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Nigerian Bourse Plunges Despite Positive Results

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Egypt Stocks
  • Nigerian Bourse Plunges Despite Positive Results

The MSCI Frontier Markets Index captures large and mid cap representation across 29 frontier markets (FM) countries. And the MSCI Nigeria Indexes were added to the review list for potential reclassification to Standalone status in September 2016 due to issues in the foreign exchange market leading to impairment in the ability of institutional investors to repatriate capital.

But on April 21, 2017, the Central Bank of Nigeria (CBN) established the Investors’ and Exporters’ FX Window which aims to improve liquidity in the foreign exchange (FX) market. Market participants have said that since the establishment of this window, funds can be repatriated at close to the official rate. Besides, concerns on the spreads and delays which investors have earlier experienced have also eased.

Apparently pleased by these developments, MSCI last Friday announced its decision to retain the MSCI Nigeria Indexes in the MSCI Frontier Markets Indexes.

MSCI will also no longer apply the special treatment for the MSCI Nigeria Indexes announced on April 29, 2016. More specifically, and as part of the upcoming November 2017 Semi-Annual Index Review , MSCI will implement all index review changes, including changes in the Number of Shares (NOS) and Foreign Inclusion Factors (FIF) that have been postponed since April 29, 2016. These changes will be made for securities classified in Nigeria in the MSCI Nigeria Indexes and in indexes which Nigeria is a component of.

Despite, these positive news, the market closed on a bearish note as the NSE All-Share Index fell 0.34 per cent to close lower at 36,462.26. But the market capitalisation appreciated by 0.20 per cent due to additional listing of shares in Guinness Nigeria Plc.

According to analysts at Meristem Securities Limited, a number of other companies posted results showing remarkable growths in top-line and bottom-line, however, sell sentiments towards bellwether stocks in the industrial and consumer goods sectors drove the market to a negative close.

“In the coming week, we expect an upturn in the market mood as we expect investors to take advantage of the significant losses recorded by certain heavyweights,” the analysts said.

Daily Market Performance

Trading at the stock market resumed on a negative note on Monday as profit taking persisted causing the NSE ASI to close 0.48 per cent lower at 36,411.73. Similarly, the market capitalisation depreciated by same margin to be at N12.53 trillion.

Losses recorded by Zenith Bank, ETI, Nigerian Breweries, Lafarge Africa, and Transcorp propelled the decline. However, the value of stocks traded on the first day of the trading went up by 43.4 per cent as invested staked N2.70 billion on 253.53 million shares in 3,609 deals.

The three most actively traded sectors were: Financial Services (195.00 million shares), Conglomerates (26.48 million shares), and Consumer Goods (12.17 million shares). The three most actively traded stocks were: Access Bank (68.74 million shares), FBNH (27.27 million shares) and Transcorp (26.06 million shares).

Apart from the NSE Oil & Gas Index that closed flat all other sectors fell. The NSE Industrial Goods Index led the pack, shedding 4.0 per cent. The NSE Insurance Index trailed with a decline of 1.2 per cent, while the NSE Banking Index declined 0.5 per cent. The NSE Consumer Goods Index shed 0.2 per cent.

However, on the second trading day, the market rebounded as investors reacted to more impressive results released by companies. The benchmark index rose by 0.33 per cent to close at 36,531.62, just as the market capitalisation of the exchange added N41.2 billion to close higher at N12.6 trillion. The positive performance was broadly driven by gains in Nigerian Breweries (+2.6 per cent), Zenith Bank (+0.8 per cent) and Dangote Sugar Refinery Plc (+2.8 per cent).

Two sectors trended northwards, two closed in the red , while one was flat. The NSE Consumer Goods Index recorded the gainers with 1.2 per cent led gainers, rising by 1.2 per cent following price appreciation in Nigerian Breweries (+2.6 per cent) and Dangote Sugar (+2.8 per cent). The NSE Banking Index trailed with 0.06 per cent due to upticks in Zenith Bank (+0.8 per cent) and Access Bank (+1.3 per cent). Conversely, the NSE Insurance Index closed 0.6 per cent, just as the NSE Industrial Goods I shed 0.2 per cent.

The market rose further on Wednesday with the index appreciating by 0.33 per cent to close at 36,531.62. Similarly, market capitalisation added N100.3 billion to close at N12.57 trillion. The appreciation recorded in the share prices of Access Bank, UBA, Nigerian Breweries, Zenith Bank, and FBN Holdings was mainly responsible for the gain recorded on third day of trading.

