Shareholders of Fidelity Bank Plc are to receive a dividend of N3.9 billion for the year ended December 31, 2016. The dividend, which translates to 14 kobo per 50 kobo share, will be paid from profit of N9.734 billion recorded for the year, down 29 per cent from N13.904 billion in 2015.
The full year audited results for the Nigerian lender, released at the Nigerian Stock Exchange (NSE), showed a 3.5 per cent growth in gross earning to N152 billion compared with N146 billion achieved in 2015.
Net interest income grew by 1.7 per cent from N60.9 billion to N61.9 billion in 2015, while fee and commission income rose from N17.23 billion to N20.557 billion. Impairment charges rose from N5.764 billion in 2015 to N8.671 billion in 2016. Profit before tax and after tax fell from N14.024 billion to N11.061 billion and N13.904 billion to N9.734 billion in 2015 to 2016 respectively due to the one-off staff cost incurred during the year.
But total deposits, a measure of customer confidence, grew by three per cent from N769.6 billion in 2015 to N793.0 billion. Similarly total assets increased by 5.4 per cent to N1.298 trillion from N1.232 trillion in the corresponding year.
Commenting on the results, Chief Executive Officer of Fidelity Bank, Mr. Nnamdi Okonkwo said: “Our financial performance in 2016 reflects the sound fundamentals of our evolving business model as we continued with the disciplined execution of our medium-term strategy which positions the business for improved and sustainable profitability.”
He explained that profits dipped due to the cost of N4.8 billion incurred as Fidelity Bank discontinued its legacy gratuity and retirement scheme. “Excluding this one-off charge, PBT for the year would have been at N15.8 billion” he stated.
Nnamdi said, however, that Fidelity Bank’s retail and electronic banking strategy has continued to deliver impressive results with savings deposits growing by 30.1 per cent to N155.0 billion while customer enrollments on its flagship Instant Banking (*770#) and Online Banking products grew by over 200 per cent leading to a 44.6 per cent growth in net e-banking revenues to N7.5 billion.
This performance he said was “driven by the upgrade of our core banking system which provides a superior architecture that enhanced our operational efficiency and deepened our electronic banking capabilities.”
The Chief Executive Officer of Diamond Bank Plc, Uzoma Dozie, has urged European entrepreneurs and investors to step-up their investment stakes in Africa, noting that the fundamentals for sustainable growth and development in the continent has remained positive.
Addressing investors, captains of industry, corporations, thought leaders, opinion and policy makers in the UK, during the presentation of the ‘Companies to Inspire Africa 2017 Report’ by the London Stock Exchange Group, Uzoma stated that returns on investment in Africa is strong, pointing that many companies in the continent are as profitable as their peers in other parts of the world.
According to him, the continent was dotted with huge number of start-ups and micro, small and medium scale enterprises, which are structured to catalyse the continent’s economic and industrial growth. He said that the continent’s 1.2 billion people with more than half of the population below 25 years, remains a huge demographic advantage to investors as it presents one of the biggest markets and workforce in the world.
“It is a great pleasure to give this keynote address at this important event. For us at Diamond Bank, we are passionate about Africa and the opportunities…. For investors looking for returns either in the short term or long term, Africa remains an investment destination of choice. Despite the recent challenges in some African Economies, the forecast is that Africa will still grow more rapidly than the OECD countries. The outlook is positive and this is the time to explore the opportunities that exist in Africa,” he said.
He stated that although, the risk elements may be high investing in Africa but the returns neutralises the challenges. “Yes, there are risks associated with investing in Africa but then business is all about taking risks and striking the right balance between risk and returns. Yes, there are challenges with investing in Africa; infrastructure is still relatively poor to support businesses, power supply is epileptic, there is political instability and security challenges, but with over 50 countries, over 1.2 billion people with more than half of this huge population under 25 years, the opportunities are enormous and more than compensate for the investment risk”, he noted.
