- Nigeria’s Portfolio Inflows Rise to $1.32bn in January
Nigeria recorded significant increase in capital importation via foreign portfolio investors (FPI) in the investors’ and exporters’ forex window (I&E window) in January 2019, the FSDH Merchant Bank Limited has revealed.
In fact, FPI contribution in January stood at US$1.32 billion in January, accounting for 51.34 per cent of total inflows, the highest contribution since April 2018.
This was based on data obtained from the FMDQ OTC Securities Exchange and was attributed to foreign investors taking advantage of higher yields on fixed income securities.
Tthe Head of Research and Strategy at FSDH Merchant Bank Limited, Mr. Ayodele Akinwunmi, disclosed this while providing insights into the firm’s monthly economic and financial market outlook released at the weekend.
Also, about N2.33 trillion was expected to hit the money market from various maturing government securities and disbursement from the Federation Account Allocation Committee (FAAC) this month.
The firm estimated that total outflow of approximately N644 billion from the various sources, leading to a net inflow of about N1.68 trillion in the market this month.
FSDH Research expects the market to remain relatively liquid in February 2019.
This, according to Akinwunmi, may continue to necessitate the issuance of open market operations (OMO) to mop-up the liquidity in the system.
“FSDH Research believes the yields on the Nigerian Treasury Bills (NTBs) may increase further, particularly on the long end from the current levels.
“NTB yields are likely to be influenced largely by the level of liquidity in the banking system, the short-term borrowing needs of the government, the need to maintain price stability and election considerations,” he explained.
In line with expectations of FSDH Research, the CBN continued with its tight monetary policy stance throughout January 2019 as it continued to mop up excess liquidity through the use of OMO. The goal is to curb inflation and maintain stability in the foreign exchange market.
“This approach led to an increase in the yields on NTBs in January 2019 compared with December,” Akinwunmi said.
FSDH Research anticipated that January 2019 inflation rate would drop to 11.40 per cent, from the 11.44 per cent recorded in December 2018. “We still however anticipate a hike in the inflation rate from June 2019 due to adjustments to the price of Premium Motor Spirit (PMS) and electricity tariff,” he added.
The National Bureau of Statistics would release the inflation report for January on Friday.
FSDH Research believes the CBN would continue to adjust its policies to keep yield above that inflation rate.
The firm stated that it observed downward movement in the external reserves in early February. This, it stated may be a pointer to demand pressure at the foreign exchange market, which may lead to depreciation in the value of the naira.
“This in the short-term is in line with our expectation. The current position of external reserves continues to provide short-term stability for the value of the naira. However, the medium-term stability in the foreign exchange market will depend on the country’s foreign exchange receipts from both crude oil and non-oil products.
“The 30-Day moving average external reserves increased by 0.13 per cent, from $43.12 billion at the end of December, to $43.17 billion at the end of January 2019,” it stated.
It pointed out that although there was a drop in the Purchasing Managers’ Index (PMI) figures that the for January 2019, the drop was in line with the historical trend of low manufacturing activities associated with January.
The Manufacturing PMI stood at 58.5 points in January, from a four year high of 61.1 points in December 2018. The Non-Manufacturing PMI also decreased to 60.1 points in January from 62.3 points in December.
Union Bank Grows Profit Before Tax by N100 Million
Union Bank Plc, one of Nigeria’s longest-standing and most respected financial institutions, grew earnings by 3 percent to N121.8 billion in the first nine months of 2021.
Profit before tax rose by N100 million to N16 billion in the period under review, slightly above the N15.9 billion filed in the same period of 2020, the bank disclosed in its unaudited financial statements released on Thursday.
Net operating income after impairments rose by 3 percent from N69.3 billion in the first nine months of 2020 to N72.12 billion in the period under review. See highlights for further details.
Union Bank Financial Highlights:
● Profit before tax: relatively flat at ₦16bn (₦15.9bn in 9M 2020).
● Gross earnings: up 3% to ₦121.8bn (₦118.8bn in 9M 2020).
● Net operating income after impairments: up 3% to ₦71.2bn (₦69.3bn in 9M 2020) driven by stronger non-interest income.
● Non-interest income: up 26% to ₦42bn (₦33.4bn in 9M 2020) supported by growth in fees and commission from e-business, credit and trade transactions as well as debt recoveries.
