Kayode Tokede  

The shareholders of Red Star Express Plc, yesterday appreciated the management for paying N0.27 kobo from its 2024 financial year (FY) performance, stressing that the company last year withstand local and foreign macro economy challenges.

The company in 2024FY reported N16.13 billion revenue, representing an increase of 16.24 per cent from N13.87 billion reported in 2023FY.

Red Star Express’s profit after tax closed 2024 FY at N343 million, an increase of 9.6 per cent over N313.9 million declared in 2023, while profit before tax for 2024 was at N542 million, compared to N593 million in 2023.

Additionally, the company’s Earning Per Share (EPS) stood at 36 kobo per 50 kobo share compared to 33 kobo  per 50 kobo share in the  previous year. 

The management had recommended to shareholders a dividend of N0.27 kobo (2023:  N0.20 kobo), amounting to a total of N257.69million (2023: N190.88 million).

Speaking to shareholders at the 31^st Annual General Meeting (AGM) in Lagos, the Chairman, Red Star Express, Suleiman Barau stated that the company’s 2024 FY performance underscores its resilience and ability to adapt to challenges operating environment. 

On future outlook, he said, “As we look ahead to the new financial year, we are excited about several strategic initiatives that position us for sustainable growth and enhanced service delivery. One of our major initiatives includes the adoption of cutting-edge e-logistics technology to streamline our operations, improve efficiency, and expand our service offerings.

“Additionally, we are positioning our business to explore ore opportunities in the identified growth services that have significantly contributed to our financial year’s results. We remain committed to maintaining best practices in cost management to ensure we continue to deliver strong performance and maximize returns for our esteemed shareholders.

“We are also committed to investing in our workforce through continuous training and development programs to ensure our tea remains highly skilled and motivated. By fostering a culture of excellence and innovation, we aim to maintain our leadership position in the logistics industry.

On his part, the Group Managing Director/ CEO, Red Star Express, Mr. Auwalu Babura stated that the 2024 FY performance is a statement to the management successful expansion efforts and robust operational strategies. 

He expressed that the 2024FY performance has been a period of significant achievements for the company and its subsidiaries, stressing that the performance led to Red Star Express securing a certificate of registration as agents of foreign airlines, and also obtained a recruiter’s licence that further strengthen its service portfolios.

“These advancements have enhanced our capacity to expand our service offerings. Our strategic partnership with FedEx continues to strengthen our international presence. Our strategic focus will continue to emphasize enhancing brand management and optimizing logistics operations. We are committed to scaling our e-commerce capabilities and integrating technology-driven solutions to better serve our customers. “

He said the future prospects for Red Star Express is set to be robust, driven by our commitment to leveraging on advanced technology.

“Red Star Express is introducing a new technology-driven e-logistics serve, aiming to revolutionise our logistics operations and enhance our service delivery. 

“We will continue to build on our warehousing capabilities and strengthen our domestic and international partnerships.  We aim to improve operational efficiency, expand our market reach and provide innovative solutions that meet the evolving needs of our customers,” Babura added on future prospects of the company. 

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The Director General of the Securities and Exchange Commission, Dr. Emomotimi Agama has said that the commission’s approach to digital asset regulation recognises the potential of blockchain and digital assets to revolutionize the capital markets and shape the Nigerian economy.

Agama who spoke while delivering a Keynote Address at the Businessday Blockchain Conference 2024, with the Theme: “Building Africa’s Future: Harnessing Blockchain for Economic and Social Transformation,” said blockchain technology has moved beyond being a mere buzzword; it is becoming an essential part of the global financial and economic ecosystem. Its decentralised, transparent, and secure nature has led to innovations in various sectors—ranging from finance to supply chains, healthcare, and governance.

He said in Africa, where there are significant issues such as financial exclusion, lack of transparency, and inefficiencies in public and private sectors, blockchain presents an opportunity to build a future where these challenges are addressed.

He stated, “as the transformative potential of blockchain is being celebrated, it is important to address the role of regulation in enabling its growth. Regulation is often viewed as a barrier to innovation, but it is, in fact, essential to building a stable and trustworthy environment for innovation to flourish.”

“We have introduced several measures to ensure that these innovations are harnessed responsibly: Accelerated Regulatory Incubation Program (ARIP) and Regulatory Incubation (RI) Program: The ARIP and RI Program were designed to on-board firms operating in the digital asset space and provide a controlled environment to test new models, products, and services.”

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Guaranty Trust Holding Company Plc (GTCO) has released its audited consolidated and separate financial statements for the period ended June 30, 2024, to the Nigerian Exchange Group (NGX) and London Stock Exchange (LSE).

The Group reported profit before tax of N1.004 trillion, becoming the first Nigerian financial institution to cross the N1trillion mark in profit.

This milestone figure represents an increase of 206.6per cent over N327.4billion recorded in the corresponding period ended June 2023.

The Group’s loan book (net) Increased by 25.5per cent from N2.48trillion recorded as at December 2023 to N3.11trillion in June 2024, while deposit liabilities grew by 39.8per cent from N7.55trillion in December 2023 to N10.55trillion in June 2024.

The Group recorded growth across all its asset lines and continues to maintain a well-structured, healthy, and diversified balance sheet across all jurisdictions wherein it operates a Banking franchise as well as across its Payments, Pension and Funds Management business verticals with total assets and shareholders’ funds closing at N14.5trillion and N2.4trillion, respectively.

Capital Adequacy Ratio (CAR) remained very robust and strong, closing at 21per cent, while asset quality was sustained as evidenced by IFRS 9 Stage 3 Loans which closed at 4.3 per cent in June 2024 from 4.2per cent in December 2023 and improvement in Cost of Risk (COR) to 1.6 per cent from 4.5 per cent in December 2023.

Commenting on the results, the Group Chief Executive Officer of Guaranty Trust Holding Company Plc, Mr. Segun Agbaje in a statement said: “We are immensely proud of the progress we have made as a leading financial holding company.

“Despite the uncertainties in the operating environment, our performance in the first half of the year, where we recorded our highest profit to date, is a testament to the resilience and adaptability of our business model.

“We remain optimistic about the future and are committed to leveraging our unique strengths as a thriving financial services ecosystem to create sustainable value for all our stakeholders as we continue to position all our business verticals–Banking, Funds Management, Pension, and Payments–for rapid growth across key markets.”

Overall, the Group continues to post one of the best metrics in the Nigerian Financial Services industry in terms of key financial ratios i.e., Pre-Tax Return on Equity (ROAE) of 103.6 per cent, Pre-Tax Return on Assets (ROAA) of 16.6 per cent, Full Impact Capital Adequacy Ratio (CAR) of 21per cent.

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In an unprecedented move aimed at strengthening the economy and advancing financial inclusion, the Federal Government has raised over $900million from its first-ever Domestic Federal Government of Nigeria (FGN) US Dollar Bond issuance. The Debt Management Office (DMO) described the achievement as a pivotal step in Nigeria’s economic development.

The Minister  of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, in a statement, said the bond issuance saw an impressive over 180% subscription, highlighting the continued confidence of investors in Nigeria’s economic stability and growth prospects. Priced at par and carrying a 9.75% coupon over five years, the bond is the first under the Domestic FGN US Dollar Bond Programme, established pursuant to Presidential Executive Order No. 16 of 2023.

The landmark bond issuance attracted a diverse range of investors, including Nigerians and non-Nigerians residing in the country, Nigerians in the diaspora, as well as qualified institutional investors. It will be listed on the Nigerian Exchange Limited and FMDQ Securities Exchange Limited, positioning Nigeria as a key player in deepening its capital markets and promoting financial inclusion.

