22042019 - ACUTE HUNGER: Outrage as IDP children feed on onion leaves

More documents

Recommendations

Info

20 — Vanguard, MONDAY, APRIL 22, 2019 FINANCIAL VANGUARD COVER How low yield, high NPL took toll on tier-1 banks’ performance Continues from page 19 2018 (Q4’18), while average NPL in 2018 w<strong>as</strong> 15.02 percent. According to Mr. Johnson Chukwu, Managing Director/ CEO, Cowry Asset Management, a Lagos-b<strong>as</strong>ed investment banking firm, decline in yield curve led to loss of major income sources for the banks during the year. He, however, said that the tier-1 banks showed resilience considering the challenges in the business environment. Zenith Bank in mixed results Financial Vanguard’s analysis showed that Zenith Bank Plc topped the earning spot in absolute figures though it recorded a huge 15.4 percent decline in its earning. Specifically, the bank’s gross earnings stood at N630.34 billion, 15.4 percent decline against N745.19 billion in 2017. FBN Holdings Plc, which also recorded decline in its earnings, ranked second in absolute figures, posting N585.95 billion <strong>as</strong> revenue against N597.76 billion in 2017. Access Bank placed third in absolute figures, but topped others in percentage growth. The bank recorded N528.7 billion gross earnings, 15.2 percent incre<strong>as</strong>e compared to N459.08 billion recorded in the previous year. UBA Plc w<strong>as</strong> the next with N494 billion gross earnings, which represents seven percent incre<strong>as</strong>e over N461.6 billion recorded in 2017, while GTBank posted N434.7 billion gross earnings, representing 3.7 percent incre<strong>as</strong>e against N419.2 billion in the corresponding year. Access leads profit growth rate Access Bank Plc with 32 percent incre<strong>as</strong>e in pre-tax profit topped other tie-1 banks. It grew its profit before tax to N103.2 billion from N78.2 billion in 2017. FBN Holdings placed second with 19.7 percent growth to N65.29 billion from N54.52 billion; Zenith Bank Plc took the third position, recording 16.2 percent incre<strong>as</strong>e in its pre-tax profit to N231.7 billion from N199.3 billion. GTBank ranked fourth with 9.1 percent incre<strong>as</strong>e to N215.6 billion from N197.7 billion, while UBA achieved 2.4 percent pre-tax growth to N106.8 billion from N104.2 billion in 2017. Analysts comment Commenting on the banks’ performance, Chukwu said: “Given the environment the banks operated in 2018, though their earnings w<strong>as</strong> almost flat, I believe that tier-1 banks showed resilience because if you compare the economic environment, especially the yield curve in the environment, you will observe that yield on federal government debt instruments declined materially in 2018, which led to loss of major income source for the banks. So, for the banks to have been able to achieve about the same level of earnings, w<strong>as</strong> a mark of resilience on their part. The other factor that worked against them w<strong>as</strong> the incre<strong>as</strong>e in nonperforming loan; we saw incre<strong>as</strong>e in non-performing loan at about 15 percent in 2018.” Continuing, he said: “The reality is that growth in the economy h<strong>as</strong> remained very weak and that is why instead of improvement, we are seeing deterioration in <strong>as</strong>set quality. Of course, if you look at the Gross Domestic Product (GDP) growth in 2018, it w<strong>as</strong> only 1.92 percent, which is almost in tandem with what you saw in the performance of the banks. The reality is that the economy remained sluggish. Therefore, there w<strong>as</strong> no improvement in opportunities available to the banking sector in the economy, rather the banks experienced loss in yield and incre<strong>as</strong>e in non-performing loans.” Bank MDs explain result Chief executive officers of the banks attributed the outcome of the year’s business to stringent and tough operating