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CBN Unveils Guidelines on Non-interest MFBs

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  • CBN Unveils Guidelines on Non-interest MFBs

In line with its mandate of promoting a sound financial system, the Central Bank of Nigeria (CBN) has issued guidelines on the regulation and supervision of non-interest (Islamic) microfinance banks (NIMFBS) in the country.

Part of the 57-page guidelines posted on the central bank’s website recently stated that a NIMFB shall be required to maintain not less than five per cent of deposit liabilities in liquidity management instruments compliant with the principles underpinning this model and as approved by the CBN.

According to the CBN, non-compliance with this directive shall attract a fine of one per cent of the amount not invested. Investment in such instruments by any MFB shall, however, not exceed 10 per cent of its deposit liabilities at any point in time.

Furthermore, it noted that the operation of a NIMFB requires the maintenance of high quality liquid assets to meet frequent request for funds from clients and for field operations.

However, in view of the paucity of eligible liquidity management instruments, NIMFBs shall be required to maintain a minimum liquidity ratio as may be determined by CBN from time to time.

The Capital Adequacy Ratio (CAR) of a NIMFB shall be measured as a percentage of shareholders’ funds unimpaired by losses to its risk weighted assets, the CBN added.

In addition, the minimum CAR (Capital/Weighted Assets Ratio) for NIMFB shall be one per cent of such percentage as may be determined by the CBN from time to time.

Also, the NIMFB shall be required to submit, within a specified period, a recapitalisation plan acceptable to the CBN.

“Failure to comply with the above shall constitute grounds for the revocation of the operating licence of the NIMFB or such other penalties as may be deemed appropriate.

“Every NIMFB is enjoined to ensure its shareholders’ funds unimpaired by losses do not fall below the prescribed minimum capital requirement, notwithstanding meeting the capital adequacy benchmark.

“The maximum amount which a NIMFB can invest in fixed assets is 20 per cent of its shareholders’ funds unimpaired by losses.

“Any contravention shall attract a penalty of one per cent of the excess investment in fixed asset and prohibition of further investment in fixed assets until the requirement is achieved,” it added.

According to the CBN, the impact of delinquent risk assets which may result in capital erosion, calls for stringent maintenance of capital funds. Every NIMFB shall therefore maintain a reserve fund into which it shall transfer from its profit after tax for each year.

The CBN said the guidelines were developed to provide a level playing field between the conventional and non-interest MFBs and to address issues underpinning the operation of non-interest financial institutions. It is expected to enhance financial inclusion by bringing to the formal sector, individuals, communities and corporations that are not captured by the conventional MFBs.

The role of MFBs in poverty reduction, increased access to financial services, contribution to financial stability and economic development has been established in Nigeria and around the globe. Beyond making credit facilities available to micro, small and medium scale enterprises and the promotion of savings culture, MFBs also serve as veritable means of employment generation and enhancing financial inclusion.

Since 2005 when the CBN issued the first regulatory framework for MFBs in Nigeria (revised in 2013), a number of MFBs were established across all states in Nigeria and Abuja and have continued to thrive and cater for the economically active poor in the country.

However, despite the increased number of MFBs in Nigeria, a large per cent of Nigerians still lack access to financial services. This could be attributed to high cost of transactions, abhorrence of interest and apathy to unethical investment by a significant part of the populace.

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.

Finance

MTN Nigeria Generates N1.35 Trillion in Revenue in 2020

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MTN Nigeria Grows Revenue by 15.1 Percent from N1.169 Trillion in 2019 to N1.35 Trillion in 2020

Despite the COVID-19 pandemic and challenging business environment, MTN Nigeria realised N1.346 trillion in revenue in the financial year ended December 31, 2020.

The leading telecommunications giant grew revenue by 15.1 percent from N1.169 trillion posted in the same period of 2019.

Operating profit surprisingly jumped by 8.5 percent from N393.225 billion in 2019 to N426.713 billion in 2020.

This, the telecom giant attributed to the surge in finance costs due to increased borrowings from N413 billion in 2019 to N521 billion in 2020.

MTN Nigeria further stated that the increase in finance costs was the reason for the decline in growth of profit before tax to 2.6 percent.

MTN Nigeria grew profit before tax by 2.6 percent to N298.874 billion, up from N291.277 billion filed in the corresponding period of 2019.

The company posted N205.214 billion profit for the year, a 0.9 percent increase from N203.283 billion recorded in the 2019 financial year.

Share capital remained unchanged at N407 million. While Total equity increased by 22.3 percent from N145.857 billion in 2019 to N178.386 billion in 2020.

MTN Nigeria’s market price per share increased by 61.8 percent from N105 to N169.90.

While market capitalisation as at year-end also expanded by 61.8 percent to N3.458 trillion, up from N2.137 trillion.

The number of shares issued and fully paid as at year-end stood at 20.354 million.

MTN Nigeria margins were affected by Naira devaluations and capital expenditure due to the new 4G network coverage roll-out.

Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.

“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” CardinalStone stated in its latest report.

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Finance

Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

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Nestle Nigeria Approves Final Dividend of N35.50k per 50 Kobo Ordinary Share for 2020

Nestle Nigeria, a leading food and beverage company, has declared a final dividend of N35.50k per 50 kobo ordinary share for the year ended December 31, 2020.

The beverage company said N24.50k of the amount declared was from the after-tax profit of 2020 and N5 and N6 were from the after-tax retained earnings of the years ended December 2019 and 2018, respectively.

Nestle Nigeria stated that the amount declared is subject to appropriate withholding tax and approval at the Annual General Meeting of shareholders.

It also noted that payment will be made only to shareholders whose names appear in the Register of Members as at the close of business on 21 May 2021.

Dividends will be paid electronically to shareholders whose names appear on the Register of Members as at 21 May 2021, and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts.

Shareholders who are yet to complete the e-dividend registration are advised to download the Registrar’s E-Dividend Mandate Activation Form, which is also available on their website: www.gtlregistrars.com, complete and submit to the Registrar or their respective Banks.

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Dennis Olisa Invests N53.6 Million in Zenith Bank

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Executive Director of Zenith Bank Plc Buys 2 Million Shares of Zenith Bank at N53.6 Million

Executive Director of Zenith Bank Plc, Dennis Olisa, has invested a combined N53.58 million in shares of Zenith Bank.

The leading financial institution stated in a disclosure statement filed with the Nigerian Stock Exchange (NSE) on Monday.

Olisa carried out the purchase in two different transactions on February 24, 2021 at the Nigerian Stock Exchange in Lagos, Nigeria.

He purchased 1 million units of Zenith Bank at N26.60 each and another 1 million shares at N26.50 per share.

On aggregate, Olisa purchased 2 million shares of Zenith Bank at N26.79 per share or N53.58 million. See the details below.

Dennis Olisa was appointed as Zenith Bank’s executive director three years ago.

Prior to his appointment, Mr. Olisa was the Chief Inspector at Zenith Bank Plc and served as its Director from March 3, 2017 until March 16, 2017.

He also served as General Manager and Heads of the Energy Oil & Gas Group at Zenith Bank Plc and served as its Deputy General Manager. He served as Head of Internal Control & Audit Group at Zenith Bank Plc

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