Banking
Capital Adequacy Ratios of Nigerian Banks Seriously at Risk
By Dipo Olowookere
A banking analyst with Lagos-based Chapel Hill Denham, Aderonke Akinsola, has disclosed that the present coronavirus pandemic could make banks in Nigeria struggle with poor asset quality in the 2020 financial year.
Akinsola made this disclosure to Bloomberg during a phone chat on the impact of the fast-spreading disease on the nation’s economy.
On Thursday, Nigeria confirmed fresh four cases of the COVID-19, a day after five new case were announced, bringing the total number of people infected with the virus to 12.
Speaking with Bloomberg, Akinsola said the present conditions “pose downside risks to the profitability of banks in 2020, mainly given the likely impact on asset quality and loan growth,” adding that, “Capital adequacy ratios of banks are more at risk amid the current macro realities.”
Nigerian banks are still trying to recover from an economic contraction in 2016 and are now faced with a triple whammy of coronavirus, plunging oil prices and volatile markets that could further delay progress, Bloomberg said in its report on Monday.
The virus has led to the crashing of crude oil prices at the global market, trading below $30 per barrel at the moment.
On Wednesday, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, hinted that the oil benchmark for the 2020 budget has been slashed to $30 per barrel from $57 per barrel.
Quoting a banking analyst at ARM Investment Managers in Lagos, Mr Emmanuel Adeleke, Bloomberg said most Nigerian lenders have their oil exposure hedged at $40-$50 a barrel, which will mean they would have to make provisions if prices remain where they are.
As a result of this, Mr Adeleke “expects flat growth in earnings for most banks this year.”
In the 2019 fiscal year, four of the big five lenders in the country; Zenith Bank, GTBank, Access Bank and UBA, posted growths in revenue as well as profit. In fact, Zenith Bank became the first bank in Nigeria to rake a net profit of over N200 billion.
However, this may be threatened by COVID-19 as businesses in the country, including schools, companies, bars, religious houses and others have already been directed to shut down.
On Monday, the Central Bank of Nigeria (CBN) announced steps taken to help the economy remain vibrant. It said it was providing a N50 billion intervention fund to critical sectors, including health and SMEs.
It further announced the extension of a one-year moratorium on the repayment of all principal debt repayments as well as cutting of interest rates on its intervention funds to 5 percent from 9 percent.
On Wednesday, the apex bank further announced the injection of N1 trillion to support the economy, noting that it would have a meeting with bank chiefs on Saturday on how to spread the money.
In the second quarter of 2016, Nigeria slipped into recession, but got out of it a year later. Since then, the country, which largely depends on crude oil for foreign exchange, has been undergoing recovery.
But the present situation at the oil market is already threatening the Africa’s largest producer of the commodity and there are fears that the country may again fall into recession in the next quarter after its rival, South Africa, slumped into recession for the second time under the present administration of Mr Cyril Ramaphosa last quarter.
By Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
By Adedapo Adesanya
The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.
The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.
Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.
Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.
“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”
Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.
“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.
Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.
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