According to Edun, proceeds from the bond will be directed towards critical sectors of the economy as approved by President Bola Ahmed Tinubu. The Minister noted that the successful issuance underscores the government’s commitment to diversifying its sources of funding and bolstering economic growth despite current economic challenges.

Edun expressed confidence in Nigeria’s economic trajectory, describing the bond issuance as extremely successful “The issuance of this inaugural Domestic FGN US Dollar Bond demonstrates that investors, as well as Nigerians, continue to have faith in the country’s economy” the minister said.

Director General of the DMO, Ms. Patience Oniha, also expressed gratitude to all the parties involved in the transaction. She praised all parties including Africa Finance Corporation as Global Coordinator, United Capital Plc as Lead Issuing House/Coordinator, Meristem Capital Limited, Stanbic IBTC Capital Limited, and Vetiva Advisory Services Limited as Issuing Houses. Our legal partners, Olaniwun Ajayi LP and G. Elias, and financial advisers, Constant Capital Markets and Securities Limited and Iron Global Markets Limited, for their critical roles in structuring and executing the bond.

“This transaction was made possible through the expertise and guidance of our advisers. We also appreciate the continued support of the Nigerian public and our institutional partners who contributed to the successful completion of this historic issuance,” Oniha said.

Speaking further, she said DMO was very pleased with the remarkable outcome of the exercise. She added in particular that over $900 million, which represented an over 180% subscription when compared to the $500 million that was offered, as well as the diverse investors who subscribed to the Bond, attested to the depth and increasing sophistication of the domestic fixed income securities market.

The DMO reaffirmed the Federal Government’s commitment to collaborating with investors and stakeholders to drive economic growth and development in the country.

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FCMB Group Plc has extended its appreciation to key financial regulators and Nigerian Exchange Group (NGX Group) following the successful completion of the initial phase of its transformational capitalisation programme.

The Group had issued 15,197,282,219 ordinary shares of 50 kobo each at N7.30 per ordinary share of N0.50kobo each.

In a statement released by the Group Chief Executive Officer of FCMB Group Plc, Mr. Ladi Barogun, the company expressed gratitude to the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), and NGX Group for their critical roles in facilitating the capital raise.

Balogun praised the CBN for its visionary leadership and commended the SEC for its efforts in reinforcing market confidence and providing guidance through challenging periods. He also acknowledged NGX Group and the NGX Invest platform for their crucial role in enabling 40,000 investors to subscribe to the public offer through digital channels.

He noted that the capital raise will bolster FCMB’s balance sheet, enhance customer banking experiences, support community development, and generate value for shareholders. And emphasized that this initiative would contribute to economic transformation, nation-building, and reshaping the African narrative.

Balogun expressed optimism about FCMB Group’s future, seeing the successful capital raise as a step toward fostering shared prosperity and creating a better world for future generations.

Following the Go-Live of NGX Invest, Group Managing Director and Chief Executive Officer of NGX Group, Temi Popoola highlighted the role of the platform in stimulating successful capital raising.

“With the support of regulators and stakeholders, we have developed a fully digitized market infrastructure for distributing financial products, including public offers and rights issues,” said Popoola. “Our aim is to digitize these transactions to advance financial inclusion and more effectively engage retail investors.”

This successful capital raise, marked by a high number of digital subscriptions, underscores the importance of regulatory support and technological innovation in Nigeria’s evolving financial landscape

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Japaul Gold & Ventures Plc has disclosed that it has secured approval from the Securities & Exchange Commission (SEC) on their Special Placement of eight billion units of new Shares at N2.50k to run pari-passu with the existing shares.

This translates into N20 billion worth of new capital to the company listed on the Nigerian Exchange Limited (NGX).

Commenting at a press briefing yesterday, Chairman, Japaul Gold & Ventures, Mr. Jegede Paul said the company’s new shares has been listed on the NGX at N2.50 per share. Japaul was incorporated in 1994 but started its business in 1997 as a private company.

He expressed further that, “Initially, it operated as an oil servicing company, supporting international oil companies by providing Offshore Logistics services such as chartering of sea going Vessels, Barges and Accommodation Barges.

“The Company also engaged in dredging and quarry operations in the Mining business since 2005 till date. Due to low patronage of IOCs generally to Oil Servicing Companies, which Japaul is not left out, a strategic decision was made by Japaulin year 2020 to diversify into mining of Gold and other Solid Minerals, having identified the great potentials in the Mining Industry in Nigeria.”

He noted that Nigeria is so blessed with more than 44 different Minerals including Gold in different parts of the Country, and Japaul has been strategically positioned to start the business of mining Gold and other Minerals with the vision of having both Gold produced and Gold reserve in excess of 100million ounces between now and year 2034.

Continuing, Paul stated that, “Japaul has many exploration licenses in different parts of the country and Mining Leases in different Gold fields. The Company is now being reorganized structurally by KPMG with the objective of becoming a world class Gold Mining Company, not only in Nigeria but across the Globe.

“Presently, Japaul has 637,000 Inferred Reserve ounces of Gold, which worth $1,551,095,000 on its Mining Leases that it has acquired. To this end, the Company has been able to come up with the means of financing further Exploration and to commence the preliminary development of the Gold field, with the already made clear plan to commence Gold production before the end of 2025.”

Commenting as well, Managing Director, Japaul Gold & Ventures, Mr. Akin Oladapo said, “ The Company’s  transition into the Mining Sector is aimed at establishing a niche for the organisation across the value chain of the Global Mining Business. As a result of this strategic shift, the Company changed its name from Japaul Oil & Maritime Services Plc to Japaul Gold & Ventures Plc in the year 2020.

Oladapo,  noted that Japaul has been able to come out of the woods, and  “ there is light now at the end of the tunnel  for the Company that looked as if it was going to go out of business, coming from a huge operating loss of N2 .869bllion in 2021 to an operating profit of N191millon in 2022, and the Profit improved further to N 619 million in 2023, but due to economic situation as regards Foreign Exchange, the Company was hit by an exchange loss of about N1.20 billion, which had adverse effect on our net position.”

“With the recent development in our Company, we are positioned for continuous growth of our revenue and profitability, there shall be ceaseless payment of dividends in a very short time from now, and tremendous value shall be added to the Assets of the investors to the Company.

“Japaul has always been a trailblazer in the line of their businesses, They were the only Company in the Maritime Sector at the Stock Exchange before the diversitication of its business to mining of Gold, and they are now trailing the blaze in finding strategic means of financing the mining of Gold, which happen to be an area of business that many financial institutions in Nigeria are yet to understand,” he added.

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Nigeria’s Letter of Credit (LC) payments have dropped by 57.04 per cent in the seven months of 2024 compared to the same period in the previous year, according to the International payments data of the Central Bank of Nigeria (CBN).

The total letter of credit payments made via official channels for seven months of 2024 was $391.91 million, reflecting a shortfall of 57.04 per cent or $520.45 million Year-on-Year (YoY) compared to seven months of 2023 when it was at $912.36 million.

A letter of credit is a mode of payment for the importation of visible goods. As requested by the customer, the bank promises in writing to pay the exporter a certain sum within a certain time frame in return for goods, as long as the customer provides the bank with the proper paperwork. 

This significant decrease highlights the challenges the country faces in its international trade and financial transactions.

A breakdown of the CBN numbers showed that LC in January 2024 was at $58.33 million, about 46 per cent decline from $107.78million January 2023. However, in February 2024, it stood at $102.6million, representing a 40.33 per cent YoY decline when compared to $123.95million February 2023.

The trend continued in March 2024, with payments dropping to $43.54 million, a significant decline of 83.6 per cent YoY from $269.49million March 2023.

