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Nestle, GTB, Others Boost Market Sentiment

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Nigerian stock market
  • Nestle, GTB, Others Boost Market Sentiment

Mouth-watering dividends from companies boosted market sentiment last week as investors were delighted with positive financial results.

The total proposed dividends rose to N499.97 billion last week Friday from N371 billion in the previous week. The surge in the proposed dividends came from Nestle Nigeria, GTB, Stanbic IBTC, Seplat Petroleum and McNichols Consolidated.

Guaranty Trust Bank (GTB) has proposed N2.45 final dividend per share for the full year ended December 31, 2018. This brought its total dividend for 2018 to N2.75 per share having earlier paid N0.30 interim dividend. This compares with N2.70 total dividend per share paid in 2017.

GTB’s 2018 interest income declined to N306.96 billion compared with N327.33 billion made in the previous year. A 4.8 percent increase in interest expense from N80.67 billion in 2017 to N84.53 billion in 2018 caused a 9.8 percent slide in net interest income which fell to N222.43 billion from N246.66 billion in 2017.

Interestingly, fee and commission income rose to N52.4 billion in 2018 in contrast to N42.9 billion realised in 2017. Net fee and commission income increased to N50.47 billion up from N40.73 billion in 2017. Profit before tax for 2018 was much better at N215.59 billion in contrast to N197.69 billion made in 2017. Profit for the year rose by 9.96 percent from N167.9 billion in 2017 to N184.6 billion in 2018.

In the course of the year, community and corporate social responsibility projects gulped N928.08 million up from N687.1 million expended on similar projects in 2017. The African Drum Festival and Art 635 Gallery were the major beneficiaries o f the arts CSR projects in 2018. Also, the Africa Centre Development, Orange Cycle Initiatives, Orange Ribbon-Autism Project, Simple Change Impact and the Swiss Red Cross Partnership topped the list of GTB’s 2018 community projects. And in education CSR, the annual Principals’ Cup and Financial Inclusion were the major beneficiaries.

Stanbic IBTC has proposed to pay N1.50 final dividend for the financial year 2018, an improvement over N1 that was paid in 2017. Gross earnings rose by 4.67 percent from N212.4 billion in 2017 to N222.36 billion in 2018. Net interest income fell to N78.2 billion in 2018 down from N83.6 billion in 2017. Non-interest revenue boosted IBTC’s profitability, rising by 15 percent from N89.2 billion in 2017 to N102.6 billion.

Profit for the year rose to N74.44 billion in 2018 up from N48.4 billion in 2017. Corporate social responsibility projects gulped N233.4 million in 2018 down from N436.6 million in 2017. The major beneficiaries were Deeping Financial Inclusion, N35 million; Lagos State Security Trust Fund, N35 million and the Global Fund for the eradication of Malaria, HIV/AIDS and Tuberculosis, N21.8 million.

Seplat has proposed $0.05 final dividend per share for the financial ended December 31, 2018 just as McNichols will be paying its shareholders N0.05 final dividend per share.

Meanwhile, more than 43 stocks have appreciated by different degrees year to date. C & I Leasing still tops with 308.4 percent year to date gain. Others are Dangote Flour, 52.6 percent; Royal Exchange, 45.5 percent; Ikeja Hotel, 39.2 percent; Cutix, 37.2 percent among others.

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.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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