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Naira Closes at 380/dollar as Forex Supply Rises

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Naira
  • Naira Closes at 380/dollar as Forex Supply Rises

The naira rose to 380 per United States dollar on the parallel market on Thursday, up from 390 it closed on Wednesday.

This came hours before the Central Bank of Nigeria sold $20,000 each to Bureau De Change operators. The CBN had sold $20,000 to each of the BDCs earlier this week to boost liquidity.

The central bank sold its usual $1.5m on the spot market on Thursday at 305.50 per dollar, according to Thomson Reuters data.

According to analysts, the CBN has sold around $4bn since it started its aggressive intervention on the forex market in February.

Analysts, however, doubted whether the CBN could sustain the trend.

“Until we see a freely traded naira a la Egypt, Nigeria is fighting with one hand tied behind its back,” the Head of Nairobi-based Rich Management, Aly-Khan Satchu, told Reuters.

The central bank has been intervening on the official market to try to narrow the currency’s spread with the black market rate. On the official market, the currency was quoted at 306 per dollar on Thursday.

The spread has become far narrower, thanks to the central bank intervention. The naira was 520/dollar on the black market in February after the apex bank devalued the naira for retail customers to 375.

The Minister of Finance, Mrs. Kemi Adeosun, said liquidity was improving on the currency markets on dollar injection, thanks to rising oil prices, adding that government was harmonising fiscal, monetary and trade policies to boost growth.

“Higher oil prices alone are insufficient to explain the central bank’s aggressive interventions over the past few weeks and (oil) production seems to have ramped up slowly over the first quarter of this year,” a senior economist at the NKC in Johannesburg, Cobus de Hart, said.

He said, “Whether the central bank used funding such as external debt-related inflows to intervene in the forex market remains to be seen, but in general, we are not convinced that the regulator will be able to sustain this trend indefinitely.”

The President, Association of Bureau De Change Operators, Aminu Gwadabe, said the increase in currency sales to the BDCs would help take out pressure from the black market, adding that some importers were no longer bringing forward dollar demand as liquidity continued to improve.

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

Union Bank CEO, Godson Chukwuemeka Okonkwo Acquires 2.4 Million Shares in the Bank Ahead of Acquisition

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Union bank - Investors King

The Chief Executive Officer, Union Bank Plc, Godson Chukwuemeka Okonkwo, has purchased 2,431,917 ordinary shares of the bank, according to the latest disclosure filing from the lender.

The CEO acquired the 2,431,917 shares of Union Bank at N4.90 per share on Thursday 6th May 2021 from the floor of the Nigerian Exchange Ltd.

Okonkwo’s N11.916 million investment was after Investors King reported a possible acquisition of the bank by Zenith Bank or Access Bank following sources cited by Bloomberg.

Bloomberg said, “Atlas Mara Limited, the London Stock Exchange-listed pan-African banking group started by Mr. Bob Diamond has received a number of approaches for its 49.97 per cent holding in Lagos-based Union Bank of Nigeria.”

It also stated that Atlas Mara received interests from Nigerian and Middle Eastern lenders for its remaining assets on the continent, according to Bloomberg sources.

The sources claimed the banks in talks with Atlas Mara asked not to be identified as talks are private. But they mentioned Nigeria’s Zenith Bank Plc, Access Bank Plc and Morocco’s Attijariwafa Bank as some of the banks that have so far expressed interests in acquiring Union Bank.

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Banking Sector

Zenith Bank, Access Bank, Others Express Interest in Acquiring Union Bank

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Atlas Mara - Investors King

Zenith Bank and Access Bank are some of the financial institutions in talks to acquire Atlas Mara Ltd.’s 49.97 percent stake in Union Bank Plc.

Bloomberg said, “Atlas Mara Limited, the London Stock Exchange-listed pan-African banking group started by Mr. Bob Diamond has received a number of approaches for its 49.97 per cent holding in Lagos-based Union Bank of Nigeria.”

It also stated that Atlas Mara received interests from Nigerian and Middle Eastern lenders for its remaining assets on the continent, according to Bloomberg sources.

The sources claimed the banks in talks with Atlas Mara asked not to be identified as talks are private. But they mentioned Nigeria’s Zenith Bank Plc, Access Bank Plc and Morocco’s Attijariwafa Bank as some of the banks that have so far expressed interests in acquiring Union Bank.

Middle Eastern banks and private equity suitors have also shown interest, according to the people. Some potential buyers have indicated they may acquire all of Atlas Mara’s remaining assets in Africa, which would include its Zimbabwe unit, the people said.

Atlas Mara has been working with Rothschild & Co. to consider options for its Union Bank stake. No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said.

Representatives for Atlas Mara and Zenith Bank didn’t immediately respond to requests for comment. Attijariwafa Bank Managing Director Ismail Douiri and a representative for Access Bank declined to comment.

Speaking on the matter, Frontier and Sub-saharan Africa Banks’ Analyst, Renaissance Capital, Adesoji Solanke, on Thursday said this is good for Atlas Mara.

He said “Good for Atlas Mara if they’re able to exit successfully, as they’ve been selling a bunch of assets over the past year, to KCB and Access Bank respectively across different markets. Whether they get a good valuation for Union Bank is another thing.

“We don’t think it’ll be a transformational deal for Access or Zenith (Return-on-Equity dilutive for both), but could be a good way for the Middle Eastern banks to get a decent foothold in the market. We suspect getting the other private equity investor block to sell will be critical as we wouldn’t expect a strategic bank investor to desire a minority shareholding.”

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Finance

Nestle Nigeria Reports N12.4 Billion Profit After Tax in Q1 2021

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Nestle Nigeria - Investors King

Nestle Nigeria Plc, a food and beverage specialty company headquartered in Lagos and majorly owned by Nestle S.A of Switzerland, grew revenue to N87.258 billion in the first quarter (Q1) of 2021 from N70.329 billion filed in Q1 2020.

The company disclosed in its unaudited financial statement released in late April.

Gross profit stood at N34.743 billion in the quarter, up from N31.658 billion achieved in the same quarter of 2020.

Results from operating activities rose from N17.538 billion in Q1 2020 to N20.314 billion in Q1 2021.

While finance income contracted from N335.242 million in Q1 2020 to N123.340 million in Q1 2021. Finance costs rose to N1.435 billion in the quarter, up from N417.928 million recorded in Q1 2020.

Net finance income/cost stood at N1.312 billion, up from N82.686 million in Q1 2020.

Profit before tax rose to N19.002 billion in the quarter under review, better than the N17.455 billion achieved in the corresponding quarter of 2020.

Nestle Nigeria paid N6.602 billion as income tax for the period, slightly higher than the N6.259 billion paid in Q1 2020.

Profit after tax expanded to N12.400 billion in the quarter, up from N11.195 billion filed in Q1 2020.

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