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Nedbank Downgrades Ecobank Stocks

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  • Nedbank Downgrades Ecobank Stocks

South Africa’s Nedbank booked a $293 million writedown on the value of its stake in sub-Saharan lender Ecobank on Tuesday and reported its slowest growth in annual profit since 2009.

Ecobank Transnational Inc’s operations in central and west Africa are exposed to some economies that have been pressured by the commodity price slide and unfavourable currency swings since Nedbank bought a 20 percent stake for $500 million in 2014.

The writedown reduces Ecobank’s value on Nedbank’s books to 4 billion rand ($308 million) from 7.8 billion rand, the South African lender said in a statement.

Nedbank said, however, that Ecobank remained vital to its expansion elsewhere on the African continent, where Ecobank has operations in nearly 40 countries outside its home market.

“It’s obvious that we would be disappointed with the performance of our Ecobank investment to date,” Nedbank Chief Executive Mike Brown told reporters.

“But we still, however, remain optimistic on the long-term growth prospects in the rest of Africa.”

Brown forecast another tough year for Ecobank, which makes the bulk of its earnings in Nigeria, before improving in 2018 and beyond. Nigeria, Africa’s biggest economy, has been hit by a currency crisis and its first recession in 25 years following the slide in oil prices since the middle of 2014.

Shares in Nedbank were little changed at 244 rand at 1300 GMT, more than 40 percent below where they should trade based on the most likely earnings trajectory, according to Thomson Reuters StarMine intrinsic valuation model.

Nedbank, a subsidiary of Anglo-South African conglomerate Old Mutual, said its diluted headline earnings per share (EPS) rose 4.8 percent to 2,350 cents in 2016, the slowest pace of growth since 2009 when its EPS fell by nearly a third.

Headline EPS is the main measure of profit in South Africa as it strips out certain one-off items.

Nedbank also said its results were affected by slack demand for loans as slowing economic growth and higher interest rates hit consumption and investment spending across Africa.

Brown forecast at least 7 percent growth in 2017 annual headline EPS, saying a peak in interest rate cycle in South Africa would lift demand or loans.

Old Mutual is in the middle of an overhaul in which it will carve itself into four parts and cut its 54 percent stake in Nedbank to a minority holding to simplify its structure.

Nedbank competes with Standard Bank, FirstRand, Barclays Africa and Capitec.

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.

Banking Sector

BoI Grows Assets by 78.8% to N1.86 Trillion

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The Bank of Industry Group concluded the 2020 financial year with a 78.8 per cent growth of assets from N1.04tn to N1.86tn between 2019 and 2020.

A statement by the bank on Monday said the increase was driven to a large extent by the successful debt syndication of €1bn and $1bn that were concluded in March and December 2020 respectively.

BoI stated that the group’s financial statement demonstrated resilience and strength, noting that the period had significant challenges in the operating environment on account of the impact of COVID-19 pandemic on the economy.

“It also indicates synergy with the various interventions developed by the Federal Government, the Central Bank as well as other strategic partners towards ameliorating the impact of the pandemic on Nigerian enterprises,” the statement said.

The group’s total equity increased by 14.8 per cent from N293.08bn in the previous year to N336.48bn in 2020.

It added that as a reflection of the adverse impact of the challenging operating environment on growth of new facilities, loans and advances grew marginally in 2020 by 1.3 per cent to N749.84bn from the 2019 position.

The bank explained that this was largely due to the economic slowdown in the year as well as the various interventions and support initiated by the bank for its customers.

“The bank reviewed and restructured all its managed projects under the CBN intervention programme with interest rate reduction from nine to five per cent per annum for a period of one year and moratorium extension of three months (with a possible extension up to 12 months),” it said.

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Banking Sector

TAJBank Deploys NQR Solution To Ease Customer Transactions

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TAJBank, Nigeria’s non-interest bank, has announced the deployment of the NQR Payment solution, an indigenous Quick Response Code (QRC) by the Nigeria Interbank Settlement Scheme (NIBSS), for merchants and customers as the newest addition to its innovative e-business channels.

The NQR Payment solution is a secure QR-code-based payments and collections platform developed for merchants and customers to receive and make payments for goods and services in a quick, easy, contactless and secure manner.

A statement signed by the Founder/Chief Operating Officer of the bank, Mr. Hamid Joda, indicated that the ingenious solution would further drive TAJBank’s culture of innovation and create a seamless payment experience for its rapidly growing individual and corporate customers in their banking transactions.

“We are excited to have this payment channel introduced into the nation’s financial system as an addition to other innovative solutions we have deployed over the past few months.

This is a proof that, as we have said in our communications signature line, TAJBank’s interest is always in our customers”, Joda enthused.

In his remarks, the non-interest lender’s Chief Marketing Officer/Co-Founder, Mr. Sherif Idi, also maintained that the deployment of the NQR payment solution would revolutionize the e-payment experience and open new frontiers for small, medium and large scale businesses who are major stakeholders of the bank.

Since it commenced operations in the non-interest banking segment of the financial services industry, TAJBank is noted for its impeccable track record of growth and innovation, rendering exceptional quality services to customers.

The lender’s NQR solution is open to all customers of the bank, both merchants and individuals, across all its branches and digital channels globally.

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Finance

African Development Bank’s First Virtual Business Opportunities Seminar of 2021, Draws 450 Global Partners and Suppliers

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The African Development Bank hosted its first virtual business opportunities seminar (BOS) of 2021 on 6 and 7 April.

The BOS seminars offer a one-stop shop for companies, civil contractors, manufacturers, consultants, and suppliers from the Bank Group’s regional and non-regional members seeking to provide goods and services to projects or to the Bank.

Held virtually as a result of the ongoing Covid-19 pandemic, delegates were informed about the Bank’s strategy for supporting economic growth, its priority areas, rules and procedures for project and corporate procurement, and ongoing public and private sector operations.

During the sessions staff discussed the sectors that offer opportunities for partners and suppliers: climate change; infrastructure, cities and urban development; industries and trade; finance and SMEs; agriculture; health, human capital, youth, and skills development.

“The Bank’s 2021 Business Opportunities Seminar was an impressive learning experience and an open door to interact virtually with different experts and gain insights into best practices and directions for conducting effective business approaches within the Bank,” said David Andrés Rojas Mejía, Senior Business Development Specialist at Catalonia Trade and Investment Promotion Agency.

Private sector partners contributed richly to the discussion, sharing their experience around partnering and contracting with the Bank. They included Kwame Boate, country director of TechnoServe Inc., (Ghana) and Cletus Kayenwee of the Rural Enterprises Program at the Ghanaian Ministry of Trade, who shared their experience contracting with the Bank on Ghana’s “One District One Factory” Enable Youth Program. The program aims to build the entrepreneurial capacity of graduate youth. Participants also heard from Abdelillah Zenjari, Deputy General Director of TEKCIM. He shared his experience partnering and obtaining a loan of €45 million to build a cement factory with a capacity of 1.4 million tons in the region of d’El Jadida in Morocco.

Over the years, the seminars have hosted approximately 2,500 delegates from 55 countries, with an average of 75% of delegates from non-regional member countries and 90% from the private sector.

For the Bank, the seminars increase interest in Bank-financed projects and enhance competition, thereby promoting higher-quality offers that deliver optimal value for money for its regional member countries.

“The sessions have also helped me to understand how to find opportunities for my firm by being better able to navigate your procurement framework and processes,” said Dede Watkin, Business Development Manager at Beale &Co, a participant.

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