But value of stocks traded fell by 32.9 per cent to N1.81 billion invested in 199.85 million shares in 3,657 deals. The three most actively traded sectors were: Financial Services (160.12 million shares), Conglomerates (13.24 million shares), and Services (11.76 million shares), while the three most actively traded stocks were: UBA (33.58 million shares), Access Bank (21.64 million shares) and Fidelity Bank (20.68 million shares).

The bull run was halted on Thursday as another round of profit taking set in, cutting the index by 0.29 per cent to close at 36,517.48. Losses suffered by Nigerian Breweries, GTBank, UBA, PZ Cussons, and Diamond Bank were mainly responsible for the decline.

The market maintained the downward on Friday with a fall of 0.15 per cent to close the week lower at 36,462.26. The depreciation recorded in the share prices of Total, Unilever, UBA, Access Bank, and Guinness was mainly responsible for the loss recorded in the index.

Market Turnover

Despite the index closing lower, investors traded more shares as they staked N16.403 billion on 1.394 billion shares extended 19,195 deals, as against 872.892 million shares valued at N14.016 billion that exchanged hands in 19,047 deals the previous week.

The Financial Services Industry remained the most active, leading with 1.116 billion shares valued at N10.153 billion traded in 9,942 deals, thus contributing 80.05 per cent and 61.90 per cent to the total equity turnover volume and value respectively.

The Consumer Goods Industry followed with 95.005 million shares worth N3.251 billion in 4,443 deals. The third place was occupied by Conglomerates Industry with a turnover of 90.194 million shares worth N645.159 million in 1,136 deals.

Trading in the top three equities namely – United Bank for Africa Plc, Access Bank Plc and FBN Holdings Plc, accounted for 515.058 million shares worth N4.458 billion in 3,088 deals, contributing 36.95 per cent and 27.17 per cent to the total equity turnover volume and value respectively.

Price Gainers and Losers

Meanwhile, 33 stocks appreciated last week, compared with 23 gainers the previous week, while 32 stocks depreciated as against 34 equities recorded the previous week. NASCON Allied Industries Plc led the price gainers with 20.7 per cent, trailed by Dangote Flour Mills Plc. Fidelity Bank Plc appreciated by 15.2 per cent, just as UAC of Nigeria Plc chalked up 12 per cent. Fidson Healthcare Plc and Dangote Sugar Refinery Plc garnered 8.8 per cent and 8.4 per cent respectively.

Other top price gainers included: Learn Africa Plc (6.3 per cent); Custodian and Allied Plc (5.8 per cent); Honeywell Flour Mills Plc (5.7 per cent); Glaxosmithkline Consumer Nigeria Plc (5.0 per cent).

Conversely, Cutix Plc led the price losers with 22.3 per cent, trailed by Forte Oil Plc (14.2 per cent). AXA Mansard Insurance Plc shed 10.2 per cent, just as Jaiz Bank Plc went down by 9.1 per cent.

University Press Plc, Lafarge Africa Plc and Diamond Bank Plc shed 7.6 per cent, 7.1 per cent and 5.4 per cent in that order. May & Baker Nigeria Plc, Nigerian Breweries Plc and Total Nigeria Plc closed 5.3 percent, 5.1 per cent and 5.0 per cent in that order.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Currency Outside Banks Increases By 66.2% As Nigerians Shun Formal Banking Channels

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A recent data has revealed that currency outside banks increased by 66.2 percent in September 2024.

To this end, money outside traditional banking channels rose to N4.02 trillion compared to N2.42 trillion reported in September 2023.

This represents an increase of N1.60 trillion in just one year.

This was revealed in the Money and Credit Statistics data of the Central Bank of Nigeria.

According to the data, on a month-on-month basis, currency outside banks grew by 3.8 percent in September 2024 from August’s figure of N3.87 trillion, translating to an increase of N147.9 billion.

The trend suggests a growing inclination among the public to retain cash outside formal banking channels, a shift that could impact banks’ liquidity and shape monetary policy dynamics.

The CBN data further shows that a considerable proportion of Nigeria’s currency is held outside the banking system.

In September 2024, approximately 93.1 percent of currency in circulation was outside banks, a rise from 87.5 percent recorded in September 2023.

This shift may reflect limited trust in banking services, inflationary pressures, or a structural dependence on cash in Nigeria’s largely informal economy.

