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Coronavirus: CBN Lowers Interest Rates on Intervention Facilities to 5%

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Central Bank headquarters
  • Coronavirus: CBN Lowers Interest Rates on Intervention Facilities to 5%

In an effort to stimulate growths and support economic activities amid raging coronavirus, the Central Bank of Nigeria (CBN) has deployed financial measures to sustain business activities, job creation and price stability.

In the circular issued to Deposit Money Banks (DMBs) on Monday, the apex bank said in furtherance of its financial stability mandate to provide support for businesses, households, stakeholders and regulate financial institutions, it has put together six measures to stabilize economic activity at a period of high uncertainty.

The Central Bank of Nigeria (CBN) announced it has lowered interest rates on all applicable CBN intervention facilities from 9 percent to 5 percent per annum effective from March 1, 2020. All DMBs are notified to effect the change immediately in accordance with the circular.

The CBN said: “Interest rates on all applicable CBN intervention facilities are hereby reduced from 9 percent to 5 percent per annum for 1 year effective March 1, 2020.”

The central bank also announced the creation of a N50 billion targeted credit facility to support households and small and medium-sized enterprises that have been affected by the coronavirus outbreak.

“The CBN hereby establishes a facility through the NIRSAL Microfinance Bank for households and small- and medium-sized enterprises (SMEs) that have been particularly hard hit by Covid-19, including but not limited to hoteliers, airline service providers, health care merchants, etc.”

Credit support was established for the healthcare sector to meet the potential increase in demand for healthcare services and products during the ongoing coronavirus outbreak. The apex bank explained that this is in addition to growing the size of existing interventions to the agricultural and manufacturing sectors in the country.

Also, the CBN granted all DMBs leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households that are most affected by the coronavirus outbreak, particularly in the oil and gas, manufacturing and agricultural sectors.

The apex bank added that “in view of the success of the LDR Policy in growing credit to the economy and reducing interest rates, the CBN would further support industry funding levels to maintain DMBs’ capacity to direct credit to individuals, households, and businesses. We will also consider additional incentives to encourage extension of longer tenured credit facilities. DMBs are encourage to continue to build capital buffers in order to improve resilience of the sector.”

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.

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Finance

NGX Index Sheds 0.79 Percent on Thursday

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Nigerian Exchange Limited - Investors King

The Nigerian Exchange Limited (NGX) Index dipped by 0.79 percent on Thursday to extend its bearish trend to 38484.82 index points.

Investors traded 259.968 million shares worth N1.982 billion in 4,975 transactions during the trading hours of Thursday, against 237,510,446 shares worth N1.882 billion traded in 4,305 transactions during the trading hours of Wednesday. 

Market capitalisation of listed stocks declined by N16 billion from N20.211 trillion recorded on Wednesday to N20.051 trillion on Thursday.

Top Gainers 
Symbols Last Close Current Change %Change
TRIPPLEG N 0.90 N 0.99 0.09 10.00 %
REGALINS N 0.41 N 0.45 0.04 9.76 %
CHIPLC N 0.54 N 0.59 0.05 9.26 %
PRESTIGE N 0.45 N 0.49 0.04 8.89 %
ACADEMY N 0.35 N 0.38 0.03 8.57 %

Top Losers

Symbols Last Close Current Change %Change
OANDO N 5.26 N 4.75 -0.51 -9.70 %
UACN N 11.20 N 10.20 -1.00 -8.93 %
LINKASSURE N 0.65 N 0.60 -0.05 -7.69 %
FTNCOCOA N 0.53 N 0.49 -0.04 -7.55 %
UPDC N 1.26 N 1.19 -0.07 -5.56 %

Top Trades

Symbols Volume Value
OANDO 56252236.00 288491744.30
GTCO 15287119.00 444928298.75
JAIZBANK 14898700.00 9218505.98
FIDELITYBK 14392576.00 34243927.81
WEMABANK 12215080.00 10084097.72

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Banking Sector

FCMB Group Posts 22.1 Percent Decline in Profit in H1 2021

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FCMB - Investors King

FCMB Group Plc, a leading financial institution in Nigeria, recorded a 22.1 percent decline in profit after tax in the first half (H1) of 2021 despite zero COVID-19 restrictions.