It closed April 2024 at $54.03million, a decline of 64.58 per  cent from $152.52million April 2023 and dropped to its lowest figure in May 2024 at $21.49million, a drop of 64.4 per cent when compared to $60.29million May 2023.

In addition, LC stood at $32.3million June 2024, a 59 per cent YoY from $79.18million June 2023, while in July 2024, the CBN reported $79.65million, an increase of 12 per cent from $71.14million July 2023.

The 12 per cent YoY increase in July 2024 followed the sale of about $122.67million to 46 authorised dealers by the CBN, in its determination to promote stability and reduce market volatility in the foreign exchange market.

A statement signed by the Bank’s Director in charge of Financial Markets, Dr. Omolara Duke, disclosed that a total of $67,500 million was sold to 27 dealers, while the sum of $2.5million was bought from one authorised dealer on July 10, 2024.

The range of the bid for the July 10, 2024 sales was N1,480.0/US$- N1,500.0/US$, while the value date for the payments, going by the settlement cycle of two days, is July 12, 2024.

The CBN had extended the timeline for the issuance of letters of credit from 24 hours to five working days as the country continues to struggle with foreign exchange scarcity. 

In the approved 2020 service charter of the CBN, the timeline for the issuance and management of LC was 24 hours. However, the newly approved 2023 service charter shows that the timeline is now five working days.

It is likely that weaken naira at the foreign exchange hindered the ability of businesses to open LC. Towards the end of July 2024, Nigeria’s naira depleted significantly to $1,611.21 against the dollar from $757.522 as of July 2023.

On the flipside, the foreign reserves rise to $36.6 billion as of July 2024 when compared to $33.95billion July 2023.

Analysts believe the reduction in letters of credit could have several implications for Nigeria’s economy.

“A sharp decline in such payments could indicate decreased import activity, which might be a result of foreign exchange shortages, stricter import regulations, or other economic constraints,” said Vice President, Highcap Securities Limited, Mr. David Adnori.

The CBN Governor, Mr. Olayemi Cardoso, had noted that the country’s foreign reserves at $36.89 billion as of July, 16 2024, could finance over 11 months of imports for goods and services, or 14 months for goods alone.

Cardoso explained that this is significantly higher than the international benchmark of 3.0 months, indicating a strong buffer against external shocks.

He also noted that the banking sector remains robust and diverse, comprising 26 commercial banks, six merchant banks, and four non-interest banks.

He said, “The spread between official and BDC rates has narrowed significantly from N162.62 in January to N47.22 in June indicating successful price discovery, increased market efficiency and reduced arbitrage opportunities.

“The stock of external reserves increased to $36.89 billion as of July 16, compared with 33.22 billion dollars as at end-Dec 2023, driven largely by receipts from crude oil-related taxes and third-party receipts. In the first quarter of 2024, we maintained a current account surplus and saw improvements in our trade balance.”

Cardoso mentioned that while the CBN was encouraged by positive trends, it remained vigilant and committed to implementing policies that support sustainable growth in the financial markets and maintain overall economic stability.

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Director General, Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, yesterday emphasised that the approval-in-principle granted to two crypto exchanges recently is in line with the commission’s desire to ensure that youths in Nigeria are given the opportunity to participate in the capital market.

 Agama who stated this during a meeting in Abuja, said that in line with the desire of President Bola Ahmed Tinubu to engage with the youthful population in the country, it became important to create a structure that will enhance that participation of the youths and other Nigerians in the market.

 The commission had last week granted approvals to Busha Digital Limited and Quidax Technologies Limited.

 According to the SEC DG, “It is important that we act accordingly, we are a country but we cannot be left out of the global phenomenon that is beginning to take shape. The SEC as a future looking institution is poised to making sure that we are in the league of countries that do what is needed.

  “As much as possible, we are building talents to be able to deal with the challenges that these asset classes could bring to our shores. A lot of young Nigerians are fully involved in it and we cannot shut the door against them, rather the intention of Mr. President is to have them inclusive in the capital market and that is why we are ensuring that there is regulation and no one is hurt at the end of the day. That’s our responsibility at the SEC by protecting investors and developing the market”.

  Agama said the SEC is doing all of these cautiously to ensure these institutions do not pose risks to the national economy and to citizens who are investors too.

  He disclosed that the SEC’s programme on the digital assets exchanges comes from its virtual Assets Service Providers Regulation adding that in view of the nature of crypto exchanges and the entire industry, it was important to outline a regulation that allows the Commission to fully understand crypto exchanges and virtual financial assets services providers.

  The SEC Boss said the idea was borne out of the initial Regulatory Incubation Programme of the SEC in its desire to understudy fintech platforms and products that are new to the market in order to be able to dimension the risks that are associated with these institutions and their products as clearly, the SEC’s primary responsibility is investor production and market development.

  “In our bid not to stifle innovation we decided to set up a Sound Box to be able to understand exactly what these companies are getting into, how it affects the customers, how it affects the Nigerian public and how it affects the Nigerian economy.

 “That was the idea, soon after that with the emergence of the VAPS regulation, we thought it wise to move forward by setting up the Accelerated Regulatory Incubation Programme. The first stage is the Regulatory Incubation Programme, the next stage is the Accelerated Incubation Programme which takes care of the desires of a lot of institutions to be regulated by the SEC. As you are aware, non-regulation of these entities poses a serious risk to our economy and so it was important in building trust and in building confidence and more so”, he explained.

He emphasized that the Commission has not yet outrightly licenced any exchange, but has provided an approval in principle adding that it is a controlled experiment wherein companies that have applied, meet the fit and proper persons test and other regulatory guidelines are invited into a regulatory incubation wherein they are understudied.

  “It gives us an opportunity to know exactly what they are doing, we know the risks that they pose to our economy, we know the risks they pose to investors and the risks they pose to themselves as operators.

  “The idea is you need to do that to be able to study them and provide all the guidance and regulations required by them to operate in the system seamlessly while also not defrauding Nigerians, not causing chaos to Nigerians, our economy and the entire system at large. We are making sure that they operate within regulations similar to what is obtainable also in other jurisdictions”, Agama added.

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Stanbic IBTC Holdings Plc, yesterday announced its audited half year ended June 2024 result and accounts to investing public, reporting N116.4 billion profit after tax, about 71.3per cent increase from N67.92 billion reported in half year ended June 2023.

The Group’s in its profit & loss figures posted on the Nigerian Exchange Limited (NGX) declared N147 billion profit before tax in H1 2024, about 77 per   cent increase from N82.99 billion reported in H1 2023. 

Amid significant increase in profit, the management of Stanbic IBTC Holdings announced an interim dividend of N2.00 per ordinary share of 50 kobo each, that is, N25.9 billion.

The group’s gross earnings rise to N378.55 billion in H1 2024, representing a 77.44 per cent increase from the N213.33 billion gross earnings posted in H1 2023.

From the profit & loss figures, net interest income of Stanbic IBTC Holdings stood at N174.3 billion in H1 2024, about 140 per cent increase from N72.68billion reported in H1 2023, driven by interest income and expenses.

In the period under review., its interest income stood at N246.13billion, 123 per cent growth from N110.26billion in corresponding period, while interest expenses moved from N37.6 billion in H1 2023, representing an increase of 91.2 per cent from N71.83 billion declared in H1 2024. 

From the balance sheet position, the group declared N6.1 trillion total assets as of June 2024, about 19per cent increase from N5.15 trillion reported in 2023 full financial year.

The growth in total assets is driven by N2.17 trillion loans and advances as of June 2024, about 6.5 per cent increase from N2.04 trillion reported in 2023 and N2.89 trillion deposits from customers as of June 30, 2024, representing an increase of nearly six per cent from N2.7 trillion reported in 2023 full financial year.

