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Survey Anticipates Growth in Credit This Quarter

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  • Survey Anticipates Growth in Credit This Quarter

The Credit Conditions Survey Report of the Central Bank of Nigeria (CBN) for the fourth quarter of 2017 has predicted an increase in availability of credit to households and firms this quarter. According to the survey obtained on Monday, the availability of secured credit to households decreased in the fourth quarter (Q4) of 2017, but was expected to increase this quarter.

Lower appetite for risk was the major factor for the decrease. It showed that lenders reported that the availability of unsecured credit to households increased in Q4 2017 and the increase in availability was also expected to be sustained this quarter.

Most lenders adduced increased appetite for risk to the increase.

“The overall availability of credit to the corporate sector increased in Q4 2017 and was expected to increase in the next quarter. Favorable economic outlook was a major factor contributing to the increase,” it stated.

Furthermore, the report stated that demand for secured lending for house purchase increased in Q4 2017, adding that more lenders expected demand for secured lending to increase further in the this quarter.

“The proportion of loan applications approved decreased despite lenders’ loosening of the credit scoring criteria. Demand for total unsecured lending from households decreased in the current quarter, and was also expected to decrease in the next quarter. “Due to lenders stance on tightening the credit scoring criteria, the proportion of approved unsecured loan applications decreased in the current quarter, but was expected to increase in the next quarter,” it added.

According to the report, secured loan performance, as measured by default rates, worsened in the review quarter. However, lenders expect lower default rates this quarter.

“Total unsecured loan performance to households, as measured by default rates, deteriorated in Q4 2017 but is expected to improve in the next quarter.

“Corporate loan performance improved across all firm sized business in the current quarter, except for small businesses. Lenders generally expect lower default in the current quarter.

“Lenders reported that the overall spreads on secured lending rates on approved new loans to households relative to MPR widened in Q4 2017, and was expected to remain widened in the next quarter,” it added.

The spreads on overall unsecured lending narrowed in Q4 2017 and were expected to remain narrow in the next quarter.

Part of the CBN’s mandate is to nurture an efficient monetary and financial system in order to promote macroeconomic stability in Nigeria.

To achieve this, the Bank needs to, among others, understand trends and developments in credit conditions.

In carrying out the survey of bank lenders, the survey covered secured and unsecured lending to households, lending to non-financial corporations, small businesses and non-bank financial firms.

Continuing, the report stated that despite lenders’ loosening of the credit scoring criteria in Q4 2017, the proportion of loan applications approved in the quarter decreased.

Lenders expected to tighten the credit scoring criteria this quarter, yet still expect an increase in the proportion of approved households’ loan applications in Q1 2018.

Maximum Loan to Value (LTV) ratios decreased last quarter, but were expected to also increase this next quarter. Lenders, however, expressed their willingness to lend at low LTV ratios (75 per cent or less) in both Q4 2017 and this quarter, the report stated.

However, they expressed unwillingness to lend at high LTV (more than 75 per cent) in the current quarter and the next quarter.

The average credit quality on new secured lending improved in Q4 2017 and was expected to improve in Q1 2018. Lenders reported that the overall spreads on secured lending rates to households relative to MPR widened in Q4 2017 and was expected to further widen this quarter.

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

Peter Obaseki Retires as Chief Operating Officer of FCMB Group Plc

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The Board of Directors of FCMB Group Plc has announced the retirement of Mr. Peter Obaseki, the Chief Operating Officer of the financial institution, with effect from March 1, 2021. He was also an Executive Director of the Group.

His retirement was approved at a meeting of the Board of the Group on February 26, 2021. This has also been announced in a statement to the Nigerian Stock Exchange (NSE) by the financial institution.

The Chairman of FCMB Group Plc’s Board of Directors, Mr Oladipupo Jadesimi, thanked Mr. Obaseki for his valuable service and excellent support to the Board for many years.

FCMB Group Plc is a holding company divided along three business Groups; Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Investment Banking (FCMB Capital Markets Limited and CSL Stockbrokers Limited); as well as Asset & Wealth Management (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited).

The Group and its subsidiaries are leaders in their respective segments with strong fundamentals.

For more information about FCMB Group Plc, please visit www.fcmbgroup.com.

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Banking Sector

COVID-19: CBN Extends Loan Repayment by Another One Year

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Central Bank Extends One-Year Moratorium by 12 Months

The Central Bank of Nigeria (CBN) has extended the repayment of its discounted interest rate on intervention facility by another one-year following the expiration of the first 12 months moratorium approved on March 1, 2020.

The apex bank stated in a circular titled ‘Re: Regulatory forbearance for the restructuring of credit facilities of other financial institutions impacted by COVID-19’ and released on Wednesday to all financial institutions.

In the circular signed by Kelvin Amugo, the Director, Financial Policy and Regulation Department, CBN, the apex bank said the role-over of the moratorium on the facilities would be considered on a case by case basis.

The circular read, “The Central Bank of Nigeria reduced the interest rates on the CBN intervention facilities from nine per cent to five per cent per annum for one year effective March 1, 2020, as part of measures to mitigate the negative impact of COVID-19 pandemic on the Nigerian economy.

“Credit facilities, availed through participating banks and OFIs, were also granted a one-year moratorium on all principal payments with effect from March 1, 2020.

“Following the expiration of the above timelines, the CBN hereby approves as follows:

“The extension by another 12 months to February 28, 2022 of the discounted interest rate for the CBN intervention facilities.

“The role-over of the moratorium on the above facilities shall be considered on a case by case basis.”

It would be recalled that the apex bank reduced the interest rate on its intervention facility from nine percent to five percent and approved a 12-month moratorium in March 2020 to ease the negative impact of COVID-19 on businesses.

To further deepen economic recovery and stimulate growth, the apex bank has extended the one year-moratorium until February 28, 2022.

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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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