Economy
Analysts Predict Fall in Banking Stocks as Skye Bank Exits NSE
By Dipo Olowookere
Last Friday, after the stock market had closed for the week, the Central Bank of Nigeria (CBN) came with a big announcement which sent shivers down the spine of investors.
Governor of the CBN, Mr Godwin Emefiele, said at a media briefing that one of the financial institutions trading its shares on the Nigerian Stock Exchange (NSE), Skye Bank Plc, had been liquidated with its assets and liabilities transferred to a bridge bank called Polaris Bank Limited.
The news came as a huge shock to observers, shareholders of the bank as well as investing public, who mostly did not see this coming.
Few months ago, the apex bank had extended the tenure of the interim management it appointed for the lender in 2016 when it took over Skye Bank. The CBN had said it extended the tenure of the new management because it was impressed with the performance of the new handlers.
Even Skye Bank, which confirmed this in a statement in July 2018, had said it was working tirelessly with the CBN to conclude various resolution initiatives to achieve a positive turn around for the bank.
“We wish to assure the bank’s shareholders and all stakeholders of the commitment of its board and management, working with the CBN and other regulators, to conclude various resolution initiatives to achieve a positive turn around for the bank and deliver value to its stakeholders,” the statement signed by Skye Bank’s Secretary/General Counsel, Mr Babatunde Osibodu, had stated.
Last month, the lender also released another statement had assured its shareholders that, “As with the Bank’s Audited Financial Statements for previous financial years (2016 and 2017), the Unaudited Financial Statements for the period ended June 30, 2018 shall be published as soon as the CBN grants its approval.”
“We wish to assure all our stakeholders that the bank remains committed to transparency, full disclosure, and compliance with regulatory requirements,” it had further assured.
But since last Friday’s announcement, many investors have been talking about how Skye Bank got itself into a mess, while some shareholders have been licking their wounds with their tails between their legs.
Already, the NSE has announced suspending trading on the shares of Skye Bank on its platform beginning from Monday, September 24, 2018 (today).
As the market resume today, analysts at Business Post are forecasting that investors will brutally whip banking stocks this week because of the Skye Bank issue.
Few of those that may be fatally wounded include Diamond Bank and Unity Bank, while others may not be spared too from the onslaught.
Last week, Unity Bank and Skye Bank were among the best performing stocks, gaining 17.70 percent and 15.50 percent respectively.
Before Skye Bank collapsed, it was recording a steady growth, which some investors misinterpreted to be something good cooking. However, they got their fingers burnt.
With this in mind, Unity Bank, which has been gathering momentum lately, may likely be viewed by investors in the same light with the defunct Skye Bank, resulting into selloffs.
It is important to note that Unity Bank is yet to release its financial statements for the year 2017 as well as for two already used quarters of this year.
We believe that as the market resumes today, the banking stocks are in for a big trouble with selloffs expected in the sector.
However, analysts at Cowry Asset believe that the NSE index will close positive at the end of the week “as we expect both domestic institutional and retail investors to take advantage of the fallen prices.
“More so, we maintain that investors should hunt for companies with potentially high dividend yields and have recorded increased earnings as at H1 2018.”
By Adedapo Adesanya
Crude production under the collective Organisation of the Petroleum Exporting Countries (OPEC ) fell in May to its lowest level in at least 37 years as the blockade of Iran by the United States and disruptions in the Persian Gulf, continued to limit output.
According to a Bloomberg survey released on Friday, output from the organisation’s 11 current members, including Nigeria, dropped by 1.22 million barrels per day to 16.33 million barrels per day last month.
Iran accounted for more than half of the decline. The data excludes the United Arab Emirates (UAE), which departed the cartel last month after six decades of membership.
War between a US-Israeli alliance and Iran has reduced oil supplies from the Middle East, largely closing the Strait of Hormuz waterway. Saudi Arabia, Iraq, the UAE and Kuwait have been forced to cut crude production. Iranian shipments face additional pressure following a US blockade of its ports imposed in mid-April.
Iranian output fell by 710,000 barrels per day to a five-year low of 2.34 million barrels per day in May, the survey showed. Central Command reported that US forces have redirected 127 commercial vessels to enforce the blockade of all maritime traffic entering and exiting Iranian ports.
