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Global Rankings as Affirmation of Nigerian Banks

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  • Global Rankings as Affirmation of Nigerian Banks

With the ranking of five Nigerian banks, especially FirstBank, which has been named the number 1 Banking Brand in Nigeria for the sixth year in a row, Raheem Akingbolu reckons that Nigerian banks have indeed become global brands.

Like all breakaway brands, First Bank, GTBank, Access Bank and Zenth Bank, have consistently formed emotional connections with the banking audience. These brands owners understand the roles the brands play in the lives of consumers and make sure their banks’ attributes match up with the target banking public. For instance, for over 100 years, promoters of First Bank, like handlers of other global brands like Coca Cola and Pepsi, think of new ways to keep the brand top-of-the brand.

Few weeks ago, First Bank of Nigeria Limited was again named as the most valuable banking brand in Nigeria in The Top 500 Banking Brands of The Banker magazine of the Financial Times and Brand Finance, London, United Kingdom for the sixth consecutive time. In many quarters, observers see the feat as an evidence of the global status of the brand. In a country, where the mortality rate of businesses is high, First Bank has existed for over 10 decades.

In a statement issued recently by the Country Representative – Nigeria of The Banker magazine, Mr. Kunle Ogedengbe, First Bank leads four other Nigerian banks in the global ranking. With $301 million brand value, First Bank ranked 357 leads Guaranty Trust Bank ranked 395 with a brand value of $258 million, Zenith Bank ranked 414 with a brand value of $247 million, Access Bank ranked 476 with a brand value of $182 million and the United Bank for Africa with a brand value of $172 million ranked 487 in the world.

Beyond the figures, another major strength of the bank is its continued drive to lead innovative drive in the banking products, services and initiatives as well as strive to maintain the highest standards of performance expected of a global brand that we are. This was confirmed less than a year ago when the bank was officially recognised as the first financial institution in the country to achieve a transaction volume of 100 million transactions in a month by Interswitch Transnational -Africa’s leading integrated payment and transaction processing company.

According to the Interswitch, this milestone feat was achieved in the month of December 2015 and represented the total transactions processed by FirstBank’s Front End Processor running on the Interswitch transaction switching platform which seamlessly links all financial institutions in Nigeria to facilitate better and quicker transactions across all platforms.

In the breakdown of the latest ranking exercise, the top ten banking brands ranking in the world are shared by four countries: China and United States of America with four each while United Kingdom and Spain have one each.

The remaining eight banks in the top ten are China Construction Bank, Chase (JP Morgan & Co of the USA), Bank of China, Bank of America, Agricultural Bank of China, Citibank (USA), HSBC (UK), and Satander (Spain) noted Macknight.

In the top 50 countries in the world, only four African countries made the list. These are South Africa (26), Nigeria (42), Egypt (46) and Morocco (47).

According to the February 2017 edition of the magazine, First Bank is however the only Nigerian bank in the top 10 banking brands in Africa along with nine others banks from South Africa, Egypt and Morocco.

Methodology

As for the methodology of the ranking, “Brand Finance employs a discounted cashflow technique to discount estimated future royalties at an appropriate rate to arrive at a net present value of a bank’s trademark and associated intellectual property – its brand value”, noted Brian Caplen, the editor of The Banker.

Caplen stressed that the process involves five steps of obtaining brand-specific financial and revenue data; modeling the market to identify market demand and the position of individual banks in the context of all other market competitors; establish the royalty rate for each bank; calculate the discounted rate specific to each bank, taking account of its size, geographical presence, reputation, gearing and brand rating; and discount future royalty stream (explicit forecast and perpetuity periods) to a net present value – the brand value.

He noted that the approach is used for two reasons: it is favoured by the tax authorities and the courts because it calculates brand values by reference to documented third-party transactions and it can be done based on publicly available financial information.

Globally, deputy editor of the magazine, Joy Macknight stated that Industrial and Commercial Bank of China is number one with a brand value of $47,832 million followed by Well Fargo of the United States of America with a brand value of $41,618 million.

From any area one chooses to look at the award, it is a clear indication that FirstBank has continued to lead the pack and consistently outperform others despite economic headwinds. This is indicative of the creativeness of the FirstBank Team.

Imports of the recognition

Reacting to the award, the Head of Marketing & Corporate Communications and General Manager at First Bank of Nigeria Ltd, Mrs. Folake Ani–Mumuney said the management was extremely excited to have been named the Most Valuable Bank Brand in Nigeria six consecutive times. While appreciating the contribution of the brand’s patrons to the success story, she pointed out that amidst the economic turbulence of 2016, it was still an eventful year for the bank as it hit a number of milestones.