The Group in 2023 financial year had announced profit before tax of N172.91 billion, up 72per cent from N100.27 billion reported in 2022, while profit after tax was at N140.62 billion, an increase of 74per cent from N80.73 billion in 2022 financial year.

While commenting on the 2023 FY results, Chief Executive, Stanbic IBTC, Dr Demola Sogunle in a statement said, ““Our strategic theme for 2023 was “Accelerating Growth”, and notwithstanding the trends in the Nigerian operating environment, we were able to record remarkable progress in our key focus areas.

“We recorded increase in profitability, growth in assets under management (AuM) while our loans and advances and customer deposits also grew during the year, showing growth in clients franchise and our ability to support our customers in meeting their financial needs.”

“Looking ahead, our vision for 2024 is one of continued innovation, growth, and unwavering commitment to our clients and stakeholders”.

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Despite notable fluctuations across the Nigerian Exchange Limited (NGX) sector indicators in August 2024, the NGX Oil & Gas Index bulked the trend with an impressive 22.39 per cent gain.

This index, which includes eight prominent Oil and Gas Marketing companies; Conoil Plc, Eterna Plc, Japaul Gold and Ventures Plc, MRS Oil Nigeria Plc, Oando Plc, Seplat Energy Plc, Total Nigeria Plc, and Capital Oil Plc showcased robust performance throughout the month.

In addition, NGX Insurance Index recorded a monthly gain of 11.46 per cent, while the NGX Banking Index rose by 6.96 per cent month-on-month. NGX Consumer Goods Index also posted a 4.30 per cent increase in August.

However, NGX Industrial Goods Index experienced a decline of 13.06 per cent, driven primarily by the underperformance of Dangote Cement, a major player in the sector. This poor performance of Dangote Cement had a considerable impact on the broader market index.

Amidst these sectoral gains, the overall Nigerian stock market exhibited volatility. The All-Share Index (ASI) dipped by 1.22 per cent to close at 96,579.54 basis points on August 30, 2024, down from 97,774.22 points at the start of the year. Market capitalization also saw a decline, shedding N36 billion to close the period at N55.478 trillion from N55.514 trillion at the beginning of August.

Despite the overall market decline, certain stocks showed remarkable gains. RT Briscoe Nigeria Plc surged by 367.10% month-on-month, rising from 76 kobo to N3.55 per share. Oando Plc followed with a 207.6 per cent increase, from N25.00 to N76.90 per share. Julius Berger Nigeria Plc also performed well, with its stock appreciating by 75.77 per cent, from N97 to N170.50 per share. These gains underscore the selective nature of market performance, where specific stocks outperformed even in a generally declining environment.

Capital market analysts observed that investor sentiment in the local market has been driven by profit-taking, but they emphasised that Nigeria’s capital market remains one of the top-performing exchanges in Africa and globally. They highlighted that while market sentiment has been cautious due to the high-interest-rate environment, the overall outlook remains positive. Key drivers of this optimism include ongoing banking sector recapitalizations and increased interest from foreign portfolio investors.

Commenting on the market’s performance over the first eight months of 2024, Vice President of Highcap Securities Limited, Mr. David Adnori, noted that investor trading has been largely sentiment driven. He added that the emergence of President Bola Tinubu has further energized the stock market, as participants are optimistic about his ability to revitalize the economy and implement business-friendly policies. Adnori expressed confidence that the market might sustain its positive momentum in the second half of 2024, bolstered by the ongoing banking sector recapitalization and anticipated H1 2024 corporate earnings, particularly from the banks listed on the Exchange.

In the context of the recent hike in the Monetary Policy Rate (MPR) to 26.75 per cent, capital market experts pointed out that this has fueled sentiment-driven trading, as investors increasingly view the fixed-income market as an alternative investment avenue to hedge against double-digit inflation.

Investment Banker and Stockbroker, Mr. Tajudeen Olayinka, also commented on the market, noting the N14.56 trillion market capitalization gain over the first eight months of 2024. He attributed this growth to the significant liquid funds available to institutional investors who currently dominate market activities. He emphasized that the future appears promising for many listed companies, which has led investors to position their portfolios for long-term gains. This resilience in the market persists despite the challenging high-interest-rate environment.

Looking ahead to the second half of 2024, Olayinka projected a more balanced market, with less rapid price movement. He explained that this is likely due to the series of offers from banks raising fresh capital to meet new capital requirements. Investors are expected to exercise their rights to additional shares or take on new shares to maintain portfolio balance. “H2 2024 will be an interesting period for the market,” he concluded.

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In a move that indicates continued support for the nation’s economic growth, banks Credit to Private Sector increased by N2.29 trillion between June and July 2024, the Central Bank of Nigeria (CBN) has said.

The additional N2.29 trillion credit is coming on the backdrop of unstable naira at the foreign exchange market and double-digit inflation rate.

The CBN in its Money and Credit statistics report credit to the private sector increased by 34 per cent from N56.46 trillion in July 2023 to N75.5 trillion in July 2024.

The CBN numbers indicated that banks’ loans and other facilities to the private sector have increased by nearly a third, underlying the resilience and support of the banking sector to the economy.

The report showed that CPS rose by 33.7 per cent to N75.48 trillion in July 2024 as against N56.46 trillion recorded in July 2023, an increase of N19.02 trillion.

A breakdown indicated that credit to private sector increased by 3.1 per cent or N2.29 trillion to N75.48 trillion in July 2024 compared with N73.19 trillion in June 2024.

The CPS includes loans, trade credits and other account receivables and supports provided by banks to the private sector within a period. The CPS is a global measure of the banking sector’s balance sheet resilience and contribution to national economic agenda.

The latest report underlined the continuing growth in banks’ operations and deployment of funds to the productive sector of the economy.

The report showed that Nigerian banks had seen significant increase in deposits during the first half of this year. The report indicated that banks’ demand deposits rose from N26.7 trillion recorded at the end of December 2023 to N33.0 trillion by June 2024.

Banks had sustained steady growth in deposits across the quarters as total demand deposits in the first quarter ended March 2024 increased by 8.1 per cent to N28.9 trillion. In the second quarter ended June 2024, banks’ deposits increased by 14.3 per cent to N33 trillion.

Analysts believe bank are lending to big corporations to enable them meet the 65 per cent Loan-to-Deposit Ratio (LDR) threshold set by the CBN.

They said banks are in position to continue to create more loans, citing aggressive growth strategies by banks and enabling regulatory environment.

In a related development, a recent report on capital importation into the country had also shown that banks attracted nearly two-third of capital importation into the country.

Analysts said this was a measure of confidence in the Nigerian banks as foreign investors gradually take more active stance in the nation’s economy.

Analysts agreed that increase private sector credit implies a major boost for the economy as there is a link between credit to the private sector and the economic growth. Several studies have continuously found that increased lending by banks directly leads to increase in Gross Domestic Products (GDP).

Commenting, analysts at Cordros Capital said the trend in credit to private sector may continue in the period ahead.

“We believe the re-enforcement of the CBN’s limit on Deposit Money Bank’s loans-to-deposits macro-prudential ratio will continue to drive the willingness of commercial banks to create risky assets over the short to medium term,” Cordros Capital stated.

The analysts however, noted that the apex bank’s intensified monetary policy tightening measures could tether the magnitude of growth going forward.

A study published by the CBN concluded that, “credit is growth-enhancing, even when trade openness, monetary policy, investment climate and infrastructure are low.” The study found that private sector credit increases economic growth.