environment. Mr. Kennedy Uzoka, Group Managing Director/CEO, UBA, pointed to weak economic growth, but stated that the bank focused on retail deposit mobilisation to stay above board. “Defying the relatively weak economic growth in Africa, earnings were positive and we grew our balance sheet by 20 percent, driven by the 23 percent growth in our deposit funding. In a period of economic uncertainty, we have focused on retail deposit mobilisation, with exciting results,” Uzoka said. Mr. Segun Agbaje, MD/CEO, GTBank, speaking on the financial results, said: “In 2018, our focus on staying nimble, strengthening customer relationships and driving our digital-first strategy paid off.” He said that the bank successfully navigated the pressures of its challenging and radically changing business environment, recorded growth across key financial indices and reaffirmed its position <strong>as</strong> one of the best performing and well managed financial institutions in Africa. Herbert Wigwe, GMD/CEO, Access Bank, said: “2018 marked a significant year of progress for the bank amid an unfavourable macro climate. We made solid progress throughout 2018 in line with our 2018-2022 five-year strategy and we remain committed to the achievement of our strategic imperatives going forward <strong>as</strong> we continue to invest in our people and technology in order to improve operational efficiency.” Peter Amangbo, MD/CEO, Zenith Bank, said: “Due to a challenging macroenvironment, gross earnings and interest income reduced by 15 percent and seven percent respectively, driven by declining trading income, compressed yields on <strong>as</strong>sets, and a reduction in the loan book by 10 percent. “Despite the decline in gross earnings, the Group mitigated these knock-on effects through growth of its net interest income and operating income by 15 percent and eight percent respectively <strong>as</strong> it w<strong>as</strong> able to ensure improved cost efficiencies across the business.” 2019 outlook Analysts at United Capital Plc in their outlook for the banking industry in 2019 said that the elevated yield environment and potential post-election uncertainty, suggests that banks may sustain the recent deployment of funds to financial <strong>as</strong>sets amid policy normalization in the US and incre<strong>as</strong>ed liquidity mop-up exercise by the Central Bank of Nigeria (CBN). “The yield environment is, however, expected to retrace in H2-19 in the event of a successful and smooth transition. This may hurt bottom lines,” they said. Chukwu of Cowry Asset Management said that 2019 would remain largely the same for the tier-1 banks. We may see a marginal improvement in GDP growth rate, which will not be sufficient to lead to reversal in the high level of nonperforming loans. “So, the banks will have to continue to contend with balance sheet that is weakened by high level of NPL. The other factor is that we have seen the yield environment trending southwards. “So, they may come under further suppression in yield in the coming months. However, I think the banks will leverage some of the on-lending facilities that the CBN is providing, including the discretionary c<strong>as</strong>h reserve policy that the CBN recently introduced, which allows them to claw back amounts in reserve for loans granted to some specific sectors of the economy.”
FINANCIAL Credit to economy rises to N30.5trn Continues from page 19 (net) to N12.74 trillion. “Further breakdown of the NDC showed a 11.42 percent m-o-m incre<strong>as</strong>e in Credit to the Government to N6.35 trillion and an incre<strong>as</strong>e of 5.37 percent in Credit to the Private sector to N24.16 trillion. “On the liabilities side, 3.22 percent m-o-m rise in Broad Money Supply w<strong>as</strong> chiefly driven by 18.83 percent m-o-m incre<strong>as</strong>e in tre<strong>as</strong>ury bills held by money holding sector to N8.23 trillion but w<strong>as</strong> offset by 0.98 percent m-o-m