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Banks Unlikely to Declare Huge Profits in 2019—Coronation Research

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Banks Unlikely to Declare Huge Profits in 2019—Coronation Research

By Dipo Olowookere

An arm of Coronation Asset Management Limited, Coronation Research, has said banks operating in Nigeria are unlikely to post large gains in profits this year.

In its 2019 economic outlook report titled A Tale of Two Halves, Coronation Research, a leading financial services company licensed and regulated by the Securities and Exchange Commission (SEC), further said the deposit money banks will also not experience much loan growth, given the weak economy and the fact that they can benefit from high treasury bill yields.

Speaking on the report, the Head of Coronation Research, Mr Guy Czatoryski, said if interest rates come down later in the year and the market conditions improve, then there could be a sharp rally in bank stocks later in the year.

He further said the narrative for the Nigerian economy in 2019 is largely hinged around the performance of the oil.

“We forecast an average $58.00/bbl for 2019. An average much below this means the Central Bank of Nigeria (CBN) will have to keep rates very high and could even challenge the Naira/Dollar exchange argument.

“An average much about $60.00/bbl means the CBN will have confidence its reserve position and will be able to cut rates later in the year, in Q4, less likely Q3.”

In addition, he said, “The current rate of N365.29/$, or close to it, is likely to prevail this year. The CBN’s policy is to defend the rate and with reserves at $43.0 billion, it is in a strong position to do so.  We think the CBN will supply US dollars to the FX markets at an average rate of $500 million per month during 2019. This is compatible with maintaining a strong reserve level

“If, as we think, the oil prices will average $58.00/bbl this year, then we think the CBN will want to keep interest rates high. It will do this through its open market operations (OMO).

“We think OMOs will be issued in a range of 17.00 percent to 19.00 percent and that T-bill rates will be very close to this level during 2019.

“We look at Nigeria in the international context of interest rates. Nigerian T-bill rates look competitive in the context of other emerging market rates – which is why the CBN is having success in attracting inflows of Foreign Portfolio Investment

“However, if oil trades at substantially above $60.00/bbl during 2019 then foreign investors in T-bills will be encouraged and the CBN might well be in a position to cut rates in Q4 2019, or even in Q3 2019.

“This could be helped by a downtrend in inflation. Inflation has proved stubborn and has trended at around 11.00 percent over the past few months. But if inflation trends, in 2019, towards the CBN’s target band of 6.00 percent to 9.00 percent, then it will help the CBN cut rates in order to stimulate the economy.

“We are agnostic on politics. However, there is some evidence that in the period after general elections (2011 and 2015) yields in the T-bill market tend to fall. This might help persuade the CBN to cut OMO rates later in the year.” According to the report, GDP growth is expected to be 2.25 percent in 2019, as a result of very weak consumer demand, and a lack of growth in government expenditure relative to the 2018 budget.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Sterling Bank Offers Optometrists Loans at Competitive Interest Rates

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sterling bank logo

By Modupe Gbadeyanka

A Memorandum of Understanding (MoU) aimed to automate operations, enhance capacity and provide loans at competitive interest rates for optometrists has been signed by Sterling Bank Plc and the Nigerian Optometrist Association (NOA).

Under the deal, members of the association will be able to borrow from the Central Bank of Nigeria (CBN) intervention for the health sector at 5 per cent as well as obtain template credit from the bank within 48 hours at a competitive interest rate of 20 per cent, which is below the prevailing rate in the banking industry.

Business Post gathered that Sterling Bank has earmarked N10 billion for the entire health care sector in the country and would accommodate any level of funding optometrists may require.

The Group Head of Health Finance at Sterling Bank, Mrs Ibironke Akinmade, while speaking at the signing ceremony in Lagos, explained that the initiative is part of the lender’s vision to be the leading bank for businesses in the health sector.

The Head of Health Finance said the rationale behind the partnership with NOA is to further position Sterling Bank as the bank of choice for businesses in the health sector, adding that this means more business collaboration and partnership with stakeholders in the health space.

“We have adopted a community approach in engagement with stakeholders in this sector. This will not only give us leverage to develop tailor-made propositions for the community, but it also creates an inroad for engagement of their members through a cluster approach,” she said.

Mrs Akinmade said the bank recently engaged the NOA in a bid to scale on its offerings to the health sector, which includes access to finance (template credit), and access to digitalisation (payment platforms and Electronic Medical Records) as well as advisory services, among others.

Also speaking, Dr Obinna Awiaka, President of NOA, said the association wants a bank that would help its members to grow and discovered that Sterling is the only bank that has a passion for the healthcare sector.