The lender gross earnings dipped by 4.02 percent from N98.179 billion achieved in the first half of 2020 to N94.228 billion in the period under review, the bank disclosed in its unaudited financial statements seen by Investors King.

Net interest income also moderated by 5.25 percent from N45.379 billion reported in H1 2020 to N42.998 billion in H1 2021. While net fee and commission income increased to N12.934 billion in the period under review, representing an increase of 33.51 percent from N9.688 billion achieved in the same period of 2020.

Net trading income drop from N3.925 billion in H1 2020 to N2.639 billion in H1 2021, this represents a decline of 32.78 percent.

Other revenue sheds 39.7 percent from N7.555 billion in H1 2020 to N4.552 billion in H1 2021. Profit before minimum tax and income tax decreased by 24.2 percent to N8.911 billion in H1 2021, down from N11.071 billion recorded in H1 2020.

The bank paid N450 million as minimum tax and income tax of N903.797 million to push profit after tax down by 22.1 percent from N9.701 billion in H1 2020 to N7.557 billion in H1 2021.

The lender realised N974.744 million from foreign currency translation differences for foreign operations. This brings the total comprehensive income for the period N8.545 billion.

Earnings per share dipped from N0.49 H1 2020 to N0.38 in H1 2021.

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Banking Sector

Ecobank Grows Profit After Tax by 29 Percent to N62.6 Billion in H1 2021

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Ecobank - Investors King

Ecobank Transnational Incorporated, a leading lender in Nigeria and across Africa, grew gross earnings by 13 percent to N442.9 billion in the first six months ended June 30, 2021.

The bank disclosed in its unaudited financial statements released through the Nigerian Exchange Limited and seen by Investors King on Monday.

Revenue expanded by 15 percent to N334.9 billion in the period under review while operating profit before impairment charges rose by 33 percent to N138.3 billion.

The bank grew profit before tax to N85.3 billion in the first half of 2021, up by 33 percent when compared to N64.133 billion recorded in the same period of 2020.

Profit after tax increased by 29 percent to N62.6 billion, up from N48.535 billion recorded in the corresponding period of 2020. Total assets expanded by 6 percent to N11.022 trillion with loans and advances rising by 7 percent to N7.861 trillion.

However, total equity was down by 1 percent to N803.2 billion.

Speaking on the bank’s performance, Ade Ayeyemi, Ecobank Group CEO, said: “We saw continued and sustained resilience in our performance, which is indicative of the success of our ‘execution momentum’ drive. As a result, we generated a return on tangible equity of 16.1% versus 15.2% a year ago and increased diluted EPS and tangible book value per share by 19% and 6%, respectively. In addition, profit before tax increased 23% to $210 million.”

“Group revenues rose 7% to $825 million, despite the challenging operating environment with the third wave of coronavirus infections threatening economic recovery. Our diversified pan-African business model continued to rise to the challenge. Revenues grew 13% and 6% in our Commercial and Consumer businesses, while our focus on growing the trade business led to increased trade assets.

The slowly increasing business and spend activity drove a 20% rise in our Payments business’s revenue to $90 million. Deposits growth was strong, with total deposits now over $19 billion, an increase of $1.0 billion in the second quarter and $2.4 billion in a year, driven by our omnichannel strategy. Though loan growth remained
flat, we are focused on providing support to MSMEs for growth,” Ayeyemi added.

“I am proud of the team’s hard work in driving efficiency, which continues to reflect in our cost-to-income ratio of 58.7% ahead of guidance and progressing well toward our medium-term goal of approximately 55%. In addition, credit quality continued to be exceptionally strong. As a result, our NPL ratio of 7.4% is a substantial improvement from the prior year’s 9.8%, as we also build reserves to insulate the balance sheet with an NPL coverage ratio of 86.7% and pushing towards our nearterm target of 90%,” Ayeyemi continued.

“We successfully raised $350 million Tier 2 Sustainability Notes in June, the first-ever by a financial institution in sub-Saharan Africa and first to have a Basel III-compliant 10-year non-call 5 structure outside South Africa in 144A/RegS format. The Bond was 3.6 times oversubscribed, demonstrating strong confidence in the Ecobank Group and our commitment to the sustainability of our communities and their social needs. I am deeply grateful to all stakeholders and must thank our clients for continuing to put their trust in Ecobank for their diverse banking needs.” Ayeyemi concluded.

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