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Nigeria’s Foreign Reserves Dips by $3.43 Billion in 2022

The reserves dipped from $40.52 billion it opened the year to $37.1 billion in 2022.

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U.S Dollar - Investors King

The Nigerian foreign reserves declined by $3.43 billion in 2022, according to the latest report from the Central Bank of Nigeria (CBN). The reserves dipped from $40.52 billion it opened the year to $37.1 billion.

The data analysis shows that the cause of the $3.43 billion loss in Nigeria’s foreign reserves is linked to the persistent intervention of the Central Bank of Nigeria in the official foreign exchange (FX) market in a move to protect the Naira.

However, regardless of the involvement of the Central Bank, the exchange rate at the Importers and Exporters window declined by 5.7% in 2022, while closing the year at N461.5/$1 compared to N435/$1 recorded as of the close of trade in 2021.

Furthermore, the exchange rate at the parallel market declined by 23.1% to an average of N735/$1 in a highly inflationary year that witnessed an alarming increase in exchange value to N900/$1 in November of last year.

The data further indicated that the foreign reserves in 2021 was worth noting that the external reserve rose past $40 billion in 2021 as a result of an influx from the International Monetary Fund (IMF) as well as a $4 billion Eurobond issuance.

Investors King understands that in August 2021, Nigeria received a total amount of $3.35 billion from the International Monetary Fund as part of the Special Drawing Rights (SDRs).

Whereas, a month after, Nigeria also raised a $4 billion Eurobond from the international debt market, which saw the country’s foreign reserves improve from around $36 billion to over $41 billion in November 2022.

However, in 2022  a lack of Foreign Exchange (FX) inflows and increased demand for greenbacks plunged Nigeria’s foreign reserve.

The data which also showed that Foreign Direct Investments (FDI) in Nigeria dwindled significantly since the beginning of the covid-19 pandemic, falling to record levels.

Also, according to data from the National Bureau of Statistics (NBS), Nigeria received $302.13 million as FDI between January and June 2022.

This is significantly lower than pre-pandemic levels. For example, in the same period of 2019, Nigeria recorded an FDI of $429.72 million (2018: $507.96 million).

The shortage of foreign direct investments (FDIs), which has been ascribed as a socioeconomic factor, has also impacted the growth level of the nation’s reserve and by extension the exchange rate.

In the same view, foreign portfolio investment also took a downturn in the past three years, falling to $1.71 billion in the first half of 2022 from $1.77 billion and $4.69 billion recorded in the subsequent quarter of 2021 and 2020.

The World Bank forecast that Nigeria’s diaspora remittance will hit $20.9 billion in 2022, a 7.5% increase from the previous year.

According to the Nigerian Upstream Petroleum Regulatory Commission, Nigeria’s daily crude oil production output increased to 1.41 million barrels in November 2022 and is expected to hit 1.6 million barrels per day in Q1 2023.

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Finance

ICPC Nabs Three Banks’ Officials, Security Guards For Flouting CBN’s New Notes Directives

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Retail banking

More startling discoveries have continued to rattle Nigeria’s banking sector following scarcity of the new naira notes.

In some parts of the country, some senior officials of commercial banks have been arrested for hoarding the newly redesigned currency of the Central Bank of Nigeria (CBN).

Following bitter complaints from Nigerians, especially bank customers over paucity of the new cash, the Federal Government has directed anti-graft agencies to swoop on those frustrating Nigerians.

This situation has led to chaos and long queues at banks across the country.

In order to tame the menace, CBN officials and security operatives have been monitoring conducts of commercial bank management in the manner they dispense cash.

Operatives of the Independent Corrupt Practices and Other Related Offences Commission (ICPC) said they discovered N258 million stashed in the vault at the head office of Sterling Bank in Abuja.

According to a statement by ICPC, the discovery followed one of the commission’s operations at ensuring that commercial banks and other interest groups do not flout the apex bank’s directive of cash hoarding.

Explaining how the operation went, ICPC said when its officials visited the bank and discovered the stashed new naira notes in the bank’s vault, it was informed that the cash was the remnant of what the CBN had given the bank for onward distribution to its branches.

The monitoring team said it found out that only the sum of N5 million each was distributed to various branches of Sterling Bank.

Signed by the ICPC spokesman, Mrs. Azuka Ogugua, the statement further revealed that the regional and service managers of the bank were apprehended but later granted administrative bail while further investigation would be carried out on the matter.

Also, a security guard of one of the banks was arrested for contributing to the chaos within the bank premises.

The ICPC said it also nabbed the Head of Operations, Keystone Bank, Mararaba in Nasarawa State for frustrating its customers at getting the new naira notes by hoarding the currency.

