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Banks Advance N21.3tn Loans in 10 Months

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Central Bank of Nigeria

The total domestic credit from the banking sector to the economy dropped by 0.8 per cent to N21.3tn as of the end of October 2015, statistics obtained from the Central Bank of Nigeria have revealed.

The CBN in its economic report for October stated that the drop in credit to the economy was a reflection of the 18.9 per cent decline in net claims on the Federal Government.

The report, a copy of which was obtained by our correspondent in Abuja on Friday, said while the total credit to the private sector experienced an increase of 1.9 per cent to N19.07tn, the credit to the Federal Government dropped by 18.9 per cent to N2.26tn.

It attributed the decline in credit to the government to a drop in bank’s holding of the government securities particularly the Nigerian Treasury Bills which fell by 10.3 per cent during the period.

It said, “At N21.34tn, aggregate credit to the domestic economy, on month-on-month basis, fell by 0.8 per cent at the end of October 2015 in contrast to the 0.6 and four per cent growth at the end of the preceding month and the corresponding period of 2014, respectively.

“The development reflected the 18.9 per cent decline in net claims on the Federal Government, which more than offset 1.9 per cent growth in claims on the private sector.

“Over the level at end of December 2014, net domestic credit, however, grew by 10.8 per cent at the end of the review period, compared with the growth of 11.7 per cent at the end of the preceding month.

“The development reflected the increase in net claims on both the Federal Government and private sector.”

The report did not provide details of where lending was channelled in the private sector but noted that growth in the key monetary aggregate decelerated during the period.

The CBN Governor, Mr. Godwin Emefiele, had while speaking after the recent Monetary Policy Committee meeting said the apex bank in November reduced the lending rate from 13 per cent to 11 per cent but stressed its objective of easing lending to the real sector of the economy had not been achieved.

He said the CBN would continue to adopt moral suasion to encourage the Deposit Money Banks to support financing for targeted lending to the real sector as well as agriculture, solid minerals and the Small and Medium Enterprises sectors of the economy.

He said, “The committee acknowledged the continuous liquidity surfeit in the system stemming partly from the recent growth-stimulating monetary policy measures, as well as the tendency of the banks to invest excess reserves in government securities, rather than extend credit to the needed sectors of the economy.

“To this end, the committee once again urged the deposit money banks to improve lending to the real sector, as part of their patriotic obligations to the country and enjoined the management of the bank to continue to explore ways of incentivising lending to employment and growth-generating sectors, particularly the SMEs.”

When asked if the CBN would consider forcing banks to lend to the real sector, the governor said inasmuch as the CBN would prefer that the DMBs increased their lending to the real sector, it would be practically impossible to force them to do so owing to the fact that banks were established to make profit.

He said, “Unfortunately, the DMBs are in business to make money and we cannot regulate their interest rate. And so it can be difficult to really force them to lend to a particular set of people.

“But what we can continue to do is to put in place policies that will encourage them to do so or we can continue to incentivise them by putting in place policies that will encourage them to do so.

“So it is a free market and we cannot really compel them as it is expected. We will continue to try.

“This is why at the last meeting, we reduced the Cash Reserve Requirement from 25 per cent to 20 per cent. And we then insisted that that liquidity that will be made available or that those banks can only enjoy the reduction if they introduce to the CBN projects that are targeted at the real sector such as manufacturing, agriculture and the SMEs.”

He said the apex bank remained optimistic that the banks would heed the advice and lend to the real sector.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Finance

Emefiele Meets President Buhari, Hinted on Revisiting Naira Withdrawal Limit

The House of Representatives has invited the CBN governor to brief the house about the new policy. 

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enaira wallet

The CBN Governor, Godwin Emefiele, stated yesterday that the apex bank would consider reviewing the new weekly cash withdrawal limits of N100,000 and N500,000 for individuals and corporate bank customers, while also clarifying that the new policy which will take effect from January 2023 is not targetted at any individual. 

Investors King had earlier reported that the House of Representatives has invited the CBN governor to brief the house about the new policy. 

During the plenary session yesterday, several lawmakers positioned that the new withdrawal policy is capable to hurt the economy, especially some Nigerians who still rely on cash transactions. 

Similarly, the Association of Mobile Money Operators of Nigerians argued that the policy is capable to get them out of business.

While speaking to journalists after a close-door meeting with President Buhari, Emefiele assured that the apex bank would not be rigid on the policy as it was not meant to hurt anybody but to strengthen the nation’s economy.

In addition, the CBN governor added that more than N1 trillion worth of old notes had been deposited to various commercial banks across the county by bank customers while adding that the CBN has distributed the new N200, N500, and N1,000 notes to banks for disbursement to their customers, ahead of the December 15, earlier scheduled for circulation of the new notes. 

