Finance

FG, States Budget N5.6tr For Salaries, Overheads

Published

7 years ago

January 12, 2017

FG, States Budget N5.6tr For Salaries, Overheads

The federal and 36 state governments will spend half of their N13.5 trillion total budgets for the year on salaries and overheads.

Analysis of the 2017 budget documents shows that the central and 33 state governments would spend N5.9 trillion (41 percent) of their total budgets on salaries.The central government’s budget for the year is N7.29 trillion; of which the recurrent expenditure will gulp N2.98 trillion. Other components of the federal government budget are statutory transfers (N414 billion) and debt servicing (N1.66 trillion).

The central government’s budget for the year is N7.29 trillion; of which the recurrent expenditure will gulp N2.98 trillion. Other components of the federal government budget are statutory transfers (N414 billion) and debt servicing (N1.66 trillion).The 33 states have a combined budget of N6.22 trillion and they are spending N2.60 trillion (42 percent) on workers emoluments. There are no budget figures from Adamawa, Ondo and Kebbi states.

The 33 states have a combined budget of N6.22 trillion and they are spending N2.60 trillion (42 percent) on workers emoluments. There are no budget figures from Adamawa, Ondo and Kebbi states.The swollen recurrent expenditures keep coming despite the economic recession triggered by the dwindling oil revenues and low votes for development projects.

The swollen recurrent expenditures keep coming despite the economic recession triggered by the dwindling oil revenues and low votes for development projects.At Nigeria’s official exchange rate of 304 to a US dollar, the federal and state governments will spend $42.9 billion this year. The 33 states are spending $19.7 billion while the federal government is spending $23 billion.

At Nigeria’s official exchange rate of 304 to a US dollar, the federal and state governments will spend $42.9 billion this year. The 33 states are spending $19.7 billion while the federal government is spending $23 billion.Capital spending by the central and the state governments this year is N5.77 trillion (43 percent) – N2.24 trillion for the federal and N3.53 trillion for the states.

Capital spending by the central and the state governments this year is N5.77 trillion (43 percent) – N2.24 trillion for the federal and N3.53 trillion for the states.Further analysis of the budget estimates of the two tiers of government

Further analysis of the budget estimates of the two tiers of government show an increase of N1.3 trillion from last year’s N12.2 trillion.The total recurrent expenditures of the federal and state governments also rose by over N200 billion, from N5.3 trillion last year to N5.5 trillion this year.

The total recurrent expenditures of the federal and state governments also rose by over N200 billion, from N5.3 trillion last year to N5.5 trillion this year.Also, capital projects by the two tiers soared by over half a trillion naira. It rose from N5.04 trillion in 2016 to N5.77 trillion this year.

Also, capital projects by the two tiers soared by over half a trillion naira. It rose from N5.04 trillion in 2016 to N5.77 trillion this year.

The 17 northern states have a total budget of N2.38 trillion, witnessing a reduction of over N100 billion from last year’s N2.5 trillion. Of this, N1.37 trillion was for capital and N928 billion for recurrent, compared to last year’s N1.4 trillion and N1.1 trillion respectively.The total budget of the 16 southern states is N3.83 trillion against previous year’s N3.5 trillion. Of this, N2.15 trillion is capital and N1.67 trillion recurrent against N1.9 trillion and N1.5 trillion in 2016.

The total budget of the 16 southern states is N3.83 trillion against previous year’s N3.5 trillion. Of this, N2.15 trillion is capital and N1.67 trillion recurrent against N1.9 trillion and N1.5 trillion in 2016.

Small spenders
The seven states with the lowest approved budgets are Nasarawa (N67 billion), Yobe (N69 billion), Gombe (N86 billion), Ekiti (N94 billion), Abia (N103 billion), Enugu (N105 billion), Niger (N108 billion), and Taraba (N110 billion).

Big spenders
Lagos, with N813 billion, is leading the league of states with huge budgetary allocations. Other big spenders are Rivers (N470 billion), Akwa Ibom (N365 billion), Cross River (N301billion), Delta (N271 billion), Bayelsa and Ogun (N221 billion each), Kaduna (N215 billion), Kano (N210 billion) and Oyo (N207 billion).

Geopolitical analysis
On geopolitical basis, the seven states of the northwest zone (minus Kebbi) have a total budget of N1.01 trillion slightly lower than previous year’s N1.12 trillion. The budget has capital and recurrent components of N635.2 billion and N376.5 billion when compared with last year’s N698 billion and N479 billion irrespectively.The total budget for the northeast zone is N593.1 billion, about N80 billion lower than 2016’s N676 billion, with capital expenditure consuming N298 billion against last year’s N347 billion; leaving N209.8 billion for recurrent, which is lower than N326 billion for the previous year.

The total budget for the northeast zone is N593.1 billion, about N80 billion lower than 2016’s N676 billion, with capital expenditure consuming N298 billion against last year’s N347 billion; leaving N209.8 billion for recurrent, which is lower than N326 billion for the previous year.The north central zone’s approved budget for the year is N781.5 billion, a rise of about N100 billion from last year’s N684 billion. N439 billion is for capital and N342.4 billion for recurrent spending, unlike N385 billion and N343 billion in the previous year.

