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
The Naira further depreciated against the United States Dollar by N3.46 or 0.25 per cent to N1,362.21/$1 from N1,358.75/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 5.
However, it appreciated against the Pound Sterling in the same market window during the session by N4.47 to trade at N1,823.59/£1 compared with the previous day’s N1,828.06/£1, and gained N7.00 against the Euro to sell at N1,574.58/€1, in contrast to Thursday’s closing price of N1,581.58/€1.
For another trading session, the Nigerian Naira maintained stability against the Dollar in the parallel market and the GTBank forex counter on Friday at N1,375/$1 and N1,372/$1, respectively.
The Naira is expected to remain strong in the near term, backed by a rise in external reserves, which are nearing $50 billion, enhancing analysts’ confidence about its outlook in the second half of 2026.
Heightened global uncertainty has reduced the incentive for importers and corporates to demand FX, as cautious trade weighs on import needs. Analysts estimate a $40 billion net FX position for the year, a projection anchored in oil windfall gains.
As for the cryptocurrency market, prices remained depressed following a strong US jobs report that spurred markets to price in higher-for-longer interest rates, sending Treasury yields and the dollar up while hammering stocks, especially AI-related names. Crypto markets saw heavy leverage washouts with about $1.6 billion in positions liquidated over 24 hours.
Ethereum (ETH) gave up 4.9 per cent to trade at $1,584.68, Solana (SOL) fell by 3.3 per cent to $63.22, Bitcoin (BTC) crashed by 1.9 per cent to $61,333.23, Dogecoin (DOGE) slipped by 1.8 per cent to $0.0821, and Ripple (XRP) moderated by 1.8 per cent to $1.09.
Further, TRON (TRX) dropped 1.6 per cent to sell at $0.3197, Binance Coin (BNB) slumped by 1.0 per cent to $581.18, and Cardano (ADA) declined by 0.4 per cent to $0.1589, while the US Dollar Tether (USDT) gained 0.07 to sell at $0.9997, and US Dollar Coin (USDC) closed flat at $0.9998.
By Adedapo Adesanya
Crude oil prices fell on Friday as traders gained confidence that renewed conflict between the United States and Iran was growing less likely.
The price of Brent crude futures settled at $93.09 a barrel, down $1.94 or 2.04 per cent, and the US West Texas Intermediate (WTI) crude futures finished at $90.54 a barrel, down $2.50 or 2.69 per cent.
President Donald Trump said the US will win the conflict with Iran either “militarily or on paper,” referring to the fitful negotiations with the Iranian government, and he suggested he could meet with Iran’s reclusive supreme leader “if it was to make a deal.”
He also said he had no desire to meet with Iranian Supreme Leader Mojtaba Khamenei, who has not been seen since the outbreak of violence on February 28 and was reportedly seriously injured in US-Israeli air strikes. He, however, added that if the two sides reached a deal, it was possible the two leaders would meet.
Meanwhile, Hezbollah leader Naim Qassem rejected on Thursday a US-brokered agreement between Israel and the Lebanese government to halt the fighting. Iran has made a ceasefire in Lebanon a condition for any peace deal with America.
Oman said operations at Mina al Fahal port were unaffected after it was reported that oil loading had been suspended following an explosion near its mooring berths. Oman exports 800,000 to 900,000 barrels per day of crude from the terminal.
As the US-Iran war peace talks dragged on, traffic in the Strait of Hormuz, where a fifth of the world’s oil passes, remained limited. Gains have been capped by oil inventories lasting longer than expected, rerouted exports and falling demand.
The Organisation of the Petroleum Exporting Countries and its allies (OPEC) is sticking to its oil demand growth forecast of 1.2 million barrels per day for this year, its Secretary General Haitham Al Ghais said, despite the Middle East conflict and closure of the Strait of Hormuz.
OPEC crude output fell last month, hitting its lowest level in decades as the US blockade of Iran and disruption in the Persian Gulf continued to curb production.
Output from its 11 current members dropped by 1.22 million barrels per day to 16.33 million a day in May, with Iran accounting for more than half of the decline, according to a Bloomberg survey. That was the lowest in at least 37 years. The data excludes the United Arab Emirates, which left the organisation last month after six decades.
Key members of the OPEC+ are expected to nudge up targets by a modest 188,000 barrels again in July during a video conference on Sunday. The session is one of four online meetings OPEC and its allies are due to hold that day.
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.
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