According to Uzoma, who was represented by Femi Jaiyeola, the Chief Compliance Officer, the challenges in the continent should serve as an investment stimulant especially as forecasts on returns and growth by analysts show that investors have nothing to lose in the long and short term. He added that Diamond Bank has remained resolute and focused on its innovative and digital-led retail strategy, pointing that this has helped in deepening financial inclusion in the most populous African country.
He said: “Changes are happening in Africa: trade barriers are being dismantled with intra Africa trade holding a lot of potential; customers’ profile are changing with educated, young urban professionals who are brand-aware and sophisticated in terms of their consumption; ongoing digital transformation; and importantly, African economies are beginning to diversify beyond commodities. These are positive changes for discerning investors and Businesses.”
Nigeria is in the worst position among major oil exporting countries in the Middle East, Africa and parts of Europe to have balanced budgets this year, with oil forecast to average $52.50 per barrel, according to Fitch Ratings Limited.
The country needs an oil price of $139 per barrel to balance its budget, the global rating agency said in a report on 14 major oil exporting nations in the Middle East, Africa and emerging Europe.
The forecast break-even oil prices of other African countries, Angola, Gabon and Republic of Congo were put at $82, $66 and $52 per barrel, respectively.
According to Fitch, Saudi Arabia needs an oil price of $74 per barrel; Bahrain, $84; Russia, $72; Kazakhstan, $71; Oman, $75; Azerbaijan, $66; Iraq, $61; United Arab Emirates, $60; Qatar, $51; and Kuwait at $45.
It said even after cuts in government subsidies and currency devaluations, 11 of them would not have balanced budgets this year, including Saudi Arabia, Bloomberg reported on Thursday.
“Fiscal reforms and exchange rate adjustments are generally supporting improved fiscal positions compared to 2015, but have not prevented erosion of sovereign creditworthiness,” Fitch said.
Only Kuwait, Qatar and the Republic of Congo have estimated break-evens that are below Fitch’s oil price forecast for this year.
Kuwait at $45 per barrel traditionally has a low break-even because of its high per-capita hydrocarbon production and more recently its “large estimated investment income” from its sovereign wealth fund, Fitch said.
Brent crude, a global benchmark, has averaged about $55 per barrel this year. It traded around $54.96 per barrel on Thursday.
The rating agency said it “substantially” raised the fiscal break-even prices for Nigeria, Angola and Gabon from 2015 levels because of rising government spending.
Meanwhile, the Nigeria LNG Limited has begun talks with potential buyers on new contracts for gas supplies from its first three production units at its Liquefied Natural Gas terminal, Reuters quoted a senior official of the company as saying.
Contracts for gas supplies from Trains 1, 2 and 3, which together produce nine million tonnes of LNG a year, are being discussed, said the official who requested anonymity. He was attending the Gastech trade conference in Chiba, outside Tokyo.
Following the sale of Keystone Bank Limited to the Sigma Golf-Riverbank Consortium by the Asset Management Corporation of Nigeria, the new owners have announced the names of members of the lender’s transitional Board of Directors.
In a statement on Tuesday, the lender listed the members as Alhaji Umaru H. Modibbo (Chairman); Mr. Hafiz Bakare (Acting Managing Director/CEO); Mrs. Yvonne Isichei (Executive Director); Mrs. Titilayo Adebiyi (Non-Executive Director); and Mr. Bulus Bunken Dan-Habu (Non-Executive Director).
According to the bank, the transitional governance arrangement, which will take effect from April 1, 2017, is subject to approval by the Central Bank of Nigeria.
The statement read, “By the 31st of March 2017, the current Board of the Bank (including the MD/CEO, Mr. Philip Ikeazor) would have fully disengaged, except for Bakare and Isichei, who will continue as part of the transitional governance board.”
United Bank for Africa Plc and Stanbic IBTC Holdings Plc have set aside N47.48 billion to cover bad loans in their 2016 financial results. The provision showed a jump of 138 per cent compared to N19.9 billion they set aside in 2015.
