They include well-respected dailies, tabloids and publications, which champion ethnic interests.
“By 2014, 70.3 million Nigerians were online (Internetworldstats.com). Mobile phones are commonly used to access the web. Most Internet users are young, educated and urban,” he stated.
Ogunkoya noted that Nigeria’s economy was the largest in Africa, while its manufacturing sector was the third largest on the continent, producing a large proportion of goods and services for the West African sub region.
He said, “Oil has been a dominant source of income and government revenues since the 1970s. Following the 2008-2009 global financial crises, the banking sector was effectively recapitalised and regulation enhanced.”
