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Declining External Reserves: Nigerians Should Not Worry, Says CBN

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  • Declining External Reserves: Nigerians Should Not Worry, Says CBN

The Acting Director, Corporate Communications of the Central Bank of Nigeria, Isaac Okorafor said the recent fall in the external reserves and rise in capital outflows are not a cause for worry.

The external reserves rose to $47.865 billion on May 10 before dropping to $46.461 billion on August 15, while capital outflow from foreign portfolio investment also so surged, raising concerns about the state of the economy ahead of the national election.

“In this country, we survived when the reserves was at $24bn; from there, we moved to $31bn, and now we are at about $47bn. So, I don’t see why we should be worried about this. Our reserves position is so comfortable that we can deal with any eventuality,” Mr Isaac Okorafor, said on Thursday at a press briefing after the Bankers’ Committee in Lagos.

According to him, capital outflows were not as much as projected, adding, “We are even in a better position of confidence.”

A statement, Mr. Ahmed Abdullahi, the Director of Banking Supervision, CBN, validated by saying the 2018 economic outlook was better than 2017.

He said, “We have seen stability in the exchange rate being sustained, GDP growth higher than 2017. There are capital reversals in our capital market, and it is a little bit bearish but the fact is that capital outflow in the Nigerian economy is far less compared to many emerging economies. It is a sign that there is high confidence in the Nigeria economy. We are happy with the developments in the economy generally.”

Similarly, Mr. Segun Agbaje, the Managing Director, Guaranty Trust Bank Plc, said economic fundamentals are very stable and positive, adding that the Monetary Policy Committee of the CBN and the Bankers’ Committee were committed to stimulating the economy.

He said, “You have heard about commercial papers or bonds that would be issued; the guidelines would come out very soon. The aim is two-fold: to stimulate certain sectors, starting with agriculture and manufacturing. So, it allows people to do capital expenditure, which is more long term; it would give people single-digit interest rate loans.”

“On the part of banks, the CBN has been very gracious and said that, ‘In these two sectors, if you have companies that are doing new capital expenditures and expansions to factories, you would be able to lend them using some of your Cash Reserve Ratio at nine per cent.’ These are not short-term loans; they are seven-year loans, with two year moratorium on principal.”

“It would probably be the first time in the history of this country where manufacturers would be able to take fixed interest rate loans for seven years, which means they would be able to plan. I think these are very laudable steps in improving and growing the economy.”

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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