It could be recalled that the Central Bank of Nigeria disclosed that naira redesign will help to address some prevailing fiscal issues which include excessive circulation of naira notes, counterfeiting, and terrorism. 

Emefiele explained that countries that have embraced digitization have gone cashless. He revealed that the president was happy with the policy 

“President Buhari was happy and said, we should carry on with our work, no need to fear, no need to bother about anybody,” he said. 

He said that the new policy of the apex bank was for the good and development of the Nigerian economy, adding, “We can only continue to appeal to Nigerians to please see this policy the way we have presented it”. 

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Finance

NNPC to Spend N1 Trillion on Road Projects Across Nigeria

NNPC release a sum of N621 billion to revamp selected roads across Nigeria through the Federal Government road infrastructure tax credit scheme.

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Mele Kyari - Investors King

The Nigerian National Petroleum Company (NNPC) Limited stated that it has provided an additional N1 trillion to fund road projects across Nigeria.

This was disclosed by NNPC Chief Executive Officer, Mele Kyari in Lagos yesterday.

Investors King learnt that this new development is coming after NNPC release a sum of N621 billion to revamp selected roads across Nigeria through the Federal Government road infrastructure tax credit scheme.

It could be recalled that President Buhari had signed Executive Order 007 which allows companies and corporations to embark on public infrastructure projects as a Tax Credit against Future Income Tax. 

Speaking during a tour of roads in the North-central and South-west, along with the Chief Executive of the Federal Inland Revenue Service (FIRS), Muhammad Nami, and other top government officials from the ministry of works, Kyari noted that NNPC intervention will help to better the road network across the country. 

The NNPC boss said, “We are very happy about the state of this road development. We are very happy with this intervention across the country, not just in this place. We are doing 1,800km across the country. NNPC is taking another set of over N1tn of investments in road infrastructure in the country”. 

Some of the roads visited by Kyari include the reconstruction of Bida-Lambata road in the state, with a length 124.81km, and the Lagos-Badagry expressway along the Agbara junction and Nigeria/Benin border.

In addition, it is important to note that roads embarked upon by NNPC are roads that will directly or indirectly sustain a smooth supply and distribution of petroleum products across the country. 

Kyari noted that the project to tax initiative is a good policy that could help to accelerate road construction in Nigeria. 

“We believe that this tax credit system which Mr President has put in place is the game changer for our country. We believe that in the next 24 months, there will be a massive change to the entire road network in this country and this is why NNPC is your company and working for all of us,” he said. 

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Banking Sector

Ecobank Reports $401 Million Before Tax in Nine Months to September 2022

Revenue grew by 7% from $1.26 billion in recorded the same period of 2021 to $1.35 billion in the period under review.

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Ecobank - Investors King

Ecobank Group on Thursday reported a 7% increase in revenue for the nine months ended September 2022, the leading financial institution announced in its audited financial statement.

Revenue grew by 7% from $1.26 billion in recorded the same period of 2021 to $1.35 billion in the period under review.

The bank’s operating profit expanded by 12% to $593 million, up from $528 million filed in the corresponding period of 2021, Investors King reports.

Profit before tax rose to $401 million, a 14% increase from $352 million achieved in 2021. Profit paid to shareholders grew by 7% from $182 million to $196 million.

Gross loans and advances to customers increased 5% from $9.469 billion to $9.917 billion. Similarly, deposits from customers increased by declined by 2% to

Commenting on the bank’s performance, Ade Ayeyemi, CEO, Ecobank Group, said: “We continued to deliver on our strategic priorities and are on track to meet full-year targets despite the complex operating environment. Group-wide return on tangible equity reached a record 21%, and profit before tax increased by 14%, or 48% at constant currency (i.e., excluding currency movements).

“These results reflect the resilience, strong brand and diversification of our pan-African franchise. We saw decent client activity in consumer and wholesale payments, trade finance and foreign currency markets. Additionally,
despite inflationary pressures, we maintained a tight lid on costs, thereby improving our cost-to-income ratio to 56.3% from 58.3% in the previous year.

“The dampened economic outlook necessitated maintaining a sound balance sheet with adequate levels of liquidity and capital. As a result, our total capital adequacy ratio at 14.4% is well above our internal and minimum regulatory limits. Also, we hold sufficient gross impairment reserves that fully cover our non-performing loans. Moreover, we have fully repaid the five-year $400 million convertible debt we issued in September and October of 2017.

“Ecobankers have worked extremely hard to serve our customers’ financial needs, and I am proud of them. As always, we will passionately work towards realising our vision and remaining the bank that Africa and friends of Africa trust.”

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