The balance sheet strength of banks also determine the flow of credits, with the continuing increase in lending amidst macroeconomic headwinds underpinning Nigerian banks’ resilience and stability.

In a study on ‘Balance Sheet Strength and Bank Lending During the Global Financial Crisis’, researchers at International Monetary Fund (IMF) examined the role of bank balance sheet strength in the transmission of financial sector shocks to the real economy.

The study found that, “banks with strong balance sheets were better able to maintain lending during the crisis.”

According to the study, banks that were ex-ante more dependent on market funding and had lower structural liquidity reduced the supply of credit more than other banks.

“However, higher and better-quality capital mitigated this effect. Our results suggest that strong bank balance sheets are key for the recovery of credit following crises, and provide support for regulatory proposals under the Basel III framework,” IMF stated.

Managing Director, Arthur Steven Asset Management, Mr Olatunde Amolegbe, said the growth in credit to the private sector could be attributable to increase in economic activity.

He however pointed out that other factors such as inflation and devaluation could moderate such increase

However, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the credit outlook remains cautious, calling for expansive distribution of credits across all tiers of companies and sectors.

According to him, there are major concerns in terms of distribution of credits across sectors and companies with small businesses, which contribute more to job creation and economic inclusion, not likely to benefit much.

He noted that banks tend to be wary of credit risk concerns associated with lending to small businesses and certain sectors, adding that efforts should be made to drive inclusive and stable credit access to all sectors including growth and employment elastic sectors such as agriculture, manufacturing, real estate, mining and construction among others.

But the CBN Governor, Dr. Olayemi Cardoso, believe the ongoing recapitalisation would strengthen banks further to drive the $1 trillion national economic target and support stable growth in the economy.

According to him, additional capital would not only provide a substantial buffer for banks against potential economic challenges, but enhance Nigeria’s banks capability to support massive economic growth and play competitively globally.

Kayode Tokede

Oando Plc is driving momentum in the oil and gas segment of the Nigerian Exchange (NGX) as investors continue to show interest in the company that recently completed the acquisition of NAOC.

Stock price of the integrated oil and gas service rose to N76.90 per share on last trading day August 30, to bring its price to an all-time high on the floor of the NGX.

The stock price this year reached a 52-week low of N5.30 per share and has witnessed revival amid posting impressive earnings.   

Due to sustained buying interest in the shares, the stock price of Oando between January and August 2024 has appreciated by N66.60 per share or 646.6 per cent from N10.30 per share when it closed in 2023.

This brings its market value Year-till-Date (YtD) gain to N827.9billion. According to THISDAY investigation, the stock price reached N76.90 per share August 30, 2024, influenced by 93,856,895.00 volume of transactions on NGX.

The company’s market capitalisation has increased to N955.98 billion as of August ending trading activities.

Oando towards ending of August 2024 successfully completed its acquisition of Eni’s Nigerian subsidiary, Nigerian Agip Oil Company (NAOC), in a landmark deal valued at $783 million.

The agreement, finalised in a signing ceremony in London, represents a transformative moment for Nigeria’s energy sector and highlights the growing prominence of indigenous players in the industry.

The acquisition, first announced in September 2023, comes precisely a decade after Oando’s landmark $1.8 billion purchase of ConocoPhillips’ Nigerian assets. That previous transaction had significantly boosted Oando’s oil production from approximately 4,500 barrels per day to 50,000 barrels per day.

Analysts told THISDAY that Oando acquisition taste is daring and one of its kind in the oil and gas industry.

Group Chief Executive of Oando, Mr. Wale Tinubu in a statement said, “Today’s announcement marks the culmination of a decade of determination, resilience, and vision.

“This achievement is not just a triumph for Oando but for every indigenous energy company as we redefine our role in the Nigerian energy sector.

“Our focus now shifts to maximising the potential of these assets while supporting the nation’s production goals and exploring new opportunities in clean energy, agriculture, infrastructure, and mining.”

Oando had announced its unaudited 2023 full-year results, showing a 78.9per cent growth in revenues to N3.5 trillion from N1.99 trillion reported in 2022.

This substantial revenue increase was driven by higher sales volumes, while the bottom line benefited significantly from foreign exchange gains related to crude oil earnings.

The company posted a profit after tax of N74.7 billion, a stark contrast to the loss of N81.2 billion recorded in the previous year.

The release of the company’s unaudited 2023 results is a crucial step toward meeting regulatory requirements for all listed companies.

This progress suggests that by the end of this year, the company will align with its peers in timely reporting, thereby bolstering confidence among shareholders and investors regarding its current status and prospects.

Kayode Tokede

Following the increase in the Standing Lending Facility (SLF) rate to 31.75 per cent, banks borrowing from the Central Bank of Nigeria (CBN) dropped by 76.4 per cent in August 2024 to N4.04 trillion from N17.12 trillion reported in July 2024.

According to financial data released by the CBN, the reported N4.04 trillion is the third lowest in 2024 as Nigerian banks exercise caution in borrowing from the apex bank.

At 26.75 per cent Monetary Policy Rate (MPR), financial institutions that borrowed from CBN must now pay 31.75 per cent p.a to bridge if the SLF must be utilised.

Recently, the CBN revised the Asymmetric Corridor around the MPR from +100/-300 basis points to +500/-100 basis points. This significant shift aims to discourage banks from holding excess liquidity at the central bank and to promote increased lending activities.

In a circular signed by the Director of the Financial Markets Department, CBN, Dr. Omolara Duke, the CBN allowed banks to borrow at a rate of 31.75 per cent.

According to the CBN, “Banks can access the SLF through the Scripless Securities Settlement System (S4) within the specified operating hours of 5:00 pm to 6:30 pm. Additionally, authorised dealers are permitted to access the Intraday Lending Facility (ILF) at no cost, provided it is repaid on the same day. The Monetary Policy Committee (MPC) adjusted the upper corridor of the standing facilities to 5.00 per cent from 1.00 per cent around the MPR, at its 296th meeting.

“Consequently, the suspension of the Standing Lending Facility (SLF) is hereby lifted and Authorised Dealers should send their request for SLF through the Scripless Securities Settlement System (S4) within the operating hours of 5.00pm to 6.30pm. To this end, Authorised Dealers are permitted to access the SLF at 31.75 per cent; Permitted to access Intraday Lending Facility (ILF) to avoid system gridlock at no cost if repaid the same day;

“The 5.00 per cent penalty (as stated in the S4 business rules) is retained, for participants that do not settle their ILF, which the system will convert to SLF at 36.75 per cent; Collateral execution (the rediscounting of instruments pledged by participants at the penal rate by CBN) is reintroduced as stipulated in the approved repo guidelines. “The circular takes immediate effect.”

A top director in a Tier-2 bank expressed to THISDAY that lending rate to key sectors would remain high, stressing that real sector of the nation’s economy would suffer.

On his part, the Vice President, Highcap Securities Limited, Mr. David Adnori attributed the decline in banks borrowing from CBN to hike in rate, stressing that key businesses in the economy are seriously impacted.

Professor of Finance and Capital Market at the Nasarawa State University, Professor Uche Uwaleke had expressed that the hike in MPR to 26.75 per cent is targeted at further reducing liquidity from the banking system and jerk up cost of credit with adverse consequences on output.

He stated that, “Having done 750 basis points between February and May this year, I had predicted they would do a minimum of 50basis points or a max of 100basis points in July. I am glad to note that they chose the floor which is a sign that a complete halt is most likely in their next scheduled meeting in September 2024. But the adjustment to the asymmetric corridor around the MPR is a major source of concern for me.

