BusinessDay 13 Jul 2018

Friday 13 July 2018
2 BUSINESS DAY
C002D5556
NEWS
UBA emerges best institution
in digital banking across Africa
DIPO OLADEHINDE
Pan-African financial services
group, United Bank for
Africa Plc, has been named
Africa’s best bank in the
Digital category at the prestigious
Euromoney awards in London.
This further lends credence to
UBA’s dominance in the digital
banking space.
Clive Horwood, Euromoney
Magazine’s Editor explained that:
“Despite fierce competition, one
bank stood out in the last year for
the inventiveness of its efforts in
digital banking: United Bank for
Africa. One of its signature launches
in Nigeria was Leo, an e-chat service
using artificial intelligence to help
customers execute transactions on
Facebook”.
The Euromoney awards ceremony
which was held on Wednesday,
July 11, 2018 covers more than 20
global product categories, best-inclass
awards and the best Banks
in over 100 countries around the
world, recognising institutions that
have demonstrated leadership, innovation,
and momentum in the
markets in which they operate.
In selecting its recipients, Euro
money’s principle is hinged both
on quantitative and qualitative
data to honor institutions that have
brought the highest levels of service,
innovation and expertise to their
customers.
At the awards ceremony, UBA
beat other nominees taking away
the prize for best institution in
Digital banking across Africa, an
Grounded aircraft cause glut
of passengers at airports
… Air Peace, Arik Air benefit
IFEOMA OKEKE
The grounding of various
aircraft by the Nigeria
Civil Aviation Authority
(NCAA) belonging
to over four domestic carriers
is currently leading to a glut of
passengers on frequent domestic
routes such as Lagos, Abuja,
Port Harcourt, Kano and Owerri,
BusinessDay’s checks found.
A source close to the NCAA
told BusinessDay that currently,
over eight aircraft have been
grounded by the regulator, making
it difficult for the affected
airlines to carry out daily scheduled
operations as planned. This
development has led some of the
airlines to overbook passengers,
rather than lose the passengers
to competing airlines.
BusinessDay’s checks show
that the fall out of this development
has seen Medview enter
an agreement with Dana Air to
help them carry their passengers
while the former struggles to get
their aircraft operational again.
A visit by BusinessDay to Lagos,
Abuja and Owerri airports
recently saw over ten aircraft
belonging to Aero Contractors,
First Nation airline, Arik Air, and
Medview, grounded as Aircraft
on Ground (AOG). “Aircraft are
not supposed to be on ground
affirmation of its recent investment
in cutting edge technology, one of
which gave birth to Leo, the chat
banker that has disrupted banking
across Africa.
In a bid to be the undisputed
leading financial services industry
Africa in the area of innovation
and technology, UBA has steadily
included new and emerging trends
to its range of solutions in-branches,
across subsidiaries and on digital
platforms. The emergence of LEO,
has been a continuous directive to
push the banking sector beyond
financial services and to show that
the bank truly comprehends the
shift in operations and the movement
of the global world with technology
today.
The Euromoney award, which is
a recognition of innovative products
and services introduced by the bank
in recent times and targeted towards
meeting customer needs, comes on
the heels of recent awards to UBA,
including Finnacle Client Innovation
Awards and Best Bank Awards
won by five of its subsidiaries across
Africa by The Bankers Magazine.
UBA was also declared the best
Bank in Africa in 2017.
Receiving the award at a wellattended
event in London, the
Group Managing Director, Chief
Executive Officer, United Bank for
Africa, Kennedy Uzoka, appreciated
the organizer’s for the recognition,
noting that UBA’s dedication to hard
work and particular emphasis to offering
quality services to customers
are being acknowledged.
but in the sky for operations. If
aircraft are on ground, it is either
it has insurance issues, maintenance
issues or other technical
issues,” Sam Adurogboye, NCAA
General Manager of Public Relations,
said.
Adurogboye explained while
some of the aircraft are due for
maintenance, the operators do
not have enough funds to fix
them. He added that other aircraft
have expired insurance papers
and the operators are sorting
out their insurance papers.
He further explained that “If
aircraft maintenance is due and
it is supposed to be repaired
overseas, operators often book
overtime to get a slot. It is only
when they have a slot for the
aircraft that operators take their
aircraft abroad for maintenance.
“Airlines pay heavily to have
their aircraft parked overseas. So,
airlines prefer to have it parked
in their country, where they will
pay minimal fees.”
A passenger who simply identified
himself as Seun booked
one of domestic airlines to Abuja
recently. He said he had to pay
over N50, 000 for a one-way
ticket to Abuja for a 5.30pm flight
which did not depart the airport
till past 10pm.
Continues on wwwbusinessday online.com
MARKETS
Investors reward firms with strong profit margins
BALA AUGIE
BusinessDay’s analysis
shows that firms with the
highest net profit margin
have outperformed others
in the sector.