The north central zone’s approved budget for the year is N781.5 billion, a rise of about N100 billion from last year’s N684 billion. N439 billion is for capital and N342.4 billion for recurrent spending, unlike N385 billion and N343 billion in the previous year.The southwest zone’s budget for the year is N1.47 trillion, slightly higher than last year’s N1.36 trillion, with capital spending consuming N805.7 billion, leaving N668 for

The southwest zone’s budget for the year is N1.47 trillion, slightly higher than last year’s N1.36 trillion, with capital spending consuming N805.7 billion, leaving N668 for recurrent component. The zone has a recurrent vote of N695 billion and N671 billion capital, last year.The south-south region has a total budget of N1.77 trillion against N1.6 trillion last year, comprising N1.03 trillion capital and N750.6 billion recurrent expenditure. The oil-rich region spent N949 billion on capital projects and N579 billion on recurrent in 2016.

The south-south region has a total budget of N1.77 trillion against N1.6 trillion last year, comprising N1.03 trillion capital and N750.6 billion recurrent expenditure. The oil-rich region spent N949 billion on capital projects and N579 billion on recurrent in 2016.

The southeast’s total budget this year is N581.2 billion, about N90 billion increase from previous year’s N490 billion. It is made up of N324 billion capital and N257.3 billion recurrent votes; which is slightly higher than last year’s N242 billion and N248 billion respectively.

Huge recurrent expenses
The seven states with swollen recurrent expenses are Plateau, where Governor Samuel Lalong budgeted N68.5 billion for recurrent, leaving N64.3 billion for capital.

Osun State Governor Abdulrauf Aregbesola budgeted N138.2, allocating N75.8 billion for recurrent and N62.4 billion for capital votes.

Another state in this league is Nasarawa, where Governor Tanko Al-Makura, budgeted N67 billion, out of which N37 billion is for recurrent and N30 billion for capital expenditure.

In Yobe, Governor Ibrahim Gaidam budgeted N69 billion for the year, setting aside N42 billion for recurrent spending and N27 billion for capital projects. Governor Ayodele Fayose’s Ekiti State also has a higher recurrent vote, standing at N55.6 billion out of N94 billion, leaving N38.4 billion for capital expenditure.

Abia State votes N103 billion, setting aside N57.4 billion for recurrent and N45.1 billion for capital spending.

Among the oil-rich states, only Bayelsa and Delta’s recurrent budgets exceeded their capital votes. Of the N271 billion Delta expenditure, N152 billion is for recurrent and N119 billion for capital expenses.

Bayelsa State Governor Henry Seriake Dickson budgeted N221 billion for the year. Recurrent vote will consume N137 billion, leaving N84.3 billion for capital spending.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Pension

PFAs Posted Decent Growth – Coronation Economic Note

Published

10 hours ago

May 6, 2024

Samed Olukoya

According to the latest monthly report released by Nigeria’s Pension Commission (PENCOM), the assets under management (AUM) of the regulated pension industry increased by +26.2% y/y to N19.7trn.

Meanwhile on an m/m basis, the AUM decline marginally by -0.5%.

This marks the first decline since September ’22. Notably, FGN debt securities accounted for 62% of the total AUM in March ’24. Meanwhile, other asset classes such as private equities, real estate, and infrastructure funds, accounted for 0.4%, 1.4%, and 0.8% of total AUM, respectively.

Total FGN debt securities held by the Pension Fund Administrators (PFAs) increased by +19.7%
y/y but declined marginally by -1.4% m/m.

Specifically, we note that the FGN bond instruments held by the PFAs increased by +17.2% y/y to N11.5trn, but declined by -2.4% m/m, on the back of a 10-year tenure FGN bond maturity (N719.9bn). The FGN bonds account for 58% of the total AUM.

FGN bonds remain attractive due to its lower risk profile and elevated yields. It is worth noting that the average FGN bond yield increased by +219bps m/m as at end-March ‘24.

The PENCOM report shows that NTBs held by PFAs grew by +120% y/y and increased by +42.5% m/m to N407.6bn in March ’24. We note that the average NTB yield increased by +250bps m/m as at end-March’24.

This asset class accounted for just 2.1% of the total AUM in the same month.

Meanwhile, State government securities held by the PFAs increased by 64.1% y/y to N266.2bn in March ‘24.

It is worth highlighting that domestic equity holdings surged by 99.6% y/y and 8.7% m/m to N2.1trn in the same period, accounting for 10.6% of the total AUM in March ‘24 compared with 9.7% in February ’24. The NGX-all-share index (NGX-ASI) rose by +90.6% y/y and +4.6% during the same period.

Furthermore, YTD (28-March ’24) return on index rose by +18.1% to close at 39.8% from 33.7% in February ’24.

Recently, the market has shown a bearish trajectory as the NGX-ASI declined by -6.1% m/m as at end-April ‘24, partly, on the back of relatively weak corporate earnings amid inflationary conditions. Given expectations of higher yields in the fixed income market on the back of continuous tightening or a hold stance of the CBN at the next MPC meeting, PFAs are likely to reallocate a greater portion of pension assets to fixed income securities.