“By implication, with an MPR of 26.75per cent, banks will now get loans from the CBN at 31.75per cent while they will be remunerated for their excess deposits at 25.75per cent. This will further squeeze liquidity from the banking system and jerk up cost of credit with adverse consequences on output and the equities market.”

He added that, “I submit that as far as taming the current elevated inflation in Nigeria is concerned in view of its major non-monetary drivers, the fiscal side holds the ace.”

Banks accessing SLF reached its highest peak of about N21.74 trillion in March 2024 amid liquidity tightening measures of the CBN. 

Financial institutions lend from the CBN using the SLF window and deposit cash with the apex bank using the Standing Deposit Facility window (SDF).

The CBN provides the SLF, a short-term lending window for banks and merchant banks, to access liquidity to run their day-to-day business operations.

On the flip side, SDF increased to N8.12 trillion in August 2024, representing an increase of 269.3 per cent from N2.2 trillion in July 2024.

The reported N8.12trillion SDF is the highest so far in 2024 and it is coming on the backdrop of the new policy of the CBN.

The CBN had introduced a new interest rate structure that allows financial institutions to earn between 19 per cent and 25.75 per cent on deposits held with the apex bank.

A CBN circular noted that commercial and merchant banks will now earn up to 25.75 per cent on deposits up to N3 billion.

It said, “Deposits exceeding N3 billion will attract a lower rate of 19 per cent. Similarly, Payment Service Banks (PSBs) would receive 25.75 per cent interest on deposits up to N1.5 billion, while deposits above this threshold will also earn 19 per cent.”

But Adnori attributed the hike in SDF rate to CBN’s moves to mop-up excess liquidity in the financial sector amid tackling inflation rate.

In addition, analysts at Afrinvest Research stated that MPC’s tinkering of the asymmetric corridor to further tighten liquidity conditions should exert pressure on funding cost for banks, both directly (as lenders tap the window) and indirectly (repricing of rates across money market).

Specifically, they said, “We note the particular importance of the SLF as a support for banks amid liquidity crunch induced by contractionary interest rate policy. Elsewhere, businesses might continue to strain under the weight of elevated borrowing costs — a necessary evil to starve decades-high inflation. That said, we are of the view that MPR as a tool has its limitations in addressing structural issues, like insecurity and weak availability of infrastructure to support productivity, amongst other things.

“We note that fiscal policy reforms are necessary to fix some of these issues and the monetary policy side can only do so much. Therefore, we assert that continued rate hike without complementary and decisive fiscal efforts might only increase the burden on businesses without much effect on inflation. Nonetheless, the decision to decelerate pace of tightening indicates awareness of these underlying complexities.

“In terms of impact, the increase in MPR is expected to lead to an upward repricing of fixed income instrument, especially short-term assets, ranging from treasury bills to commercial papers which will naturally make these investments more attractive to investors compared to stocks.”

Kayode Tokede

About five of the banks that are in the capital market to raise fresh capital have pledged to allocate N575.62 billion from the N1.12 trillion net proceeds for loan to corporate, Small and Midsize Enterprise (SME) and retail banking sectors.

The banks are: Access Holdings Plc, Fidelity Bank Plc, Guaranty Trust Holding Plc (GTCO), FCMB Group Plc, and Zenith Bank Plc.

This was indicated in the offer prospectus of five lenders that have commenced their capital raise, to meet the new capital requirement of the Central Bank of Nigeria (CBN).

In late March, the CBN announced new capital requirements for the banks operating in the country.

The apex bank directed commercial banks with international authorisation to increase their capital base to N500billion, national banks to N200billion and those with regional authorisation were expected to achieve a N50billion capital floor.

An analysis of the offering documents showed that Access Holdings had budgeted the highest amount for its  local and international business expansion.

Access Holdings indicated that 65 per cent or N223.01 billion of the N343.09billion net proceeds from its rights offer would be invested business expansion.

According to the Pan-African bank, about N154.39 billion or 45 per cent of the proceeds would go into lending to corporate and commercial business segment; N51.46 billion or 15 per cent to retail business segment and N17.15 billion or five per cent of the proceeds goes into lending to SME customers.  

On its part, GTCO said N133 billion of the net proceeds of N400 billion will go into lending to corporate, commercial, retail and SME segments.

Of its net proceeds of N392.49billion, the holding company said N138.5 billion would go into branch network expansion and refurbishment and N98.5 billion on technology/ infrastructure upgrades.

Zenith Bank said out of net proceed of its N185.14 billion offer, N83.3 billion would go into working capital to support expanding operations out of which it budgeted N68.5billion on loans to corporate, SMEs & retail.

Zenith Bank is offering 5,232,748,964 new Ordinary Shares by way of a Rights Issue at N36.00 per Share and based on a ratio of one Ordinary Share for every 6 Ordinary Shares held by Existing Shareholders as at the Qualification Date.

Fidelity Bank, another bank that has closed its offering, said it plans to invest about N66.53billion out of the N95.05billion proceeds on business and regional expansion. This is the lowest amount, among the five banks lending in the real sector. 

Out of the N66.53billion, Fidelity Bank, said it is lending N9.5billion to retail business segment; N14.3billion to SME segment; N40.4 billion to the corporate & commercial segment and N2.38billion goes to investment in regional expansion.

Of the five banks reviewed, FCMB Group has the second least amount budgeted for loans to corporate, SME & retail at N84.57billion (78.22 per cent of the N108.11 billion net proceeds).

According to the Group, about N38.98 billion goes into lending to the wholesale banking segment; N35.32 billion into lending to retail & SME segments and N10.27 billion to agricultural and non-oil export.

Kayode Tokede

Following receipt of the approval of its shareholders, Nigerian Breweries Plc has now received clearance of the relevant documents from the Securities and Exchange Commission (SEC) and the Nigerian Exchange Limited (NGX) to raise a sum of N599.1 billion by way of a Rights Issue.

A total of 22,607,491,232 Ordinary Shares of 50 kobo each in the share capital of Nigerian Breweries are being offered to shareholders whose names appear in the register of members as of the Qualification Date being 12 July 2024.

The Issue shall be on the basis of eleven (11) new Ordinary Shares for every five (5) Ordinary Shares held as of the Qualification Date and at an Issue price of N26.50 per Ordinary Share.

The Issue is part of Nigerian Breweries’ Business Recovery Plan to strengthen the Company’s capital base by deleveraging its balance sheet, eliminating certain foreign exchange-related exposures and reducing bank borrowings, thereby giving the Company greater financial flexibility to promote business growth and continuity.

At the signing ceremony yesterday in Lagos, the Managing Director, Nigerian Breweries, Mr. Hans Essadi, in a statement explained that the Issue represents an opportunity for shareholders to support the company’s strategic vision and participate in the next phase of its growth.

Essaadi further disclosed that the proceeds of the Issue will be channeled towards payment of its foreign and local currency denominated obligations, thereby eliminating foreign exchange risk and revaluation losses and enhancing long term profitability and sustainable value creation for its shareholders.

In his remarks, the Managing Director, Vetiva Advisory Services Limited, Mr. Olutade Olaegbe, commended the management of Nigerian Breweries for their visionary leadership and their commitment towards executing the Issue.

He also thanked the Company for trusting Vetiva Advisory services Limited and Stanbic IBTC Capital Limited to advise on this landmark transaction and expressed confidence that the Issue would encourage other global multinational companies to approach the equity capital markets to meet their strategic objectives.

Vetiva Advisory Services Limited and Stanbic IBTC Capital Limited are acting as the Lead Issuing House and the Joint Issuing House to the Issue respectively, to assist the Company in managing the Issue process. The acceptance list for the Issue is expected to open on 02 September 2024 and close on 11 October 2024.