● Operating expenses: up 3% to ₦55.2bn (₦53.4bn in 9M 2020), reflecting higher non-discretionary regulatory costs as well as depreciation and amortisation costs from technology spend.
● Gross loans: up 16% at ₦855.7bn (₦736.7bn in Dec 2020) reflecting increased lending to growth sectors of the economy.
● Customer deposits: up 14% at ₦1.3tr (₦1.1tr in Dec 2020) reflecting gains from our marketing drive for low-cost deposits and deepened customer loyalty.
Commenting on the results, Emeka Okonkwo, CEO said: “We continue to demonstrate the resilience of our business despite the volatility in the macroeconomic environment, growing our gross earnings by 3% and delivering stable Profit Before Tax of ₦16 billion. This stability is underpinned by our strategic focus on deepening our customer engagements and meeting their needs as we grow our core business.
“Consequently, our deposit base is up 14% to ₦1.3 trillion and our loan book has expanded by 16% to ₦855.7 billion driven by our compelling campaigns, new product offerings and effective sales channels. We have also achieved stronger transaction volumes across our businesses and channels, driving growth in fees and commissions, while we ensure robust cost controls.
“As we approach the end of the year, we are focused on building on our efficiency and optimising our core business while deepening our relationships with customers.”
Speaking on the 9M 2021 numbers, Chief Financial Officer, Joe Mbulu said: “We are focused on executing our plans for revenue diversification, driving strong growth in transaction volumes while we continue our strong debt recovery initiatives. These are mitigating the on-going impact of relatively low risk asset margins.
“During the period, non-interest income increased by 26% to ₦42 billion, driven by stronger net fee and commissions which gained 44% to ₦10.3 billion from ₦7.2 billion and recoveries which grew by 163% to ₦13 billion from ₦4.9 billion. We also maintained very strong control over our expenses, which grew by 3.3%, well below the rate of inflation as we continue to realise the benefits of our cost efficiency culture and mindset.
“With our capital adequacy ratio at 15.8%, above regulatory requirements and good asset quality with NPLs at 4.7% despite continued growth in our loan book, we are focused on further optimising our capital structure to support our growth plans as we look towards 2022 and beyond.”
Airtel Africa Posts Strong Growth Across its Units, Revenue Jumps 27.6 Percent
Airtel Africa grew revenue by 25.2 percent in the first half (H1, 2022) that ended September 30, 2021 to $2,272 million with double-digit growth across all regions. In the second quarter (Q2) of the same period, revenue grew by 20.3 percent.
The telecommunications giant stated in its unaudited financial statement released on Wednesday, October 28, 2021. See the company’s financial highlights below.
Airtel Africa Plc Financial Highlights
• H1’22 reported revenue grew by 25.2% to $2,272m with double digit growth across all regions. Q2 reported revenue growth of 20.3%.
• Revenue in constant currency grew by 27.6%.
• Strong double-digit constant currency revenue growth across all regions: Nigeria up 32.4%, East Africa up 25.8% and Francophone Africa up 22.1%; and across all key services, Voice up 19.7%, Data up 36.9% and Mobile Money up 42.0%.
• Underlying EBITDA grew by 35.2% to $1,098m in reported currency and underlying EBITDA margin improved to 48.3%, an increase of 360 basis points led by both revenue growth and improved operational efficiencies.
• Operating profit up 55.1% to $732m in reported currency.
• Profit after tax more than doubled to $335m, largely due to higher profit before tax which more than offset the associated increase in tax charges.
• Basic EPS was 7.6 cents, an increase of 155.9%, as a result of higher profit. EPS before exceptional items increased to 7.5 cents from 3.0 cents in previous period.
• Operating free cash flow was $853m, up 43.1%, and over the last 18 months we have up streamed more than $570m across our operating entities.
• Leverage ratio reduced to 1.5x from 2.2x.
• Customer base grew by 5.4% to 122.7 million, with increased penetration across mobile data (customer base up 10.9%) and mobile money services (customer base up 19.0%). Customer base growth was affected by the new NIN/SIM registration regulations in Nigeria; excluding Nigeria the customer base grew by 13.7%.
• The board has declared an interim dividend of 2 cents per share (1.5 cents in H1’21) in line with an upgraded dividend policy.
The new policy aims to grow the dividend annually by a mid to high-single digit percentage from a new base of 5 cents per share for FY 2022, with a continued focus to further strengthen the balance sheet.
