Investors in banks quoted on the main board of Nigeria’s stock market reported a gain of about N1.45 trillion last year following strong earnings results, improvement of the economy and gradual stability being recorded in foreign exchange.
Checks by New Telegraph showed that the stocks recorded a gain of N1.45 trillion or 72.46 per cent to close at N2.487 trillion in market capitalisation on the last trading day of December 29, 2017, as against opening figure of N1.442 trillion at the beginning of trading on January, 2017.
Market watchers believe the investors are taking position on lenders due to good fundamentals and to benefit from expected dividend they may declare as the economy improves gradually.
Majority of Nigerian banks have demonstrated their resilience in the last two years amid macro-economic challenges, which weighed on credit expansion, asset quality and capital adequacy, to record largely positive performances for the year.
According to analysts at Afrinvest, the financial performance of the sector was principally affected by monetary policy decisions tied to the management of the FX market, which had a ripple effect on earnings across the industry.
“This was positive for banks’ non-interest income, especially Tier-1 lenders with aggregate long Net Open Positions (i.e. higher foreign currency denominated monetary assets than liabilities), which recorded massive jumps in FX revaluation gains. Furthermore, in a bid to attract private capital flows and shore-up the naira and external reserves, CBN drove up policy and market interest rates, resulting in higher fixed income yields, which bolstered interest income for banks.
“Consequent on the higher interest and non-interest income, industry gross earnings (for the 14 banks within our coverage) rose faster at 16.4 per cent in FY2016 (better than 10.4 per cent in 2015). However, the industry still faced significant cost pressures, particularly impairment charges, which surged 91.8 per cent within the period as a result of weaker asset quality and the one-off forbearance on writing off fully provisioned loans granted by the CBN in 2016. Nonetheless, profitability metrics improved as industry PBT expanded 9.8 per cent in 2016, an improvement from a 28.4 per cent decline recorded in the prior year, while Return on Equity (ROE) strengthened to 12.3 per cent from 9.1per cent in 2015”.
They noted that similar to earnings performance, the impact of prudential guidelines and monetary policy reflected on balance sheet and capital adequacy of banks.
“Following the devaluation in June, capital adequacy level took a hit as FX-denominated risk weighted assets were revalued upwards while the CBN gave banks a soft landing by relaxing prudential rules. The effect of currency depreciation was also evident in the industry gross loan book, which grew nominally by 23.0 per cent Y-o-Y given that 39.5 per cent of industry loans are foreign currency denominated. In addition, Total Deposits grew 19.3 per cent in 2016, following a decline of 1.8 per cent in 2015 while Total Assets and Total Liabilities expanded 20.7 per cent and 21.8 per cent respectively,” they said.
Telecoms’ GDP leaps to 1.8% growth
From a decline of -3.28 per cent in the fourth quarter of 2017, Gross Domestic Product (GDP) growth rate in Nigeria’s telecommunications sub-sector jumped to 1.8 per cent in the first quarter of this year, New Telegraph has learnt.
This, according to latest data from the National Bureau of Statistics (NBS), shows a general improvement in the Information and Communication sector.
The telecoms and information services, which come under the Information and Communication sector in the NBS’ categorisation of economic activities, had in the last three quarters recorded negative growth rate as it fell by 1.9 per cent in second quarter 2017. In the third quarter of same year, it also went down by -5.68 per cent. By fourth quarter, the sector still went down by -3.28, even at the time when the overall GDP growth rate of the country looked positive.
However, the telecoms sector has shown remarkable signs of growth since the beginning of this year as subscriber data continue to surge.
Analysis of active mobile subscriptions in the first three months of the year shows that the telecom operators added 4.2 million subscribers within the period. Data subscriptions on the four GSM networks also crossed the 100 million mark in January and have maintained a steady growth.
The Information and Communication sector is composed of the four activities of Telecommunications and Information Services; Publishing; Motion Picture, Sound Recording and Music Production and Broadcasting. In nominal terms, the first quarter of 2018 saw the sector grow by 1.79 per cent (year-on-year) , a 7.25 per cent points decrease from the rate of 9.04 per cent recorded in the same quarter of 2017. However, it is 2.34 per cent points higher than rate recorded in the preceding quarter. The quarter-on-quarter growth rate was 3.58 per cent. The Information and Communications sector contributed 10.64 per cent to total Nominal GDP in the 2018 first quarter, lower than the rate of 11.43 per cent recorded in the same quarter of 2017 but higher than the 10.04 per cent it contributed in the preceding quarter.
