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Interbank Rates Fall on Matured Treasury Bills

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  • Interbank Rates Fall on Matured Treasury Bills

Nigeria’s interbank overnight lending rate fell sharply on Friday to an average of 12 per cent from around 60 percent a week ago after the central bank repaid matured treasury bills and a refund of excess cash deposited by banks to buy dollars.

The central bank sold $100 million at its special intervention auction in the foreign exchange market on Tuesday, which was less than the amount requested by banks, leading to a refund of the excess deposited by banks on Friday, Reuters disclosed.

The regulator also injected about N168 billion in matured open market operation (OMO) treasury bills into the system on Thursday, raising money market liquidity levels.

“The interbank rate is seen climbing again next week as the central bank resumes its aggressive liquidity mop up and sustains its intervention in the forex market,” a currency trader said.

The overnight lending rate jumped last week to as high as 100 percent intraday after the central bank tightened liquidity to support the naira currency.

The central bank has consistently issued OMO treasury bills to reduce excess liquidity in the money market and curb speculation on the local currency.

It sold a total of N68.79 billion worth of treasury bills on Friday in its bid to further tighten liquidity in the banking system. The bank’s sales on Friday amounted to N65.5 billion of 363-day open OMO treasury bills at 18.55 percent, and 3.29 million naira of the 174-day paper at 17.95 percent.

On the other hand, a report by Cowry Asset Management Limited showed that the NITTY moved in mixed directions across the maturities– yields on the 1month and 3 months maturities rose to 17.77% from (14.41%) and 19.45% (from 19.43%) respectively. However, 6 months and 12 months yield fell to 19.79% (from 20.36%) and 22.13% (from 22.30%) respectively.

“This week, we expect maturities via secondary market worth N14.65 billion viz: 167-day bills worth N7.976 billion and 168-day bills worth N6.674 billion. We expect further financial system liquidity ease and stability in interbank rates,” the investment firm added.

Forex Transactions

Meanwhile, the local currency remained stable week-on-week on the interbank segment amid CBN’s intervention of $364 million into the interbank foreign exchange market from which the Retail Secondary Market Intervention Sales (SMIS) received $264.19 million while $100 millon was allocated to authorised dealers in the wholesale window.

According to analysts at Cowry Asset Management Limited, the naira also strengthened at the Investors & Exporters Forex Window (I&E) to N361/$.

However, it depreciated at the Bureau De Change and Parallel market segments by 0.27 per cent each to N365/$ and N368/$ respectively.

“Dated forward contracts at the interbank OTC segment suggests likely appreciation of the naira amid an increase in the foreign exchange reserves – external reserves increased week-to-date by 1.06 per cent to $31.55 billion as at Thursday, August 17, 2017. The 3 months, 6 months and 12 months forward contracts appreciated week-on-week by 1.37 per cent, 1.29 per cent and 2.09 per cent, to N379.04/$, N400.18/$ and N438.59/$ respectively,” Cowry Asset Management added in a note at the weekend.

However, the spot rate of the naira depreciated slightly week-on-week by 0.03 per cent, to N305.65/$”.

“In the coming week, we expect further stability of the naira/dollar exchange rate amid consistent build up in external reserves and continued CBN intervention in the interbank segment.”

Bond Market

In the just concluded week, prices of FGN bonds traded at the OTC segment moved in mixed directions – the 20-year, 10% FGN JUL 2030 paper and the 10-year, 16.39% FGN JAN 2022 debt depreciated w-o-w by N0.44 and N0.06 respectively; corresponding yield rose to 16.47% (from 16.35%) and 16.38% (from 16.36%). However, w-o-w the 7-year, 16.00% FGN JUN 2019 and 5-year, 14.50% FGN JUL 2021 appreciated by N0.14 and N0.42 respectively as their yields fell to 16.80% (from 16.89%) and 16.41% (from 16.57%).

Elsewhere, FGN Eurobonds traded on the London Stock Exchange appreciated in value across all the maturities amid renewed bargain hunting. The 10-year, 6.38% JUL 12, 2023 and 5-year, 5.13% JUL 12, 2018 bonds appreciated by USD0.80 (yield fell to 5.53%) and USD0.20 (yield fell to 3.58%) respectively.

But, this week, the Debt Management Office (DMO) will auction bonds worth N135 billion, viz: the 5-year, 14.50% FGN JUL 2021 worth N35 billion, 10-year, 16.2884% FGN MAR 2027 worth N50 billion and 20-year, 16.2499% FGN APR 2037 worth N50 billion.

“We expect bond prices to appreciate at the OTC market on the back of expected ease in financial system liquidity.”

As part of efforts to further strengthen the value of the Naira on the parallel market segment of the foreign exchange (forex) market, the Central Bank of Nigeria (CBN) has directed that payments for port charges to the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA) by oil marketing companies should henceforth be accommodated in the official forex window.

Easing Dollar Access to Maritime Operators

As part of efforts to further strengthen the value of the Naira on the parallel market segment of the forex market, the CBN last week directed that payments for port charges to the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA) by oil marketing companies should henceforth be accommodated in the official forex window.

