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09042018 - AS APC'S NEC MEETS TODAY: Oyegun, Tinubu's ‘soldiers’ head for showdown

26 —Vanguard, MONDAY,

26 —Vanguard, MONDAY, APRIL 9, 2018 FINANCIAL VANGUARD Investors Forum UBA Plc: Strong fundamentals may spike investor sentiments •Benefits of diversification in uptrend — CFO By Emeka Anaeto, Business Editor AMIDST a flicker of hope on recovery from the Nigerian Stock Exchange, NSE, threeweek long bear run, the shares of United Bank for Africa, UBA, may be one of the early beneficiaries of the bottom-out. The stock had positive investor sentiment pulling it back from slide and lifting it by 2.15 per cent gain last week, as against 0.08 per cent decline recorded by the NSE benchmark week-onweek. Investment analysts and stockbrokers had attributed the initial price down on the stock to the bandwagon effect of the general market re-balancing that characterised March 2018 tradings. But it appears that many stocks with strong financial fundamentals especially in the just released 2017 full year, FY‘17, financial statements, as well as pointers to an impressive first quarter 2018, Q1’18, such as UBA, would be having a faster recovery. The group chief financial officer, GCFO, of the bank, Mr. Ugo Nwaghodoh, in a chat with Financial Vanguard, had expressed optimism that the recent adverse investor sentiments in most stocks would soon give way to the reality of strong positive sentiments especially for UBA and other stocks with sound fundamentals. Regulatory requirements He had told a gathering of financial media professionals that some of the key drivers of the bank’s FY’17 impressive performance announced two weeks ago include: Growth in interest income; Efficient cost of funding; and Continued growth in trading activities, supported by the bank’s successful Eurobond float which provided it competitive FX liquidity. He also noted that the bank had maintained high liquidity even in the tight circumstance and market situations at 50percent as against regulatory requirements of 30percent, adding that despite the spike from 3.9percent to 4.6percent in its non-performing loans ration, the bank’s capital adequacy ratio is still stronger than most bank’s at 20 percent as against the regulatory minimum of 15 percent. Perhaps one of the most attractive investment value unique to UBA is the contribution of the subsidiaries outside Nigeria. The bank’s FY ’17 results show significant growth in the contribution and market share from its pan-African subsidiaries, among other positive trends in the financial performance. The audited results showed that gross earnings grew substantially Tony Elumelu, Chairman, UBA Plc to N462 billion, up by 20 percent from N314 billion recorded in the corresponding period of 2017. Also the Group delivered a strong 16 per cent year-on-year growth in profit before tax of N105 billion, compared to N90.6 billion in the 2016 financial year. The Bank’s subsidiaries outside Nigeria contributed a third of the Group’s top-line and 45 per cent of the profit for the year, a remarkable improvement from 31 percent contribution made by the ex-Nigeria offices in 2016. This, according to Nwaghodoh affirms the success of the Bank’s expansion strategy, with target of 50 percent contributions by 2020. He also said this development would moderate impacts on the bank from adversities in any single market, citing the situation in Nigeria where earnings in fixed income securities are expected to trend down due to policy changes by the Central Bank of Nigeria, CBN, a development which Nwaghodoh said is not happening in all other economies UBA operates in. Our core transaction banking offerings gained strong momentum, with income from these business lines growing by double digits nancial statements, thus putting the total dividend for 2017 financial year at 85 kobo per share. Speaking on this financial performance and the bank’s overall financial position, Nwaghodoh stated: “In a period of high interest rates, we achieved a relatively low 3.7 per cent cost of funds. This operational efficiency reflects the benefit of our rich pool of stable Kennedy Uzoka, GMD, UBA Plc Financial highlights The Bank’s Operating Income grew to N326.6 billion, a 20.6 percent increase compared to N270.9 billion recorded in 2016. This, according to analysts, affirms the capacity of the Group to deliver strong performance through varying economic cycles and challenging business environment. The audited results also showed that the Bank’s Total Assets peaked at N4.07 trillion, translating into 16.1 percent year-on-year growth from the figure of N3.50 trillion recorded as at 2016 financial year. In the 2017 financial year, the Bank’s Net loans achieved a prudent 9.7 percent growth at N1.65 trillion, while the customer deposits grew to N2.73 trillion, representing 10 percent