For the first time in seven months, the dollar fell below the psychological N400 barrier, when the greenback traded at N399 to the dollar in Lagos and exchanged at N395 in Abuja, lower than N410 at which it traded on Tuesday.
With the gains made by the local currency in the last five weeks, the naira inched closer to one of the Central Bank of Nigeria’s (CBN) key foreign exchange policy objectives of an exchange rate convergence.
The naira trades for N375 to the greenback for invisibles and at N307 to the dollar on the FX interbank market, the official window for manufacturers and importers of raw materials eligible to buy FX from this segment of the market. The last time the naira traded at between N395 and N400 to the dollar on the parallel market was in August 2016.
The significant gains made by the naira on the parallel market, according to market analysts, was a reflection of the improved confidence in the FX market, following the sustained dollar interventions by the CBN since last month. One analyst also attributed the gains made by naira to the Bureau de Change (BDC) operators that are awash with dollars and with little or no customers to patronise them.
He said several retail customers who used to resort to the BDCs (which realistically fund the parallel market) to fund invisible transactions now get to buy dollars at a lower rate from the banks.
“The BDCs are awash with cash. Remember that the central bank sold about $200,000 to each BDC at some point and they had also bought dollars at high rates which they hoarded, thinking that the naira would remain in a free fall.
“But with the CBN’s intervention, they are stuck with loads of dollars and little or no customers, so they have stopped buying dollars and are looking for avenues to offload what they bought at ridiculously high rates.
“Essentially, the speculative attacks on the naira has come back to haunt them and they’ve got their fingers burnt,” he said.
In all, the central bank has auctioned a total of $1.895 billion through forward sales, as well as targeted intervention for invisibles.
This amount does not include its daily intervention of $1.5 million on the interbank market. The CBN Governor, Mr. Godwin Emefiele, on Tuesday expressed optimism about the convergence of the FX rates on the official and parallel markets, stating that the gains made by the naira against the greenback in the last five weeks was not a fluke.
Emefiele said he was happy that the central bank’s intervention was yielding positive results. “I am happy, indeed very gratified, that the interventions have been positive, we have seen the rates now converging and we are strongly optimistic that the rates will converge further.
“In terms of sustainability, I think it’s important for us to say that the foreign reserves at this time are still trending upwards to almost $31 billion as I speak with you.
“And the fact that we have done this consistently for close to five weeks, should tell everybody or those who doubt the strength of the central bank to sustain this policy,” he had said after the meeting of the Monetary Policy Committee (MPC).
But an analyst at Ecobank Nigeria, Mr. Kunle Ezun, who welcomed the development in the FX market, pointed out that achieving a convergence between the official (interbank rate) and parallel market rate would be a more onerous task. “For us to have a convergence between the interbank and parallel market, it would require the CBN to devalue the official exchange rate to about N350 to the dollar.
“Without that, I don’t see how the official and parallel market rates can converge. Maybe what the CBN governor was talking about is achieving a convergence between the parallel market rate and the rate for invisibles, which is N375 to the dollar.
“But what the CBN has done in the last one month has really helped the parallel market rate. But we need to see improved liquidity on the interbank market,” Ezun said in a phone chat with THISDAY.
Sarah Alade Bows Out
In another development, the Deputy Governor of the CBN, Economic Policy, Dr. Sarah Alade, retired on Wednesday and urged Emefiele to uphold the credibility of the bank.
Alade, who for four months served as the acting governor of the central bank, following the suspension of the former CBN governor, Sanusi Lamido Sanusi, now the Emir of Kano, also recalled a dark period during her stint when the central bank had “four governors”.
Alade spoke at a send off held at the CBN headquarters in Abuja that had in attendance Emefiele; the Minister of Finance, Mrs. Kemi Adeosun; Minister of Budget and National Planning, Senator Udoma Udo Udoma; and officials from the International Monetary Fund (IMF) and World Bank, reported the News Agency of Nigeria (NAN).
Sanusi, in February 2014, was suspended by former President Goodluck Jonathan over allegations of financial recklessness and misconduct.
This happened after Sanusi had claimed that the Nigerian National Petroleum Corporation (NNPC) had not remitted $20 billion from crude oil earnings to the treasury.
“Throughout my period at the bank, I had one slight regret and that’s during the period I was the acting governor. It was the time that the CBN was being investigated. It had never happened before that the activities of the CBN were under investigation.
