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Cost of Funds Ease on Liquidity Injection

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Interbank rate
  • Cost of Funds Ease on Liquidity Injection

The Nigerian Interbank Offered Rate (NIBOR) dropped 6.5 percentage points to five percent on average last Friday as the money market was awash with cash from budgetary disbursal and coupon payment on matured bonds.

The cost of borrowing among commercial lenders had closed at 11.5 per cent the preceding Friday due to drop in liquidity in the market necessitated by bond and treasury bills sales.

According to Reuters, about N400 billion was injected into the banking system last Wednesday from December budget allocations to states and local governments, while N49 billion coupon on matured bonds was released by the central bank on Friday, boosting liquidity and forcing down interbank rate.

On Thursday, the central bank withdrew around N217 billion through the sales of short-dated open market operations (OMO) bills in a bid to reduce the level of excess liquidity in the banking system, but market liquidity remains high.

Balance in commercial lenders’ accounts with the central bank stood at N254.46 billion surplus on Friday, as against N202.58 billion the preceding week.

“We strongly believe that the central bank will conduct more OMO next week to take out the excess cash from the system,” one trader said, adding that expected dollar sales at a special forex auction could also help reduce the liquidity level and seen rate rising again.

The naira was unchanged at N498 to the dollar on the parallel market and N305.25 per dollar on the official interbank window on Friday as the market awaited the result of a special forex auction targeted at selected sector of the economy.

The central bank had on Wednesday asked commercial lenders to submit backlog dollar demand from fuel importers, airlines, raw-materials producers, and makers of agricultural chemicals and machinery for manufacturers.

The stock market main index rose 0.15 percent to 26,328 points, higher level since January 16, driven by gains in energy company Oando, which was up 4.05 percent and local French Total tick up 4.9 percent.

Monetary Policy Committee

The Monetary Policy Committee (MPC) at the end of its first meeting in 2017 held last week resolved to retain all its monetary policy instruments.

Specifically, the MPC kept the Monetary Policy Rate (MPR) at 14 per cent, the cash reserve requirement (CRR) at 22.5 per cent; also held the liquidity ratio at 30 per cent; and retain the asymmetric corridor at +200 and -500 basis points around the MPR. While reading the MPC communique, Emefiele said the committee was of the view that the key undercurrent that is scarcity of FX, low fiscal activity, high energy prices and the accumulation of salary arrears – cannot be directly ameliorated by monetary policy actions. He said the committee also anticipated that the recent increase in oil prices would be complemented by production gains to provide the needed tailwinds to sustainable economic activity.

In that regard, the committee commended the commitment of the fiscal authorities to step up efforts to fill the aggregate demand gap through a speedy resolution of the domestic indebtedness of the federal government to states and local contractors. The Committee believes that doing so will aid the effort towards economic recovery.

“Total foreign exchange inflows through the CBN increased significantly by 82.45 per cent in December 2016 owing mainly to the increase in oil prices.

Total outflows, however, spiked during the same period. The Committee noted that the average naira exchange rate remained stable at the inter-bank segment of the foreign exchange market in the review period.

Naira Value

The Central Bank of Nigeria (CBN) last week said it was working assiduously with the fiscal authorities to preserve the external reserves as well as to safeguard the value of the naira.

The central bank’s acting Director, Corporate Communications, Isaac Okorafor, said it had observed with great concern the continued and unwarranted attack on its policies by a group of Nigerians, whose real interests, findings had shown was anything near altruistic but rather self-serving and unpatriotic.

The banking sector regulator said while it respects the rights of every Nigerian or stakeholder to their respective views, it found it curious that certain interests had remained persistent in their move to misinform the larger public, with the intention of discrediting genuine efforts at managing the economy, thereby creating panic within the financial system.

It said Intelligence reports at its disposal revealed the involvement of some influential interests funding the push to have the CBN and the federal government reverse its forex policy which is aimed at conserving foreign exchange and also promoting exports.

“As the Bank has explained severally, its decisions on forex management were prompted by the challenge the country’s reserves suffered at the time, arising from issues such as speculative attacks and round tripping.

” It is pertinent to note that pressures on the country’s foreign reserves persisted due to a huge fall in the monthly foreign earnings, which fell from over US $3.2 billion to as low as $400 million at a time when the demand for the US dollar, particularly by importers, continued to rise considerably,” it added.

Inequality and Poverty

The Managing Director of the International Monetary Fund (IMF), Christine Lagarde last week bemoaned the high level of inequality in Africa.

The IMF boss while commenting on her Visit to Uganda, stressed that growth was essential for improving the lives of people in low-income countries. This, she said should benefit all parts of society.