Access Bank Plc, Guaranty Trust Bank (GTBank) Plc and Zenith Bank Plc, had reported a total loss provisions N119.59 billion, indicating an increase of 183 per cent from N42.297 billion in 2015.
However, when UBA and Stanbic IBTC released their audited results last week, they followed the same trend of rising impairment charges as a result of the economic headwinds that had affected some of their debtors.
A breakdown of the impairment charges showed that UBA made the higher provision of N27.68 billion, which is a significant jump from N5.06 billion in 2015. That of Stanbic IBTC rose from N14.9 billion to N19.8 billion.
Despite the huge impairment charges, both financial institutions ended the year with higher profit after tax (PAT). For instance, Stanbic IBTC Holdings grew its PAT by 51 per cent to N28.52 billion, from N18.891 billion in 2015.
UBA’s PAT rose by 22 per cent from N60 billion to N72 billion in 2016. Based on the performance, the Board of Directors of UBA proposed a final dividend of 55 kobo,, bringing the total dividend to 75 kobo per share for the year. The bank had earlier paid an interim dividend of 20 kobo.
Commenting on the results, the Group Managing Director and Chief Executive Officer of UBA, Kennedy Uzoka expressed satisfaction at the resilience of the bank, despite the macroeconomic challenges in a number of countries where it operates.
He said: “Given the operating environment in 2016, I am very pleased with our profitability – an impressive 32 per cent growth in profit before tax to N91 billion – whilst we have also focused keenly on operational efficiencies, illustrated by the reduction in our Cost-to-Income Ratio.”
Speaking on the bank’s outlook for the 2017 financial year, Uzoka said: “As we implement our Customer First Philosophy, we are approaching 2017 with real optimism, especially with the outlook remaining positive in many of our markets, where we benefit from our increasingly diverse revenue streams. We reiterate our pledge to delivering excellent service to our customers, and remain committed to creating superior and sustainable return for our shareholders.”
Speaking in the same vein, Chief Financial Officer (CFO) of UBA Group, Ugo Nwaghodoh said, 2016 performance reflected the strong potential and resilience of the bank’s business. “We grew top and bottom lines by 22 per cent and 32 per cent respectively, despite the stagflation in Nigeria, our core market. Reflecting improved balance sheet management and better value extraction, our net interest margin (NIM) improved to 6.7 per cent,” he said.
•Government targets $18 billion by 2019 To boost bilateral ties and increase inflows of foreign direct investments, stakeholders within Nigeria and Norway have sought opportunities in the non-oil sector in addressing economic challenges bedevilling the two nations.
Besides, the Nigerian Export Promotion Council (NEPC) has identified a potential earning of $18 billion from non-oil export sector by 2019 if opportunities in the sector are properly harnessed.
According to stakeholders, the challenges impacting both on the Nigerian and Norwegian national economies have created unprecedented opportunities to strengthen commerce and investment ties between our countries.
Speaking at the Nigerian Norwegian Chamber of Commerce’s quarterly business roundtable in Lagos, the Chairman of the Chamber, Chijioke Igwe stated that though the global economy is undergoing both structural and cyclical adjustments, due in part to the collapse of energy prices, there are significant areas of complement across the economic landscapes of both Norway and Nigeria. He said: “Both our countries have had a long and productive trade relationship over many years; both economies are also committed to economic diversification from the traditional engine of growth, the energy sector
“While Norway has a highly developed industrial and services base, Nigeria presents viable investment potential, with the wealth of human capital, agriculture, mineral resources, infrastructure and value added manufacturing”.
The Chief Executive Officer of NEPC, Olusegun Awolowo stated that the Federal Government’s agenda to replace oil as the major national foreign exchange earner will see the country’s earnings growing to $30 billion by 2025 if there is an increase in production output from farms, while exporters explore ways to penetrate new markets.
Awolowo stated that the outputs from the farms are very low to meet local demand, even as pressure rises to increase foreign exchange earnings from non-oil export.