“We went for the IMF meetings and when we met with investors, they asked us ‘what is happening? We understand that there was some financial mismanagement in the CBN’. It was humiliating.
“I think for me, that was a low point. The credibility of this institution was eroded. “For an institution this important to be subjected to that, is bad. At the end of the day, it was not just CBN that suffered for it but the economy as a whole did suffer.
“So I want to encourage us that whatever we need to do, let us do it right. We must not subject this institution to that type of incident again,” she said.
Sharing her experience as acting governor, Alade explained that the investigation had paralysed activities at the bank.
“I remember that during that period, I was reminded every morning that we had four governors. “The suspended governor, the governor-in-waiting, the acting governor and the investigating governor.
“I remember that the investigating governor told us that there should be no initiative, no payment, no decision-making, nothing. The only thing we could do was to just maintain the bank. “So the bank was sort of paralysed. We could not do anything. For me, it was a humiliating experience, but we did the best we could,” she said.
The persons Alade was referring to were Sanusi – suspended governor; Emefiele – governor-in-waiting; Alade – acting governor; and Mr. Jim Obazee – investigating governor, who at the time was the Executive Secretary of the Financial Reporting Council of Nigeria (FRCN).
Obazee, who was recently fired by President Muhammadu Buhari, had written a damning report on the bank’s 2011 and 2012 audited financial accounts under Sanusi’s stewardship.
At the send off for Alade, Emefiele described her as “a friend, colleague and a woman of extreme virtue”. He applauded her for her hard work and the 23 years she had served at the central bank.
Similarly, Adeosun described the retiree as one of the brilliant and inspiring Nigerian women in the financial sector.
In her capacity as the Deputy Governor, Economic Policy, a post she held for 10 years, Alade served on the teams on major economic policy studies and was involved in the preparation of the CBN’s Monetary and Credit Policy proposals over the years.
She was actively involved in the drafting of the Medium Term Economic Programme for Nigeria and the IMF Staff Monitored Programme/Standby Arrangement.
She was also a member of the Technical Committee on Vision 2010 and is currently a member of the Technical Committee on Vision 2020, as well as the National Economic Management Team.
As deputy governor, Alade superintended over the Economic Policy Directorate, comprising the Research, Monetary Policy, Trade and Exchange, Statistics Departments and the Financial Markets Department.
As chair of the Monetary Policy Implementation Committee, she interfaced with operational departments and coordinated technical inputs for the Monetary Policy Committee of the CBN.
Fitch: Banks Continue to Face Headwinds
Meanwhile, Fitch Ratings on Wednesday said Nigerian banks would continue to face challenges this year, following the extreme difficultly they faced in 2016.
The ratings agency, in a report on Nigerian banks, pointed out that the financial institutions faced multiple threats from the operating environment in 2016, including Nigeria sliding into recession, the economy continuing to suffer from low oil prices, and severe shortages of foreign currency (FC).
Consequently, banks struggled with declining operating profitability (excluding translation gains), sluggish credit growth, fast asset quality deterioration, tight FC liquidity and weakening capitalisation, putting increasing pressure on their credit profiles.
Fitch stated that the “outlook for the rest of 2017 is not much brighter. We believe that the banks will continue to face extremely tight FC liquidity despite the authorities’ best efforts to normalise the foreign exchange (FX) interbank market and improve the supply of US dollars”.
It added: “Importantly, deliveries under the CBN’s FX forward transactions since first half of 2016 have helped the banks access US dollars and reduce a large backlog of overdue trade finance obligations to international correspondent banks.
“However, given the severity of the FC liquidity issues, refinancing risk remains at the top of our perceived risks for the sector, especially as some banks have large Eurobond maturities in 2017/2018.
“Fast asset quality deterioration is in line with our expectations given the macro challenges and the continuing issues in the oil-sector.
“Oil-related impaired loans (NPLs) are high and this excludes large volumes of restructured loans. Other industry sectors contributing to NPLs include general commerce and trading, which have been affected by both the naira depreciation and FC shortages.
“For the Fitch-rated banks, we believe the NPL ratio could rise to 10%-12% by end of first half 2017 (this remains lower than the CBN’s reported figure for the entire sector).
“As a one-off policy change, the CBN allowed banks to write off all fully reserved NPLs by end-2016. Together with significant loan restructuring (particularly in the oil sector), this will ease pressure on NPLs for now, in our view.