Full terms of the Issue will be set out in a Rights Circular to be mailed directly to qualifying shareholders of the Company, which will contain a Provisional Allotment Letter and the Acceptance Form. All shareholders should read the Rights Circular and, where in doubt, consult their Stockbroker, Fund/Portfolio Manager, Accountant, Banker, Solicitor or any other professional adviser for guidance before subscribing.

Kayode Tokede

On the back of the recent in Monetary Policy Rate (MPR) to 26.75 per cent, by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), the average maximum lending rate in Nigeria’s banking sector dropped to 28.89 per cent in July 2024 from 29.11 per cent June 2024. 

Maximum lending rate is upper limit of interest rates for loans to the sector, which might apply to higher-risk scenarios or different loan structures.

With the average maximum lending rate at 28.89 per cent, bank customers are expected to witness a hike on lending to real sectors, a factor contributing to weak business activities.

The banking sector lending rate in Nigeria averaged 14.17 per cent from 1961 until 2024, reaching an all-time high of 37.80 per cent in September of 1993 and a record low of 6.00 per cent in April of 1975.

In 2020, the average maximum lending rate reached a peak of 30.73 per cent when the MPR rate stood at 13.5 per cent

Analysis of the CBN “Money market indicator” data revealed that the average maximum lending rate opened January 2024 was at 27.07 per cent when MPR was at 18.75 per cent and dropped to 26.55 per cent in February 2024, when the monetary policy committee of CBN hike MPR to 22.75 per cent.

In March and April 2024, the banking sector average maximum lending rate stood at 29.38 per cent and 29.49 per cent, respectively, amid 24.75 per cent MPR.

However, in May 2024, the average maximum lending rate was at 28.67 per cent when the MPR stood at 26.25 per cent. Before the end of half year of 2024, average maximum lending rate hits a new record of 29.11 per cent in June 2024, while the MPR was flat at 26.25 per cent.

In a move to tightening liquidity and curb raising inflation the MPR of the hike MPR to 26.75 and the banking sector average maximum lending rate dropped to 28.89 per cent, the CBN’s money market indicator revealed. 

However, the steep increase in the policy rate has sparked concerns regarding the potential impact on the cost of credit for businesses already facing economic hardships.

Each bank offers different lending rates that reflect their respective approaches to lending to the manufacturing sector.

As of July 5, 2024, THISDAY gathered from CBN’s data that in the manufacturing sector,  Stanbic IBTC Bank, followed by FCMB, Sterling Bank Plc and Unity Bank Plc have the highest maximum lending rate in the banking sector.

Stanbic IBTC reported a maximum lending rate of 50 per cent; FCMB, 40 per cent; Unity Bank, 38 per cent and , Sterling Bank, 37 per cent in the manufacturing sector.

The Manufacturers Association of Nigeria (MAN) had lamented that the average maximum lending rate charged by banks on loans to its members rose to 35 per cent in second quarter (Q2) of 2024, up from 28.6 per cent in first quarter (Q1) of 2024.

The report by MAN had showed that the aggregate index score of the manufacturing sector decreased from 53.5 points to 51.9 point in Q2 2024.

Furthermore, the report indicated that lending rate to manufacturers during the period under review for Zenith Bank Plc was 30 per cent on the average while Access Bank Plc and the United Bank for Africa (UBA) were 32 per cent apiece.  For First Bank of Nigeria Plc and Ecobank Plc, it was 35 per cent.

The report added: “The continuous hikes in MPR have tightened financial conditions for the productive sector, with the average maximum lending rate charged by commercial banks on manufacturers’ finances rising to 35 per cent in Q2 2024 from 28.6 per cent in Q1 2024.”

 Analysts have predicted that the maximum lending rate would increase further as the MPC of the CBN hike rate to 26.75per cent at the late meeting in June 2024.

The average maximum lending rate had closed 2023 at 26.62per cent on the backdrop of CBN hike in MPR to 18.75per cent.

The unanticipated rise in MPR has impacted on the banking sector lending rate as the CBN sustained pressure in tackling inflationary pressure.

This unprecedented move has not only set the MPR at its highest level to date but also reflects the CBN’s determined effort to address the persistent pressure on foreign exchange and inflation.

The decision has garnered praise from the International Monetary Fund (IMF), which commended the MPC’s resolve to tighten monetary policy further by increasing the policy rate to 26.75 per cent.

Analysts have attributed the increase in lending to the hike in MPR and severe macroeconomy challenges.

The recent announcement, made by CBN Governor, Dr. Yemi Cardoso, had highlighted the central bank’s proactive approach towards monetary tightening amidst challenging economic conditions.

The rate hike will slow economic growth and reduce consumer spending, according to analysts at FBN Quest.

“Ultimately, the impact on the general economy could be a potential slowdown in economic growth, with consumer spending suppressed, and a decrease in business investments,” FBN Quest said in a recent note.

The report also showed that the average prime lending rate rose to 15.85 per cent in June 2024 as against 13.85 per cent in June 2023.

The money market data by CBN showed that the average prime lending rate hit the highest peak since amid uptick in Monetary Policy Rate (MPR).

Fitch Ratings projected that the CBN maintained stand on continues tightening policy in the near term, which seems necessary to more fully control inflation as rapid credit and money-supply growth suggests a still-loose monetary context.

“Such a tightening will still face implementation challenges, partly due to the potential for countervailing political pressure. However, without further sizeable monetary tightening, it may be difficult to achieve macroeconomic stability – real interest rates remain negative, deterring inward portfolio investment,” Fitch Ratings added.

Investment Banker & Stockbroker, Mr.  Tajudeen Olayinka stated that banks review their lending rates on regular basis, subject to their respective cost of funds and the direction of MPR, not necessarily using MPR as a distinct value.

According to him, the MPR signals to them the direction of interest rate in the market and the price they will pay if they have to borrow from or lend to CBN.

“Therefore, their deposit mix, which includes idle customers’ deposits, determines what their weighted average cost of funds would be. They then factor in the signal from MPR, to enable them arrive at their various prime lending rates which are usually reserved for their prime customers.

“But with all these recent circulars from CBN concerning idle deposits and foreign exchange windfalls, the market should prepare for a prolonged high interest rate regime. CBN doesn’t seem to have a good understanding of its recent destructive policies,” he added.

Kayode Tokede

TGI Foods SPV Plc, a special purpose vehicle established by the Tropical General Investments (TGI) Group, has announce the launch of its N25 billion Series 1 & Series 2 Commercial Papers Issuance under its three-year N100 billion Commercial Paper Issuance Programme.

In a statement, the company said the commercial paper programme will support the working capital requirements of TGI Foods’ co-promoters, West African Soy Industries Limited (WASIL) and WACOT Rice Limited, “both of which are integral parts of TGI Group’s expansive food manufacturing and processing footprints in Nigeria.”

Vice Chairman of TGI Group, Farouk Gumel noted that, “this issuance demonstrates TGI Foods’ continued determination to invest in Nigeria’s food sector and support our national ambition of self-sufficiency in staple food items.” 

He further reiterated the Group’s commitment to strategic alliances to further champion Nigeria’s food security cause.

“This Commercial Paper programme marks a significant milestone in our ongoing efforts to secure flexible financing that supports our operations and growth initiatives,” Gumel said.

Commenting on the issuance, financial advisors and dealers to TGI Group, expressed their confidence in the SPV and its promoters. “We are therefore happy to work with TGI on this, as we continue to be enthused by the huge potential this holds for all parties” said Lanre Buluro, Managing Director, Chapel Hill Denham Advisory Limited.

The Managing Director at Afrinvest Capital Limited also said, “By supporting TGI Group on this programme, investors are voting for sustainable national food security while deepening the capital market.”

