- NSE Index Falls 0.8% as Bears Dominate Trading
The Nigerian Equities Market began the week on a bearish as the Nigerian Stock Exchange (NSE) All-Share Index declined by 0.81 per cent to close at 27,634.99, while market capitalisation ended at N9.492 trillion.
Bears dominated the trading session with 26 stocks declined while only seven appreciated. Wema Bank Plc led the seven gainers, rising by 6.4 per cent, trailed by WAPIC Insurance Plc with 4.0 per cent. FCMB Group Plc appreciated by 2.7 per cent, while Skye Bank Plc garnered 1.6 per cent, just as African Prudential Registrars Plc gained 1.5 per cent.
Conversely, Nigerian Aviation Handling Company Plc led the price losers with 7.5 per cent, followed by Forte Oil Plc with 5.0 per cent as investors continued to react negatively to the nine months results of the oil product marketing firm. The company had declined by over nine per cent last week.
Forte Oil Plc posted 34.7 per cent decline in profit after tax (PAT) for the nine months ended September.
Although the company’s top lines showed growths, higher cost of finance and tax expenses compressed the bottom-line.
Forte Oil Plc recorded a gross revenue of N121.1 billion in 2016, showing an increase of 32.2 per cent from N91.6 billion in 2015. An analysis of the revenue showed that fuels accounted for N103 billion,, up from N76.2 billion in 2015. Lubricants and greases recorded N8.188 billion, compared with N5.161 billion in 2015, while power accounted for N7.931 billion as against N7.02 billion in 2015.
Cost of sale rose by 34.3 per cent from N78.6 billion to N105 billion, while profit before tax (PBT) stood at N15.5 billion, showing an increase of 19.4 per cent.
The company was able to keep operating expenses flat at N9.9 billion, against N10 billion in 2015. While other income fell by 13.9 per cent from N2.7 billion to N2.3 billion, net finance cost soared by 663 per cent to N2.2 billion.
Consequently, the company ended the nine months with profit before tax (PBT) of N5.6 billion, from N5.3 billion in 2015. However, tax expenses rose by 182.6 per cent from N1.0 billion to N2.8 billion, hence PAT fell to N2.8 billion, down from N4.3 billion.
First Bank, GTBank, UBA, Others Generate N133.92 Billion from Electronic Payment in Nine Months
Rising investment in financial technologies and the growing adoption of electronic payments have earned 12 Nigerian banks a total sum of N133.92 billion in the first nine months of the year.
Billions spent in ensuring that bank customers have access to their funds and can perform financial transactions 24 hours a day paid off during the COVID-19 lockdown as many customers were able to maintain social distancing by carrying out financial transactions on numerous digital platforms.
Some of the electronic platforms banks generated revenue from in the first nine months were Automated Teller Machine transactions, USSD, online transfer, electronic bills payments, Remita, Point of Sale payments and agency banking, among others.
While some of the twelve banks were Access Bank Plc, First Bank of Nigeria Plc, First City Monument Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank Plc, United Bank for Africa Plc and Sterling Bank Plc.
The other five were Jaiz Bank Plc, Union Bank of Nigeria Plc, Wema Bank Plc, Unity Bank Plc and Stanbic IBTC Plc.
A breakdown of the banks’ unaudited financial statements showed Access Bank’s revenue from electronic payments rose by 105 percent to N38.80 billion in the period under review, up from N18.96 billion posted in the same period of 2019.
First Bank’s electronic payment revenue stood at N34.59 billion, representing an increase of 0.5 percent over the N34.42 billion recorded in the corresponding period of 2019.
Similarly, fees and commissions FCMB earned from digital payments in the first nine months amounted to N6.62 billion, a 17 percent contraction from the N7.98 billion earned in the same period of 2019.
Jaiz Bank posted a 24 percent contraction on its electronic payment earnings from N406.65 million in 2019 to N309.55 million in the same period in 2020.
Also, Stanbic IBTC’s electronic earnings dropped by 15 percent from N2.49 billion posted in 2019 to N2.12 billion in 2020.
Fidelity Bank’s e-payments revenue contracted by 34 percent in the first nine months of the year to N1.74 billion, down from N2.63 billion in 2019. While GTBank posted a 26 percent decline in electronic banking income to N8.21 billion in the period under review, below N11.04 billion earned in the same period of 2019.
Union Bank Plc realised N5.34 billion from electronic payments charges in the first three quarters of the year. Meaning, the bank’s electronic payments decline by 5 percent to N5.6 billion.
For Sterling Bank Plc, electronic products earned the bank N4.31 billion in the very first nine months of 2020, again a reduction of 16 percent from N5.11 billion posted in the same period of 2019.
UBA Plc, Unity Bank and Wema Bank Plc generated N26.71 billion, N1.74 billion and N2.02 billion from electronic payment income, respectively.
Ghana/Kenya: Eurobonds to Decouple as Fiscal Challenges Come to Fore
Ghana and Kenya, two of the sub-Saharan African sovereigns with the highest amount of outstanding Eurobonds, could see a widening of their risk premiums over 2021, according to a Senior Credit Analyst at Redd Intelligence, Mark Bohlund.
Faced with fiscal challenges, the two African nations are expected to return to the Eurobond market in the first quarter of 2021, but this time with bigger risk premiums as investors are expected to incorporate a higher likelihood of frontier-market issuers being pushed into debt restructuring.
Mark Bohlund said, “Ghana and Kenya are likely to return to the Eurobond market in 1Q21 but see a widening of their risk premiums over 2021 as investors incorporate a higher likelihood of frontier-market issuers being pushed into debt restructuring.”
With Ghana’s outstanding Eurobonds presently estimated at US$10.3 billion and Kenya’s outstanding Eurobonds put at US$6.1 billion, spreads on Ghana’s Eurobonds will increase over those of Kenya in 2021.
“It is likely that spreads on Ghana’s eurobonds over those of Kenya will increase over 2021 as concerns rise over its weak fiscal position and high reliance on commercial overseas financing,” Bohlund stated.
Commenting on the countries’ fiscal positions, Bohlund said both countries are likely to post double-digit fiscal deficits this year, as contracting economies add to already faltering government revenue.
“With interest costs absorbing close to 50% of government revenue, Ghana will struggle to find sufficient cost- savings in other areas to reduce the fiscal deficit substantially in 2021.”
“In contrast to Kenya, Ghana has already cut back its capital expenditure to a bare minimum. The Bank of Ghana stepped up its purchases of government bonds sharply in September and we expect this to continue during 2021.
“In Kenya, part of the solution should be to encourage county governments to raise more revenue, but this will be challenging to implement before the August 2022 elections.
“Having shied away from bi- and multilateral creditors in favor of commercial borrowing, Ghana is likely to struggle to secure sufficient external financing in 2021. This makes increased central bank financing likely and poses downside risks to the cedi.
“Neither Ghana nor Kenya is likely to seek DSSI participation in 1H21 even if they deem that international bond issuance will not be possible.
“We have changed our view and now expect both Ghana and Kenya to issue Eurobonds in 1H21.
“Kenya is likely to continue to draw on funding from the IMF, the World Bank and other multilateral creditors, as well as bilateral financial support from China as the Standard Gauge Railway, continues to bleed funds.”
Bohlund added that the spreads between Ghana and Kenya Eurobonds are likely to widen further as a higher risk of a debt restructuring is priced into Ghanaian assets.
Insider Dealing: Paul Miyonmide Gbededo Adds Another 612,326 Shares of Flour Mills to His Stake
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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