“Slower economic growth and a lower risk appetite from banks will continue to translate into subdued credit growth and weak core earnings generation in 2017.
“Loan growth averaged 25% in 9M16, but this was due to the currency translation effect post-devaluation as about half of sector loans are in FC.”
According to Fitch, loan growth was negligible in constant currency terms, adding that banks’ 2016 profitability was underpinned by large translation gains booked on net long FC positions following the naira devaluation.
“Excluding these, some banks would have reported a significant fall in operating income. Regulatory capital ratios are high from a global perspective, but remain under pressure due to inflated risk-weighted assets (due to the FC translation effect) and lower core retained earnings.
“In our view, there is a limited margin of safety as some banks could very easily breach minimum regulatory requirements in the event of further naira depreciation and/or weaker asset quality,” it added.
The agency observed that the Long-Term IDRs of all Nigerian banks are in the ‘B’ range, indicating highly speculative fundamental credit quality.
The low ratings, it noted, reflect the significant influence of the weak operating environment, which overshadows other rating factors.
“The banks’ IDRs are driven by their Viability Ratings, Fitch’s assessment of their standalone creditworthiness. “Following a re-assessment of potential sovereign support available to the banks in 2016, Fitch believes that sovereign support cannot be relied on given Nigeria’s (B+/Negative) weak ability to do so in FC.
“As a consequence, we removed sovereign support from the Long-Term IDRs. Overall, the largest Nigerian banks with stronger and more diverse business models, high revenue-generating capacity and stronger liquidity profiles appear to be coping better than smaller banks on most metrics.
“However, tail risks remain high for all banks due to their sensitivity to concentration risk,” it said.
Lafarge Africa Plc, one of the leading cement and building solutions providers in Nigeria, yesterday reported a profit after tax (PAT) of N16.898 billion for the year ended December 31, 2016, showing a decline of 38 per cent compared with N27.163 billion in 2015.
According to the audited results, Lafarge Africa Plc recorded revenue of N219.714 billion, compared with 267.234 billion in 2015. Loss before tax stood at N22.818 billion, compared with a profit before tax of N29.286 billion. However, a N39.717 billion tax credit, which came mainly from deferred tax assets generated from Unicem operations, lifted the company’s PAT to N16.898 billion.
The board has recommended a dividend of 105 kobo, which is 65 per cent lower than 300 kobo the company declared in 2015.
Commenting on the performance, the Chief Executive Officer, Lafarge Africa, Michel Puchercos, said: “Our turnaround plan delivered solid results in fourth quarter (Q4) 2016 in spite of the challenging environment in Nigeria and South Africa. Technical challenges have been resolved with all our plants operating at high reliability. Our energy optimisation plan has proved successful with increased use of alternative fuel (AF) to offset gas shortages. Ewekoro 1 plant migrated from 100 per cent reliance on gas and LPFO to about 40 per cent use of AF at the plant. Logistics and commercial turnaround plans are in place and enabling to restore market share.”
According to Puchercos, Mfamosing line 2 was delivered ahead of time and above specification, and is now fully operational.
“The new Line contributed 338kt in Q4 2016 to cement production volume and is expected to deliver significant cost savings going forward. Our immediate objective is to deliver fully on our turnaround plan by optimizing our processes, developing our alternative fuel strategy, reducing operational costs to deliver strong EBITDA margins returning to historic levels,” he said.
The company explained that in Q4, the third-party syndicated loan of $88.4 million was pre-paid, through a loan refinancing arrangement with LafargeHolcim Group. This inter-company loan was hedged through a non-deliverable futures (NDF) transaction. “Consequently, overall $581 million debt was restructured, which removed the FX impact on Lafarge Africa’s results. Net debt was reduced to N108.3 billion, below the N120 billion announced notably supported by capex control and solid cash flows,” the company said.
The Securities and Exchange Commission (SEC) is intensifying efforts to deepen the nation’s capital market by ensuring that more companies raise funds and get listed in the market.
The new issue market has been relatively dormant with initial public offering (IPO) drying up in recent times. Although the market has witnessed the listing of two companies this year, the prospect of more companies coming to list is not very bright. However, in a move expected to attract more activities in the market, SEC has proposed a reduction in the cost of primary equity and fixed income issues.
However, the commission is seeking the contributions of stakeholders in the market before making the new fees operational. In the proposed cost structure, the total primary fixed income issuance fees will be 2.293 per cent, down from the current 3.9375 per cent. Similarly, primary equities issuance fees will be 2.833 per cent as against 3.17 per cent.