Kuwait recorded the second-largest decline last month, with production falling by 310,000 barrels per day to 490,000 barrels per day, less than one-fifth of pre-war levels. Saudi Arabia, the group’s leader, saw output decrease by 240,000 barrels per day to 6.57 million barrels per day.
The production reductions have not prevented OPEC and its allies from raising quotas over recent months, continuing a year-long process of restoring output halted several years ago.
This comes ahead of a meeting scheduled to be held on Sunday, June 7, where a sub-group of seven members is expected to increase targets by 188,000 barrels again in July. The session is one of four online meetings OPEC and its partners plan to hold that day.
Delegates indicated the alliance has plans for two additional monthly quota increases in August and September. UAE output rose by 300,000 barrels per day to 2.44 million barrels per day in May, according to the survey.
By Aduragbemi Omiyale
The 2025 third quarter Budget Implementation Report from the Budget Office of the Federation has shown that the federal government exceeded the funds allocation for repayment of debts for the first nine months of the fiscal year by about 18 per cent.
In a report by Punch, the sum of N10.74 trillion was budgeted for debt servicing between January and September 2025, but the government used N12.63 trillion for the purpose, N1.90 trillion or 17.65 per cent more than the allocation for the year.
The funds were spent on domestic debts, foreign debts and sinking fund by the central government in nine months.
Business Post reports that for the whole year, the amount approved by the National Assembly and signed by President Bola Tinubu for debt repayments was N14.31 trillion.
Looking at the nine-month figures, domestic debt service gulped N6.23 trillion, exceeding its N5.39 trillion provision, while foreign debt service was N6.30 trillion versus the budget provision of N5.06 trillion.
According to the report, the figures indicated that 67.2 per cent of the federal government’s retained revenue of N18.63 trillion was spent on debt service in the first nine months of 2025. When the sinking fund is included, debt-related payments consumed about 67.8 per cent of revenue.
It was also observed that aggregate federal government revenue underperformed the budget by N12.03 trillion or 39.24 per cent, as actual revenue of N18.63 trillion fell short of the N30.67 trillion projected for the first three quarters.
In the third quarter alone, the government generated N7.70 trillion versus the quarterly target of N10.22 trillion as a result of persistent oil revenue shortfalls, despite stronger non-oil collections.
The debt burden also crowded out capital spending, as total capital expenditure was N3.10 trillion in the first nine months compared with the N17.58 trillion budgeted for the period, indicating that actual debt-related payments were more than four times capital expenditure.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a loss of 1.13 per cent on Thursday, June 4, shrinking the market capitalisation by N30.03 billion to N2.630 trillion from N2.660 trillion on Wednesday.
Similarly, this brought down the NASD Unlisted Security Index (NSI) by 50.19 points to 4,396.08 points from the 4,446.27 points recorded a day earlier.
The loss was influenced by the overpowering of the bulls by the bears, after the bourse closed with two price gainers and three price losers, led by FrieslandCampina Wamco Nigeria Plc, which slumped by N20.03 to sell at N190.38 per unit compared with midweek’s N210.41 per unit. Food Concepts Plc declined by 25 Kobo to trade at N2.50 per share versus the previous day’s N3.00 per share, and Acorn Petroleum Plc crumbled by 2 Kobo to end at N1.32 per unit, in contrast to the preceding session’s N1.34 per unit.
For the gainers, Central Securities Clearing System (CSCS) Plc added N2.93 to close at N78.34 per share compared with the previous price of N75.41 per share, and Afriland Properties Plc gained 80 Kobo to settle at N16.80 per unit versus N16.00 per unit.
There was a slip in the volume of transactions yesterday by 46.8 per cent to 280,714 units from 527,221 units, as the value of trades dropped 66.5 per cent to N21.8 million from the preceding session’s N64.2 million, and the number of deals fell by 8.7 per cent to 42 deals from 46 deals.
Great Nigeria Insurance (GNI) Plc ended the session as the most traded stock by value on a year-to-date basis with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.7 million units traded for N4.4 billion.
GNI Plc also finished the day as the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
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