Economy
AG Mortgage Skips Dividend Payment over Capital Impairment
By Adedapo Adesanya
AG Mortgage Bank Plc has said due to its capital impairment, it won’t be able to pay dividends to shareholders for the fiscal year ended December 31, 2020.
This information was disclosed in its Annual Report and Accounts for the year. The firm is skipping the dividend payment despite growth in its earnings, cut in operating costs, and management of cost.
Analysis of the financial results of the company by Business Post showed that its gross earnings grew by 15 per cent from N945 million in 2019 to N1.08 billion in 2020, while the profit before tax (PBT) rose by 172 per cent from N66 million to N180 million, with the post-tax profit rising by 405 per cent from N22 million to N111 million.
Also, the total deposits stood at N4.8 billion as of December 31, 2020, higher than the previous year’s figure of N3.4 billion by 41 per cent, while the total assets went up by 28 per cent from N12.5 billion to N16 billion, with shareholders’ funds increasing by 26 per cent from N5.1 billion to N6.4 billion.
The Chairman of the Board of Directors, Mr Ejikeme Ejim, noted that the year 2020 was buffeted by the COVID-19 pandemic and its effect which sank the country into another recession barely three years after pulling out of the last one.
He said, “All economic activities came to a halt during the total shut down of the economy to manage the effect of the pandemic. The price of crude oil, the mainstay of the economy crashed to as low as $30 per barrel.
“This put pressure on the nation’s foreign exchange stability, leading to a significant devaluation as the central bank adjusted the exchange rate from N307/$ to N380/$. Expectedly, inflation rate shot up to 13 per cent by mid-year and 18 per cent by year-end.”
He said the mortgage industry witnessed a resurgence of hope within the period following the revitalization of the Federal Mortgage Bank of Nigeria (FMBN) for the provision of long term capital for both developments of housing stock via its Estate Development and Construction Finance Loans as well as on-lending to prospective house owners through the National Housing Fund (NHF) loans.
“This is complemented by the opening of alternative financing windows of the Family Homes Funds and the Nigeria Mortgage Refinancing Company (NMRC). However, mortgage banks remain restricted in their capacity to support housing delivery by virtue of the level of funding outside the sources mentioned above.
“On the other hand, the slow capital market environment continually poses a challenge to mortgage banks in their bid to raise capital in fulfilment of the minimum capital requirements as demanded by the Central Bank of Nigeria (CBN).”
On the company’s recapitalization efforts, the bank increased its equity capital to N10 billion by the creation of additional 10,000,000,000 ordinary shares of 50 kobo each.
He added that activities were in top gear for raising additional capital of N1.8 billion to ensure that the bank regularizes its capital impairment and retains its status as a National Primary Mortgage Bank.
The bank noted that details of the fundraising exercise would be circulated to members in due course after all the regulatory approvals have been obtained.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
By Adedapo Adesanya
The Naira appreciated against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N14.79 or 0.9 per cent to trade at N1,534.50/$1 compared with the preceding day’s N1,549.29/$1 on Thursday, December 12.
The strengthening of the domestic currency during the trading session was influenced by the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the Central Bank of Nigeria (CBN).
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN; publication of real-time prices and buy-sell orders data from this system has lent support to the Naira at the official market.
Equally, the local currency improved its value against the British Pound Sterling by N3.91 to wrap the session at N1,954.77/£1 compared with the previous day’s N1,958.65/£1 and against the Euro, the Nigerian currency gained N2.25 to sell for N1,610.41/€1 versus N1,612.66/€1.
However, in the black market, the Naira crashed further against the US Dollar on Thursday by N10 to quote at N1,680/$1 compared with Wednesday’s closing rate of N1,670/$1.
Meanwhile, the cryptocurrency market majorly corrected after earlier gains as US President-elect Donald Trump reiterated his ambition to embrace crypto assets, but a bond market rout dragged risk assets lower.
Mr Trump said, “We’re going to do something great with crypto” while ringing the opening bell at the New York Stock Exchange, reiterating his ambition to embrace digital assets in the world’s largest economy and create a strategic bitcoin reserve.
Alongside, the European Central Bank trimmed its benchmark interest rates by 25 basis points and in its dovish policy statement hinted that more rate cuts were likely to happen.
The biggest loss was made by Cardano (ADA), which fell by 4.9 per cent to trade at $1.10, followed by Ripple (XRP), which slid by 4.1 per cent to $2.33 and Dogecoin (DOGE) recorded a value depreciation of 2.9 per cent to sell at $0.4064.
Further, Solana (SOL) slumped by 1.8 per cent to $225.89, Binance Coin (BNB) slipped by 1.3 per cent to $746.92, Bitcoin (BTC) declined by 0.6 per cent to $99,998.18, Ethereum (ETH) crumbled by 0.5 per cent to $3,909.43, and Litecoin (LTC) dipped by 0.3 per cent to $121.52, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market slumped on Thursday, pressured by an expected increase in supply, supported by rising expectations of a Federal Reserve interest rate cut.
The International Energy Agency (EIA) made a slight upward revision to its demand outlook for next year but still expected the oil market to be comfortably supplied, with Brent crude futures losing 11 cents or 0.15 per cent to trade at $73.41 per barrel and the US West Texas Intermediate (WTI) crude futures declining by 27 cents or 0.38 per cent to finish at $70.02 per barrel.
The IEA in its monthly oil market report increased its 2025 global oil demand growth forecast to 1.1 million barrels per day from 990,000 barrels per day last month, largely in Asian countries due to the impact of China’s recent stimulus measures.
At the same time, the IEA expects nations not in the Organisation of the Petroleum Exporting Countries and Allies (OPEC+) group to boost supply by about 1.5 million barrels per day next year, driven by the US, Canada, Guyana, Brazil and Argentina – more than the rate of demand growth.
On Wednesday, OPEC cut its demand growth forecast for 2024 for the fifth straight month.
The IEA said that, even excluding the return to higher output quotas, its current outlook is to a 950,000 barrels per day supply overhang next year, which is almost 1 per cent of the world’s supply.
The Paris-based agency said this would rise to 1.4 million barrels per day if OPEC+ goes ahead with its plan to start unwinding cuts from the end of next March.
Next year’s surplus could make it harder for OPEC+ to bring back production. The hike was earlier due to start in October 2024, but OPEC+ has delayed it amid falling prices.
Meanwhile, inflation rose slightly in November increasing the possibility of a US Federal Reserve rates cut again as the data fed optimism about economic growth and energy demand.
Support also came as crude imports in China grew annually for the first time in seven months in November, up more than 14 per cent from a year earlier.
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