“In 2016, FirstBank clinched the “Best Retail Bank in Nigeria” award by The Asian Banker for the fifth consecutive time; we were recognised by Interswitch as the first financial institution in the country to achieve sustained transaction volumes of 100 million transactions twice in one year; our mobile banking platform –FirstMobile – recorded a milestone in its user numbers with the attainment of 1million active users and also reached N1.3trillion transactions mark in its short period of launch.

FirstBank also became the first financial institution in Nigeria to achieve the latest version of ISO quality standards: the Quality Management Systems certification ISO 9001:2015 from the International Standards Organisation (ISO). The certification is proof of the Bank’s demonstrated ability to consistently provide products and services that meet customer needs as well as applicable statutory and regulatory requirements,” she said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Fed’s Decision to Hold Rates Stalls Oil Market, Brent Crude Slips to $82.17

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Crude Oil - Investors King

Oil prices faced a setback on Thursday as the U.S. Federal Reserve’s decision to maintain interest rates dampened investor sentiment.

The Federal Reserve’s announcement on Wednesday indicated a reluctance to initiate an interest rate cut, pushing expectations for policy easing possibly as late as December. This unexpected stance rattled markets already grappling with inflationary pressures and economic uncertainty.

Brent crude, the international benchmark for Nigerian crude oil, saw a drop of 43 cents, or 0.5% to $82.17 a barrel, reflecting cautious investor response to the Fed’s cautious approach.

Similarly, West Texas Intermediate (WTI) crude oil also slipped by 46 cents, or 0.6% to settle at $78.04 per barrel.

Tamas Varga, an analyst at PVM Oil, commented on the Fed’s decision, stating, “In the Fed’s view, this is the price that needs to be paid to achieve a soft landing and avoid recession beyond doubt.”

The central bank’s move to hold rates steady is seen as a measure to balance economic growth and inflation containment.

The Energy Information Administration’s latest data release further exacerbated market concerns, revealing a significant increase in U.S. crude stockpiles, primarily driven by higher imports.

Fuel inventories also exceeded expectations, compounding worries about oversupply in the oil market.

Adding to the downward pressure on oil prices, the International Energy Agency (IEA) issued a bearish report highlighting concerns over potential excess supply in the near future.

The combination of these factors weighed heavily on investor sentiment, contributing to the decline in oil prices observed throughout the trading session.

Meanwhile, geopolitical tensions in the Middle East continued to influence market dynamics, with reports of Iran-allied Houthi militants claiming responsibility for recent attacks on international shipping near Yemen’s Red Sea port of Hodeidah.

These incidents underscored ongoing concerns about potential disruptions to oil supply routes in the region.

As markets digest the Fed’s cautious stance and monitor developments in global economic indicators and geopolitical tensions, oil prices are expected to remain volatile in the near term.

Analysts suggest that future price movements will hinge significantly on economic data releases, policy decisions by major central banks, and developments in geopolitical hotspots affecting oil supply routes.

 

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Crude Oil

Nigerian Oil Loses Ground to Cheaper US and Russian Crude

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Crude oil

Nigeria’s once-thriving oil industry is facing a significant challenge as traditional buyers increasingly turn to more affordable alternatives from the United States and Russia.

This shift has led to France emerging as the leading buyer of Nigerian crude, marking a significant change in the global oil market dynamics.

Top Nigerian crude grades like Bonny Light, Forcados, and Brass have long been favored by refineries in Europe and Asia due to their low sulfur content.

However, the country’s primary customers, including India and China, are now opting for cheaper US and Russian oil.

This trend poses a substantial risk to Nigeria, which relies on oil exports for more than half of its foreign exchange earnings.

Data from BusinessDay reveals a stark decline in India’s purchase of Nigerian crude. In the first quarter of 2024, India bought N1.3 trillion worth of Nigerian oil, a significant drop from the average of N2 trillion purchased between 2018 and 2021.

“Buyers are increasingly turning to cheaper alternatives, raising concerns for the country’s revenue stream,” said Aisha Mohammed, a senior energy analyst at the Lagos-based Centre for Development Studies.

The latest tanker-tracking data monitored by Bloomberg indicates that India is buying more American crude oil as Russian energy flows dwindle amid sanctions.

India’s state-owned oil refiners and leading private companies have increased their imports of US crude, reaching nearly seven million barrels of April-loading US oil. This shift is the largest monthly inflow since last May.