Commenting on the performance of the telecom, Segun Ogunsanya, chief executive officer, said “Our first half financial performance has been strong. The first half of last year, and especially Q1, was impacted by the start of Covid, but even after adjusting for these effects, our revenue growth rates for the half year for the Group and all our service segments are ahead of our FY’21 revenue growth trends, and in reported terms these are all in strong double digits.
“The risks from Covid still remain, with sub-Saharan Africa continuing to experience a third wave of the pandemic. Governments continue to implement balanced measures of lockdowns and restrictions accordingly. But vaccination levels remain low, and we continue to monitor the situation for potential impacts on economies and consumers.
“Operationally we have continued our network modernisation and expansion, aligned with an extension of our distribution capabilities, which have together contributed towards continued strong growth in ARPUs across voice, data and mobile money. We have seen an improvement in our customer growth trends for the Group as we approach stability of net monthly movements in Nigeria.
“Alongside our results we have today launched our sustainability strategy. Airtel Africa has always been a business with a sustainable premise at the heart of our purpose to transform lives across Africa through our promotion of both digital and financial inclusion. Our sustainability strategy builds upon this, extending and more comprehensively articulating our sustainability goals and credentials. I am excited by the new initiatives we have launched and I look forward to reporting back on our developments in this area with our first sustainability report next year.
“As incoming Group CEO, I have inherited the responsibility to build upon a business with solid foundations and as I look ahead, I continue to see huge potential across voice, data and mobile money from low penetration levels across Africa. The continent continues to be a growth story for us despite the pandemic. We will continue to invest in mobile and digital technologies to drive digital and financial inclusion sustainably in Africa. I am pleased with the progress we have made in the last couple of years on delivering value to everyone touched by our network.”
Chemical and Allied Products Plc Reports 51 Percent Increase in Revenue
Chemical and Allied Products Plc (CAP Plc) announced its Financial Results for the third quarter ended September 2021.
Revenue increased by 51 percent increase from N5 Billion in the quarter ended September 2020 to N9 Billion in September 2021. This rise in revenue was driven by an increase in the sale of paint products which rose from N6 Billion in 2020 to N9 Billion in 2021. Although distribution costs also rose during the period under review and this ate into the revenue earned.
Cost of sales however saw a massive increase from about N3 Billion in September 2020 to N6 Billion in September 2021. This was driven by a change in inventories of finished goods and work in progress which rose from N2 Billion in 2020 to N5 Billion in 2021. Royalty fees also increased from N201 Million in 2020 to N307 Million in 2021.
This saw profit for the period fall from N927 Million in 2020 to N613 Million despite the increase in revenue, a 34% drop.
Earnings per share fell from 133 kobo in September 2020 to 78 kobo in September 2021. The company declared no dividends during the period.
CAP Paint Key Financial Highlights
• Revenue of N9.1 billion, higher than prior year by 51%.
• Gross profit of N2.7billion million, with gross margin of 30%.
• Operating expenses of N2.2billion with operating expenses as a percentage of sales of 25%, a 179bps improvement from 27% prior year.
• Other income of N253million, 279% above prior year due to profit from sale of a non-core asset.
• EBIT of N710 million, with EBIT margin of 8%.
• Profit Before Tax of N851 million, with PBT margin of 9%.
• Profit After Tax of N614 million, with PAT margin of 7%.
• Increased working capital deliberately to ensure sufficient raw material availability to continue production, hence inventory increased by N2.8 billion from Dec 2020.
• Trade and other receivables increased by N366 million in line with higher revenue.
• Strong cash position of N3.3 billion, with the key movement from Dec 2020 being the N1.5 billion paid to shareholders as dividends.
Commenting on the performance, Managing Director, David Wright, stated: “The merger between Chemical and Allied Products Plc (CAP) and Portland Paints and Products Nigeria Plc (Portland Paints) was successfully completed on the 1st of July 2021 with CAP being the surviving entity.
The financial results for the third quarter of 2021 reflects the combined entity. Despite the challenging environment, we continue to generate higher sales across our product portfolio.
Revenue improvement has been driven by (i) strong volume growth, (ii) price increases and (iii) new products in our portfolio, following the merger.
Raw material cost escalation remains a key concern and we will continue to carefully assess pricing. In addition to pricing, we will focus on production and operating efficiencies in order to protect margin”.
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