Finance

External Debt Servicing May Pose a Problem ― Rewane

Published

6 years ago

June 25, 2018

External Debt Servicing May Pose a Problem ― Rewane

The Managing Director/Chief Executive Officer, Financial Derivatives Company Limited, Mr Bismarck Rewane, has raised concern over the nation’s ability to service its foreign debts.

Rewane, during a presentation at a breakfast session sponsored by Rand Merchant Bank in Lagos, said his prediction was based on the multiple scenario analyses by the firm.

He said the forecast for the nation’s economy showed a mixed outcome of positivity and negativity.

According to him, inflation is close to an inflection point and government revenue will remain robust, thanks to oil proceeds.

Rewane said, “The pressure on the exchange rate will build up due to increased liquidity and demand pressures, and there would be a temptation to appreciate the naira for political expediency.

“Key policy reforms will take the back burner for politics. Nigeria’s foreign debt service will become a potential problem. Nigeria’s external trade will be more balanced between Asia, the European Union and America.”

The financial expert added that there was also a possibility of capital flight as elections were approaching.

According to him, Gross Domestic Product growth trajectory will be sustained, albeit at a slow pace, and will force the marginal propensity to consume to blink.

Rewane, who spoke on ‘Enhancing Nigeria-South Africa Trade: The case for a naira/South African rand swap’, stated that a swap arrangement between Nigeria and South Africa, estimated to be in the region of $1bn over three years, would enhance trade flows by at least 50 per cent to $4bn.

He said a swap would narrow Nigeria-South Africa trade imbalance to less than $1bn, and would benefit companies that play in retail, telecoms, power and entertainment sectors.

He noted that a swap would ease the demand pressure on both currencies, and bring about a three per cent cutback on external reserves depletion.

According to Rewane, Nigeria’s currency is near fair value.

He stated that if a currency attained equilibrium, there would be no need for a swap.

He said bilateral trade between Nigeria and South Africa would improve trade ties, encourage movement of goods and services, ease pressure on external reserves, and enhance infrastructural development and job creation.

Rewane added that there was a wrong framework that equated a currency trader to a smuggler and expected both to pay premiums.

“A trader is one who wants to pay all his duties ,while a smuggler is one who is willing to pay a price, provided it is lower than the normal dues. When you set up a framework that assumes everybody is a trader and is expected to pay a premium, it would affect the market,’ he said.

According to him, the currency will go into equilibrium, changing the structure and converging multiple exchange rates.

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Samed Olukoya

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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Finance

VFD Group Plc Eyes N1.05 Billion Net Profit as Q4 Earnings Forecast Hits N16.12 Billion

Published

7 hours ago

September 11, 2024

Samed Olukoya

VFD Group Plc, an industry-agnostic proprietary investment company with a portfolio of over 40 businesses across various sectors and geographies, has projected to earn N1.05 billion in the fourth quarter of 2024.

This was revealed in a financial projection statement signed by the Director of Finance, John Okonkwo, and Group Managing Director, Nonso Okpala.

According to the statement, gross earnings is projected to hit N16.12 billion in the period ending December 31, 2024.

Investment and similar income is expected to contribute N15.1 billion while investment expenses are projected at N10.42 billion.

This is expected to result in a net investment income of N4.68 billion.

Also, other income sources are expected to bring in N1.02 billion to take the total operating income to N5.7 billion.

However, the company is projected to spend N3.98 billion as operating expenses.

This includes personnel expenses of N1.09 billion, depreciation and amortization costs of N534.82 million and other operating expenses amounting to N2.35 billion.

Net impairment charge of N216.74 million was expected while net operating income is expected to stand at N5.49 billion.

VFD Group estimates its profit before tax will reach N1.51 billion, with an income tax expense of N452.67 million, leaving a profit of N1.05 billion for the period.

The company’s cash flow projections also paint an optimistic picture. Net cash generated from operating activities is expected to be N3.16 billion, while cash used in investing activities is forecasted at N6.4 billion.

On the financing side, the group projects cash generation of N8.81 billion, leading to a net increase in cash and cash equivalents of N5.57 billion.

By the end of Q4, cash reserves are expected to rise to N9.86 billion from N4.28 billion at the beginning of the quarter.

Although these numbers are projections, the forecast indicates VFD Group’s ability to manage its finances effectively in the face of economic uncertainties.

Banking Sector

Zenith Bank Extends Public Offer and Rights Issue by Two Weeks

Published

1 day ago

September 10, 2024

Investors King

Zenith Bank Plc on Monday announced that it has obtained regulatory approval to extend its public offer and rights issue by two weeks.

In a statement released via the Nigerian Exchange Limited (NGX), the leading financial institution said its offers for both existing shareholders and new investors have been extended to September 23, 2024, from the initial closing date of September 9.

The bank attributed the extension to the nationwide protest that began on August 1, the same day the offers were opened.

Zenith Bank stated that the extension will provide shareholders with more opportunities to take advantage of the rights issue and allow the general public ample time to subscribe to the public offers.

Banking Sector

Unity Bank Projects N27b In Q4 Earnings, Targets N4b Profit

Published

2 days ago

September 10, 2024

Investors King

Unity Bank Plc has projected gross earnings of N27 billion and a Profit After Tax of N4 billion in Q4, 2024, in its latest earnings forecast released to the Nigerian Exchange Group.

Although the projected gross earnings represent a marginal increase from the N26 billion projected for Q3 2024, the lender continues to maintain a profitable outlook, with pre-tax profit expected at N4.2 billion.

An analysis of the earnings forecast shows that the lender also expects interest income to rise from N23 billion to N24.5 billion, with net revenue expected to rise marginally by 1.0% to N7.2 billion within the quarter compared to N6.5 billion in Q3, 2024.

Net operating income is projected at N12 billion, while cash flow from financing activities is projected to rise to N481.4 billion from N353.6 billion, a 1.3% projected increase on a quarter-on-quarter basis. This projected growth in cash flow from financing activities continues to reflect the lender’s growing liquidity position which is essential for sustained business operations.

The lender said it expects to cover the milestones with a consistent optimistic outlook in its projection, barring any significant changes in the operating environment, under which the assumptions were made.

The lender noted that it will continue to deliver top-notch customer-centric products and services, especially in the digital lending space following the roll-out of enhanced platforms and channels for superlative customer experiences.

Analysts are of the view that the Q4 forecast reflects a steady growth trajectory on the back of key performance indicators and strategic repositioning to hedge the challenging market conditions.