According to the anti-graft team, while on its routine operation, it found out that the Automated Teller Machines (ATMs) at the branch were not dispensing to its customers while other bank customers were accessing only N1000 despite being given all the denominations by the CBN.

After the unscheduled visit to the bank, the commission disclosed that the ATMs started dispensing N5000 to non-customers and N10000 to its customers.

The team also revealed that it arrested one Abdulkareem Shaibu, a Security Guard with Zenith Bank, 3rd Avenue Gwarimpa, as well as Ali Adam and Shafiu Umar.

While Shaibu, the security guard, was arrested for being in possession of five ATM cards which he was using to collect money for different unknown persons who were not within the bank premises at that time, Adam and Umar were arrested in front of Zenith Bank, 1st Avenue Gwarimpa, for selling the new naira notes.

Relatedly, two officials of FCMB Ogo-Oluwa, Osogbo, Osun State were apprehended for assaulting officers of ICPC and CBN Cash Swap Monitoring Team.

Investors King reports that these fresh arrests came as Nigerians continue to rage over the cash crisis ravaging the country for weeks now.

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Banking Sector

CBN Threatens to Withdraw License of POS Operators That Charge High

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POS Business in Nigeria

The Central Bank of Nigeria (CBN) has threatened to withdraw the license of any POS Operators found guilty of inflating charges beyond the approved amount.

Blaise Ijebor, Director of CBN Risk Management department made this known while speaking with journalists on efforts of the apex bank alongside state government on ensuring the availability of cash in circulation.

He emphasized that the approved charge for every N5,000 is N100, adding that charges beyond that by agents taking advantage of the situation would attract punitive measures.

According to him, the apex bank is not unaware that the POS agents are engaging in all sorts of practices that involve charging customers up to 30% of their money before making funds available.

He said, “We are monitoring the situation and anyone caught would have his or her license withdrawn and would not be in the business because we are going around with the Economic Financial Crimes Commission (EFCC).

“Customer should not be agitated; there is no need for any tension because your money is safe in the bank for now. Just get the little cash you need while using alternative means available to make payment”

He also disclose that the CBN disbursed over N1 billion to banks between Sunday and Tuesday to ease withdrawal tension. Meanwhile, it appears the tension has failed to die down in spite of this as POS operators continues to charge above the required amount and cash remains scarce across states.

Investors King can confirm that agents still charge as high as N500 and above for withdrawals on N5000, and N1,000 on N10,000 at various locations as of the time of this report.

Despite the CBN’s claim of disbursing enough money to banks, Nigerians have continued to lament unavailable cash at the ATM stands, banks and POS, yet election date is around the corner.

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Banking Sector

Sterling Bank’s PAT Hit N18.6 Billion in 2022

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Sterling Bank - Investors King

Sterling Bank Plc increased its Profit After Tax for the year 2022 by 38% to N18.6 billion compared to the N13.5 billion filed in the previous year.

The bank’s interest income improved to N128 billion in 2022 compared to the N111 billion recorded in the previous year as deposits from banks, customers and other borrowed funds increased for the period, Investors King reports.

Interest expense also improved to N52 billion compared to the N45 billion in the previous year as deposits from banks and customers, as well as other borrowed funds, increased for the period while the net interest income stood at N76 billion from N66 billion in the previous year.

Net Fees and commission income amounted to N21 billion from N19 billion in the previous year. This is as Facility management fees, account maintenance fee, commissions and similar income all increased during the year – Although, Fees and commissions income reported excludes amount included in determining effective interest rate on financial assets that are not at fair value through profit or loss.

Similarly, net trading income rose on the back of Bonds while Treasury bills and foreign exchange trading saw a decline. The banks also saw foreign exchange revaluation loss for the period.

Important to note is the fact that foreign exchange trading income includes gains and losses from the spot and forward contracts and other currency derivatives while other foreign exchange differences arising on non-trading activities are presented as foreign exchange revaluation loss.

Other operating income at N11 billion from N6 billion was driven by other sundry income, Cash recoveries on previously written-off accounts and other items including income on FX forward discounting, Mudaraba Commodity Income among others.

The bank reported a credit loss expense on financial assets to the tune of N8.5 billion in 2022 compared to N9.8 billion in 2021. This is as impairment charges on loans and contingents, other assets, and investment securities declined for the period, hence the net operating income after impairment stood at N107 billion from N87 billion in the previous year.

Total expenses improved to reach N87 billion compared to the N73 billion the previous year as the bank saw improvement in its personnel expenses, other operating expenses, general and administrative expenses and other property, plant and equipment costs.

Profit before tax stood at N20 billion from N14 billion the previous year while earnings per share was 65 kobo compared to N47 kobo in previous year.

 

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