Friday <strong>13</strong> <strong>Jul</strong>y <strong>2018</strong> 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, <strong>Jul</strong>y 11, <strong>2018</strong> 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, <strong>BusinessDay</strong>’s checks found. A source close to the NCAA told <strong>BusinessDay</strong> 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. <strong>BusinessDay</strong>’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 <strong>BusinessDay</strong> 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 <strong>BusinessDay</strong>’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 <strong>13</strong>.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 20<strong>13</strong>- 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 <strong>2018</strong>, 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 (<strong>13</strong>.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
Friday <strong>13</strong> <strong>Jul</strong>y <strong>2018</strong> C002D5556 BUSINESS DAY 3
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