“The world’s largest exporters tend to be wealthier than other nations even as only three countries in the top 20 exporters depend mainly on oil exports. It is time for Nigeria to plan for a future with zero oil. As such we are focusing on sectors based on financial value, degree of complexity and products where the nation has comparative advantage”, he added.
Citing the need to deepen trade ties between Nigeria and EU countries, the Head of Trade and Economics section, EU Common Embassy in Nigeria, Filippo Amato stated that the body is interested in the development of the country and would not jeopardise its growth.
Igwe added that the NNCC was established in order to create a platform to facilitate trade and investment, remove perception barriers and mitigate transaction risks that its members might experience in exploiting the commercial potential in Nigeria.
The rise in the issuance of bonds and other debts instruments by governments and corporate organisations has taken a heavy toll on the fortunes of the equities sector. Market investors may have lost about N2.3trillion in recent years.
The preference for the bonds and debts instrument arises from the fact that returns on such facilities, which are loaned to governments or corporate bodies, are guaranteed for the fixed period of their tenure, unlike the stocks or equities which are exposed to the vagaries of market forces as they are traded daily.
For instance, the market capitalisation of quoted equities, which was put at N11, 237 trillion on January 5, 2015, stood at N8,842 trillion as at Tuesday, March 21, 2017, down by N2.3 trillion, while the All-share index declined by 8384.72 points or 32.8 per cent, from 33,943.29 to 25,558.57.
Overall, the practice has made government the biggest competitor of the equities market as its unrestricted floating of official bonds and debts instruments has rechannelled elsewhere funds needed to stimulate activities in the stock market. Consequently, investors may choose to remain in the market and become poor, or divest in pursuit of the new investment fad called government bonds. Either way, the equities market is weakened as funds required to boost trading are being gradually crowded out by incessant bonds issuance by government.
Crowding out occurs when increased government involvement in a sector of the market economy substantially affects the other sectors of the market, either on the supply or demand side. Domestic debts are debts instruments issued by the Federal Government and denominated in local currency.
Indeed, the worry stems from the priority that the debts enjoy over equity during payment on account of the risk management strategies and the poor investment decisions demonstrated by some investors in relation to the current slow economic activities.
Furthermore, investors pointed out that with the high level of debts instruments, the lull in the equities market may hit a deeper bottom and become more intense, as more investments would be channelled to the fixed income market.
In the last three years, a number of bonds and debts instruments have been issued to support various ventures, the latest being two weeks ago when the Debt Management Office (DMO) listed its $1billion Sovereign Eurobond on the FMDQ OTC Securities Exchange Plc.
The 15-year Eurobond priced at par and at a coupon of 7.875 per cent per annum is the first foreign currency denominated security to be listed and traded in the Nigerian debt capital market.
Last month, Forte Oil Plc listed N9 billion bonds on the platform. The bond, which is the first under the company’s N50 billion bond issuance programme with 17.50 per cent fixed rate, was listed concurrently on the NSE. The bond with a five-year tenure represents the first corporate listing on the FMDQ this year.
The FMDQ OTC PLC (FMDQ), on April 8, 2015, had welcomed the listing of the United Bank for Africa Plc’s N30.50billion first series’ seven-year 16.45% Fixed Rate Subordinated Unsecured Notes due in 2021 (the UBA Bond). Also, in October 2015, the securities exchange achieved another feat with the listing of N8 billion Nigeria Mortgage Refinance Company (NMRC) bond on its platform.
The Chief Executive Officer of NMRC, Prof. Charles Inyangete, explained that the successful completion of the bond issuance and the investors’ interest it generated underscored the confidence reposed in the underlying principle and operational model of the NMRC.
These listings have, therefore, opened an opportunity for other Nigerian corporate organisations to raise funds from the international market to list bonds for trading by local investors on the platform.
