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Stakeholders Demand CBN Report on Financial Market Status

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  • Stakeholders Demand CBN Report on Financial Market Status

Stakeholders in the financial industry have emphasised the need for the Central Bank of Nigeria to issue a report on the status of the financial market.

According to them, the collapse of Skye Bank Plc is darkening the outlook for Nigeria’s other small lenders struggling to recover from the economy’s contraction two years ago, and threatening to derail the regulator’s ambitions of expanding the industry, Bloomberg reports.

The CBN revoked Skye Bank’s licence for failing to meet capital and liquidity thresholds. The Lagos-based company’s battle to raise more cash as a buffer against potential shocks is playing itself out in other parts of the industry, with some of Skye’s peers resorting to the sale of bad loans or ditching business outside of Nigeria to clean up their balance sheets.

The Head, Research and Strategy, Elixir Investment Partners, said the CBN report on the health of the financial market would help improve investor confidence.

The CBN Governor, Godwin Emefiele, after a monetary policy meeting in Abuja on Tuesday, said the industry remained sound even though there would always be strong points and weak points in every chain.

He stated that the CBN was striving to ensure that there were more banks rather than having them liquidated.

“We are embarking on a journey to keep a bank alive, to protect depositors’ monies and also ensure that we do not throw over 5,000 staff of that bank into the labour market,” Emefiele had stated.

According to him, the regulator established Polaris Bank to take over the assets and liabilities of Skye and asked the Asset Management Corporation of Nigeria to capitalise the new entity with a view to eventually selling it.

Bloomberg reported that these actions were invoking memories of government bailouts after a credit crunch in 2009, when AMCON was set up to take on the bad debts and save the industry.

A banking analyst at FBNQuest Merchant Bank, Olubunmi Asaolu, told Bloomberg that while the country’s biggest lenders now had strong capital buffers as well as solid assets and earnings, developments with Skye showed that the industry consisted of a mix of stable and not-so-stable banks.

Asaolu added that the smaller banks had generally been closer to a precarious position than the market would like since the end of the last crisis in 2009.

“For anyone to invest in a tier two bank, they need to be convinced the opportunity is significant,” he noted.

Stress tests by the CBN showed that only the largest banks would withstand a 50 per cent increase in non-performing loans. The NPLs stood at 15 per cent at the end of June 2017 from 12.8 per cent at the end of December 2016.

The Chief Financial Officer, Unity Bank Plc, Ebenezer Kolawole, said the bank was trying to raise about N270bn ($743m) to recapitalise its operations after selling its bad-loans book.

He added that the bank hoped to conclude talks with an investor during the first half of 2019.

Shares in Wema Bank Plc have dropped by eight per cent since Skye Bank was seized a week ago, while Diamond Bank has declined by six per cent and Unity Bank by five per cent, Bloomberg reports.

Sterling Bank gained three per cent over the period.

A bank analyst at Vetiva Capital Management Limited, Lekan Olabode, said the central bank’s swoop on Skye Bank would result in shareholders losing money and would put a lot of fear in people about backing other small lenders.

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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