Such a high percentage of currency outside banks poses potential challenges for channelling funds into productive investments, potentially hindering economic growth.

The CBN report also highlights a parallel rise in overall currency in circulation, which encompasses both bank-held and outside cash.

In September 2024, currency in circulation rose beyond 56.1 percent year-on-year to reach N4.31trn, up from N2.76trn in September 2023, reflecting an increase of N1.55trn.

This indicates that the volume of currency retained outside the banking sector outpaced the total released for circulation within the past year.

Compared to August 2024, currency in circulation rose by 4.0 percent month-on-month, adding N166.2bn from the previous figure of N4.14trn.

Earlier in September, the CBN announced plans to sanction banks that fail to dispense cash through their automated teller machines, as part of efforts to improve cash availability in circulation.

The CBN also revealed plans to release an additional N1.4 trillion into circulation over the next three months to ease cash flow within the banking system.

This strategy aims to ensure that ATMs and bank branches have sufficient cash, addressing ongoing challenges faced by customers over cash shortages.

In related developments, it was observed that Nigeria’s money supply grew significantly by 62.8 percent year-on-year in September 2024, despite the Monetary Policy Committee’s tightening stance intended to manage excess liquidity to control inflation.

According to CBN data, M3 reached N108.95 trillion in September 2024, up from N66.94 trillion in the same period last year.

On a month-on-month basis, money supply rose by 1.6 percent, increasing from N107.19trn in August 2024.

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Banking Sector

Zenith Bank Achieves Triple-Digit Growth, Revenue Surges 118% to N2.9 Trillion

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Zenith Bank Plc has announced its unaudited results for the third quarter ended 30 September 2024, recording a remarkable triple-digit growth of 118% from N1.33 trillion reported in Q3 2023 to N2.9 trillion in Q3 2024.

This performance underscores the Group’s resilience and market leadership in spite of the challenging macroeconomic environment.

According to the Bank’s unaudited third quarter financial results presented to the Nigerian Exchange (NGX), the triple-digit growth in the topline also led to an increase in the bottom line, as the Group recorded a 99% Year on Year (YoY) increase in profit before tax, growing from N505 billion in Q3 2023 to N1.0 trillion in Q3 2024.  Profit after tax equally grew by 91% from N434.2 billion to N827 billion in the same period.

The growth in the topline was driven by the expansion of both interest income and non-interest income. Interest income saw a notable 190% rise to N1.95 trillion, attributed to the high-yield environment.

Non-interest income rose by 41% to N856 billion, bolstered by substantial growth in fees and commissions, which highlights the strength of Zenith Bank’s retail growth and the robust performance of its digital channels during the reporting period.

The robust increase in profitability reflects the Bank’s focus on operational efficiency and strong risk management practices. Earnings per share (EPS) nearly doubled, rising to N26.34 from N13.82 in Q3 2023, underscoring Zenith Bank’s strong value creation for shareholders.

The Bank’s balance sheet grew significantly, with total assets growing by 49% to N30.4 trillion, largely supported by customer deposits, which rose by 42% to N21.6 trillion.

This growth in deposits was broad-based across corporate and retail segments, highlighting the Bank’s deepening reach and customer loyalty.

Gross loans increased by 46% to N10.3 trillion, underscoring the commitment to supporting strategic sectors in the economy.

Capital adequacy ratio remained strong, improving to 21.9%, well above regulatory requirements. The return on average equity (ROAE) stood at 37.8%, up from 35.1%, while return on average assets (ROAA) also improved to 4.3% as Zenith Bank maximized its asset base.

Cost of funds increased to 4.3%, reflecting the broader market trend of rising interest rates, while the cost of risk was maintained at 7.3%, underscoring the Bank’s proactive approach in provisioning for credit risk.

The Bank’s cost-to-income ratio rose to 39.5%, reflecting the impact of strategic investments in technology and capacity building aimed at supporting long-term growth, even as it continues to strive for greater operational efficiency.

Zenith Bank’s asset quality remains a cornerstone of its strength, with a non-performing loan (NPL) ratio of 4.5%, within regulatory limits. A high coverage ratio of 198.4% underscores the Bank’s disciplined approach to risk management, positioning it for resilience in the face of market volatility while supporting stable loan growth.

Zenith Bank remains steadfast in its commitment to sustainable growth and value creation. The Bank launched a capital raise program on August 1, 2024, consisting of a combined Rights Issue and Public Offer.