The long reign of the bears and the continuous depreciation in stock prices in the equities also became a justification for their apathy to investing in the stock market. The Director General of the DMO, Federal Government’s debt management body, Dr. Abraham Nwankwo, had assured that it would put modalities in place to ensure that government debt instruments do not take away much-needed funds required to boost the equities market. He spoke during the facts-behind-the listing presentation of the $1billion Euro bond. This has not happened even as stakeholders insist that instead of this constant bleeding, government measures must stimulate investments from outside into the capital market, especially the equities sector.
Reacting to the development, the President and Chairman of Governing Council of the Institute of Capital Market Registrars (ICMR), Bayo Olugbemi, affirmed that bonds and government instruments were already crowding out funds from the equities market.
He noted that because of the attractive coupon rate (interest rate) and frequencies of payment on these instruments, they hold more promises for every segment of investors. “Therefore, putting one’s scarce funds in the not very attractive equities market will be akin to willingly throwing your resources into the pit. The major reason for investing is to get attractive returns,” he added.
The Managing Director, GTI Plc, Amos Aladere, said that the challenge was not just in crowding out funds from the equities market, but also stifling private business owners in the country.
He explained that lenders’ funds were migrating to the Federal Government savings bond, leaving little or nothing for equities market and indigenous entrepreneurs. “SMEs are the growth catalyst of any economy. But it will later be beneficial to the economy if the funds being raised are used to speed up infrastructural development.”
The National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Adeniyi Adebisi, said that the ideal option under the circumstances was that government measures should stimulate investments from the outside into the equities market.
“The National Assembly’s committees on Capital Market, the Nigerian Stock Exchange, the Securities and Exchange Commission (SEC), shareholders activist groups at a seminar in Badagry recently expressed worries about the dwindling fortunes of the capital market from N13trillion some years ago to now below N9 trillion.
“In a way, Federal Government’s floating of savings bonds into the capital market is a positive step towards deepening the market, as was hitherto widely clamoured. However, the gain of one sector of the capital market is the loss of another sector. The savings bonds issues have certain advantages over the stock capital market, and as such will necessitate movements of funds from that sector to the other sector of the same capital market,” he said.
The naira is likely to strengthen further on the black market as the Central Bank of Nigeria steps its interventions in the foreign exchange market.
According to currency analysts and economic experts, the naira will record further gain in the coming days as the CBN aims to narrow the gap between the official and parallel market rates.
The naira strengthened to 385 to the dollar on the black market on Thursday, from 395 on Wednesday, and from 457 last Thursday.
On the official interbank market, the naira closed at 308 to the dollar, against 306 last Thursday.
“We see the exchange rate converging at some point between 380-400 naira to the dollar in the near term because of the determination of the central bank to increase dollar supply,” the President, Association of Bureau De Change operators, Aminu Gwadabe, said.
A currency expert at Ecobank Nigeria, Mr. Kunle Ezun, said the dollar might sell at 375/380 next week if the central bank continued its intervention programme in the forex market.
“It depends on what the CBN is targeting; but the good thing is that when the dollar sells for between 375 and 380, the incentive to do round-tripping will not be there anymore and this is good for the market, the economy and the country,” he added.
The CBN was planning to sell $100m in currency forwards on Thursday to be delivered within the next 60 days.
The local currency has been appreciating in recent weeks on the back of the continued and consistent interventions in the forex market by the CBN.’
Meanwhile, the Kenyan shilling is expected to remain stable over the next week, mainly owing to importers’ demand for dollars outweighing inflows from farm exports.
Market participants said there was no consensus on what policymakers are likely to do when they meet to set interest rates on March 27, according to a Reuters report.
The Tanzanian shilling is seen trading in a tight range against the dollar, helped by a slowdown in demand for the US currency.
“The shilling will likely remain range-bound next week due to subdued business activity. Demand and supply of dollars are largely matching each other at the moment,” a trader at a commercial bank told Reuters.
The Ugandan shilling is seen weakening moderately in the days ahead, weighed down by a typical surge in appetite for hard currency from manufacturers towards month-end.
Ghana’s cedi would be expected to remain bullish next week, bolstered by strong forex liquidity inflows amid weakening dollar demand, analysts said.