She noted that in sub-Saharan Africa, presently, it is more than twice as expensive to move from rural to urban areas than it is in China. Furthermore, she said only a third of sub-Saharan African households have electricity, compared to 85 per cent in the rest of the world.

“And in low-income countries, only about 20 percent of the adult population has a bank account, compared to more than 80 percent in the rest of the world. Such barriers get in the way of successful and equitable reforms.

Infrastructure development and financial sector reforms are examples.

“More, and more efficient, spending on roads, airports, power grids and education help an economy grow more productive and make it easier for people to relocate from farms to cities.

Fitch on Nigeria’s Outlook

Fitch Ratings last week revised the outlook on Nigeria’s long-term foreign and local currency Issuer Default Ratings (IDRs) to negative from stable and affirmed the country’s IDRs at ‘B+’. The issue ratings on Nigeria’s senior unsecured foreign currency bonds was also been affirmed at ‘B+’. Similarly, the country’s ceiling was affirmed at ‘B+’ and its short-term foreign and local currency IDRs was affirmed at ‘B’. The global rating agency attributed its decision to revise the outlook on Nigeria’s long-term IDRs to the country’s tight foreign exchange (FX) liquidity and low oil production. These according to Fitch contributed to Nigeria’s first recession since 1994. The Nigerian economy contracted through the first three quarters of 2016 and Fitch estimated Gross Domestic Product (GDP) growth of -1.5 per cent in 2016 as a whole.

“We expect a limited economic recovery in 2017, with growth of 1.5 per cent, well below the 2011-15 annual growth average of 4.8 per cent. The non-oil economy will continue to be constrained by tight foreign exchange liquidity. Inflationary pressures are high with year on year consumer price index (CPI) inflation increased to 18.5 per cent in December.

“Access to foreign exchange will remain severely restricted until the Central Bank of Nigeria (CBN) can establish the credibility of the Interbank Foreign Exchange Market (IFEM) and bring down the spread between the official rate and the parallel market rates. The spot rate for the naira has settled at a range of N305-N315 per dollar in the official market, while the Bureau de Change (BDC) rate depreciated to as low as N490 per dollar in November 2016.

Power Sector Firms in 60% FX Allocation

Desirous of revamping the country’s ailing power sector, the MPC last week told commercial banks and other authorised dealers in the foreign exchange (FX) market to include power sector operators in its FX allocation policy which stipulated that 60 per cent of total FX purchases from all sources (interbank inclusive) should be channelled to the manufacturing sector. Therefore, Emefiele, urged operators in the power sector to take advantage of the priority FX allocation given to the sector to enhance their operations.

“The 60 per cent that has been set aside of all FX that is available to all the banks to manufacturers, we did that for a purpose because we felt that there is need to support manufacturing sector. There is need to ensure that FX is made available to those that will provide jobs and get the manufacturing and industrial output to look positive. And I am happy that the recent data released by the Nigerian Bureau of statistics has started to show that the Purchasing Manager’s Index (PMI) is looking upward.

“The 60 per cent that is set aside for the manufacturers, I dare say that those in the power sector also qualify for that because they are importing plants and equipment or components for their transformers and generators for their machines. I don’t mean generators that people will put in their houses and generate electricity for themselves. We will appeal to the banks to look in their directions increasingly,” Emefiele explained.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Insurance

AXA Mansard Launches MyAXA Plus – A Better, Faster, and More Convenient Mobile App

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MyAXA App- Investors King

AXA Mansard Insurance Plc, a member of the AXA Group and global leader in insurance and asset management, today announced the launch of its new “MyAXA Plus” mobile application.

This follows the launch of the company’s first mobile app in 2017 and further underscores the company’s desire to deliver delightful and relevant, cutting-edge financial solutions to its customers and the larger society.

“MyAXA Plus” has been very well received because it provides a much improved, seamless, and satisfying experience that puts users at the heart of every feature and action on the app.

The features available at launch include:

  • Make Claims: Customers can make claims on their insurance policy, enabling fast reporting of incidents and payment of claims by the company.
  • Book Hospital Visits: HMO customers of AXA Mansard can receive care at over 1,700+ hospitals, and with MyAXA Plus, they can also pre-book hospital visits, reducing their wait time while also getting faster access to specialist consultations.
  • Renew Insurance Policy: Customers, by providing their car plate number on the app, can also renew their motor insurance policy within a few minutes.
  • Invest & liquidate funds: Investors, whether with a high or low-risk appetite can find the right investment options on the app. Also, liquidation of funds and crediting of the customer account is completed within 5 minutes via the app.
  • Data-driven advice: App users can make informed decisions by checking the market rates and trends before investing funds, reading articles by experts, and interacting with a robot-advisor that uses information provided by the customers to suggest the right products and insurance cover in seconds.

