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CBN Recorded $40.9bn Forex Inflow in Nine Months – Report

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Forex Weekly Outlook November 7-11
  • CBN Recorded $40.9bn Forex Inflow in Nine Months – Report

Between January and September last year, a total foreign exchange inflow of $40.93bn was recorded by the Central Bank of Nigeria.

The inflow of $40.93bn, when compared with the $27.95bn recorded in the first nine months of 2017, represents an increase of $12.98bn.

An analysis of the third quarter economic report of the CBN showed that about $14.15bn passed through the apex bank in the first quarter of last year.

In the second quarter of last year, the CBN recorded foreign exchange inflow of $13.82bn, while the sum of $12.95bn was recorded during the third quarter of 2018.

The report stated that despite the decline in domestic crude oil production, there was an improvement in foreign exchange revenue from oil export in the third quarter of 2018.

This, it stated was on account of the favourable international price of crude oil.

It added that the development was, however, moderated by the significant decline in inflow from non-oil exports.

It read in part, “Aggregate foreign exchange inflow through the CBN amounted to $12.95bn, indicating a 6.3 per cent decline below the level at end-June 2018.

“It, however, showed an increase of 8.1 per cent, over the level in the corresponding period of 2017.

“The decline, relative to the preceding quarter, reflected, mainly, the fall in inflow from non-oil sources.”

In terms of outflow, further analysis of the report showed that $9.65bn left the apex bank in the first quarter.

The figure rose by $3.64bn to $13.29bn in the second quarter, before reaching $16.93bn during the third quarter of last year.

The apex bank attributed the increase in outflow relative to the preceding quarter to a 32.2 per cent and 28 per cent increase in public sector payments and interventions in the foreign exchange market.

Overall, a net outflow of $3.98bn was recorded through the bank in the third quarter, compared with $530m and $2.64bn in the second quarter of 2018 and the corresponding period of 2017.

Finance and economic experts, who spoke on the foreign exchange inflow, explained that the demand management policy of the Federal Government was responsible for the inflows.

They, however, said while the current administration had made remarkable progress in the area of reducing inflation and increasing external reserves, there was a need to intensify its economic diversification programme.

For instance, a Professor of Finance and Head, Banking and Finance Department, Nasarawa State University, Uche Uwaleke, said, “The introduction of the Investors and Exporters’ window, on the back of crude oil price recovery, has equally helped stabilise the exchange rate facilitating raw materials imports for local firms.

“That said, the CBN should continue to explore innovative ways to support domestic industries beyond the use of forex policies.

“There is no doubt that the CBN’s forex policies have helped the growth of local industries in Nigeria. Notable among these are the restrictions to access official forex placed on 42 imported items.

“This measure was not only in support of the Federal Government’s import substitution strategy, but it was also a demand- management strategy which helped to conserve scarce forex especially during the period of oil price slump.

“Today, thanks to that restrictive measure, a number of products which were hitherto not produced here such as toothpicks are now being manufactured locally.”

He said to strengthen the exchange rate between the Naira and the Dollar, there was a need for well-coordinated fiscal policies to pursue import substitution and enhance the competitiveness of local production with a view to curtailing foreign exchange demand.

He said, “The government should fast track efforts to improve the ease of doing business and the state of infrastructure in order to attract foreign investments as well as develop multiple streams of earning foreign exchange.”

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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