Economy
New Export Fund: Investors in 10 banks to Lose N29b
There are indications that about N30 billion would be pulled out from distributable profits of 10 banks to honour Nigerian Bankers Committees’ (NBC) decision to fund the Central Bank of Nigeria’s, (CBN) export fund in 2017.
The figure would be far above the N25 billion CBN had projected for the first year (2017) as last week’s Zenith Bank Plc’s results, the first to be announced so far, already show a significant overshoot of that estimate.
The leading 10 out of 26 banks in the country are set to announce figures that would cumulatively overshoot the CBN’s estimate.
NBC had last month directed that deposit money banks in Nigeria, from the 2016 audited accounts, will set aside 5 percent of their profit after tax (PAT) and pay same into a pool fund to finance Nigerian export businesses or businesses with import substitution capabilities.
This effectively takes away a significant portion of money from equity investors’ benefits in the quoted banks.
Impact on the Banks Based on the Full Year 2016 PAT estimates put together by Cardinal Stone Partners, a Lagos based investment house, on their coverage banks, total exposure will amount to N29.3 billion.
The Cardinal Stone Reports also indicated the relative exposure of each of the banks.
According to the report, in absolute terms, Guaranty Trust Bank Plc (GTB) has the largest exposure with an expected contribution of N7.1 billion (24% of total sector contribution) whilst Diamond Bank Plc will be the least exposed with an expected contribution of N0.4 billion (1% of total sector contribution).
Nigerian banks have consistently paid dividends, with top tier banks such as GTB and Zenith Bank Plc paying as much as 45% of PAT.
At the backdrop of this the analysts at Cardinal Stone stated: “After incorporating the impact of this development on FY’16 expected dividends, we estimate an average 5% drop in dividend per share, translating to an average expected dividend yield of 12% for FY’16.
“Finally, the policy’s impact on our valuation is immaterial as our recommendations remain largely unchanged.
“However, Access Bank Plc and Ecobank Transnational which previously had “BUY” recommendations have been downgraded to a HOLD.
Briefing journalists at the end of the January 2017 NBC meeting, Mr Ahmed Abdullahi, Director, Banking Supervision Department, CBN, said the initiative was to support the federal government’s drive to create and deepen a non-oil economy.
The Bankers Committee considered it necessary “to support the effort of the government in diversifying the economy by coming up with an initiative that will help with export drive and import substitution,” he said.
“Therefore, the committee has decided that we will be contributing 5 percent of each bank’s profit after tax in a pool of funds that will be kept at the Central Bank of Nigeria (CBN) and it will be used to finance eligible bankable projects that are meant for export or import substitution.
“The scheme will be controlled by the members of the Bankers Committee. There will be a project review committee that will review submissions from entrepreneurs that require funding. The committee will make a recommendation to the Board of Trustees of the Bankers Committee,” he explained.
He said each bank has an equity holding in the scheme based on its annual contribution from its annual profits. Mr Abdullahi said the scheme will start from the 2016 financials.
“Banks have submitted their 2016 statement of accounts and they are to be published not later than April, 2017.
“So we are starting the programme this year using 2016 financials of banks. Any industry that is going to be export driven will benefit.
“Similarly, any industry that will provide import substitution will also benefit,” he said.
“Based on the banks’ last three years profit and loss accounts, we estimate about N25 billion will be contributed annually by the banks,” he said.
By Aduragbemi Omiyale
Secure Electronic Technology (SET) Plc is planning to reconstruct its shares at the Nigerian Exchange (NGX) Limited by merging four stocks into one.
However, this exercise is subject to the approval of shareholders of the company and the board is proposing an Extraordinary General Meeting (EGM) to be held on or before April 17, 2025.
Business Post reports that the decision to reconstruct the shares of the organisation was reached at the board meeting of the firm on Friday, MArch 7, 2025.
In a notice to the stock exchange, SET Plc said it was agreed that the proposed share reconstruction and recapitalisation of the company shall be by way of one or a combination of the following; an offer for subscription, rights offering or private placement, upon terms agreed by both parties under the definitive agreement.
It further said, “The issued and share capital of the company be reduced from N2,815,770,000, represented by 1,407,885,000 ordinary shares of 50 Kobo each, subject to the approval of the Federal High Court, Securities and Exchange Commission (SEC), and relevant regulatory authorities.”
“This restructuring share result in the cancellation of 4,223,655,000 units of shares and the portion of the share capital cancelled, being valued at N2,111,827,500 be transferred to a special reconstruction reserve,” it noted.
The disclosure also said, “There shall be a proportional upward adjustment in the share price of SET on the NGX to be reflected after the conversion, so that the value of one converted share shall be equal to the market price of four pre-reconstruction shares, and at the end of the reconstruction, SET market capitalisation and each shareholder’s percentage holding shall remain unchanged.”