After touching record lows of 4.742 to the dollar this month, the cedi has rallied steadily to reach 4.40 by mid-morning on Thursday, compared to 4.56 a week ago. It is down about four per cent since January, Reuters data shows.
“We expect a sustained bullish cedi in the face of comparatively weaker demand for the greenback amidst sufficient forex supply,” analyst at Accra-based Dortis Research, Joseph Biggles Amponsah, said.
“However, to extend this gain into the next quarter, the supply of dollars to the market needs to be sustained.”
The kwacha is expected to hold firm against the dollar next week because of hard currency conversions by companies preparing to pay salaries and other month-end obligations.
The performance of the stock market remained negative thursday as profit taking persisted. However, the decline was marginal as sentiments were mixed. Although price gainers outnumbered price losers, losses suffered by bellwether stocks made the Nigerian Stock Exchange (NSE) All-Share Index (ASI) to remain in the negative territory. The NSE ASI shed 0.05 per cent to close lower at 25,514.03.
Seplat Petroleum Development Company Plc led the price losers with 9.7 per cent trailed by Guinness Nigeria Plc, which went down by 4.2 per cent. African Prudential Registrars Plc and Access Bank Plc declined by 3.7 per cent and 3.5 per cent per cent in that order. NASCON Allied Industries Plc closed 2.9 per cent lower just as Diamond Bank Plc shed 2.1 per cent.
Forte Oil Plc and FCMB Group Plc dipped by 1.7 per cent and 1.6 per cent respectively, while Zenith Bank Plc went down by 1.4 per cent.
Zenith Bank is losing value a day after the shareholders approved its final dividend of N55.573 billion final dividend for the year ended December 31, 2016.
On the positive side, Lafarge Africa Plc maintained the number spot on the gainers’ chart, rising by 8.4 per cent to close at N41.00 per share. The stock had similarly led the price gainers the previous day as investors reacted to the 105 kobo dividend the cement manufacturing firm recommended for 2016 year.
Although the dividend is lower than the 300 kobo paid the previous year, market operators said they least expected any dividend from Lafarge Africa Plc given its nine months results that showed N40 billion loss.
Lafarge Africa Plc reported a profit after tax of N16.8 billion as a result of tax credit of N39.71 billion. The profit was 38 per cent lower than the N27 billion profit recorded in 2015.
But for the tax credit, which came mainly from deferred tax assets generated from Unicem operations, the company would have ended 2016 with a loss before tax of N22.8 billion.
The Chief Executive Officer, Lafarge Africa, Mr. Michel Puchercos, had said the immediate objective of the company is to deliver fully on “our turnaround plan by optimising our processes, developing our alternative fuel strategy, reducing operational costs to deliver strong EBITDA margins returning to historic levels.”
Apart from Lafarge, Learn Africa Plc also appreciated yesterday, chalking up 4.6 per cent. Livestock Feeds Plc garnered 4.6 per cent, while Sterling Bank Plc and Fidson Healthcare Plc appreciated by 4.2 per cent and 4.1 per cent respectively.
Zenith Bank Plc has shelved plan to raise N100 billion via a combination of bonds and share sales due to weak capital markets, it said on Thursday.
The bank had expected market conditions to improve when it announced plans to seek approval for the funds last month, said Zenith’s head of investor relations Michael Anyimah, but the lender cancelled them due to the struggling economy.
“The request for shareholders’ approval to raise fresh capital has been withdrawn,” Reuters quoted Anyimah to have said, adding that the bank had strong buffers to support its operation.
Zenith Bank shares which had shed 6.4 per cent this year on the Nigerian Stock Exchange closed at N13.60 per share thursday.
Nigerian regulators have been trying to revive their IPO market which dried up almost 10 years ago following a crisis in the West African country. The Securities and Exchange Commission has proposed to cut listing fees to attract issuers. Zenith posted a pre-tax profit of N156.75 billion for 2016, up from N125.62 billion a year earlier.
