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Equities Hit 15-month Low With N155b Loss

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  • Equities Hit 15-month Low With N155b Loss

Nigerian equities continued on the negative trend yesterday as the stock market reopened to large and open sell orders, which overwhelmed bargain-hunting activities.

Benchmark indices at the equities market indicated average decline of 1.25 per cent, equivalent to net capital depreciation of N155 billion within the five-hour trading session. The decline depressed the average year-to-date return for Nigerian equities to -12.11 per cent.

The All Share Index (ASI)-the main index that tracks share prices at the Nigerian Stock Exchange (NSE), slumped to 33,611.69 points, its lowest point in 15 months. The ASI had opened this week at 34,037.91 points.

Aggregate market value of all quoted equities dropped from its opening value of N12.426 trillion to close at N12.271 trillion.

With nearly two losers for every gainer, the negative overall market situation was due to widespread selloffs across the sectors, especially within the large-cap stocks in the consumer goods and banking sectors.

All sectoral indices closed in the red, underlining the market-wide bearishness. The NSE Consumer Goods Index declined by 3.7 per cent. The NSE Insurance Index dropped by 2.1 per cent. The NSE Banking Index dipped by 1.25 per cent. The NSE Oil and Gas Index declined by 0.52 per cent while the NSE Industrial Goods Index slipped by 0.001 per cent.

Consumer goods’ leader and NSE’s highest-priced stock, Nestle Nigeria led the 22-stock losers’ list with a loss of N145 to close at N1,355. Forte Oil followed with a drop of N1.95 to close at N19.05. Global Spectrum dropped by 60 kobo to close at N5.75. Guaranty Trust Bank lost 50 kobo to close at N34.50. Nigerian Breweries and Zenith Bank declined by 40 kobo each to close at N92.50 and N20.50 respectively while NEM Insurance dropped by 23 kobo to close at N3.08 per share.

On the positive side, Flour Mills of Nigeria led 10 other gainers with a gain of 50 kobo to close at N22. Custodian Investment rose by 10 kobo to close at N5.50. Honeywell Flour Mills and University Press appreciated by 8.0 kobo each to close at N1.52 and N2 respectively while FBN Holdings and NPF Microfinance Bank added 5.0 kobo each to close at N9.05 and N1.65 respectively.

Total turnover stood at 137.63 million shares valued at N1.36 billion in 3,104 deals. Diamond Bank was the most traded stock with 30.07 million shares worth N40.4 million. United Bank for Africa followed with a turnover of 16.66 million shares worth N130.87 million while Guaranty Trust Bank placed third with 11.25 million shares worth N390.94 million.

Market analysts were almost unanimous on the outlook for the market. “We believe that today’s market performance reflects investors’ bearish outlook on the market as political risks remain heightened in addition to the continued absence of positive drivers. We, however, expect some bargain hunting to drive performance in the near term based on the availability of attractive stocks in the market,” Afrinvest Securities stated.

Analysts at SCM Capital Markets maintain their “conservative outlook for the market, in the absence of a positive catalyst amidst political risks as the 2019 electoral cycle draws nearer and sustained emerging market weakness”.

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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