This capital raise was driven by the Central Bank of Nigeria (CBN)’s recapitalization directive for commercial banks issued in March 2024. While the Bank awaits final capital verification approvals from authorities, the fundraising exercise was successful, reflecting strong confidence in Zenith Bank’s brand.

The additional capital will enhance the Bank’s ability to expand its product offerings, deepen its penetration in strategic sectors, boost lending to the real sector and pursue its African and global expansion plan.

In furtherance of this, the Bank in September 2024 received regulatory approval for the establishment of a Zenith Bank branch in Paris, France, which is fully operational and will enhance the Bank’s product offerings in international markets.

With a strengthened capital base, Zenith Bank is well-positioned to navigate the evolving economic landscape, while putting best-practice sustainability standards at the heart of its business.

The Bank will also continue to prioritize opportunities that enhance stakeholder value and a strong compliance and corporate governance culture, which will reinforce the its leadership position within Nigeria’s financial sector and drive long-term growth.

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Banking Sector

UBA Expands Footprint in the Middle East with New Subsidiary in Saudi Arabia

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UBA House Marina

Africa’s Global Bank, United Bank for Africa (UBA) Plc, has set the wheels in motion to expand its operations in the Middle East with plan ongoing to open a subsidiary in Saudi Arabia, its largest economy.

This move which is expected to happen within the next year will mark the bank’s second subsidiary in the Gulf Region, following the expansion of its business to the United Arab Emirates in 2022.

UBA’s Group Deputy Managing Director, Muyiwa Akinyemi, who disclosed this during a panel session during the 8th Edition of the Future Investment Initiative(FII) in Riyadh, Saudi Arabia and in an interview with Arise TV, underscored the bank’s strategic commitment towards fostering Africa’s growth through infrastructure development, youth empowerment, and sustainable partnerships across key global markets.

He said, “Opening a presence in Saudi Arabia represents the next step for us in connecting the Africa-Gulf region. We are excited to bring UBA’s expertise in financial services to Saudi Arabia, where we aim to facilitate knowledge transfer and create strong economic linkages. This venture will further enable us to access Saudi expertise in food security, energy transition, and sustainable practices, which are all critical for Africa’s continued development.”

While emphasising the importance of Africa as a strategic investment destination for long-term capital, he said, “Africa’s infrastructure deficit is an opportunity for investors worldwide. Our pitch to the Gulf and Southeast Asia emphasizes that Africa must be part of their investment horizon. Today, food security is paramount as our population expands.

Akinyemi also highlighted the bank’s dedication to nurturing Africa’s youth talent through entrepreneurship. “Guided by our Group Chairman’s efforts with the Tony Elumelu Foundation, UBA is committed to supporting young entrepreneurs in tech, agriculture, and entertainment, which are all burgeoning sectors in Africa. With such a young and dynamic population, we see enormous potential for innovation and growth.”

He also reiterated the bank’s continuous support for Small and Medium Enterprises (SMEs) in Africa and beyond as he outlined the bank’s commitment to these businesses, which he referred to as key players in the African economy and vehicles for employment and economic growth.

“SMEs are the backbone of economic development in Africa. They contribute significantly to job creation and value chains, particularly within Nigeria. Over the last year, UBA has committed billions to support SMEs across Africa, and our network of over 20 countries enables us to make a substantial impact.”

During the panel discussions, Akinyemi took time to emphasize UBA’s longstanding experience on the continent as it navigates an ever-evolving investment landscape, adding that “As investors, we focus on infrastructure and sustainable projects that encourage economic prosperity while addressing pressing issues such as talent migration. Our goal is to ensure that people can thrive in Africa without needing to relocate. By investing in local talent and fostering growth sectors, we contribute to building the next generation of global innovators right here in Africa.”

The DMD further articulated UBA’s approach to risk management on the continent, emphasizing that the bank’s 75-year history has uniquely equipped it with insights and strategies to navigate diverse markets.

“With over seven decades of experience, Africa is what we know, and that knowledge allows us to manage risks effectively. We see tremendous opportunities in various sectors across the continent, and our continued investments are driven by a commitment to bring economic empowerment to communities, increase GDP, and improve socioeconomic quality. Our anniversary is a celebration of UBA’s legacy of contributing to Africa’s progress. We look forward to leveraging this milestone to drive even greater impact across sectors and empower future generations,” he said.

United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than forty-five million customers, across 1,000 business offices and customer touch points in 20 African countries. With presence in New York, London, Paris and Dubai, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.

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