The sector, in the first quarter of 2018, recorded a growth rate of 1.58 per cent in real terms, year-on-year. From the rate recorded in the corresponding period of 2017, there was a decline by 1.15 per cent points. Quarter on quarter, the sector exhibited a growth of –4.15 per cent in real terms. Of total real GDP, the sector contributed 12.41 per cent in 2018 first quarter, lower than in the same quarter of the previous year in which it represented 12.46 per cent but higher than the preceding quarter, in which it represented 11.35 per cent.
Analysts see the growth rate as a positive sign of more economic activities in the sector, leading to job creations and increased contribution to the economy.
Citing the NBS statistics, Executive Vice Chairman, Nigerian Communications Commission (NCC), Prof. Umar Danbatta recently disclosed that the telecoms sector in the first quarter of 2017 contributed N1.45 trillion to the GDP, adding that in the second quarter, the figure rose to N1.549 trillion.
“This performance at a period of recession is very remarkable,” he said. “We are keeping dates with the NBS to identify and track how these trends progress. On the aggregate, the telecoms industry’s contribution to GDP in Nigeria stands at 10 per cent.
“But the figures may not tell the entire story. Investments in the sector, in human and material resources, have continued to soar. In 2001, the telecom sector could boast of a mere $50 million worth of investments but as at September 2017, we have investments worth $70 billion. The Value Added Services (VAS), segment of the telecom market in Nigeria today is worth $200 million and is estimated to grow to $500 million by 2021. The industry has provided both direct and indirect employment opportunities, accentuated growth and expansion.”
Reps probe Pencom over alleged financial mismanagement
The House of Representatives has resolved to investigate the National Pension Commission (PENCOM) over alleged reckless financial management of retirees’ funds and infraction on the public procurement Law. The House has consequently mandated its committee on public procurement and pensions to carry out a comprehensive investigation on alleged monumental fraud ongoing at the commission.
The decision followed the passage of a motion sponsored by Hon. Zakariya Galadima on the “need to investigate the alleged violation of provisions of the public procurement Act and financial mismanagement by the National Pension Commission (PENCOM)” During debate, the legislators faulted the commission over several financial infractions as against the principles and objectives of the provisions of the Pension Reform Act, which required the commission to collect and utilize fees, levies and penalties prudently in accordance with its regulatory and compliance roles. For instance, part of the 2014 Act authorizes PENCOM to invest the retiree funds in order to generate revenue but the lawmakers are worried that such investments powers of the agency have been grossly eroded by financial abuses.
In his lead debate, Galadima faulted the agency over several financial mismanagement while expressing worry that PENCOM engaged in fraudulent practice by investing N1billion into Aso Savings and Loans Plc under its investments portfolio at a ridiculously low interest rates and further directed Aso to lend the money to MGSL Mortgage Bank Limited where a top PENCOM management staff has interest.
Confectionery firm hosts BBNaija ex-housemates
Infusion Cakes & Cafe, a Lagos-based confectionery firm, has hosted ex-housemates of the reality TV show, Big Brother Nigeria (BBNaija), in a meet and greet session in Lagos recently.
Founder and chief executive of Infusion Cakes & Cafe, Mrs. Ibigbeye Okobi, in a statement, said the company decided to host the BBNaija ex-housemates because: “We really enjoyed the free spirit they exhibited, how natural they were and how they were able to get Nigerians to actually get engaged in everything they did while in the house.”
Okobi said the management of Infusion Cakes & Cafe also felt that the location of the company in the highbrow Lekki area of Lagos would serve as an excellent platform for Nigerians who were keen to meet the ex-housemates, get to know and interact with them in a friendly and hospitable environment to really appreciate them.
Infusion Cakes & Cafe is a modern bakery and cafe where customers can get a combination of international and locally made cakes, coffee, pastries and desserts for refreshment, weddings and special occasions like birthdays and anniversaries, among others.
The highlight of the event was a competition for the decoration of cakes. Participants in the competition included the reigning Miss Nigeria, Miss Mildred Peace Ehiguese; one of the BBNaija ex-housemates, Anto; and a representative of Team Definition, a band of musical artistes which entertained guests at the session.
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