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Interbank Overnight Rate Rises by 6%

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Interbank rate

The scramble for funds by commercial banks forced the interbank overnight rate to jump by six per cent to 13.33 per cent on Thursday, from 7.33 per cent the previous day.

Similarly, the open buy-back and overnight rate also rose to 12.75 per cent, from 6.75 per cent.

This came barely 48 hours after the Central Bank of Nigeria’s Monetary Policy Committee increased the Cash Reserve Ratio for commercial banks to 22.5 per cent from 20 per cent, and the benchmark interest rate from 11 per cent to 12 per cent, as part of measures to curb rising inflation.

Similarly, customers’ deposits in the vaults of banks fell significantly on Thursday after the CBN withdrew about N400bn from the banking system to meet a new CRR on deposits, it was learnt.

The significant drop in the Deposit Money Banks’ deposits forced a number of them to the interbank market to borrow funds to cover their positions ahead of the Easter break.

Data posted on the FMDQ OTC website showed that the interbank overnight rate rose to 13.33 per cent from 7.33 per cent on Wednesday.

“We have had major fund placers in the market quoting between 20 and 25 per cent for overnight placement, while takers are quoting between seven and 10 per cent,” one dealer told Reuters, adding that no deals had yet been done on the rates being quoted.

Traders said there was additional cash outflow for premium payments to the Nigerian Deposit Insurance Corporation, which further put pressure on liquidity in the system and forced lending rates up.

On Wednesday, yields on Nigeria’s benchmark 20-year bond rose by 55 basis points to 12.7 per cent after the CBN unexpectedly tightened monetary policy.

The total commercial lenders’ credit balance with the central bank stood at N320.9bn on Thursday, up from N217bn last week.

However, traders said the level of cash in the banks’ vaults would have dropped significantly due to cash withdrawals to meet the new CRR and premium payments on customer deposits.

Commenting on the MPC decision, analysts at Afrinvest said, “The move to hike the CRR by 2.5 per cent to 22.5 per cent was in a bid to curb speculative activities in the foreign exchange market.

“We estimate this to quarantine the sum of N409.7bn from the system. However, we are of the view that this reflects the notion that previous decision to reduce the CRR by five per cent was largely premature given that the operating environment remains unattractive for loan growth.

“We do not expect a reversal in this tightening stance in the medium term as committee members would remain wary of the liquidity impulse from expansionary budget. In the interim, we expect to see a 100bps-200bps increase in yields in the fixed income market, while the cost of funds may likely rise for Tier-2 banks as the interbank market adjusts to the tightening of liquidity. However, assets repricing of fixed income securities and other risk assets will likely compensate for this.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Insider Dealing: Paul Miyonmide Gbededo Adds Another 612,326 Shares of Flour Mills to His Stake

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Paul Miyonmide Gbededo, the Group Managing Director, Flour Mills of Nigeria Plc bought an additional 612,326 shares of the company.

The management stated this in a disclosure statement sent to the Nigerian Stock Exchange on Monday.

The managing director purchased the shares at N27.75 per share on November 20, 2020 at the Nigerian Stock Exchange in Lagos, Nigeria. Meaning, Gbededo has invested another N16,992,046.5 into the company.

This was in addition to the 3,284,867 shares valued at N91,642,269 and 4,200,852 shares worth N117.62 million purchased by Gbededo earlier in the month of November. Bringing his recent purchases to 8,098,045 million shares worth N226,254,315.5. See the details of the latest transaction below.

 

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FCMB Reports 16.4 Percent Increase in Profit After Tax in Q3 2020

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FCMB

FCMB Group Plc, one of the leading financial institutions in Nigeria, reported a 16.4 percent increase in profit after tax for the third quarter of the year.

In the unaudited financial statements released through the Nigerian Stock Exchange (NSE), the lender’s profit before tax grew by 10.2 percent year-on-year to N4.8 billion while profit after tax increased by 16.4 percent to N4.2 billion.

FCBMB Group Plc expanded gross earnings by 4.8 percent to N48.3 billion during the period under review. Similarly, the bank’s net interest income rose by 30.03 percent year-on-year to N22.7 billion.

The strong performance continued across the board as net fee and commission income increased by 0.29 percent to N5.2 billion. Net trading income rose by 39.4 percent year-on-year to N1.82 billion.

Personnel expenses dropped by 7.9 percent to N6.9 billion during the quarter while general and administrative expenses declined by 7.52 percent year-on-year to N7.6 billion. Largely due to the COVID-19 lockdown.

Loans and advances to customers rose by 10.8 percent to N793.14 billion between December 2019 and September 2020. Total desposits from customers during the same period grew by 26.7 percent to N1.2 trillion.

The bank’s total assets increased by 22.12 percent to N2.04 trillion.

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Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary

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stanbic IBTC Insurance

Stanbic IBTC Holdings Plc on Friday announced that it has obtained all required Regulatory Approvals and a license from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary, Stanbic IBTC Insurance Limited (SIIL).

In a statement signed by Chidi Okezi, Company Secretary, Stanbic IBTC and released on Friday, the bank said “The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria. In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.

“Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets. Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.

“Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.”

 

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