The company emphasised that it would “consolidate its issued shares at a basis of 1 for 4 ratio, meaning every four shares of SET Plc currently held by a shareholder shall be converted to one share and shareholdings that result in fractional shares post-reconstruction shall be rounded up to the nearest whole number.”
It was disclosed that this exercise was suggested by Gamma Civic Limited, a part of Gamma Group, a company listed on the Mauritius Stock Exchange and represented by Cruzan Investment Limited, a company incorporated in Nigerian under the Companies and Allied Matters Act 2020.
By Adedapo Adesanya
FrieslandCampina Wamco Nigeria Plc brought down the NASD Over-the-Counter (OTC) Securities Exchange by 0.06 per cent on Wednesday, March 12.
Business Post reports that the share price of FrieslandCampina Wamco Nigeria Plc slumped by N1.26 during the session to N37.45 per unit from the preceding day’s N38.71 per unit.
However, Geo-Fluids Plc gained 27 Kobo to trade at N2.95 per share versus Tuesday’s closing price of N2.68 per unit, and First Trust Microfinance Bank Plc appreciated by 3 Kobo to close at 56 Kobo per share, in contrast to the previous day’s rate of 53 Kobo per share.
When the platform ended trading activities yesterday, its value went down by N1.17 billion to settle at N1.955 trillion compared with the preceding day’s N1.956 trillion and the NASD Unlisted Security Index (NSI) decreased by 2.03 points to close at 3,385.50 points, in contrast to the previous trading day’s 3,387.53 points.
The volume of securities traded at the bourse dropped by 36.3 per cent to 298,845 units from the 469,185 units published on Tuesday, the value of securities decreased by 4.8 per cent to N10.4 million from the N10.9 million quoted at the preceding session, and the number number of deals moderated by 34.2 per cent to 25 deals from 38 deals.
At the close of business, Impresit Bakolori Plc was the most active stock by value (year-to-date) with 533.9 million units worth N520.9 million, followed by FrieslandCampina Wamco Nigeria Plc with 12.5 million units valued at N484.0 million, and Afriland Properties Plc with 17.2 million units sold for N352.8 million.
Also, Impresit Bakolori Plc was the most active stock by volume (year-to-date) with 533.9 million units worth N520.9 million, trailed by Industrial and General Insurance (IGI) Plc with 69.9 million units sold for N23.7 million, and Afriland Properties Plc with 17.2 million units valued at N352.8 million.
By Aduragbemi Omiyale
The House of Representatives has passed Nigeria Insurance Industry Reform Act, 2024, repealing Act, Cap 117, Laws of the Federation of Nigeria, 2004; the Marine Insurance Act, Cap M3, Laws of the Federation of Nigeria, 2004; The Motor Vehicle (Third Party) Insurance Act, Cap M22, Laws of the Federation of Nigeria, 2004; the National Insurance Corporation of Nigeria Act, Laws of the Federation of Nigeria, 2004 and the Nigerian Insurance Reinsurance Corporation Act, Cap N131, Laws of the Federation of Nigeria, 2004.
At the plenary on Wednesday, the green chamber of the National Assembly approved some conditions the operating licence of an insurance company can be revoked by the National Insurance Commission (NAICOM).
The new piece of legislature, which provides for a comprehensive legal and regulatory framework for insurance business in Nigeria, was enacted yesterday after the consideration of the Senate bill.
During the presentation by House Leader, Mr Julius Ihonvbere, yesterday, for a clause-by-clause consideration, it was agreed that NAICOM can withdraw the licence of an insurer or reinsurer if it is not conducting insurance business in accordance with sound insurance principles.
In addition, this action can be carried out if the licence holder has “failed to satisfy the capital or solvency requirement as prescribed by the commission and has ceased to carry on the business of insurance and the primary purpose for which it was registered for at least one year in Nigeria.”
The lower chamber of the parliament also concurred with the Senate that for obtaining an operating licence, “An application for licensing as an insurer shall be made to the commission in the prescribed form and accompanied by such other documents or information as the commission may from time to time require.
“The commission shall publish and make available to the general public a service charter which shall provide for products and services of the commission and the complete list of requirements to obtain the products and services.”
However, no person or organisation is allowed to “commence or carry out insurance, reinsurance or related business in Nigeria unless licensed by the commission as an insurer or a reinsurer under this bill.”
NAICOM was given the power to “regulate the insurance industry [in Nigeria] in order to develop the insurance sector and to protect the interest of policyholders, prospective policyholders and other stakeholders under insurance policies in ways that are consistent with the continued development of a viable, competitive and innovative insurance industry.”
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