- CBN Introduces Guidelines for Non-interest Financial Institutions
The Central Bank of Nigeria has introduced guidelines on the management of investment account holders for Non- Interest Financial Institutions in Nigeria.
The regulatory body said the objectives of the guidelines was to provide the minimum standard to be met by NIFIs operating in Nigeria before they could recognise Profit Sharing Investment Account Holders deposits as risk absorbent and deduct same from the computation of Risk Weighted Assets.
This would enable them to calculate the Capital Adequacy Ratio as specified in the guidance notes on regulatory of capital for NIFIs in Nigeria issued by the CBN.
It stated that the guidelines complemented the regulations for NIFIs in Nigeria issued by the CBN such as guidance notes on calculation of capital requirements for NIFIs; Guidelines on income soothing for NIFIs; and guidance notes on disclosure requirements to promote market discipline for NIFIs.
According to the CBN, NIFIs mobilise large percentage of their funds using Mudarabah and Wakalah contracts.
In Mudarabah, the bank is acting as the Mudarib (entrepreneur) and the fund providers as the Rabb-ul-Mal otherwise called PSIAHs.
It explained that, “In Wakalah, the bank acting as Wakeel (investment agent) for the PSIAHs, earns a Wakalah fee, and an incentive fee in the event of the realised profit exceeding an agreed threshold, and the agreed profit goes to the PSIAHs.
“Mudarabah contract by its nature entails the sharing of profit between the contracting parties based on pre-agreed profit sharing ratio and the bearing of loss by the fund provider except in cases of proven negligence, misconduct or breach of contract by the entrepreneur in which case the entrepreneur would bear such loss.”
The CBN explained that NIFIs in Nigeria essentially maintained two different types of Mudarabah accounts used for deposit mobilisation “which are Restricted Investment Accounts and Unrestricted Investment Accounts.”
Under the RIA contract, it added, the bank would act strictly based on the investment mandate of the customer, while under URIA contract, the bank was free to invest the funds as it deemed fit.
In practice, NIFIs co-mingle such PSIA deposits with other funds like shareholders’ funds and current account deposits into different pools and invest in profitable ventures.
“Being an equity-based contract, the PSIAHs are expected to bear the credit risk of any counterparty the funds are invested with, as well as the market risk of the assets in which the funds were invested,” it stated.
Insider Dealing: Paul Miyonmide Gbededo Adds Another 612,326 Shares of Flour Mills to His Stake
Paul Miyonmide Gbededo, the Group Managing Director, Flour Mills of Nigeria Plc bought an additional 612,326 shares of the company.
The management stated this in a disclosure statement sent to the Nigerian Stock Exchange on Monday.
The managing director purchased the shares at N27.75 per share on November 20, 2020 at the Nigerian Stock Exchange in Lagos, Nigeria. Meaning, Gbededo has invested another N16,992,046.5 into the company.
This was in addition to the 3,284,867 shares valued at N91,642,269 and 4,200,852 shares worth N117.62 million purchased by Gbededo earlier in the month of November. Bringing his recent purchases to 8,098,045 million shares worth N226,254,315.5. See the details of the latest transaction below.
FCMB Reports 16.4 Percent Increase in Profit After Tax in Q3 2020
FCMB Group Plc, one of the leading financial institutions in Nigeria, reported a 16.4 percent increase in profit after tax for the third quarter of the year.
In the unaudited financial statements released through the Nigerian Stock Exchange (NSE), the lender’s profit before tax grew by 10.2 percent year-on-year to N4.8 billion while profit after tax increased by 16.4 percent to N4.2 billion.
FCBMB Group Plc expanded gross earnings by 4.8 percent to N48.3 billion during the period under review. Similarly, the bank’s net interest income rose by 30.03 percent year-on-year to N22.7 billion.
The strong performance continued across the board as net fee and commission income increased by 0.29 percent to N5.2 billion. Net trading income rose by 39.4 percent year-on-year to N1.82 billion.
Personnel expenses dropped by 7.9 percent to N6.9 billion during the quarter while general and administrative expenses declined by 7.52 percent year-on-year to N7.6 billion. Largely due to the COVID-19 lockdown.
Loans and advances to customers rose by 10.8 percent to N793.14 billion between December 2019 and September 2020. Total desposits from customers during the same period grew by 26.7 percent to N1.2 trillion.
The bank’s total assets increased by 22.12 percent to N2.04 trillion.
Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary
Stanbic IBTC Holdings Plc on Friday announced that it has obtained all required Regulatory Approvals and a license from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary, Stanbic IBTC Insurance Limited (SIIL).
In a statement signed by Chidi Okezi, Company Secretary, Stanbic IBTC and released on Friday, the bank said “The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria. In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.
“Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets. Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.
“Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.”
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