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NAHCO, Guinness, Dangote Flour Lead N98bn Market Loss

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Nigerian Stock Exchange
  • NAHCO, Guinness, Dangote Flour Lead N98bn Market Loss

The Nigerian Aviation Handling Company Plc, Guinness Nigeria Plc and Dangote Flour Plc emerged as the top three losers at the close of trading on the floor of the Nigerian stock Exchange on Thursday as the market capitalisation slid by N98bn.

A total of 137.694 million shares valued at N898.708m exchanged hands in 2,488 deals.

The NSE market capitalisation dropped to N9.018tn from N9.116tn, while the All-Share Index closed at 26,212.09 basis points from 26,495.04 basis points.

NAHCO shares dropped by N0.30 (9.49 per cent) to close at N2.86 from N3.16, while the share price of Guinness depreciated to N78.90 from N83.05, losing N4.15 (five per cent).

Similarly, Dangote Flour share price closed at N4.04 from N4.25, losing N0.21 (4.94 per cent).

The NSE continued to seek its first positive close of the year as sizeable declines in select market heavyweights pulled the NSE ASI down by 1.07 per cent.

On the global scene, major bourses across Europe traded mixed amid the release of impressive full year earnings from the United Kingdom’s house building sector and JP Morgan’s decision to revise lower its valuation on a few European insurers.

Also, the United States opened mixed as investors assessed a series of economic data and the Federal Reserve’s thoughts on President-elect Donald Trump’s policies.

At the NSE, the industrial goods sector came as the biggest loser in Thursday’s session largely on the back of a 4.01 per cent decline in Dangote Cement Plc.

The consumer goods and the oil/gas sectors also closed lower amid losses in blue-chip Guinness and Forte Oil Plc by five per cent and 3.41 per cent, respectively.

The financial services sector, however, recorded its first green close of the year, buoyed by advances across a number of tier-1 banks such as Access bank Plc, FBN Holdings Plc, Guaranty Trust Bank Plc, United Bank for Africa Plc and Ecobank Transnational Incorporated Plc by 4.96 per cent, 3.30 per cent, 2.49 per cent, 2.22 per cent and 1.99 per cent, respectively.

Market breadth turned positive with 17 advances and 16 declines.

“We highlight that today’s market closing position was largely distorted by the loss in market heavyweight – Danote Cement. Excluding the loss in the stock, the ASI would have closed in the green. Consequently, considering the improved market sentiment (as indicated by the positive market breadth), we foresee a positive close in Friday’s trading session,” analysts at Vetiva Capital Management Limited said in a draft.

Meanwhile, there was an oversubscription of Treasury bills instruments sold as the naira depreciated at the parallel market.

The results of the Primary Market Auction, which was held on Wednesday, showed oversubscription across all instruments. Treasury bills worth N172.85bn were sold in 91-day (N35bn), 182-day (N22bn) and 364-day (N115.85bn), with respective bid-to-cover ratios of 1.02, 1.05 and 1.17 and stop rates of 14 per cent, 17.5 per cent and 18.68 per cent, accordingly.

Money market rates (open-buy-back and overnight rates) increased marginally by 0.50 per cent and one per cent to close at 8.50 per cent and 9.42 per cent, respectively. As a result, the average money market rate advanced by 0.75 per cent to close at 8.96 per cent at the end of the trading day .

Mixed reaction, according to Meristem Securities Limited was witnessed in the Treasury bond space. However, significant demand was observed at the shorter end of the curve.

The April 2017, July 2017, August 2017 and May 2018 instruments all recorded declines of 0.52 per cent, 0.03 per cent, 0.10 per cent and 0.19 per cent, respectively. Consequently, the average bond yield advanced by 0.02 per cent, closing at 16.69 per cent at the end of Thursday’s trades.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Finance

Nigeria’s Public Debt Hits ₦121.67 Trillion as Borrowings Surge – DMO

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The Debt Management Office (DMO) of Nigeria has announced that the country’s total public debt has risen to ₦121.67 trillion ($91.46 billion) as of March 31, 2024.

This represents an increase of ₦24.33 trillion from the ₦97.34 trillion ($108.23 billion) recorded at the end of December 2023.

The surge in debt is attributed to both domestic and external borrowings by the Federal Government, the 36 state governments, and the Federal Capital Territory (FCT).

The DMO’s report reveals that Nigeria’s domestic debt now stands at ₦65.65 trillion ($46.29 billion), while the external debt is ₦56.02 trillion ($42.12 billion).

The DMO noted that the rapid increase in public debt is largely due to new borrowing to partially finance the 2024 Budget deficit and the securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria (CBN).

“The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria,” the DMO stated.

Despite the rising debt, the DMO remains optimistic about future debt sustainability, contingent on improvements in government revenue.

“Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the Government’s Revenue to enhance debt sustainability,” the DMO added.

The increase in debt comes at a time when President Bola Tinubu is preparing to present the 2024 Supplementary Budget to the National Assembly.

This follows the President’s approval of the ₦28.7 trillion 2024 Appropriation Bill on January 1, 2024, which was ₦1.2 trillion higher than the budget originally proposed in November 2023.

The 2024 budget, dubbed the “Budget of Renewed Hope,” set ambitious targets, including pegging the oil price at $77.96 per barrel and estimating daily oil production at 1.78 million barrels.

However, the naira has faced severe depreciation, plunging to nearly ₦2,000/$1 in February, before stabilizing around ₦1,500/$1.

Economic analysts warn that the escalating debt and currency depreciation could pose significant challenges to Nigeria’s economic stability.

The government’s ability to manage its borrowing and stimulate revenue generation will be critical in navigating these fiscal pressures.

As Nigeria grapples with these economic realities, the focus remains on finding sustainable solutions to manage the growing debt burden while fostering economic growth and stability.

