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 Dipo Olowookere
Renewed buying interest raised the Nigerian Exchange (NGX) Limited by 0.33 per cent on Monday, with gains recorded in almost all the major sectors of the bourse at the close of transactions.
According to data harvested by Business Post, the insurance counter expanded by 0.62 per cent, the banking index grew by 0.59 per cent, the energy sector appreciated by 0.40 per cent, and the consumer goods space improved by 0.10 per cent, while the industrial goods segment closed flat.
When the closing gong was struck by 4 pm to signify the close of business on Customs Street, the All-Share Index (ASI) was up by 1,113.76 points to 243,707.07 points from 242,593.31 points, and the market capitalisation chalked up N714 billion to close at N156.308 trillion compared with the previous session’s N155.594 trillion.
Interest in Nigerian stocks yesterday resulted in a rise in the activity level, with the trading volume soaring by 17.86 per cent to 717.2 million units from 608.5 million units. The trading value advanced by 77.19 per cent to N56.7 billion from N32.0 billion, and the number of deals surged by 36.22 per cent to 73,321 deals from 53,826 deals.
FCMB was the busiest stock during the trading day, with a turnover of 152.3 million units worth N1.8 billion, Premier Paints exchanged 61.0 million units valued at N135.3 million, Dangote Cement traded 34.7 million units for N29.7 billion, The Initiates sold 32.8 million units worth N1.0 billion, and Jaiz Bank transacted 32.6 million units valued at N293.3 million.
Yesterday, the market breadth index was positive after the exchange closed with 37 price gainers and 28 price losers, representing strong investor sentiment.
International Energy Insurance gained 9.92 per cent to settle at N7.98, the Initiates added 9.91 per cent to its share price to quote at N32.15, ABC Transport garnered 9.68 per cent to trade at N6.80, Abbey Mortgage Bank grew by 9.63 per cent to close at N10.25, and Linkage Assurance soared by 9.36 per cent to N1.87.
On the flip side, Fidson Healthcare gave up 10.00 per cent to finish at N122.85, Academy Press crashed by 9.70 per cent to N7.45, RT Briscoe depreciated by 9.43 per cent to N13.45, SUNU Assurances tumbled by 9.37 per cent to N4.06, and Learn Africa decreased by 8.70 per cent to N10.50.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a marginal 0.05 per cent drop on Monday, June 8, depleting the market capitalisation by N1.27 billion to N2.606 trillion from N2.607 trillion, and cutting the Unlisted Security Index (NSI) by 2.12 points to 4,356.20 points from the previous 4,358.32 points.
The contraction witnessed during the session was triggered by a price loser, which overpowered that gains recorded by two securities on the trading platform.
Data indicated that MRS Oil Plc lost N6 at the close of business to settle at N165.00 per share compared with last Friday’s price of N171.00 per share.
Conversely, Lighthouse Financial Services Plc added 9 Kobo to sell at N1.03 per unit versus 94 Kobo per unit, and Central Securities Clearing System (CSCS) Plc appreciated by 8 Kobo to N78.48 per share from N78.40 per share.
The volume of securities traded by investors yesterday soared by 51.9 per cent to 213,188 units from 140,345 units, and the value of securities increased by 12.6 per cent to N20.2 million from N17.9 million, while the number of deals executed fell by 7.4 per cent to 25 deals from 27 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion, and CSCS Plc with 64.8 million units exchanged for N4.4 billion.
GNI Plc also remained as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, trailed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
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