The central bank issued the directive Tuesday in a circular titled, “Payment of Ports and Nigerian Maritime Administration and Safety Agency Charges by Oil Marketing Companies,” signed by its Director, Trade and Exchange Department, Mr. W.D. Gotring, a copy of which was obtained by THISDAY. CBN explained that the initiative would help improve forex availability in the market, as well as address the challenges encountered by stakeholders in the maritime sector.

The two-paragraph circular stated: “In the continued effort to improve forex availability in the Nigerian forex market and ameliorate challenges encountered by critical stakeholders, payment for port charges to the NPA, NIMASA, etc, by oil marketing companies can now be accommodated by the CBN using Form ‘A’.

“Therefore, authorised dealers are directed to accept the request for payment of port charges from oil marketing companies and forward same to the CBN forex window.”

National Corruption Report

An estimated N400 billion, or the equivalent of $4.6 billion in purchasing power parity (PPP), representing 39 per cent of the combined federal and state education budgets in 2016, is paid out as bribes to public officials in Nigeria annually, a new report released by the National Bureau of Statistics (NBS), in collaboration with the United Nations Office on Drugs and Crime (UNODC), revealed last week

The National Corruption Report, which covered the period between June 2015 and May 2016 also showed that almost a third of Nigerian adults (32.3 per cent) who had contact with public officials between June 2015 and May 2016 had to pay, or were requested to pay a bribe to such public officials. According to the report, the magnitude of public sector bribes in Nigeria becomes even more palpable when factoring in the frequency of the payments, adding that the majority of those who paid bribes to public officials did so more than once over the course of the year. Bribe-payers, it added, pay an average of some six bribes in one year, or roughly one bribe every two months.

“Roughly 400 billion Nigerian Naira is spent on bribes each year. Taking into account the fact that nine out of every ten bribes paid to public officials in Nigeria are paid in cash and the size of the payments made, it is estimated that the total amount of bribes paid to public officials in Nigeria in the 12 months prior to the survey was around 400 billion Nigerian Naira (NGN), the equivalent of $4.6 billion in purchasing power parity (PPP). This sum is equivalent to 39 per cent of the combined federal and state education budgets in 2016,” the report said.

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 long experience in the global financial market.

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Access Bank Enters Into Definitive Agreement With Cavmont Capital

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Access Bank Signs Definitive Agreement With Cavmont Bank Ltd

Following July 8, 2020 announcement, the Board of Access Bank Plc on Thursday said its subsidiary, Access Bank Limited (Zambia) has entered into a definitive agreement with Cavmont Capital Holdings Zambia regarding the acquisition of Cavemont Bank Ltd.

In the statement released through the Nigerian Stock Exchange, the bank said the proposed acquisition will position Access Bank as one of the top 10 banks in Zambia and improve the bank’s momentum to advance its strategic objectives.

The bank said “This is a highly complementary transaction, combining ABZ’s wholesale and trade finance capabilities with Cavmonth Bank’s retail and commercial banking operations. Customers of the enlarged bank will benefit from greater security offered by what will be one of the most capitalised banks in Zambia with a more diversified product and service offering and a broader geographical footprint and infrastructure. The enlarged bank will be well-placed to participate in the long-term economic growth of Zambia, predicated on the country’s vast reserves of natural resources and fast-growing young population.

The transaction agreement showed Access Bank Zambia will acquire the entire issued share capital, assets and liabilities of Cavmonth Bank while Capricorn Group Limited, majority shareholder of Cavmonth Capital Holdings, will invest around $16.5 million or ZMW300 million of preference shares into Access Bank Zambia.

According to the bank, the transaction is expected to be completed in the fourth quarter of 2020.

Speaking on the transaction, Herbert Wigwe, the Group Managing Director, Access Bank Plc, said “Access Bank is focused on building the scale needed to become a leading bank in its key operating markets through leveraging the right partnerships. This transaction underscores our approach and is another stepping stone towards delivering on our strategic aspirations of becoming the World’s Most Respected African Bank and Africa’s Gateway to the World. It will strengthen our presence in Zambia, while furthering our footprint for growth in the COMESA region, Africa’s largest free trade area.

“Over the years, we have worked hard to build a sustainable international bank of African origin that can expand the potential of businesses, support economic prosperity, facilitate trade and investment and extend the power of banking to millions of people who do not yet have the financial tools to achieve their dreams. This proposed transaction aligns with that strategy”.

Thinus Prinsloo, Managing Director of Capricorn Group, also said: “Access Bank is an African banking group with an impressive growth trajectory and geographic reach across Africa and internationally. This transaction is an excellent strategic fit with Cavmont Bank’s presence in Zambia and will strengthen the capital base from which to achieve long-term sustainable growth. Zambia is an economy with th potential that is poised for a robust recovery, and this combination best positions the combined bank to harness these opportunities“.

Peet van der Walt, the Managing Director of Cavmont Bank, explained that: “Cavmont Bank’s vision is to be a world-class bank, rated amongst the best in Zambia. This proposed merger with Access Bank Zambia accelerates our strategy and positions us as a top ten bank in the country. As a subsidiary of one of the largest banking groups in Africa, Access Bank Zambia has the scale, capabilities and ambition to enable the combined bank to pursue exciting strategic opportunities in Zambia.

