- Index Appreciates by 1.25% as 20 Stocks Gain
The Nigerian equities market closed on a positive note on Monday as 20 stocks gained, boosting the Nigerian Stock Exchange All-Share Index by 1.25 per cent.
The NSE market capitalisation rose to N9.145tn from N9.032tn, as the NSE ASI closed at 26,580.22 basis points from 26,251.39 basis points recorded on Friday.
A total of 219.025 million shares valued at N1.407bn were traded in 3,423 deals.
The NSE ASI halted its losing streak to settle the year-to-date return at -1.10 per cent.
On the other hand, the volume and turnover of transactions pared by 0.56 per cent and 7.41 per cent, respectively, at the close of trading. Twenty stocks appreciated in value while 17 declined at the end of Monday’s trading activities.
On the gainers’ chart for the day were United Capital Plc, FCMB Group Plc, Fidelity Bank Plc, Sterling Bank Plc and African Prudential Registrars, which appreciated by 9.60 per cent, 9.40 per cent, 8.43 per cent, 7.14 per cent and 5.63 per cent, respectively.
However, the stocks of 7UP Bottling Company Plc, Ashaka Cement Plc, Cadbury Nigeria Plc, Capital Hotel Plc and the Nigerian Aviation Handling Company Plc fell by 4.95 per cent, 4.86 per cent and 4.78 per cent, respectively.
Market performance, as measured by the NSE indices, reflected the positive sentiments in the market as most sectors recorded gains. However, the food/beverage and oil/gas sectors declined by 0.27 per cent and 0.18 per cent, accordingly.
“We attribute this rebound to bullish activities on some stocks trading at low prices. We expect the rest of the week to be swayed by mixed investors’ sentiments, possibly skewed more towards bargain-hunting,” analysts at Meristem Securities Limited said in the firm’s daily post.
At the start of the week, the Central Bank of Nigeria conducted an Open Market Operation auction offering N30bn on the 150 day-to-maturity and 318DTM bills. The apex bank eventually sold N22bn and N201bn at respective stop rates of 18 per cent and 18.6 per cent (effective yields: 19.44 per cent and 22.20 per cent).
Despite this, the interbank call rate moderated by 41 basis points to 7.92 per cent. At the foreign exchange interbank market, the naira remained unchanged at N305 and N378 against the dollar for the spot rate and one-year forward rate respectively.
The fixed income market trend remained the same at week open as the bullish sentiment on Treasury bills contrasted with the bearish sentiment in the bond space. Treasury bill yields moderated by eight basis points on the average with the largest declines observed on the mid-dated maturities. Specifically, yields on the 122DTM, 234DTM and 241DTM bills moderated to 15.74 per cent, 18.79 per cent and 19.36 per cent, respectively. Meanwhile, yields on benchmark bonds rose 11 basis points on the average amid advances across the entire space.
Notably, yields on the 8.50 per cent FGN November 2029 and 12.1493 per cent FGN July 2034 bonds climbed by 14 basis points and 16 basis points to close at 16.30 per cent and 16.02 per cent, respectively.
The Debt Management Office released its bond issuance calendar for Q1 2017, outlining an average monthly issuance of N130bn. “While we expect bullish trading to persist in the Treasury bills market amid healthy demand, we believe the higher volume on offer may further pressure bond yields higher in the days ahead,” analysts at vetiva Capital Management Limited said.
Unity Bank Forecasts N380.815 Million Profit for Q3 2021
Unity Bank Plc on Friday predicted profit after tax of N380.815 million for the third quarter (Q3) ending September 30, 2021.
This represents a decrease of N162.3 million year-on-year when compared to the N543.14 million recorded in the same quarter of 2020.
The lender projected gross earnings of N10.890 billion for the quarter while interest income was expected to hit N7.204 billion.
Interest expense was estimated at N5.351 billion for the period. Unity Bank puts net revenue from funds at N1.853 billion in Q3 2021.
Other incomes were expected at N3.686 billion and impairment for credit loss was projected at N885.663 million in the quarter under review.
The bank forecasts net operating income at N4.653 billion and puts operating expenses at N4.237 billion.
Profit before tax was projected to hit N416.191 million in the quarter, below the N590.4 million achieved in the same quarter of 2020.
Unity Bank’s Cashflow Projections for the Third Quarter Ending September 30, 2021 (₦)
Net cash provided by operating activities 1,720,815,055
Net cash flow provided by/(used) in investing activities (260,034,996,531)
Net cash flow from operating and investing activities (258,314,181,476)
Net cash used in financing activities 258,694,996,531
Net increase/(decrease) in cash and cash equivalents 380,815,055
Cash and cash equivalents, beginning of period 107,494,314,017
Cash and cash equivalents, end of period 107,875,129,072
Ecobank Raises US$350 Million Tier 2 Sustainability Notes
Ecobank Transnational Incorporated (“ETI”), a Lomé based parent company of the Ecobank Group listed on Nigerian Exchange Limited, announced it has successful raised US$350 million Tier 2 Sustainability Notes.
This represents the first ever Tier 2 Sustainability Notes by any financial institution in Africa.
The lender disclosed in a statement signed by Adenike Laoye, Group Head Corporate Communications/Chief of Staff to the Group Chief Executive Officer, Ecobank.