Cement Company and Northern
Nigeria (CCNN)’s net profit
margin hit a 6 year high of 16.48
percent in 2017, the largest margin
expansion in the sector, and the
Sokoto based cement maker’s
stock price gained 148.15 in the
past year, this compares with the
Dangote Cement’s 1 year return of
14.85 percent and Lafarge Africa’s
1 year return of -24.85 percent.
Dangote Sugar Refinery Plc’s
net profit margin of 19.18 percent
in 2017- the highest since 2006- is
the largest margin expansion in
the sector as the largest producer
of the sweetner’s 1 year return
of 140.07 percent outperforms
International Breweries’ 1 year
return of 35.18 percent, Nigerian
Breweries return of 26.68 percent,
and Unilever’s 35.18 percent.
Nigeria Treasury yield among
highest in the world
Emeka Ucheaga, David Ibidapo,
Sobechukwu Eze & Abdullateef Eniola-Giwa
In a world where investors are
chasing high yield, Nigeria
comes in as a first class destination.
With the one year
Treasury bill currently around
13.1 percen t, Renaissance Capital
reports that Nigeria treasury bills
currently offers the third highest
treasury yield in frontier markets
and the fifth highest local currency
yield when emerging markets and
frontier markets are merged.
High yield in Nigeria has certainly
attracted foreign investors
as billions of dollars have been
poured into the money market over
the past year. In 2017, up to $3.2 billion
was invested in money market
instruments with the majority of
investments entering the country
in the fourth quarter of the year.
Around $2.1 billion was invested
by foreign investors in Q4
2017 as inflation continued its
downward trend compared to
around $211 million invested in the
money market in Q1 2017. Foreign
investors were wary of investing in
treasury bills at the time possibly
Seplat Petroleum Development
Company Plc’s net profit
margin of 58.66 percent- the
highest since 2013- is the largest
margin expansion in the sector as
its share price has gained 38.49
percent since the start of the
year, this compares with Oando
Nigeria Plc’s one year return of
-21.47 percent, Forte Oil’s return
of -42.15 percent, Total Nigeria
Plc’s return of -17.45 percent, Mobil
Nigeria Plc -19.98 percent, and
Conoil Nigeria Plc’s -9.75 percent.
Guaranty Trust Bank (GT-
Bank) Plc’s recorded the highest
net profit margin in the sector
as its stock price gained 16.69
percent in the past year, this compares
with Access Bank’s one year
return of 7.26 percent.
An uptick in crude oil price
and output, introduction of the
new foreign exchange regime
by the apex bank, devaluation
of the currency, increase in the
price of key products, helped
propel the bottom lines of firms
the consumer goods, banking,
due to high double digit inflation.
Inflation peaked in January 2017
before it began its long deceleration
for 16 consecutive months since
last year.
In the first three months of 2018,
foreign portfolio investors invested
$3.52 billion dollars in money market
instruments, that’s more than
they did in the entire 2017.
Even though interest rates in
United States is starting to normalise
as the Federal Reserve Bank
of America raised interest rate in
June for the fifth time since March
last year, at just 2.36 percent yield
for the one year treasury bill, it is
still miles behind yields offered
in emerging and frontier markets
around the world.
According to RenCap currency
report, emerging economies such
as Egypt and Turkey have local
currency yields at 19.3 percent and
17.7 percent respectively. While
frontier markets such as Argentina
(39%), Ukraine (16.5%), Nigeria
(13.1%) and Kenya (10.4%) are all
offering double digit rates on their
sovereign debt compared to their
counterparts in developed markets
who are mostly offering low single
industrial goods and oil and gas
sectors in 2017.
“I think what has happened
is that most of these firms-especially
the manufacturers and
goods firms- raised prices of their
products at a higher rate than that
at which costs increased,” said
Ayodeji Ebo, managing director
and CEO of Afrivest Securities.
“Most banks return on equity
(ROE) has improved. That could
be attributed to the high interest
rate environment of 2017 combined
with foreign exchange
gains,” said Ebo.
“The rebound in oil price and
relative calm in the Niger Delta
region helped strengthen the
margins of upstream oil and gas
firms,” Ebo summed.
For the year ended December
2017, after tax profits for the
10 lenders that have reported
results spiked by 44.28 percent
to N693.92 billion from N478.19
billion the previous year (2016).
Continues on wwwbusinessday online.com
digit yields.
Countries with high yields have
been attracting more foreign investments
in the past one year,
although the two rate hikes in USA
this year have caused investment
outflows to increase in emerging
markets this year. Bloomberg reported
last September that investors
were increasing investments
in emerging countries that pay the
highest local interest rate. However,
the story this year is a little different
as traders now see more risk
in investing in emerging countries
at the same time interest rates are
increasing in USA.
Bismarck Rewane, CEO Financial
Derivative explained that due
to unforeseen eventualities in the
upcoming election in Nigeria, the
current yield level is likely not high
enough to compensate investors
for political risk. To this end, there
is a large tendency that foreign
investors would exit the country
and return after elections. This
could push treasury yield higher
to compensate for additional risk.
Continues on wwwbusinessday online.com