“Our customers will benefit from greater security offered by one of the most capitalised banks in the country, increased scale in Zambia, access to a broader digital and retail offering, and a geographic network across the continent. We look forward to working closely with Access Bank to deliver the benefits of the merger to all the stakeholders.” Shareholders should note that the cautionary announcement dated July 8, 2020 is hereby withdrawn and shareholders are no longer required to exercise caution when dealing in the group’s shares in relation to the potential transaction.”

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FIRS Says All Illegal Stamp Duty Fees Collected By NIPOST Will Be Recovered

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‘All Illegal Stamp Duty Fees Collected By NIPOST Will Be Recovered’ Says FIRS

The Federal Inland Revenue Service (FIRS) has responded to the allegation levied against its body by the Nigerian Postal Service (NIPOST) over the printing and sales of Stamp Duty to the public.

FIRS Nigeria, in a tweet titled ‘‘That Vexed NIPOST Tweet by Mrs. Maimuna Abubakar’’ responded to an earlier tweet by Maimuna Abubakar, the chairperson, NIPOST.

FIRS stated that normally it would not have responded to the tweet but given the sensitivity of the situation, it must, therefore, respond in order not to mislead the public.

Part of the Tweets read “NIPOST is a government parastatal established by Decree 41 of 1992 with the function to *develop, promote, and provide adequate and efficiently co-ordinated postal services at reasonable rates*.”

“This function is clearly contrary to the claim by NIPOST over the administration of stamp duties in Nigeria. On the other hand, the FIRS is the sole agency of government charged with the responsibility of *assessing, collecting, and accounting for all tax types including Stamp Duties*.”

FIRS, therefore, said all illegal funds collected by NIPOST for stamp duty will be recovered to the last kobo in line with President Muhammadu Buhari’s inaugurated Inter-ministerial committee, on the recovery of stamp duties from 2016 till date.

The tweet also noted that “In addition, anyone found culpable of misappropriating the funds in the said illegal NIPOST Stamp Duties Account would be made to face the law as provisioned by the country’s statute books.’’

‘‘The public is hereby reminded that we at the FIRS are resolute in our resolve to safeguard national interests and not any personal ego or interest as NIPOST officials appear to carry on lately.’’

A recap to what Mrs. Maimuna Abubarka tweeted on Sunday August 2, 2020 on her twitter handle at @reg_ng. says that “I am worried for NIPOST, having sleepless night because of NIPOST, we need the general public to come to our aid, FIRS stole our mandate FIRS are now selling stamps instead of buying from us.’’

“What is happening, are we expected to keep quiet and let FIRS kill and bury NIPOST? We need to get our mandate back.”

“NIPOST are the sole custodians of national stamps, another agency printing and selling stamps is against the law/ of the land.”

Abubakar also added that “FIRS did not only steal our stamps but also our ideas, what NIPOST had worked for since 2016, our documents, patent and sneaked everything into finance bill and tactically removed the name of NIPOST.’’

“I like to make this clear, NIPOST is the only agency charged with the responsibility of producing adhesive stamps and revenue for the for the purchase of such stamp accrues to NIPOST.”

“There is no where in FIRS act or stamp duty act where it’s so stated that FIRS can produce stamp or sale stamp.”

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FCMB Grows Profit by 29 Percent to N9.7bn in H1 2020

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FCMB Posts 29 Percent Increase in PAT to N9.7bn in H1 2020

FCMB Group Plc has said its profit before tax expanded by 26 percent in the first half of the year ended June 30, 2020.

The lender grew profit before tax from N8.8 billion reported in the same period of 2019 to N11.1 billion in the period under review.

The lender disclosed this in a statement on “FCMB Group records impressive half year results as profit before tax rose by 26 per cent to N11.1bn,” released on Tuesday.

Profit after tax grew by 29 percent year-on-year to N9.7 billion in the first half of the year despite the COVID-19 pandemic.

This, according to the lender, translated to a 9.4 percent return on average equity and 49 kobo earnings per share, an increase of 16 percent and 29 percent year-on-year, respectively.

It explained that FCMB Group comprises of commercial and retail banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited).

The statement noted that the Group has corporate & investment banking (the Corporate Banking Division of the Bank, FCMB Capital Markets Limited and CSL Stockbrokers Limited).

Also, the Group owned the asset & wealth management arms (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited).

FCMB said, “The half year results also showed that the group recorded an increase in gross revenue by nine per cent to N98.2bn as against N89.8bn for the same period last year.

“Net interest income equally rose by 17 per cent for the first half of 2020 to N45.4bn from N38.7bn posted in the first half of 2019, while non-interest income stood at N17.5bn, an increase of 14 per cent compared to N15.3bn within the six months period last year.”

Lender’s loans and advances rose by 29 percent year-on-year during the period under review and four percent on a quarterly basis to N794.6 billion.
Accordingly, customer deposits jumped up by 28 percent year-on-year to N1.1 trillion in the first half of the year.

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