year-on-year growth on N2.49 trillion recorded in 2016 financial year. Reflecting a strong internal capital generation, the Bank’s shareholders’ fund also soared 18.2 percent to N529.4 billion in the 2017 financial year. Subject to the approvals of the shareholders, the Board of UBA Plc proposed a final dividend of 65 kobo per every share of 50 kobo each. This final dividend proposal is in addition to the 20 kobo per share interim dividend paid after the audit of the 2017 half year fisavings and current account deposits. The net interest margin stabilized at seven per cent, even as yields on treasury assets dropped in the last quarter of 2017. Our core transaction banking offerings gained strong momentum, with income from these business lines growing by double digits. “We remain committed to our responsible approach to balance sheet management, with focus on growing risk asset and broader balance sheet in a profitable and prudent manner. Amidst a subdued Nigerian credit market, we grew our loan portfolio by 10 per cent, leveraging our robust liquidity and capitalization to support good businesses through this challenging economic cycle. We closed the year with a Basel II capital adequacy ratio of 19 per cent and a liquidity ratio of 50 per cent, well ahead of 15 per cent and 30 per cent regulatory requirement respectively. Our disciplined approach to lending and broader risk management continues to uphold our asset quality.” Operational Efficiency Notwithstanding tight system liquidity, UBA’s net interest margin remained stable at 7.0 percent, as it sustained cost of funds at 3.7percent. Reflecting the impact of higher cost of risk, the bank closed the year with 16 percent return on average equity (RoAE) and 2.1 percent return on average assets (RoAA). Having conservatively provided for the major hit to its risk asset portfolio, the bank’s GCFO expects both RoAE and RoAA to recover strongly in 2018. He stated: “We expect our improved customer service and innovative offerings to accelerate market share gain just as technology enhancement and investment in people should drive productivity and efficiency gains.” Diversified Asset In spite of slow recovery in economic activities in Nigeria, UBA’s single largest market, the Group’s total assets grew 16 percent yearon-year, buoyed partly by the successful issuance of USD500 million debut Eurobond and a change in exchange rate for translating the FX balances. Leveraging on enhanced customer service, the Group grew retail deposits by 21percent, at the backdrop of a near-zero savings by households. Individual customers’ deposit now represents 43percent of UBA’s deposit funding. These low cost, stable deposits, reinforce the bank’s optimism on reducing funding cost, improving margins and profitability going forward. The Group maintained its appetite for a well-diversified balance sheet, with more than half of the assets in liquid, low risk instruments. Asset Quality UBA’s vision and financial goals are based on creating a sustainable business which delivers long term value creation. This is based on maintaining moderate risk appetite to achieve a good balance between profitability and sustainability. Given its conservative provision on a major exposure, the bank do not expect any further charge. Thus, both NPL ratio and cost of risk should begin to moderate from 2018. Notwithstanding inflationary pressures and lagged impact of Naira devaluation, the bank’s costto-income ratio, CIR, remains below the sub-60 per cent guidance and the bank says it is on track to deliver our medium term CIR target. Boost to Internationalisation Previous week UBA announced that its London subsidiary has obtained regulatory permission to carry out Wholesale Banking activities in the UK. Following this authorization, UBA is now the only Sub-Saharan African bank to conduct banking activities in New York and London, as well as in 20 other countries across Africa. Commenting on the landmark achievement, the Group Managing Director/CEO, UBA PLC, Mr. Kennedy Uzoka said: “This authorization strengthens our capabilities in meeting the growing cross-border financing needs of our customers. It enhances our customer coverage and product offerings whilst positioning our Group as an optimal conduit for trade and foreign investments into and across Africa as well as export flows to the United Kingdom. Importantly, the licence will enable us to fulfill our aspiration of deepening financial intermediation in Sub-Saharan Africa and providing the muchneeded financial support to the broader real sector of the African economy,” he added. The CEO of United Bank for Africa (UK) Ltd (“UBA UK”), Mr. Andrew Martin noted further, “this enhanced positioning of our business is timely, as it comes at a time when the UK is seeking to expand trade and broaden economic ties with Nigeria and Africa in general.”

