Naira Tumbles to 402 on Dollar Scarcity
The naira tumbled to 402 at the parallel market on Wednesday, a day after the Central Bank of Nigeria banned nine banks from the foreign exchange market over their failure to remit $2.334bn to the Federal Government’s Treasury Single Account domiciled with the Central Bank of Nigeria.
The local currency had closed at 397/dollar on Tuesday.
At the interbank market, the naira closed at 315.93/dollar, lower than 305.5 it recorded on Tuesday.
On the interbank market on Wednesday, no trades were posted until three minutes before the end of the session, when the CBN which has been reducing its dollar sales, intervened, Reuters reported quoting traders.
Only three deals worth $0.75m were traded at 305.50 per dollar, a level the market has closed at since Monday. The naira had hit an all-time low of 365.25 per dollar on the interbank on Thursday
The overnight naira interbank lending rate stayed ultra-high on Friday, quadrupling from 6.26 per cent since Wednesday as the Central Bank of Nigeria took steps in the debt and currency markets to try to prop up the ailing local currency.
The CBN sold dollars on Thursday and Friday, traders said. It also sold about N236bn ($776m) of open market operations treasury bills on Thursday, which sent the banking system into a deficit of around N39bn on Friday.
Traders said interbank rates should ease this week when part of July’s budget allocation should enter the banking system.
The Federal Government distributes revenue from crude exports every month among its 36 states, and local and federal administrations.
First Bank Denies Forgery Allegation in Face of Legal Battle with Loan Defaulter
First Bank of Nigeria Limited has issued a denial against the forgery allegation made by Francis Chukwumah Nwufor, the owner of Whiteplains British School.
In the lawsuit marked CR/266/2023, the federal ministry of justice had accused the bank of forging a “tripartite legal mortgage without the consent of Mr Francis Chukwumah Nwufor, with intent to commit fraud.”
In an official statement, First Bank described the accusation as a spurious allegation made by a delinquent debtor, which is aimed at tainting the bank’s loan recovery efforts and legal enforcement of its security collateral interest in line with the terms of the loan.
The bank emphasized that it operates by the highest standards of ethical conduct and will under no circumstances involve itself in any act of illegality. It further assured its numerous customers, stakeholders, and the general public that it remains focused on its mission of providing the best financial services.
The case has been adjourned until May 8th, as the prosecution lawyer stated that all the defendants had yet to be served with the charge.
It is common for loan defaulters to resort to legal battles with banks and this case is no different. However, it is important for both parties to ensure that the matter is handled in a transparent and legal manner.
First Bank’s denial of the allegation is a clear indication that it is standing firm against any attempt by recalcitrant debtors to fritter away depositors’ funds under its custody. The bank’s focus on its mission of providing the best financial services to its numerous customers is commendable and should be the guiding principle for all financial institutions.
CBN Denies Banks Upgrade of Operations Till License Approval
Following the increase in requests seeking operational upgrades for financial institutions, the Central Bank of Nigeria (CBN) has warned against taking such action until their licences are approved.
The CBN informed banks and other financial institutions who have requested for conversion of licenses to refrain from enlarging or reducing their present banking networks while their requests are still pending, Investors King reports.
This was contained in CBN’s circular ‘FPR/DIR/PUB/CIR/001/072’ to banks and other financial institutions in the country dated March 28, 2023.
The circular was titled– “Regulatory guidelines for change of operational licence for banks and other financial institutions in Nigeria” signed by the Director, Financial Policy and Regulation Department, Chibuzor Efobi.
The apex bank barred financial institutions from launching new services or banking activity until otherwise approved and included in the company’s terms.
According to CBN, the regulatory guideline became imperative as more banks and other financial institutions submitted requests for upgrade or conversion to other licence regimes.
The laid down guidelines will properly guide and give explanations to eligible financial institutions on the system’s requirements.