decre<strong>as</strong>e in Narrow Money to N11.03 trillion (<strong>as</strong> Demand Deposits which fell by 2.22 percent to N9.19 trillion offset the effect of currency outside banks which rose by 5.70 percent to N1.84 trillion) and a 0.74 percent m-o-m moderation in Qu<strong>as</strong>i Money (near maturing short term financial instruments) to N15.50 trillion. “Reserve Money (B<strong>as</strong>e Money) decre<strong>as</strong>ed m-o-m by 4.30 percent to N7.17 trillion <strong>as</strong> Bank reserves declined m-o-m by 8.47 percent to N4.58 trillion despite a 4.75 percent m- o-m rise in currency in circulation to N4.46 trillion.” DMO to offer N100bn FGN bond Annual Inflation rate Interbank Interest rates Foreign Exchange rate Vanguard, MONDAY, APRIL 22, 2019 —21 Meanwhile the Debt Management Office (DMO) will issue FGN bonds worth N100 billion with analysts projecting oversubscription and further reduction in the stop rate. The bond offer comprises N40 billion worth of 12.75% FGN APR 2023 (5- Yr Re-opening), N40 billion worth of FGN APR 2029 (10-Yr New Issue) and N20 billion worth of FGN APR 2049 (30-Yr Reopening). Projecting, analysts at Lagos b<strong>as</strong>ed investment firm, Cowry Asset Management Limited said, “We expect the bonds to be issued at lower stop rates amid demand pressure.” Recall the FGN bond auction held by DMO in March recorded 67 percent oversubscription. While the DMO offered N100 billion worth of bonds, investors’ demand or total subscription stood at N240.6 billion. In response to the huge demand, the DMO reduced the stop rates by 125 b<strong>as</strong>is points (bps) from its previous auction levels down to 13.50 percent across all tenors offered. Yields on FGN bonds Consequently, the fiveyear, seven-year and 10- year bonds were auctioned at lower stop rates of 13.50 percent, down from 14.52 percent, 13.50 percent down from 14.80 percent, and 13.50 percent down from14.94 percent respectively. Cost of funds to rise The FGN bond offer is, however, expected to trigger rise in cost funds in the interbank money market this week. L<strong>as</strong>t week cost of funds dropped sharply following inflow of N165.91 billion from matured tre<strong>as</strong>ury bills (TBs), which cancelled out the impact of outflow of N58.49 billion through primary market TBs sold by the Central Bank of Nigeria (CBN). As a result average short term cost of funds dropped by 10.5 bpts,with interest rate on Collateralised (Open Buy Back, OBB) lending falling by 10.43 bpts to 9.86 percent l<strong>as</strong>t week from 20.29 percent the previous week. Similarly, interest rate on Overnight lending dropped by 10.57 bpts to 10.57 percent l<strong>as</strong>t week from 21.57 percent the previous week. Analysts at Cowry Assets, however, project that this trend will be reversed this week. “In the new week, T-bills worth N46.25 billion will mature via the secondary market. However, with the DMO expected to issue N100 billion worth of debts, we expect Nigeria Interbank Offered Rate (NIBOR) to trend upwards”, they said.
Page 1 and 2: How low yield, high NPL took toll o
Page 3 and 4: Vanguard, MONDAY, APRIL 22, 2019
Page 5 and 6: Vanguard, MONDAY, APRIL 22, 2019—
Page 9 and 10: VANGUARD, MONDAY, APRIL 22, 2019—
Page 11 and 12: VANGUARD, MONDAY, APRIL 22, 2019
Page 13 and 14: Vanguard, MONDAY, APRIL 22 , 2019
Page 15 and 16: 9th NASS: Give speakership to S-E<s
Page 19: Credit to the economy rises to N30.
Page 23 and 24: FINANCIAL VANGUARD Developing new b
Page 25 and 26: FINANCIAL VANGUARD MTN still in the
Page 27 and 28: FINANCIAL VANGUARD Vanguard, MONDAY
Page 29 and 30: FINANCIAL VANGUARD Vanguard, MONDAY
Page 31 and 32: Buhari is right; fuel subsidy is a
Page 37 and 38: Sudan: Protesters cut ties with mil
Page 43 and 44: Vanguard, MONDAY APRIL 22, 2019 —
Page 47 and 48: Ighalo scores goal No 6 of se<stron

22042019 - ACUTE HUNGER: Outrage as IDP children feed on onion leaves

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?