FINANCIAL VANGUARD PenCom certifies 4,000 firms for federal contracts By Cynthia Alo NATIONAL Pension Commission, PenCom, has certified about 4,000 firms to bid for Federal Government contracts. Head, Research and Corporate Strategy Department, PenCom, Aminu Farouk, disclosed this in an interview with the News Agency of Nigeria, (NAN) in Lagos. Farouk said that as at March this year, about 353 firms had complied with the requirements as stipulated in the Pension Reform Act 2014, and were cleared to secure federal government contracts. “The 353 companies pushed the total sum of the companies the Commission issued compliance certificates since PenCom’s inception to over 4000,” Farouk said. He also stated that some of the firms cleared by the Commission included Reynolds Construction Company Limited (RCC), which has 3,643 employees and has also contributed N726.43 million. “Leadway Assurance Company Limited, with 283 employees, has contributed N133.02 million; Ghazi Shipping and Trading Company Limited, with five employees contributed N3.13 million; AIICO Insurance Plc, with 264 employees contributed N135.11 million,” he added. He said that Cornerstone Insurance Plc with 204 employees, has contributed N132.20 million, while Linkage Assurance Plc, which has 231 employees, contributed N65.50 million respectively. Farouk said, “NSIA Insurance Limited with 99 employees contributed N27.95 million, while Solid Trust Insurance Brokers Limited with nine staff contributed N5.03 million. Risk Analyst Insurance Brokers Limited has nine employees and contributed N2.42 million. “Prorisk Insurance Brokers Limited has nine staff and contributed N2.42 million, while Image Brokers Limited has 16 employees and contributed N1.51 million. Wib Insurance Brokers Limited with three staff contributed N855, 499.58 and Denos Insurance Brokers Limited with nine staff, contributed N660, 240.12.” He explained that the compliance certificate issued to them would serve as evidence that the firms have fully paid the contributions of their employees. Farouk explained that the certificates issued to the firms meant they have fully paid the contributions of their employees and paid premium for Group Life insurance covering their employees fully. “Thus, in the event of death in active service, their families will be paid benefits to the tune of 300 per cent of the deceased’s full annual salary and allowances,’’ Farouk said. He appealed to Ministries, Departments and Agencies (MDAs) to support the initiative of issuing certificate of compliance to deserving Law Union & Rock grows profit to N1.1bn LAW Union & Rock Insurance Plc has recorded profit before tax of N1.1 billion for the financial year ended December 2017. This represents 66.8 percent increase from the N658.64 million recorded in the 2016 financial year. In a statement, the company said that profit after tax also appreciated by 62.1 percent, from N561.85 million in 2016 to N910.71 million at the end of the review year. The company said that its shareholders will smile to the bank for a dividend payout after a long period of reinvestment and ploughing back for growth and expansion. Its earnings per share stood at 21 kobo, as against 16 kobo the previous year, indicating increase in shareholder's value. The company, during the period under review also recorded a gross premium income of N4.25 billion, as against N3.9 billion in 2016, indicating eight percent increase. Investment and other income also appreciated to N912.5 million from N687.3 million in 2016. Total assets grew by 16.9 percent, from N8.58 billion in 2016 to N10.03 billion in the review year. Claims and claims expenses stood at N1.4 billion, as against The company, during the period under review also recorded a gross premium income of N4.25 billion, as against N3.9 billion in 2016, indicating eightpercent increase N967.8 million in the past year. Mr. Jide Orimolade, Managing Director/Chief Executive of the company said that Law Union & Rock has introduced new products into the market Vanguard, MONDAY, APRIL 9, 2018 — 27 firms. Farouk said that some of the MDAs often accept spurious evidence of compliance from contractors and are reluctant to ensure that companies bidding for works fulfil their obligations relating to pensions as enunciated in the Public Procurement Act (PPA) 2007. including: I-Salute; Doctor-on- Cover; GPA-4-Schools and Sure Pay. I-Salute, he said was designed to provide support and relief to officers and their families in event of accidents that result in any or a combination of bodily injury requiring in medical expenses. The Doctors-on-Cover was designed to help medical doctors comply with the law as well as protect them from unforeseen legal liabilities that could prevent them from practicing what they love. GPA-4-Schools is a Group Personal Accident product designed for Schools and Students/Pupils at all levels of education – Kindergarten, Nursery, Primary, Secondary and Tertiary. It provides cover against accidental death or permanent disability of the insured's parent or guardian and also the medical expenses incurred as a result of any accident involving any insured parent or student/pupil. Whereas SurePAY is an e- insurance product that provides some level income security in event of loss of employment. It guarantees the payment of an agreed amount of monthly income up to six (6) months after job loss, he said. Linkage Assurance plans online motor insurance LINKAGE Assurance Plc has secured the approval of the National Insurance Commission (NAICOM) to distribute its motor insurance policies online. The company in a statement said its online platform is a robust technology platform that makes its motor policies more accessible to its customers anywhere in Nigeria. However the policy can also be bought by anyone outside Nigeria whose vehicle is within Nigerian territory. The product, which is a major breakthrough in the company’s quest to deepen penetration through more distribution channels, is expected to drive more sales and boost the firm’s premium growth. The company said the platform will enable customers to buy Comprehensive Motor Insurance, Motor Third party, Third Party Plus and Third Party Fire and theft policies online for fleet and single cars. Managing Director/Chief Executive of the company, Dr. Pius Apere, commenting on the product said: “This is a major breakthrough for us because we are committed to ensuring that we deliver seamless service, such that our customers from the comfort of their home or offices can buy insurance and get their certificates without a face to face contact with us”. Apere said this was a result of hard work, dedication and most importantly commitment to deliver consumer value. According to him, Linkage will continue to invest in technology, research and its people for more innovative products and services. “Our customers are our priority and we will continue to meet their needs and expectation," he stated. For motor comprehensive and motor Third Party Plus covers, in addition to personal data and car details, customers are expected to upload picture of the car to be insured. Upon the successful payment for the respective policy with the use of credit/debit cards or Linkage scratch cards (exclusive to Third Party - N5,000 and Third Party Plus - N10,000), the customer is to receive/download his or her insurance certificate and policy document. This portal can also be utilized by brokers and agents pre-registered with Linkage Assurance Plc. Upon the launch of the platform, visitors to Linkage Assurance website can get to the motor insurance portal via the “online insurance" button on the site.