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COVID-19 Plunges Market Capitalisation of Global Banking by 30%

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global banking

COVID-19 Erodes 30% of Global Banking Market Capitalisation

The COVID-19 pandemic has erased 30 percent from global banking market capitalisation this year, according to the latest report.

The report revealed that the market capitalisation of the global banking market capital declined by 30.32 percent between the fourth quarter of 2019 and the second quarter of 2020.

A break down of the report showed market capitalisation was $8.97 trillion in the final quarter of 2019 before it dropped to $6.25 trillion in the second quarter of 2020.

The report noted that the first quarter of 2020 experienced the lowest market capital in five years.

The largest drop in market capitalisation was recorded in the middle of the COVID-19 pandemic in the first quarter, hence the reason why the quarter experienced the largest decline.

The market capitalisation declined to $5.78 trillion in the quarter, the lowest since the first quarter of 2016. The largest market capital was recorded in Q4 2017 when it expanded to $9.32 trillion.

COVID-19 has impacted the profitability of global lending facilities, especially with many bad loans being written off.

The report noted that “Despite mitigation measures in place, the pandemic has raised the credit risk for most banks. The economic uncertainty resulting from the health crisis has a meaningful impact on the real economy, and a slump in economic activity raises banks’ loan losses.

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

States Debt Rises by 163 Percent -BudgIT

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Naira

Debts of All 36 States Rise by 163 Percent or N3.34 Trillion to N5.39 trillion Between 2014 and 2019

Debts continue to rise across the 36 states of the Federation, according to a recent report by BudgIT, a public sector-focused financial information house.

In the just released 2020 edition of its annual state of states report titled, “Fiscal Sustainability and Epidemic Preparedness Financing at the State Level”, BudgIT said debts rose by 162.87 percent or N3.34 trillion from N2.05 trillion in 2014 to N5.39 trillion in 2019 across the 36 states.

The report stated that 10 of the states incurred half or N1.68 trillion of the entire debt, adding that seven of the 10 states are from the South while three are from the North.

Speaking on how states can attain fiscal sustainability, Damilola Ogundipe, BudgIT’s Communications Lead, said: “States need to grow their Internally Generated Revenue, IGR, as options for borrowing are reduced due to debt ceilings put in place by the Federal Government to prevent states from slipping into debt crisis. There has to be a shift from the culture of states’ overdependence on Federation Account Allocation Commission, FAAC.

The report further stated that 13 states, including Lagos, Oyo, Kogi and others, were unable to fund their recurrent expenditure together with debt repayments due in 2019.

It stated: “From our 2020 State of States analysis, 13 states were unable to fund their recurrent expenditure obligations together with their loan repayment schedules due in 2019 with their respective total revenues. 

“The worst hit of these 13 states are – Lagos, Oyo, Kogi, Osun and Ekiti states while the other states on this pendulum are Plateau, Adamawa, Bauchi, Gombe, Cross River, Benue, Taraba and Abia. 

“Furthermore, of the remaining 23 states that can meet recurrent expenditure and loan repayment schedules with their total revenue, eight of those states had really low (less than N6 billion) excess revenue, that they had to borrow heavily to fund their capital projects. 

“The worst hit are Zamfara, Ondo and Kwara who had N782.45 million, N788.22 million and N1.48 billion left, respectively. 

“Based on their fiscal analysis, only five states – Rivers, Kaduna, Akwa Ibom, Ebonyi and Kebbi states – prioritised capital expenditure over recurrent obligations, while 31 states prioritised recurrent expenditure according to their 2019 financial statements.”

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Oil Marketers Says No to Labour Strike, Decries Over N320bn Losses

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petrol Oil

Oil Marketers Reject Labour Strike, Decries Over N320bn Losses

Oil marketers across the country have rejected labour’s planned strike over N320 billion worth of investment losses.

The marketers under the aegis of the Natural Oil and Gas Suppliers Association of Nigeria also kicked against the proposed industrial action by the Nigeria Labour Congress and other civil right groups, pleading with the union and allies to have a rethink and look into the situation from a bigger picture.

This was after labour and other civil right groups announced they would be embarking on a nationwide strike starting from September 28, 2020 to force the government to reverse the increase in pump price and electricity tariffs.

Labour had said the government remained insensitive to the plight of Nigerians despite the negative impacts of COVID-19 on the economy and Nigerians.

However, Ukadike Chinedu, the association spokesperson of Natural Oil and Gas Suppliers Association of Nigeria, who was quoted in a statement issued in Abuja, said members of the association may be forced to cut staff in an effort to reduce operating costs given current economic realities.

He said, “Some of our concerns are heavy losses of over N320bn investments from product purchases at government specified prices and sales at compelled price reductions, which could not be justified by the costs of transaction.”

Ukadike added that several oil businesses were no longer trading because of heavy losses and several others were dying in silence.

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Banks’ Credit to Economy Hits N19.33 Trillion in August

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Godwin Emefile

Deposit Money Banks Credit to Economy Rose to N19.33 Trillion in August

The total credit facility to the economy rose to N19.33 trillion in the month of August.

The Central Bank of Nigeria-led monetary committee disclosed on Tuesday after the nation’s monetary policy committee meeting.

The committee attributed the improvement to the 65 percent loan-to-deposit ratio policy implemented to compel the nation’s deposit money banks to join central bank efforts at growing the real sector of the economy.

Godwin Emefiele, the Governor of the Central Bank of Nigeria, who spoke during the meeting said “The bank’s policy on Loan to Deposit ratio also resulted in a significant growth in credit to various sectors from N15.57tn to N19.33tn between end-May 2019 and end-August 2020, an increase of N3.77tn.

“This growth in credit was mainly to manufacturing (N866.27bn), consumer credit (N527.65bn), oil and gas (N477.65bn), agriculture (N287.11bn) and construction (N270.97bn).”

On monetary aggregates, broad money supply (M3) rose to 6.93 per cent (year-to-date) in August 2020 from 5.23 per cent in July 2020, reflecting the increase in both Net Foreign Assets and Net Domestic Assets.

He said total domestic credit grew by 6.94 percent in August 2020, lower than the 9.43 percent recorded in July 2020.

The committee reduced the nation’s benchmark interest rate by 100 basis points to 11.5 percent, down from the previous 12.5 percent.

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