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CBN Conducts Special Examination on Banks

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In order to ascertain the actual well-being of banks owing to the nation’s macroeconomic challenges and rising non-performing loans (NPLs), the Central Bank of Nigeria (CBN) is currently carrying out examination on banks.

At the end of the exercise, the banking sector regulator said, it would determine how best the industry should be supported.

The Director, Banking Supervision, CBN, Mrs. Tokunbo Martins, disclosed this in response to enquiries.

Banking sector NPLs have been predicted to jump to 12.5 per cent of the total loans of the banks this year, up from the central bank’s target level of five per cent at the end of last year, according to Agusto & Co, Nigeria’s main rating agency.
This is even worsened by the weakening consumer confidence and slide in the country’s Gross Domestic Product (GDP).

In view of the current macro-economic challenges in the country, the CBN last week announced that it had granted a one-off forbearance to banks this year to write-off their fully provided NPLs without waiting for the mandatory one year.

The CBN had explained that it acknowledged the request by banks to amend the requirements of Section.3.21 (a) of the Prudential Guidelines, which mandates banks to retain in their records, fully provided NPLs for a period of one year before they are written off.

“The CBN has no intention of repealing the provision of the above mentioned section of the guidelines. In view of the current macro-economic challenges, however, the CBN hereby grants a one-off forbearance this year 2016 to banks, to write-off fully provided for NPLs without waiting for the mandatory one year,” Martins stated in the circular addressed to all banks.

In a related development, in view of what it described as the abuse of access to its Standing Lending Facility (SLF) by banks and other authorised dealers, the CBN has also directed all authorised dealers to refrain from accessing the discount window on the settlement date for government securities’ auctions.

The securities referred to are CBN bills, Nigerian Treasury Bills and Federal Government of Nigeria bonds. It stressed that any violation of the directive would result in the denial of access to the SLF.

Responding to question on the need to conduct special examination on the banks to mitigate systemic risk in the industry, Martins stated: “I totally agree. We are currently carrying out examinations in that regard and also conducting stress test. At the end of it, we will determine how best the industry should be supported.”

Meanwhile, as the tenure of the Chief Executive Officer of the National Bureau of Statistics (NBS), Mr. Yemi Kale, ends today, financial market analysts have commended his contribution to the transformation of the country’s data system since his appointment in 2011.

The NBS has since 2011 grown as a reliable statistics body whose data have continued to be relied on nationally and internationally for effective planning.

Speaking on the achievement of the NBS boss since his appointment, Head of Research, SCM Capital Limited, Mr. Sewa Wusu, told THISDAY: “Kale has done significantly well. In terms of statistics on the Nigerian economy, such as inflation, GDP, and others that have really helped the economy in terms of planning and understanding the level at which the economy is performing, he has done very well.

“Today, we have series of data on the macro economy and that has helped in policy formulation and planning. Before Kale came, we didn’t have the robustness of most of the reports we are seeing now. To a large extent, the NBS has been living up to its expectation under Kale. That is what you enjoy when you have a round peg in a round hole. They know what to do at every point in time.

“More can still be done and he can still do more, that is why I am advising that his tenure be renewed. Lots of foreign investments banking firms now do proper analysis on the Nigerian economy because of the structured NBS data release timetable,” he stated.

One of Kale’s greatest achievements was seeing through the rebasing of Nigeria’s GDP which, in 2014 saw Nigeria emerge as the largest economy in Africa, a position, which it lost to South Africa recently. Among several other achievements including the unveiling of the Enhanced General Data Dissemination System (e-GDDS), which would help Nigeria attract the much needed Foreign Direct Investments (FDIs) into the country.

The e-GDDS is the data standards initiatives by the International Monetary Fund (IMF) which aims at enhancing member countries’ data transparency and promoting development of sound statistical systems. The page particularly serves as a one-stop publication vehicle for essential macroeconomic data.

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.

Banking Sector

Ecobank Partners NiDCOM to Mobilise Nigerians Abroad for National Development

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In a bid to fulfill it’s objectives and mandate, the Pan African Bank has promised to support Nigerians living and working abroad through it’s partnership with NiDCOM.

The Managing Director, Ecobank Nigeria, Patrick Akinwuntan has stated that the bank is privileged to work closely with the Nigerians in Diaspora Commission, (NiDCOM) and will continue to pursue one of its key mandates of helping to enhance the economic development and integration of Africa through its support to Nigerians living and working abroad.

Speaking at the maiden edition of the Diaspora Quarterly Lecture Series with Ecobank as the sole banking partner which took place on Saturday, 8th May 2021, he noted that Ecobank remains a critical bridge for Nigerians abroad, as it has made huge investments in the necessary platforms to enable them connect with home seamlessly. The event held online and had over 2000 participants from across all the continents in attendance.