SEC will charge issuers 0.275 per cent for any N500 million to be raised, as against 0.30 per cent currently charge. The next N500 million will attract 0.225 per cent fees, while balance above N1 billion will attract 0.15 per cent commission. Also, NSE will charge listing fee of 0.25 per cent on the Main Board subject to maximum fee of N200 million. Listing fee for the Premium Board will be 0.25 per cent of offer size subject to maximum fee of N400 million, while listing on ASeM attract flat fees of N100,000. For fixed income primary issuance fees, the SEC is expected to charge 0.15 per cent on the first N500 million being raised by an issuer compared to 0.15 per cent of offer size previously charged. The next N500 million will as well attract 0.145 per cent fee, while balance above N1 billion will attract 0.1425 per cent fee. For the NSE, there is zero fee for companies already having equity listing, compared to 0.15 per cent of offer size originally paid by issuers.
Issuing houses are expected to charge 1.35 per cent for every initial N1 billion being raised by companies from the equities market, just as issuing houses are expected to charge 1.35 per cent of offer size. The next N1 billion will attract 1.225 per cent fee, while balance over N2 billion will cost the issuer 1.15 per cent of the offer size.
Furthermore, the Central Securities and Clearing System (CSCS)’ commission on N5million is fixed at 0.0075 per cent of the offer size as against 0.01 per cent currently charged. But companies without equity listing are expected to pay 0.0375 per cent issuance fee. While that of CSCS is capped at N5 million at 0.0075 per cent of the offer size, stockbrokers are expected to collect 0.13 per cent of offer size as fee.
However, the commission proposed 900 per cent increase in registration filing fees for all categories of Capital Market Operators( CMOs), from N5,000 to N50,000, while processing fee is pegged at N200,000. According to the proposed rule, registration for stock/commodities exchanges, bankers to an issuer, clearing and settlement agency/depository agency will go up by 900 per cent from N100,000 to N1 million respectively, registration for an over-the-counter market is being raised to N1 million, while that of inter broker/dealer and capital trade points have been pegged at N500,000 respectively, among others. SEC has given stakeholders up to March 28, to send in their contributions to the proposed fees structure before it will become operational.
The disbursement of the N500bn London-Paris Club loan refund to states by the Federal Ministry of Finance is to commence next week, investigations have revealed.
Top government officials confided in our correspondent that the Minister of Finance, Mrs. Kemi Adeosun and the Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, would meet anytime soon over the modalities for the disbursement of the funds.
The official said, “We have received the President’s directive which was issued last week and we have already started working on the release of the funds but of course you know there are processes to be followed which is what we are doing now.
“The minister will have to meet with the CBN governor to discuss the modalities for the release of the funds to the respective states and that will be done anytime from now.
“It is after that meeting that a payment mandate will be issued for the monies to be credited to the respective accounts of the state.
“All these processes usually take between two and five working days depending on the circumstances. So by this week, the states will start getting the money barring any last minute change in plans.”
It was gathered that the meeting between the governor and the finance minister was imperative in order to review the states that have met the criteria for the disbursement of the funds.
One of the criteria is that a minimum of about 50 per cent of the funds would be devoted to the payment of salaries and pension, in line with government’s plan to stimulate consumer demand.
It was also learnt that the funds would be credited to an auditable account from which payments to individual creditors would be made and that such payments would be made to Bank Verification Number-linked accounts that could be verifiable.
The Director of Information in the Federal Ministry of Finance, Mr. Salisu Dambatta, could not be reached for comments as text messages and calls sent to him were not responded to.
He, however, sent a text message that he was in a meeting when the calls became persistent.
A text message sent to him over the issue had yet to be responded to as of 4.30pm.
President Muhammadu Buhari had on Thursday directed that the amount be released by the finance minister to the states to enable them to meet pressing financial obligations such as the payment of salaries and pension arrears.
He said the presidential order should be carried out “appropriately and with dispatch.”
Buhari, who had earlier released the first tranche of N388bn to the state governments in December 2016, said the latest release was meant to ease their financial hardship.