According to PENCOM, the total pension contributions since inception remitted to the Individual Retirement Savings Account (RSA) increased by +17.3% y/y to N9.9trn as at end-December ‘23 compared with N8.5trn recorded as at end-December ‘22. Remittance from the public sector accounts for 52%, while private sector accounts for 48% of the total pension contributions.

This can be partly attributed to improvement in the efforts to expand pension coverage.

Notably, PENCOM added a total number of 8,927 micro pension contributors in Q4 ’23 bringing the total number of registered MPCs in the Micro pension plan from inception to 114,382 as at end-December ’23 from 89,327 as at end-December ’22.

Banking Sector

GTCO Plc’s Profit Before Tax Grows by 587.5% to N509.35 Billion in Q1, 2024

Published

12 hours ago

May 6, 2024

Samed Olukoya

GTCO Commemorates Listing on Nigerian Exchange - Investors King

Guaranty Trust Holding Company (GTCO) Plc, one of Nigeria’s leading financial institutions, has unveiled its first quarter (Q1) financial results for the period ending March 31, 2024.

According to the report submitted to the Nigerian Stock Exchange (NGX), GTCO recorded a 587.5% growth in profit before tax (PBT) to N509.35 billion.

This substantial increase in pre-tax profit represents a significant jump from the N74.089 billion reported in the corresponding period of the previous year.

The financial statement also revealed a 227.93% rise in income tax to N52.213 billion, compared to N15.922 billion in the same period of 2023.

As a result, GTCO’s profit after tax (PAT) for the first quarter of 2024 rose to N457.134 billion, an exceptional growth of 685.9% from N58.167 billion recorded in the first quarter of the previous year.

The strong performance of GTCO can be attributed to several key factors. The Group’s loan book increased by 21.9% rising from N2.48 trillion recorded in December 2023 to N3.02 trillion by March 2024.

Similarly, deposit liabilities grew by 26.0% from N7.55 trillion in December 2023 to N9.51 trillion in March 2024.

Despite the challenging economic environment, GTCO’s balance sheet remained well-structured, diversified, and resilient.

Total assets closed at an impressive N13.0 trillion while shareholders’ funds stood solid at N2.0 trillion.

Commenting on the outstanding financial results, Mr. Segun Agbaje, the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, expressed optimism about the future.

He said the robust performance across all business verticals reaffirmed the value of the Holding Company Structure.

“Our first quarter results reflect the unfolding value of what we have created in all our business verticals through the Holding Company Structure – from Banking and Payments to Funds Management and Pension,” said Mr. Agbaje.

“We are positioned to compete effectively on all fronts and fulfill all our customers’ needs under a unified, thriving financial ecosystem.”

The growth in profitability underscores GTCO’s resilience, strategic focus, and unwavering commitment to delivering superior value to its stakeholders amidst evolving market dynamics.

As the Group continues to leverage its strengths and innovative capabilities, it remains well-positioned to navigate the ever-changing landscape of the financial services industry with confidence and resilience.

Banking Sector

UBA Plc Reports 166% Surge in Q1 Profit to N143 Billion

Published

12 hours ago

May 6, 2024

Samed Olukoya

United Bank for Africa (UBA) Plc has made a significant leap in its financial performance, reporting a 166% surge in its first-quarter profit to N143 billion.

The details, disclosed in the financial services group’s unaudited report for the first quarter, showed a robust growth trajectory despite challenging market conditions.

This surge translates to a 169.4% year-on-year increase in earnings per share (EPS) to N3.96 in the first three months of the year, up from N1.47 reported in the same quarter of 2023.

According to the financial results, interest income rose by 129.7% year on year to N440.76 billion. The bank also witnessed a significant uptick in investment, reporting a 147.1% year-on-year growth.

UBA’s interest expense saw an increase of 93.9% year on year to N140.09 billion. This was attributed to higher costs incurred on deposits from customers, deposits from financial institutions, and borrowings.

Despite this, customers’ deposits grew by 112.6% year on year to N18.38 trillion.

Net interest income also grew by 151.3% year on year to N300.68 billion from about N120 billion in the previous year.

Furthermore, non-interest income advanced by 38.9% year on year to N77.91 billion, fueled by expansions in net fees and commission income and net FX trading income.

At the end of Q1, UBA’s operating income stood at N373.31 billion, a 122.5% year-on-year increase.

However, operating expenses saw an uptick of 104.1% year on year, driven by expansions in employee benefits, regulatory costs, and inflationary pressures.

Despite these challenges, the group’s profit-before-tax surged by 154.7% year on year to N156.34 billion from N61.37 billion a year ago.

Net profit also increased by 166.1% year on year to N142.58 billion from N53.59 billion in the previous year.

UBA’s stellar performance in the first quarter underscores its resilience, strategic positioning, and commitment to delivering value to shareholders amid evolving market dynamics. As the bank continues to navigate challenges and seize opportunities, it remains poised for sustained growth and value creation in the financial services sector.