Russian crude flows to India surged following the invasion of Ukraine, making Russia the biggest supplier to the South Asian nation.

However, tighter US sanctions have stranded Russian cargoes, narrowing discounts, and prompting India to ramp up purchases from Saudi Arabia.

“Given the issues faced with importing Sokol in Russia, it’s no surprise that Indian refineries are turning toward US WTI Midland as their light-sweet alternative,” explained Dylan Sim, an analyst at industry consultant FGE.

As a result, France has overtaken the Netherlands to become the biggest buyer of Nigerian crude oil, purchasing products worth N2.5 trillion in the first quarter of 2024.

Spain and India occupied second and fourth positions, with imports valued at N1.72 trillion and N1.3 trillion respectively, as of March 2024.

The sluggish pace of sales for Nigeria’s May supplies highlights the market’s shifting dynamics. Findings show that about 10 cargoes of Nigerian crude for May loading were still available for purchase, indicating a reduced demand.

Rival suppliers such as Azeri Light and West Texas Intermediate have also seen price weaknesses, impacting Nigerian crude demand.

“We’ve got much weaker margins, so Nigeria’s crude demand is taking a hit,” noted James Davis, director of short-term oil market research at FGE.

Sellers seeking premiums over the Dated Brent benchmark have found the European market less receptive, according to Energy Aspects Ltd.

“May cargoes were at a premium that didn’t work that well into Europe, but lower offers have seen volumes move,” said Christopher Haines, EA global crude analyst. “Stronger forward diesel pricing is also helping.”

Some Nigerian grades are being priced more competitively, including Qua Iboe to Asia and Bonny Light to the Mediterranean or East, with the overhang slowly reducing, according to Sparta Commodities.

However, the overall reduced demand could lead to a decrease in revenue from oil exports, a major source of income for the Nigerian government.

“Reduced demand could lead to a decrease in revenue from oil exports, a major source of income for the Nigerian government,” warned Charles Ogbeide, an energy analyst with a Lagos-based investment bank.

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Refiners Predict Petrol Prices to Fall to N300/Litre with Adequate Local Crude Supply

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Petrol - Investors King

The pump price of Premium Motor Spirit (PMS), commonly known as petrol, could drop to N300 per litre once local production ramps up significantly, according to operators of modular refineries.

This projection hinges on the provision of sufficient crude oil to domestic refiners, which they say would undercut the exorbitant costs currently imposed by foreign refineries.

Speaking under the aegis of the Crude Oil Refinery Owners Association of Nigeria (CORAN), the refiners stressed the urgency for the government to ensure a steady supply of crude oil to local processing plants.

They argue that the reliance on imported petroleum products has been economically disadvantageous for Nigeria.

Eche Idoko, Publicity Secretary of CORAN, emphasized that the current high costs could be mitigated by boosting local production.

“If we begin to produce PMS in large volumes and ensure adequate crude oil supply, the pump price could be reduced to N300 per litre. This would prevent Nigerians from paying nearly N700 per litre and stop foreign refiners from profiting excessively at our expense,” Idoko stated.

The potential price drop follows the model seen with diesel, which experienced a significant price reduction once the Dangote Petroleum Refinery began its production.

“Diesel prices dropped from N1,700-N1,800 per litre to N1,200 per litre after Dangote started producing. This is a clear indication that local production can drastically reduce costs,” Idoko explained.

In a previous statement, Africa’s richest man, Aliko Dangote, affirmed that Nigeria would cease importing petrol by June 2024 due to the Dangote Refinery’s capacity to meet local demand.

Dangote also expressed confidence in the refinery’s ability to cater to West Africa’s diesel and aviation fuel needs.

Challenges and Governmental Role

However, achieving this price reduction is contingent on several factors, including the provision of crude oil at the naira equivalent of its dollar rate.

CORAN has advocated for this approach, citing that it would bolster the naira and reduce the financial burden on refiners who currently buy crude in dollars.

The Nigerian government has shown some commitment towards this goal. Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), confirmed that a framework has been developed to ensure consistent supply of crude oil to domestic refineries.

“We have created a template for the Domestic Crude Oil Supply Obligation to foster seamless supply to local refineries,” Komolafe stated.

Industry Reactions

Oil marketers have welcomed the potential for reduced petrol prices. Abubakar Maigandi, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed optimism about the Dangote Refinery’s impact on petrol prices.

“We expect the price of locally produced PMS to be below the current NNPC rate of N565.50 per litre. Ideally, we are looking at a price around N500 per litre,” Maigandi noted.

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