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Banking Sector

Federal High Court Sets Date for Contempt Hearing in GTB vs. AFEX Loan Case

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The Federal High Court in Lagos has scheduled June 27, 2024, for the next hearing in the ongoing contempt suit filed by Guaranty Trust Bank Plc (GTB) against directors of AFEX Exchange Commodities Limited.

The case revolves around a disputed N17.81 billion loan obtained under the Central Bank of Nigeria’s Anchor Borrowers’ Programme.

Presiding over the court, Justice Chukwujekwu Aneke set the date following a session where arguments were presented by the plaintiff’s lead counsel, Mr. Ade Adedeji (SAN), and the respondent’s counsel, Prof. Olawoyin (SAN).

The core issue pertains to the alleged disobedience of a court order by the directors of AFEX Exchange Commodities Limited.

GTB, through its counsel Ajibola Aribisala (SAN), has accused AFEX and its directors—Ayodele Balogun, Jendayi Fraaser, Justin Topilow, Mobolaji Adeoye, and Koonal Ghandi—of contempt for failing to comply with a court directive.

The bank alleges that these directors did not appear in court as mandated, which led to the initiation of contempt proceedings.

During the latest session, Adedeji emphasized the necessity for the directors to appear in person, stating, “My lord, the parties in contempt are not in court. The contemnors cannot sit in the comfort of their homes and send a lawyer to court in contempt proceedings. The law is trite that they must appear before the court.”

In response, Olawoyin argued that he had only recently been briefed on the matter and was not fully aware of the prior developments.

He noted that some of the individuals listed as directors were no longer with the company, adding that one current director, Mr. Akinyinka, was present in court, while another was on pilgrimage.

The contempt case traces back to a suit marked FHC/L/CS/911/2024, where GTB sought to recover the loan amount through legal measures.

On May 27, Justice Aneke granted an interim Global Standing Instruction (GSI) injunction, which directs over 20 banks to transfer funds credited to AFEX into its account with GTB until the debt is settled.

Also, the court authorized GTB to take possession of AFEX’s 16 warehouses across seven states and sell the commodities stored within, as these were procured using the CBN’s loan facility.

The N17.81 billion loan comprises N15.77 billion in principal and interest outstanding as of April 17, 2024, and an additional N2.04 billion covering recovery costs and incidental expenses.

As the court prepares for the next hearing, the financial and legal communities are closely watching the proceedings.

The outcome will significantly impact not only the involved parties but also set a precedent for handling similar cases in the future.

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Banking Sector

CRC Credit Bureau Celebrates 15 Years with Record 14% Credit Penetration in Nigeria

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Retail Sales

CRC Credit Bureau Limited celebrated its 15th anniversary with a record 14% credit penetration rate.

The occasion was marked with the CRC Finance and Credit Conference 2024 held in Lagos, where key industry stakeholders gathered to reflect on the bureau’s journey and discuss future trends in credit risk management.

Founded in January 2010 and licensed by the Central Bank of Nigeria (CBN), CRC Credit Bureau has played a pivotal role in enhancing access to credit across Nigeria.

Dr. Tunde Popoola, the Group Managing Director/CEO of CRC Credit Bureau Limited, highlighted the bureau’s journey, noting that from its inception with a single product, CRC has expanded its offerings to 18 products covering all aspects of the lending value chain.

Speaking at the conference, Dr. Popoola underscored the bureau’s contribution to Nigeria’s financial sector, stating, “CRC Credit Bureau has been instrumental in transforming access to credit in Nigeria over the past 15 years. We started with a vision to simplify credit access through reliable data and have since grown to serve millions of Nigerians.”

The event focused on the theme “Sustainable Financing Options: Innovations in Credit Risk Management,” emphasizing the importance of sustainable finance amid economic challenges.

The conference provided a platform for stakeholders to discuss strategies for mitigating risks and enhancing the efficiency of credit operations in Nigeria.

Reflecting on the current state of credit penetration, Dr. Popoola noted that while Nigeria has made significant progress, the 14% penetration rate still falls below global benchmarks.

He highlighted that CRC Credit Bureau currently holds credit scores for 33 million Nigerians, facilitating over 29.4 million searches in 2023 alone, with an additional 10 million searches conducted in the first quarter of 2024.

Joel Owoade, Chairman of CRC’s Board of Directors, acknowledged the economic headwinds impacting businesses in Nigeria but stressed the importance of sustainable financing to mitigate risks associated with lending.

“As we navigate economic fluctuations, sustainable financing remains crucial to fostering economic stability and growth,” Owoade remarked.

The conference also featured insights from industry experts on leveraging artificial intelligence (AI) in credit risk management and regulatory frameworks to support AI-driven innovations.

Olaniyi Yusuf, Managing Partner of Verraki, highlighted the potential of AI to create jobs and enhance economic productivity, calling for supportive regulatory environments that balance innovation with risk management.

Representatives from the Central Bank of Nigeria (CBN) emphasized the regulator’s efforts to promote sustainable credit practices.

Dr. Adetona Adedeji, Acting Director of the Banking Supervision Department at CBN, outlined initiatives such as the National Collateral Registry and Global Standing Instruction aimed at enhancing credit access while minimizing risks.

As CRC Credit Bureau looks ahead, Dr. Popoola expressed optimism about the future, stating, “We remain committed to driving greater financial inclusion and expanding credit access in Nigeria. Our focus is on leveraging technology and strategic partnerships to deliver innovative solutions that meet the evolving needs of consumers and lenders.”

The celebration of CRC Credit Bureau’s 15th anniversary underscored its pivotal role in Nigeria’s financial sector, marking a milestone in the nation’s journey towards broader financial inclusion and sustainable economic growth.

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