In addition, MyAXA Plus allows registered and unregistered users to generate instant quotes of any product; use the BMI calculator; read blog articles; check investment trends & rates; calculate returns on investment; calculate the market value of any car; and contact sales agents for more information.

“After launching the first of its kind MyAXA mobile app which gave customers a consolidated, single point of access to their general and life insurance; health insurance; assets and savings accounts in 2017, our team set out to build a more advanced solution to further empower customers to achieve their financial goals and access quality healthcare, wherever and however they choose,” said Mr. Bayo Adesanya, the Chief Digital Innovation Officer at AXA Mansard.

“We are committed to achieving the singular goal of putting our customers first, in this instance, by building an app that incorporates their feedback on desired features and improvements, as well as including other market-leading innovations. We urge our existing and future customers to start using MyAXA Plus today.”

To download MyAXA Plus by AXA Mansard Insurance, visit App Store for iOS users and the Google Play Store for Android users respectively.

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Banking Sector

CBN Grants Lotus Bank Non-Interest Banking Licence

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Lotus Bank- Investors king

The Central Bank of Nigeria (CBN) on Thursday, June 17, granted a non-interest banking licence to Lotus Bank Limited.

This was contained in a statement titled ‘CBN grants Lotus Bank licence to commence non-interest banking operations’.

The statement read in part: “Lotus Bank seeks to pursue the mission of creating value and growth for all through digital innovation and best-in-class customer experience for Nigerians.”

Commenting on the grants, the founder and managing director of Lotus Capital (the pioneers of non-interest finance in Nigeria), Hajara Adeola, said the bank was starting its operations on a solid foundation of experienced leadership and a strong advisory council of experts.

Adeola explained that the bank is managed by a team of seasoned professionals and financial experts led by the Managing Director/Chief Executive Officer, Kafilat Araoye, who has over 25 years of commercial banking experience.

She added that the institution’s focus and guiding principle is ‘to deliver an alternative option to interest-based banking and to cater to the needs of not just the banked but also the underbanked and unbanked population.

According to her, non-interest banking was geared towards supporting the real sector and Lotus Bank aimed to improve financial inclusion in the country.

The founder of the bank, however, disclosed that it would operate transparent pricing models as it was the norm in non-interest banking.

The statement added: “Our values are deeply rooted in partnership. A critical component of our mission is the provision of innovative solutions that drive ethical prosperity for all stakeholders.

“We pride ourselves on digital solutions that provide our customers with the convenience of unlimited access to our services and products.”

“Our products and service offerings will include non-interest business financing, deposit products (current, savings and investment accounts) and personal financing.”

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Banking Sector

Fidelity GAIM Season 4 Final Draw To Hold On July 22

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Fidelity Bank- Investors King

One of the leading financial institution in Nigeria, Fidelity Bank Plc, has announced plans to enrich the lives of fifteen Nigerians with a total of 39 million Naira at the final draw of the “Get Alert in Millions Campaign (GAIM)” Season 4 savings promo, slated for July 22, 2021.

The savings promotion, which is specifically aimed at promoting the culture of saving among Nigerians, is one of the bank’s many initiatives aimed at rewarding new and existing customers for their unwavering loyalty and patronage.

Despite the fact that the promotion was halted in 2020 due to the Coronavirus (Covid-19) Pandemic and the resulting global lockdown, hundreds of Nigerians have benefited from this unique reward scheme in which lucky customers are credited with millions of naira and consolation prizes via a draw system.

The Chairman, Promo Committee, Fidelity Bank Plc, Mr. Richard Madiebo expressed his delight at the resumption of the savings promotion, stating that the campaign seeks to reward customers for their loyalty and patronage. According to Mr. Madiebo, for the past twelve years, the bank has empowered new and existing customers, providing an avenue for many to change their fortunes through its savings Promo.

He stated that the bank takes pride in keeping its promises, adding that the lender would continue to look out for innovative ways to satisfy and enrich its customers across the nation.

“And as we wind down on the 4th season of the GAIM promo, we are elated at the prospect of not only driving financial inclusion across Nigeria but also at the unique opportunity to enrich the lives of our customers especially in times of economic uncertainties”, noted Madiebo

Over the years, the leading tier two Bank has continued to intensify its efforts and innovate ways towards ensuring customer and stakeholder satisfaction. Through this promo, Fidelity Bank has promoted financial inclusion through digital channels and enriched the lives of its customers even in times of economic uncertainties.

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