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Africa’s Retail Banking Revenue to Hit US$53 Billion by 2022

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  • Africa’s Retail Banking Revenue to Hit US$53 Billion by 2022

Africa’s retail banking revenue has been estimated to grow to US$ 53billion (about N19.08trillion) by 2022. The figure represents 41 per cent of the total banking revenue in the region in the next four years.

According to 2018 African banking report recently released by McKinsey, the expected growth in revenue will come from South Africa, Egypt, Nigeria, Morocco, Ghana and Kenya.

McKinsey, in its report, noted that Africa’s banking markets are among the most exciting in the world as the continent’s overall banking is the second fastest-growing and second most profitable of any global region, and a hotbed of innovation.

“Africa’s banking revenue pools to grow at 8.5 percent a year between 2017and 2022, bringing the continent’s total banking revenue to US$129billion”, McKinsey said.

McKinsey added: “Africa’s retail banking markets are ripe with potential and present huge opportunities for innovation and growth”.

However, Nigeria, the most populous nation in Africa, has a herculean task before it to speedily expand its retail banking market as report showed that is lagging behind. According to available information, financial institutions in Nigeria provide less than 10 percent of its credit facilities to consumers and MSMEs compared to other emerging economies.

Indonesia provides 18 percent of its banking sector credit facilities to consumers and MSMEs while Brazil has grown to 33 per cent and South Africa far ahead of them all at 45 per cent.

Managing Director/Chief Executive Officer, CRC Credit Bureau Limited, Mr. Tunde Popoola, gave the assurance that Nigeria would soon take its place in the comity nations as regards consumer lending.

He made this known on the occasion of the CRC-2018 Industry Forum held in Lagos on Thursday. His words: “Following the enactment of the Credit Reporting Act, 2017 and our launch of a global scoring platform, it is expected that the value of consumer loan would grow exponentially.”

Popoola disclosed that CRC Credit Bureau was positioned to help banks and other institutions successfully manage their retail lending business on a scale that enables exponential financial growth. “From just over one thousand customer base in 2009, repository records show that it has grown to about 17million in Nigeria”. He mentioned that the targets of CRC were millions of Nigerian consumers and tremendous untapped opportunity to grow asset size and profits

“Our goal is to grow bank assets and profitability in a healthy way, prevent systemic risk by diversifying loan portfolio and grow Nigeria’s GDP”, he added.

In addition, the World Bank has projected that, by the year 2020, one billion adults currently excluded from traditional financial systems will gain access to some form of banking services.

The bank, however, noted that the future of retail lending was in embracing financial technology for financial inclusion. “Today and tomorrow belong to those who are able to play in retail banking. The drivers of any sustainable retail lending business model include digitisation and data-driven decisions” the World Bank said.

Meanwhile, the International Finance Corporation (IFC), the financing arm of the World Bank, also in a separate report disclosed that credit bureaus (in emerging markets) had the capacity of expanding credit financing by $1,256billion, touching 613million more people and reducing transaction cost by about 30-40 percent.

According to IFC, credit bureaus play an important role helping consumers and small businesses obtain financing.

“The credit information on individuals or small business borrowers they provide to lenders helps remove uncertainty that has traditionally been associated with lending. Accurate and timely credit information also allows financial institutions reduce risks, loan processing times, costs, and default rates,” IFC said.

IFC added: “For borrowers, detailed credit information and a modern credit reporting system often lead to lower interest rates, making loans more affordable and more available. Credit bureaus also support responsible lending practices, and help borrowers avoid over-indebtedness. These benefits all combine to support broad economic growth”.

Advanced credit reporting systems make a major contribution to increasing access to finance, which is fundamental to the growth of small and medium enterprises (SMEs). A lack of access to finance is often cited as one of the major obstacles hindering economic growth in sub Saharan Africa.

On how IFC is supporting the growth of credit bureaus, it disclosed that the IFC’s Africa Credit Bureau Programme is providing advisory services to central banks, national bankers associations, and other private sector stakeholders. Meanwhile, IFC’s specific interventions in credit reporting include, but are not limited to advisory support to help develop and implement credit information sharing systems (private credit bureaus, public credit registries or mixed credit credit-reporting models), with an emphasis on microfinance institutions and small and medium enterprise credit reporting; advisory support to governments to develop the appropriate legal and/ or regulatory framework for credit information sharing (at times in collaboration with the World Bank); public and private sector education campaigns on the benefits of credit information sharing and support for the development of value-added services in markets with more mature credit information sharing systems.

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.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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