The circular reads partly, “Under these guidelines, the following prohibitions/restrictions shall apply to eligible banks and OFIs applying for conversion or re-categorisation. The bank or OFI shall not, pending when the application is determined expand or reduce its current banking network;
“Roll-out new products and services; carry out any new strategic banking activity but the settlement of rights and obligations shall continue until extinguished in accordance with existing terms and conditions;
“Take any business decision after the conversion process has commenced, except in line with the bank’s conversion strategy submitted to the CBN; Engage in any banking activity specific to the proposed new licence; any other requirement that may be prescribed from time to time by the CBN.”
Zenith Bank Caps The Year 2022 With Impressive 24% Growth in Gross Earnings
Zenith Bank Plc has announced its audited results for the year ending December 31, 2022, achieving an impressive double-digit growth of 24% in gross earnings from NGN765.6 billion reported in the previous year to NGN945.5 billion in 2022. This is despite the persistent challenging macroeconomic environment and headwinds.
According to the audited financial results for the 2022 financial year presented to the Nigerian Exchange (NGX), the double-digit growth in gross earnings was driven by a 26% year-on-year (YoY) growth in interest income from NGN427.6 billion to N540.2 billion and a 23% year-on-year (YoY) growth in non-interest income from NGN309 billion to NGN381 billion. Profit before tax also grew by 2% from NGN280.4 billion to NGN284.7 billion in the current year. The increase in profit before tax was due to the significant growth in all the income lines.
Impairments grew by 107% from NGN59.9 billion to NGN124.2 billion, while interest expense grew 63% YoY from N106.8 billion to N173.5 billion, respectively. The impairment growth, which also resulted in an increase in the cost of risk (from 1.9% in 2021 to 3.3% in the current year), was due to the impact of Ghana’s sovereign debt restructuring programme. The growth in interest expense increased the cost of funds from 1.5% in 2021 to 1.9% in 2022 due to hikes in interest rates globally.
Customer deposits increased by 39%, growing from NGN6.47 trillion in the previous year to NGN8.98 trillion in the current year. The growth in customer deposits came from all products and deposit segments (corporate and retail), thus consolidating the bank’s market leadership and indicating customers’ trust.
The continued elevated yield environment positively impacted the bank’s Net-Interest-Margin (NIM), which grew from 6.7% to 7.2% due to an effective repricing of interest-bearing assets. Operating expenses grew by 17% YoY, but growth remains below the inflation rate. Total assets increased by 30%, growing from NGN9.45 trillion in 2021 to NGN12.29 trillion, mainly driven by growth in customer deposits. With the steady and continued recovery in economic activities, the Group prudently grew its gross loans by 20%, from NGN3.5 trillion in 2021 to NGN4.1 trillion in 2022, which increased the Non-Performing Loan (NPL) ratio modestly from 4.2% to 4.3% YoY. The capital adequacy ratio decreased from 21% to 19%, while the liquidity ratio improved from 71.2% to 75%. Both prudential ratios are well above regulatory thresholds.
In 2023, the Group intends to expand its frontiers as it also reorganises into a holding company structure, adding new verticals to its businesses and growing in all its chosen markets, both locally and internationally.
As a testament to its commitment to shareholders, the bank has announced a proposed final dividend payout of N2.90 per share, bringing the total dividend to N3.20 per share.
In recognition of its track record of excellent performances, Zenith Bank was recognised as the Number One Bank in Nigeria by Tier-1 Capital, for the 13th consecutive year, in the 2022 Top 1000 World Banks Ranking published by The Banker Magazine; Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020 and 2022; Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best Commercial Bank, Nigeria 2021 and 2022 in the World Finance Banking Awards; Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022; Best in Corporate Governance’ Financial Services’ Africa, for three consecutive years from 2020 to 2022, by the Ethical Boardroom; Best Commercial Bank,
Nigeria and Best Innovation In Retail Banking, Nigeria in the International Banker 2022 Banking Awards. Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, and Retail Bank of the year, for three consecutive years from 2020 to 2022, at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards. Similarly, Zenith Bank was named as Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Most Innovative Bank of the Year 2019 by Tribune Newspaper, Bank of the Year 2020 by Independent Newspaper, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.
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