“Nigerians in the diaspora play a major role in nation building, their contribution goes a long way to catalyse economic development. For us at Ecobank, we are a pan-African institution positioned to foster the economic growth and integration of our continent, so we are particularly pleased to work closely with the Nigerians in Diaspora Commission (NiDCOM), ably led by the Chairman/CEO, Hon Abike Dabiri-Erewa”.

“We are committed to ensuring that every Nigerian living abroad is able to remit home seamlessly and affordably, access viable investment opportunities and as the financial institution of choice for Nigerians abroad, we have deployed the necessary resources to actualise this.” He stated.

The Minister of Interior, Ogbeni Rauf Aregbesola, who was also present, reiterated the readiness of the government to collaborate with Nigerians in the diaspora, highlighting the new processes put in place to facilitate passport issuance, noting that all backlog of passport applications would be cleared by the end of May 2021.

Also speaking, the Hon. Minister of State, Foreign Affairs Amb. Zubairu Dada said harnessing the human capital and material resources of Nigerians in the diaspora towards the socio-economic, cultural, and political development of Nigeria can no longer be ignored. He pointed out that the Nigerian diaspora community is well educated, resourceful, skilled, and exposed to global best practices.

The NiDCOM Chairman/CEO, Hon. Abike Dabiri- Erewa explained that the Diaspora Quarterly Lecture Series is projected to be a major aspect of national discourse, where Nigerians abroad can be kept abreast of the government’s policies, programmes and projects.

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Finance

Increase in Price Boosts Revenue of Dangote Sugar by 41.5 Percent in Q1 2021

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Revenue of Dangote Sugar Refinery Plc rose by 41.5 percent to N67.394 billion in the first quarter (Q1) of 2021 from N47.643 billion recorded in the same quarter of 2020.

According to the leading sugar manufacturer, the increase in revenue was a result of the increase in the price of sugar in the first quarter. The company claimed price adjustment was necessary to mitigate the negative effect of inflation and depreciation on the company.

Volumes only rose by 5.7 percent during the quarter despite a 41.5 percent increase in revenue, meaning the increase in price was the main sales catalyst.

In the company’s unaudited financial statements, gross profit grew from N12.721 billion in Q1 2020 to N18.044 billion in Q1 2021.

Similarly, operating profit stood at N15.884 billion, up from N10.747 billion posted in Q1 2020.

Finance cost more than double from N1.353 billion in Q1 2020 to N3.412 billion in Q1 2021.

Dangote Sugar’s profit before tax rose from N9.509 billion recorded in the corresponding quarter to N11.949 billion in the quarter under review.

The company paid N3.646 billion in income tax, slightly higher than N3.137 paid in the same quarter of 2020.

Profit for the period grew from N6.372 billion in Q1 2020 to N8.302 billion in Q1 2021.

Commenting on the company’s performance, Dangote Sugar said “EBITDA increased by 34.7% to N17.02 billion (2020: N12.64 billion) on account of increased earnings. Group profit after taxation for the period increased by 30.3% to N8.30 billion (2020: N6.37 billion) reflecting management’s unrelenting drive to deliver consistent shareholder value.”

On price increase, the company hinged it on series of devaluation carried out in 2020 by the Central Bank of Nigeria (CBN), escalating inflation, port congestion and rising in price of global sugar. Dangote Sugar said its imported raw sugar from Brazil under Federal Government’s backward integration plan.

We have continued to witness high cost of raw materials, energy costs and other input costs due to rising inflation and FX rate fluctuation. Further cost escalation is anticipated in the year as inflationary pressure mounts,” the company said.

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Finance

FBN Holdings Suffers 39 Percent Drop in Profit to N15.6 Billion in Q1 2021

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FBN Holdings - Investors King

FBN Holdings Plc profit after tax declined by 39 percent from N23.140 billion recorded in the first quarter (Q1) of 2020 to N15.6 billion in the first quarter of 2021.

In the leading financial institution’s unaudited financial statements released through the Nigerian Exchange Limited, gross earnings declined by 14.5 percent to N137 billion in the period under review, down from N160 billion filed in the previous quarter.

Similarly, net interest income declined from N60.253 billion achieved in Q1 2020 to N52.793 billion.

Net interest income after impairment charge for losses also dipped from N50.547 billion in Q1 2020 to N39.619 billion in Q1 20201. While net fee and commission income rose from N20.773 billion in Q1 2020 to N28.427 billion in Q1 2021.

Profit before tax declined by 34 percent to N18.906 billion in the quarter under review, down from N28.680 billion posted in the corresponding quarter of 2020.

FBN Holdings paid N3.285 billion in income tax in the first quarter of 2020.

Therefore, profit for the period stood at N15.621 billion. While Net Assets contracted from N765.2 billion to N764.8 billion.

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