He said the relationship between members of his association and the bank will build the economy because once the healthcare industry is built the economy will also be built.

Dr Awiaka said the NOA is satisfied with the relationship with Sterling Bank because in no distant time the bank, in conjunction with healthcare professionals, will help to develop the sector, which will translate to a better future for the country.

He said the development will make Nigerian professionals that are leaving the country in droves return to the country to practice and this will reduce medical tourism among the country’s leaders, thanking Sterling Bank for coming on board and taking the bull by the horn to support the healthcare industry.

The NOA was established in 1968 and is the prime umbrella association representing over 5,000 doctors of optometry across the 36 states of the country and the Federal Capital Territory (FCT), Abuja, as well as all other optometric interest groups in Nigeria.

Since 2018, Sterling Bank has concentrated investment in five sectors of the economy under its HEART strategy in a bid to make an impact on the country’s economic development. The five sectors in HEART’s strategy include health, education, agriculture, renewable energy and transportation.

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MTN Assures Nigerians Affordable Financial Services as MoMo PSB Begins Operations

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MoMo PSB

By Adedapo Adesanya

MTN Nigerian Communications Plc has announced that its fintech subsidiary, MoMo PSB Limited, has formally commenced commercial operations in the country.

In a notice on Thursday at the Nigerian Exchange, MTN said the development followed a successful pilot initiated on May 16, 2022, in commemoration of the launch of its GSM operations on May 16, 2001, and listing by introduction on the Nigerian Exchange Limited on May 16, 2019.

“Indeed, this is a key milestone in delivering the company’s Ambition 2025 strategic priorities,” the notice said.

The company said with an expansive agent network of over 166,000 active agents and digitized partnership infrastructure, MoMo PSB “is poised to enable millions of unbanked and under-banked Nigerians to access a wide range of financial service products.

“MoMo PSB will continue to scale its agent network in order to reach Nigerians across the country and remove friction from everyday payment by digitizing cash payment.

“By dialling *671# on any network, customers can open a MoMo wallet, send money to any phone number in the country and pay their bills.

“In addition, MoMo wallets in the future will enable Nigerians in the Diaspora to send money to any phone number in the country, an important feature given Nigeria’s ranking as the destination for the highest remittance inflow in Sub-Saharan Africa.”

The CEO of MTN Nigeria, Mr Karl Toriola, appreciated the support and guidance of the Central Bank of Nigeria (CBN) through the process and noted that this will help the country’s financial inclusion.

“This is an important milestone for MTN Nigeria in our mission to support the government’s drive towards financial inclusion in Nigeria. Not just for those in urban centres and markets, but also people in the rural and remote areas of the country who remain excluded from the financial system,” he stated.

On his part, MoMo PSB CEO, Mr Usoro Usoro said: “Providing easy to use, accessible and affordable financial services to all Nigerians is essential to executing the CBN’s financial inclusion strategy and digital inclusion agenda of the Minister of communications and Digital Economy.

“We look forward to playing our part and are excited about the opportunities to partner with relevant institutions across various sectors to co-create and expand access nationwide.”

This is coming on the same day that MTN’s rival, Airtel announced its subsidiary, SmartCash Payment Service Bank Limited (SmartCash PSB), has commenced operations in Nigeria.

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Airtel Commences SmartCash Payment Operations in Nigeria

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SmartCash Payment

By Adedapo Adesanya

Airtel Africa has announced that its subsidiary, SmartCash Payment Service Bank Limited (SmartCash PSB), has commenced operations in Nigeria.

Services will initially be available at selected retail touchpoints, and operations will be expanded gradually across the country over the next few months.

Speaking on the development, Mr Segun Ogunsanya, Airtel Africa chief executive officer, said, “I am very excited to announce our commencement of operations for financial services in Nigeria through SmartCash PSB. This is the beginning of our journey to revolutionise the financial services landscape in the country.

“To help further digitise the economy, and most importantly to help bank the unbanked by reaching the millions of Nigerians who do not currently have access to financial services by delivering current and savings accounts, payment and remittance services, debit and prepayment cards and more sophisticated services.”

This is coming less than one month after the Central Bank of Nigeria (CBN) granted the company the license to operate mobile money services in the country.

The licence will enable the telco to expand its digital financial products and reach the millions of Nigerians that do not currently have access to traditional financial services.

It will also be able to augment plans by the Nigerian Government, the CBN, and traditional financial institutions to further deepen financial inclusion in the country for the benefit of all citizens and the Nigerian economy.

Airtel Africa is a leading provider of telecommunications and mobile money services with a presence in 14 countries across Africa.

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