- CBN Set to Settle $270.6m FX Futures Contract This Week
The Central Bank of Nigeria (CBN) is expected to settle OTC FX Futures contract to the tune of $270.6 million on the interbank market this Wednesday.
The transaction to be settled on the FMDQ OTC Securities Exchange would be the fourth futures contract to mature since the introduction of the flexible FX regime.
But analysts anticipate that the central bank would open a new futures contract expected to mature October 2017.
Afrinvest West Africa Limited, which disclosed this explained: “In the week ahead, the central bank will be settling US$270.6 million in open futures contracts maturing 26th October 2016. We expect the apex bank to open a new October 2017 futures contract with a total value of $1.0bn to replace the maturing instrument.
“However, we believe rate at the parallel market will be pressured in the weeks ahead on the back of the apex bank’s decision to maintain status-quo on the suspension of 19 banks from dollar sale to BDCs, suspension of naira debit cards for FX transactions and Travelex’s inability to meet the rising foreign currency demand from BDC operators,” Afrinvest stated.
In an effort to meet part of the pent up demand for foreign exchange by critical sectors of the economy, the central bank last week allocated $314 million to Nigerian banks for onward sale to their customers through Special Secondary Market Intervention Retail Sales (SMIS).
According to a CBN source, the intervention, which was a sixty-day forwards sale, was aimed specifically at meeting the FX payment of matured obligations for the importation of agriculture and industrial raw materials, machineries and equipment as well as spare parts and ticket sale remittances for airlines.
He said in order to ensure that these sectors continue to enjoy the support of the banking system in sourcing raw materials and machinery the chief executives of deposit money banks (DMBs) signed undertakings to open new letters of credit (LCs) equivalent to the amount of forwards receive for each of the sectors.
“Therefore, this round of sales was meant to meet both matured obligations and finance new trade LCs,” the senior CBN official had said.
At the close of the intervention, he said the CBN received valid application (that is those that met the criteria stipulated in the circular for the auction) amounting to $814,208,535.82. Of this amount, it intervened with the sum of $313,916,711.09.
A sectoral breakdown showed that total demand from the agriculture sector stood at $31,941,640.73, of which 61.73 per cent, or $19,718,153.67 was met by the CBN.
Total demand by airlines was $216,738,717.57, of which 31.91 per cent, or $69,164,224.83 was met; demand for machinery stood at $167,638,045.08, of which 65.09 per cent, or $109,117,686.71 was met; and demand for raw materials of $397,890,132.44, of which 29.13 per cent, or $115,916,711.09 was met.
In fulfilment of its pledge to fund forward sales under the flexible FX regime, the CBN also guaranteed letters of credit (LCs) for importers to ship in required goods.
A statement from the acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor had explained that the move by the CBN to settle the 60-day forward sales would further ease pressure on the naira and improve market liquidity.
The naira closed at N455 to the dollar on the parallel market on Friday. However, on the interbank FX market, the spot rate of the naira closed at N455 to the dollar on Friday.
Ecobank Partners NiDCOM to Mobilise Nigerians Abroad for National Development
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.
Increase in Price Boosts Revenue of Dangote Sugar by 41.5 Percent in Q1 2021
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.
FBN Holdings Suffers 39 Percent Drop in Profit to N15.6 Billion in Q1 2021
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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