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Banking Sector Credit Predicted to Hit N16.7tn

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  • Banking Sector Credit Predicted to Hit N16.7tn in 2018

Analysts at FSDH Merchant Bank Limited have projected that banking sector credit to the private sector will rise to N16.7 trillion this year.

This, according to their prediction would represent a growth of 6.34 per cent compared with the N15.7 trillion recorded in 2017.

The firm held the view that the manufacturing sector would attract the highest credit this year, further adding that the uncertainties surrounding the fuel subsidy in the petroleum marketing sector may lead to a contraction of credit to that sector.

It noted that the improvement in the macroeconomic and business environment; improved consumers’ confidence; and the drop in the yields on the Nigerian Treasury Bills (NTBs) would be the main drivers of the expected credit growth.

The provisional figure that the National Bureau of Statistics (NBS) released for fourth quarter 2017 had shown that the banking sector credit to the private sector dropped from N16.1trillion in fourth quarter of 2016, to N15.7 trillion in fourth quarter of 2017.

Although the total credit as at the end of 2017 was higher than the figure of N13.1trilion in fourth quarter 2015, the impact of the devaluation of the local currency may be responsible for the growth in 2017 over 2015.

The sector with the highest credit allocation as at the fourth quarter of 2017 was mining and quarrying, and petroleum marketing, which accounted for 28 per cent of the total banking sector credit to the private sector.

This was followed by manufacturing 14 per cent; general services 18 per cent; and trade, seven per cent.
Also, agriculture which contributed about 29 per cent of the Gross Domestic Product (GDP) in Nigeria in third quarter 2017, attracted three per cent of the total credit.

“Our findings show that the agriculture sector in Nigeria is faced with many problems. Thus, the sector is unable to attract the required credit. “Some of the problems are: inadequate storage facilities; poor transport network; inadequate research to develop improved seedlings; and weak integration between the sector and the manufacturing sector in providing manufacturing inputs.”

The CBN Governor, Mr. Godwin Emefiele had assured Nigerians that the central bank would continue to explore measures that would see that interest rates are supportive of domestic production.

According to him, the Bank would continue to fine tune measures to ensure and guarantee a stable exchange rate regime.

Emefiele had pointed out that with on-going recovery in economic performance, he was optimistic that improved outcomes would be recorded in the central bank’s work towards taming inflation, bringing down interest rates and guaranteeing exchange rate stability.

He disclosed that the CBN has been consistently devising ingenious approaches to solve peculiar challenges and would continue to learn from the experiences of other countries, particularly developing nations.

According to Emefiele, interest rates are a major incentive (or disincentive) to carry on industrial production activities.

They are the key price for capital and largely determine the ability to engage in profitable domestic economic ventures.

Economic theory dictates that low interest rate will boost incentives to procure loans to engage in production, and vice versa.

He therefore noted that it was imperative that authorities endeavor to keep interest rates at reasonably low levels.

More so, he stressed that the rate of inflation is a major determinant of the level of interest rates, adding inflation erodes the real returns on financial assets (denominated by interest rates) and it is necessarily required that such rates should be above the price index in other to guarantee real positive returns.

The CBN Governor pointed out that the lower the monetary authority is able to keep inflations rates using monetary policy, the lower it can force down interest rates and make it more attractive for users of funds to access credit.

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.

Finance

Investors Oversubscribed for FGN Bonds by N205.87 Billion in October

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FG October Bonds Oversubscribed by N205.87 Billion

The Debt Management Office (DMO) has said investors oversubscribed for the Federal Government’s October bonds by N205.87 billion.

The DMO stated this after concluding the monthly FGN bonds auction on Wednesday.

Two instruments of 12.5 per cent FGN March 2035 re-opening 15-year bond and 9.8 per cent FGN July 2045 re-opening 25-year bond were auctioned.

The two bonds of N15bn each with a total auction figure of N30bn received a subscription of N235.87bn.

The 15-year tenor and 25-year tenor bonds received 99 and 67 bids but recorded 21 and 26 successful bids respectively.

The amounts allotted for each of the bids were N20bn and N25bn respectively.

According to the DMO, successful bids for the 15-year tenor bond and 25-year tenor bonds were allotted at the marginal rates of 4.97 per cent and six per cent respectively.

However, it added, the original coupon rates of 12.5 per cent for the 12.5 per cent FGN March 2035 bond and the 9.8 per cent for the 9.8 per cent FGN July 2045 bonds would be maintained.

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Lafarge Africa Sustains Growth in Third Quarter, Reports N53.3bn Revenue

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Lafarge Africa Grows Revenue by 31.4 Percent to N53.3bn Revenue in Q3 2020

Lafarge Africa Plc, a cement manufacturer headquartered in Lagos, sustained its strong growth in the third quarter (Q3) ended September 30, 2020.

In the company’s financial results released on the Nigerian Stock Exchange on Friday, the cement manufacturer’s revenue rose by 31.4 percent from N45.172 billion posted in the third quarter of 2019 to N59.337 billion in the third quarter of 2020.

Similarly, operating profit grew by 7.2 percent from N7.746 billion in the corresponding quarter to N8.302 billion in the quarter under review. This strong performance continues across the board as net income expanded by 2.8 percent to N4.867 billion, up from N4.734 billion posted in the third quarter of 2019.

Lafarge earnings per share rose by 2.8 percent to 30 kobo in the third quarter, again up from the 29 kobo posted in the same period of 2019.

On the outlook for the company going forward, the company said:

 Market demand is expected to remain strong in Q4.
 Naira devaluation and inflation remain a concern in Q4.
 The implementation of our “HEALTH, COST & CASH” initiatives would continue to deliver
improvement in our performance.
 We will maintain a healthy balance sheet.

Speaking on the company’s performance, Khaled El Dokani, CEO, Lafarge Africa Plc, said “Our robust results for the first 9 months reflect the strong recovery of the demand in Q3 and the successful implementation of our “HEALTH, COST & CASH” initiatives. Both have delivered considerable improvement in recurring EBIT, net income and free cash flow, despite the impact of the COVID-19 pandemic and Naira devaluation, particularly in Q3.

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Despite COVID-19 Pension Assets Hit N11.4 Trillion

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Total Pension Assets Expand to N11.35 Trillion

The National Pension Commission has revealed that the total pension assets rose to N11.35 trillion as of the end of August 2020 despite the COVID-19 pandemic that disrupted businesses and economic productivity.

According to the latest figures from the National Pension Commission,  the commission assets expanded from N11.08 trillion in June 2020 to N11.3 trillion in July.

The report noted that 66.27 percent or N7.51 trillion of the funds had been invested in the Federal Government’s securities.

While some of the funds were also invested in domestic and foreign ordinary shares, corporate debt securities, local money market securities and mutual funds.

In the commission’s second quarter (Q2 2020) report, it said that following “the issuance of demand notices to some defaulting employers whose outstanding pension contribution liabilities had been established by recovery agents, 16 of the affected employers remitted N261.33 million during the period.

“PenCom said this represents a principal contribution of N152.79 million and penalty of N108.54 million during Q2 2020.”

In the commission’s Q2 2020 report, it said “the pension fund administrators (PFAs) 2,839 contributors under the micro pension plan, remitted a total of N7.4 million to the RSAs as pension contributions.

Also in the same quarter, it said the PFAs recaptured 56,990 RSA holders and uploaded their data to the enhanced contributory registration system (ECRS).

PenCom further said the growth in the industry’s membership was driven by the RSA scheme, which had an increase of 41,147 contributors, representing 0.46 percent.

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