Lagos – The Naira is set to appreciate further in the week as the Central Bank of Nigeria (CBN) plans to inject more Foreign Exchange (Forex) into the market to meet the requests of genuine customers. The spokesman of CBN, Mr Isaac Okorafor, gave the assurance in a statement on Sunday in Lagos. The News Agency of Nigeria (NAN) reports that the apex bank had so far kept to its promise of continuing to supply enough forex to guarantee liquidity in the market. The statement said the bank was committed to ensuring that authorised dealers got sufficient supply to meet the demands of authentic customers of banks. It disclosed that the bank had since February offered over one billion dollars to the interbank market.
The bank expressed optimism that stability had been restored to the forex market. According to the statement, individuals can easily access forex to address personal and business allowances. NAN reports that a summary of the CBN intervention in the interbank market over the past two months, shows the highest bid rate was N360 per dollars, while the lowest was N315 per dollar.
The Nigerian National Petroleum Corporation (NNPC) on Sunday said it has increased its petrol stock in the country and now has a robust inland supply of over 1.2 billion litres which it said would be sufficient for 34 days forward consumption nationwide. It also said in a statement from its Group General Manager, Public Affairs, Ndu Ughamadu, that the Central Bank of Nigeria (CBN) has released foreign exchange (forex) to oil marketers to import diesel and Aviation Turbine Kerosene (ATK). NNPC noted that its petroleum product supply outlook for March to May 2017 was looking good and that it has taken adequate steps to ensure stability in supply of diesel and aviation fuel.
According to it, the corporation will equally import diesel to supplement the quantities it gets from its refineries in Kaduna, Warri and Port Harcourt. In addition, NNPC stated that it has re-commissioned its strategic 479.2km System 2B petroleum products pipeline network which stretches from the Atlas Cove in Lagos to Mosimi, Ejigbo, Ibadan and Ilorin, for the effective distribution of petroleum products nationwide, especially with the envisaged resumption of loading activities at the Mosimi, Ejigbo and Ibadan depots. The Calabar and Aba depots, it added, have also been stocked with diesel while diesel load out from its Kano depot would commence soon. Ughamadu added in a separate statement that the NNPC has indicated to the Oil and Gas Trainers Association (OGTAN) that it would improve on its engagements with the body to cut down its annual expenditure on the training of its workforce abroad. OGTAN is an independent umbrella group that provides training to service providers in the oil and gas industry.
It was established by the Nigerian Content Development and Monitoring Board (NCDMB) in 2010 to represent the education and training sectoral group of the Nigerian Content Consultative Forum (NCCF) under Section 58 of the Local Content Act. The statement said the corporation’s Group Managing Director, Dr. Maikanti Baru, made the remark when the President of OGTAN, Dr. Mayowa Afe, visited him in his office. Baru said rather than going overseas, the NNPC would consider working with OGTAN as a local partner to reduce its training cost. “As much as possible, we will continue to utilise the services of OGTAN members in order to upgrade our human resources to be able to meet the challenges in the oil and gas industry,” Baru said while commending OGTAN for growing the training component of the Nigerian Content policy.
He stated that while the NNPC had been at the forefront of growing local skills for the oil and gas industry, which had led to the rise of indigenous welders and fabricators, OGTAN’s training has been key to growing local expertise for Nigeria’s petroleum industry. Afe commended the NNPC for sanitising the distribution channels for petroleum products in the country. According to him, the current transparency in petroleum products distribution had brought sanity to the country’s downstream sector. “Let me congratulate you on the sanity that has come to petroleum products distribution in Nigeria.
“There is sanity now and we want to thank the NNPC group for the sanity, openness and transparency they have brought to the distribution of petroleum products in the country. “Though there is still much to do, the openness has brought a lot of comfort to Nigerians,” said Afe.
Nigeria, which again lost its Africa’s top oil producer status to Angola in January, has recorded further decline in its crude oil production, a new report from the Organisation of Petroleum Exporting Countries has indicated.
OPEC, in its Monthly Oil Market Report for March 2017, put crude oil production from Nigeria at 1.526 million barrels per day in February, down from 1.533 million bpd in the previous month, based on direct communication.
Production from its southern African counterpart, Angola, stood at 1.649 million bpd in February, up from the 1.615 million bpd recorded in January.
OPEC, which uses secondary sources to monitor its oil output, but also publishes a table of figures submitted by its member countries, said the group’s total production in February averaged 31.96 million bpd, showing a decrease of 14,000 bpd over the previous month.
It said, according to secondary sources, crude oil output increased the most in Nigeria in February, while production in Saudi Arabia, Iraq, United Arab Emirates and Angola showed the largest declines.