According to the bank, the Tier 2 issuance is the first to have a Basel III-compliant 10NCS structure outside of South Africa in 144A/RegS format and will be listed on the main market of the London Stock Exchange. The bond, which matures in June 2031, has a call option in June 2026 and was issued with a coupon of 8.75 percent with interest payable semi-annually in arrears.
The lender said an equivalent amount of the net proceeds from the notes will be used by ETI to finance or re-finance, new or existing eligible assets as described in ETI’s Sustainable Finance Framework, available at https://ecobank.com/group/sustainability-financeframework on which DNV has issued a Second Party Opinion.
Speaking on the issuance, Ade Ayeyemi, Group Chief Executive Officer of ETI, stated: “This is a landmark issue for Ecobank, and indeed the success of this first Sustainable Tier 2 issuance is testament to our clear strategy, solid positioning across the pan-African banking space as well as our deliberate and long term focus on sustainable initiatives. We are particularly pleased with the diverse orderbook which reflects the confidence investors have in Ecobank to deliver on our commitment to sustainable financing.”
Investor interest for this Sophomore Eurobond issue was global, including United Kingdom, United States, Europe, the Middle East, Asia and Africa, achieving a 3.6x oversubscribed orderbook, of over US$1.3 billion at its peak.
The transaction was anchored at the start by Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (“FMO”), a Dutch development bank, with a committed US$50 million order. The notes saw significant demand from asset managers from Europe on opening (including the UK) demonstrated by a number of large tickets.
Overall, investor interest was global including accounts from the United States, the Middle East, Africa and Asia.
CBN Debunks Report on Planned Nationalisation of Unity Bank
The Central Bank of Nigeria (CBN) has denied planning to nationalise Unity Bank Plc as alleged by an online news medium.
Reacting to the report, the Acting Director, Corporate Communications Department, CBN, Osita Nwanisobi, described it as, “fake news” and should be discarded in its entirety.
He said: “The report is fake news. There is no iota of truth in it.” He added that the public should disregard such news.
The report had claimed that the apex bank’s target examination of Unity Bank showed that the Tier 2 lender is in ”grave financial condition”, with Capital Adequacy Ratio (CAR) and Non- Performing Loans (NPL) ratio that breached prudential standards.
However, analysts note that just last month, the CBN’s Monetary Policy Committee ( MPC) noted in the communiqué it issued at the end of its meeting that the banking industry is in good health.
According to the communique: “the Capital Adequacy Ratio (CAR) and the Liquidity Ratio (LR) both remained above their prudential limits at 15.8 and 38.9 per cent, respectively. The Non-Performing Loans (NPLs) at 5.89 per cent in April 2021, showed progressive improvement compared with 6.6 per cent in April 2020.”
Unity Bank’s audited FY’ 2020 results showed improved performance in key parameters. For instance, the Bank’s gross loans portfolio increased by 92.9 per cent to N206.2 billion in 2020 from N106.9 billion in 2019.
The bank’s total assets rose by 67.90 per cent when compared with N293.05 billion achieved in the comparative period of 2019. Also, the lender posted gross earnings of N42.71 billion compared with N44.59 billion recorded in the comparative period of 2019, reflective of its business and economic realities of the time.
Its customer deposit portfolio grew by 34.4 per cent to N356.62 billion in 2020, up from N257.69 billion posted in the corresponding period of 2019. Profit after tax stood at N2.09 billion, while profit before tax was N2.22 billion during the year under review amidst the tough macroeconomic environment where it operated. Its net operating income rose to N25.46 billion from N23.21 billion in the corresponding period of 2019, representing a 9.71 per cent increase.
This is even as the net interest income recorded a significant jump, as it rose by 7.60 per cent to N17.75 billion from N16.49 billion in the corresponding period of 2019.
Furthermore, the bank sustained the growth momentum demonstrated in its 2020 full year earnings as it recorded an impressive performance of 43 per cent in both profit before and after tax in Q1 2021.
The Bank’s unaudited Q1 results show that the retail lender profit before tax (PBT) grew by 43 per cent to N784.3million from N550.1 million recorded in the corresponding period of 2020.
The profit after tax (PAT) for the period, which also grew by 43 per cent stood at N721.5million compared to the N506.1million recorded in Q1 2020.
As an outcome of increased focus on supporting local enterprises and industry, the asset portfolio also showed significant growth in loan book of 76 per cent as net loans and advances to customers increased to N223.2 billion, from N126.6 billion recorded in the corresponding period.
The total assets of the bank for the period showed an appreciable growth of 42 per cent to close at N521.5 billion, from N366.8 billion in the corresponding period of 2020.
The balance sheet of the bank had been considerably de-risked with the non-performing loan (NPL) ratio of near-zero per cent, which it has consistently maintained over time. With this, the bank ranks topmost in risk management assessment.
The bank recorded gross earnings of N11.5 billion, representing a marginal decline of three per cent when compared to N11.9billion posted in the corresponding period of 2020.
The bank has assuredly intensified its recapitalization efforts by the recent updates the lender provided to the supervisory authority and significant mileage is currently being recorded as part of its corporate transformation and renewal programmes.
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