Secondary sources put Nigeria’s output at 1.608 million bpd, while Angola was said to have produced 1.641 million bpd.
The number of active oil rigs in Nigeria, which had continued to decline in recent months, however, rose to 26 in February, latest data from Baker Hughes Incorporated and OPEC showed.
The nation’s rig count stood at a low of 23 in December last year, down from 38 in January 2015.
The reduction in the rig count was mostly triggered by the slump in global crude oil prices since mid-June 2014 as oil companies were forced to slash their capital budgets and suspend some projects.
Rig count is largely a reflection of the level of exploration, development and production activities occurring in the oil and gas sector.
Nigeria saw the fourth-largest drop in rig count among its peers in OPEC last year. The number of rigs in the country averaged 25 in 2016, down from 30 in 2015 and 34 in 2014.
“Regulatory uncertainty has resulted in fewer investments in new oil and natural gas projects, and no licensing round has occurred since 2007. The amount of money that Nigeria loses every year from not passing the PIB is estimated to be as high as $15bn,” the United States Energy Information Administration said in its ‘Nigeria Brief’.
Nigeria has the second-largest amount of proven crude oil reserves in Africa, but exploration activity has slowed.
“Rising security problems, coupled with regulatory uncertainty, have contributed to decreased exploration,” the EIA said.
According to the agency, the PIB, which was initially proposed in 2008, is expected to change the organisational structure and fiscal terms governing the oil and natural gas industry if it becomes law.
It said, “International oil companies are concerned that proposed changes to fiscal terms may make some projects commercially unviable, particularly deepwater projects that involve greater capital spending.”
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had recently said the agreement by OPEC and non-OPEC producers to cut production with a view to stabilising prices was already yielding results for Nigeria.
He said higher oil prices and a long-term plan for production were spearheading the country’s efforts to get its oil and gas sector back on track.
Kachikwu noted that tackling militancy in the Delta communities was a high priority for the government, which would produce far-reaching benefits.
“We can already see that our efforts to create a more enabling environment and increase stability are producing positive responses from investors,” he said.
Meanwhile, the International Energy Agency said on Wednesday that global oil inventories rose for the first time in January as the market grappled with a swell in production last year.
According to the agency, if OPEC maintains its output cuts, demand should overtake supply in the first half of this year.
The IEA said crude stocks in the world’s richest nations rose in January for the first time since July by 48 million barrels to 3.03 billion barrels, more than 300 million barrels above the five-year average.
It said compliance by OPEC with its agreed output cut of 1.2 million bpd in the first half of this year was 91 per cent in February and, if the group maintained its supply limit to June, the market could show an implied deficit of 500,000 bpd.
“If current production levels were maintained to June when the output deal expires, there is an implied market deficit of 500,000 bpd for first half of 2017, assuming, of course, nothing changes elsewhere in supply and demand,” the IEA said.
The value of trading at the stock market surged 133 per cent wednesday as investors staked N2.164 billion on 233.777 million shares in 3,196 deals, up from N928.5 million invested in 227.757 million shares in 32,543 deals the previous day. The market also maintained its uptick as the bulls sustained their hold, driving the Nigerian Stock Exchange (NSE) higher by 0.07 per cent to close at 25,301.23.
Having opened on weak note on Monday, the market rebounded on Tuesday following activities of bargain hunters, who swooped on bellwether stocks. Hence, the NSE ASI went up by 0.59 p cent on Tuesday. The bullish trend was sustained yesterday, although marginally. However, investors committed more funds to equities.
Commenting on the performance, analysts at Meristem Securities Limited, said: “Market activities in the Nigerian bourse somewhat mirrored that of the previous day as there were renewed buy sentiments towards counters trading at attractive prices. We expect this trend to be sustained however, we do not rule out profit-taking activities at the end of the week.”
Yesterday’s positive trend was influenced by gains recorded in the shares of Zenith Bank (+2.8 per cent), Unilever (+4.9 per cent ) and Stanbic (+2.8 per cent) which offset the impact of decline in GTBank (-0.6 per cent), Nestle(-0.7 per cent) and ETI (-2.0 per cent).
However, the price gainers’ table was led by African Prudential Registrars Plc and Continental Reinsurance Plc with 8.1 apiece. Continental Reinsurance Plc had on Tuesday reported its audited results for the year ended December 31, 2016, showing improved performance.
The company recorded gross premium written of N22.406 billion, up from N19.738 billion, while net insurance premium stood at N21.843 billion, compared with N18.195 billion in 2015. Net insurance benefits and claims were N21.42 billion, up from N16.1 billion in 2015.
But underwriting profit dipped to N414 million, from N2 billion in 2015. Interest income rose to N1.5 billion, while foreign exchange gain soared from N467 million in 2015 to N4.1 billion in 2015. Impairment costs equally rose from N492 million to N1.788 billion in 2016.
The company ended with profit before tax of N4.652 billion, up from N2.916 billion, while profit after tax grew from N2.14 billion to N3.018 billion in 2016. The board of the company recommended a dividend of 14 kobo per share.
Guaranty Trust Bank Plc (GTBank) is exposed to Etisalat Nigeria to the tune of N42 billion ($138 million) via a secured loan.
According to Reuters, the Chief Executive Officer, GTBank, Mr. Segun Agbaje, who disclosed this, said the debt would be restructured.
The Nigerian affiliate of Abu Dhabi-listed telecoms company, Etisalat is currently in talks with 13 Nigerian banks to renegotiate the terms of a $1.2 billion loan it took out four years ago after missing a payment. The Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) have since waded into the matter. At the current official rate, the loan without interest stands at N377 billion.
The Vice President for Regulatory Affairs at Etisalat Nigeria, Ibrahim Dikko had explained that the company missed payments due to the economic downturn in Nigeria, a currency devaluation and dollar shortages on the country’s interbank market.
Emirates Telecommunications Group (Etisalat) owns a 40 percent stake in its Nigerian affiliate, which accounted for around 3.7 per cent of the group’s revenue in 2013. Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks in 2013, which it used to refinance an existing $650 million loan and fund a modernisation of its network.
Dikko said the business performed well last year and it was still in profit at the level of earnings before interest, tax, depreciation and amortisation, while loan repayments had been up to date “until recently.”
In addition, Agbaje wednesday said GTBank was not looking to refinance its Eurobond due next year because it does not see opportunities to grow its dollar loan book. The GTBank boss said the bank expected naira loans to grow 10 percent this year, down from 15.8 percent last year, largely due to currency devaluation. He said the bank expected a N168 billion pre-tax profit for 2017, up from N165 billion the previous year.
ContinentalReinsurance Plc yesterday announced its financial results for the year ended December 31, 2016, showing improved performance. The reinsurance firm, grew its profit before and after tax by over 40 per cent and declared a dividend of 14 kobo per share. However, the bottom-line was bolstered by a significant growth in foreign exchange gain.
An analysis of the results showed that Continental Reinsurance recorded gross premium written of N22.406 billion, up from N19.738 billion, while net insurancepremium stood at N21.843 billion, compared with N18.195 billion in 2015. Netinsurance benefits and claims were N21.42 billion, up from N16.1 billion in2015.Butunderwriting profit dipped to N414 million, from N2 billion in 2015.
Interest income rose to N1.5 billion, while foreign exchange gain soared from N467 million in 2015 to N4.1 billion in 2015.Impairment costs equally rose from N492 million to N1.788 billion in 2016. In all, the company ended with profit before tax of N4.652 billion, up from N2.916 billion,while profit after tax grew from N2.14 billion to N3.018 billion in 2016.
Following the improve results, the board of the company has recommended for approval and payment to shareholders whose names appear in the register of members on Friday, July 14, 2017 , a dividend of 14 kobo per share. This is higher than the 12 kobo dividend paid in respect of 2015. Meanwhile,the losses recorded at the stock market on Monday were reversed yesterday as the bulls returned, lifting the Nigerian Stock Exchange (NSE)All-Share Index by 0.59 per cent to close at 25,284.56. Similarly, the market capitalisation added N51 billion to close at N8.8 trillion.
The positive performance was influenced by activities of bargain hunters who swooped on bellwether stocks across sectors. The appreciation recorded in the share prices of GTBank, Nigerian Breweries, Dangote Cement, UBA, and Zenith Bank were mainly responsible for the gain recorded in the Index. The total value of stocks traded rose by 36.3 per cent from N681.16 million recorded yesterday. The total volume of stocks traded was 227.75 million in 2,543 deals.The three most actively traded stocks were: Diamond Bank (57.64 million), FBNHoldings (32.88mn) and NEM Insurance (25.93 million). The most actively traded sectors were: Financial Services (188.85 million), Conglomerates (19.48million) and, Oil and Gas (12.30 million).