Group Managing Director/CEO of Lighthouse Capital Limited,  Ugbede Nelson Attah, added ” The strategic vision and execution demonstrated by TGI Group through this issuance exemplify the type of forward-thinking leadership needed to transform Nigeria’s agricultural landscape.”

The Managing Director/CEO of PAC Capital Limited, Humphrey Oriakhi stated, “This initiative presents a unique opportunity for investors to align with a purpose-driven venture that promises both substantial financial returns and positive social impact.”

Kayode Tokede

Alaro City, in collaboration with Universal Homes, is set to host the grand opening and handover of the first phase of Universal Homes apartments ending August 2024.

The apartment block is now officially ready to welcome its new owners, marking a significant milestone in Nigeria’s real estate and urban development landscape.

Located within Alaro City, an expertly planned urban development in the Lekki Free Zone, these uniquely designed apartments have been designed to redefine modern living.

Alaro City is setting new benchmarks by blending cutting-edge technology with sustainability and community-focused designs, ensuring that residents enjoy not only comfort and convenience but also an environment that fosters long-term growth and well-being.

Managing Director of Alaro City. Yomi Ademola in a statement said, “This development is a testament to our unwavering commitment to building a city that meets the highest standards of modern living, while preserving the environment and encouraging a sense of community.

“The completion and handover of the first phase of Universal Homes signifies the beginning of a new chapter in Alaro City, where residents can enjoy the benefits of smart home technology in a serene, well-planned urban environment.”

Kayode Tokede

The Managing Director/CEO, Africa Prudential Plc, Mrs. Catherine Nwosu, yesterday revealed that the only listed registrar company on the Nigerian Exchange Limited (NGX) is poised to take advantage of new market opportunities, grow its revenue and satisfy customers.

Speaking virtual during the company’s “investors relations call” on half year (H1) ended June 2024 unaudited result and accounts, Nwosu said the company recently completed a strategic retreat and discovered mind blowing opportunities within Nigeria and outside the shores of the country, assuring shareholders that the management would present itself to tap from these opportunities.

Africa Prudential had declared N2.03 billion net operating income in H1 2024, about 24 per cent increase from N1.63billion reported in H1 2023, driven by N1.48 billion interest income in H1 2024 from N950.41 million reported in H1 2023.

The growth impacted on bottom-line as profit before tax stood at N1.13 billion in H1 2024, representing an increase of 89 per cent from N597.22 million reported in H1 2023, while profit after tax moved from N415.07 million in H1 2023, increasing about 88 per cent to N779.4 million in H1 2024.

Beyond the surge in interest income from investment, she stated that the company executed 10 transactions within the period under review.

“So, these bring additional income to our business, and we’ll continue to do more to engage more clients, because that is our core business, and that is where the bulk of our revenues will be coming from,” she added.

On business look, she said: “We will maintain our focus on the fixed income market, taking advantage of high interest rates to ensure consistent returns to investors.

“Our investor engagement is very critical to us, so we will continue to leverage on a multi-channel approach to provide best in-class customer experience across all our touch points.

“We will consistently excite our clients by providing proactive, data driven insights for their business growth.

“We will strengthen partnerships with key stakeholders to drive profitability and increase market penetration. Cost optimization is key to our growth, and will continue to drive our cost down, maintaining quality products and services.

“Risk management is also very key to us to drive our core business through leveraging a robust risk management framework.

“We will launch an additional range of new products and innovative services. These offerings are designed to the diverse needs and expectations of our esteemed investors.

“We will continually pursue operational efficiency through process reengineering and automation to enhance operational efficiency, aiming to maximize service delivery, boost our customer satisfaction and improve our revenue generation position.”

On the surge in interest income, the Chief Finance Officer, Africa Prudential, Mr. Taofik Giwa, stated that the company took advantage of the prevailing high interest rates yield in the fixed income market space.

“We did invest more in fixed income instruments such as treasury bills, fixed placements, commercial papers and bonds to actually grow earnings for investment income. With particular focus on asset classes that are not less than 20 per cent interest rate, it reduced not less than 18 per cent across all our portfolio,” he said.

On sustaining the growth throughout the 2024 financial year, he said the company is intentional about its strategy in terms of how it wanted to grow its profit and maintain the good track record.

“We know that we are going to close the 2024 financial year favourably for our investor’s sake. So basically, just juggling our investment strategy, ensuring that we grow our revenue baseline, and I think with that, we are able to edge the forces that are working the ties against us,” he said.

Kayode Tokede

The Securities and Exchange Commission (SEC) has directed shareholders to access the e-dividend portal through its official website.

The Director General of the SEC, Dr. Emomotimi Agama who stated this in an interview recently, emphasised that the process is safe and urged investors to take advantage of the opportunity to mandate their accounts.

Agama said, “if you access that portal from the SEC website, it is genuine. The only other website that is genuine that it can be accessed from is the Nigerian Interbank Settlement System website because that platform was built in conjunction with NIBSS.

“This is very important knowing fully well the cyber security threats that exists in this space. You cannot run away from the fact that a lot of people might be trying to clone the website like they do for other institutions. But my guide is simply go to the SEC website www.sec.gov.ng which is fully protected and access it.”

He stated that requesting for Bank Verification Number on the portal is not out of place because for now it is the most authentic retrieval of information in the financial space.

He said, “We need to verify that you are who you say you are. If the BVN provided does not match with your identity, it means it’s not yours. As an institution we try to protect the investor and protect us too as regulators. We will try to make it as easy as possible and also as protected as possible too.”

Agama said the issue of unclaimed dividends to the SEC is a very important topic because it speaks to the investors themselves.

The SEC Boss said the reason why investors come to the market is to have returns and when the return is not getting to them it becomes a challenge and the SEC is very serious about it.

Kayode Tokede posits that the ongoing capital raising exercise by Access Holdings Plc would lead to significant growth in operations and create higher value for all shareholders

The Central Bank of Nigeria (CBN) on March 28, 2024, announced a two-year bank recapitalisation exercise, which commenced on April 1, 2024, and is expected to end on March 31, 2026. In line with this development, Access Holdings Plc, one of Nigeria’s largest financial institutions, had announced plans to raise a staggering N351 billion through a rights issue.

The company has a capital raising programme of $1.5 billion, planned to be executed via  equity, quasi-equity, and debt issuances. For investors, the capital raising presents an opportunity to expand the company’s earnings window and improve returns on investment.

For the right issue, Access Holdings is offering 17.772 billion ordinary shares of 50 kobo each to existing shareholders at N19.75 per share. The offer opened on Monday, July 8, 2024.

The offer period, which was initially scheduled to close today, August 14, 2024, has now been extended to August 23, 2024. The extension followed approval of the Securities & Exchange Commission (SEC).

Access Holdings extended the acceptance period for the rights issue, providing existing shareholders and other investors additional opportunity to participate in the new capital raising.

In a regulatory filing at the Nigerian Exchange (NGX), Access Holdings explained that the decision to extend was in response to the recent nationwide protest that disrupted operations of businesses and individuals across Nigeria.

Stakeholders insist that the funds raised is expected to fortify the bank’s capital base, supporting its continued expansion and its ability to seize emerging opportunities in the financial sector.

The proceeds of the proposed Rights Issue would be used to support ongoing working capital needs including organic growth funding for its banking and other non-banking subsidiaries.

The plans for the programme were disclosed in the Group’s Notice of the 2^nd Annual General Meeting holding on April 19, 2024, which was published on the Nigerian Exchange portal on March 27, 2024.

Breakdown of the Rights Issue

With the rights issue, Access Holdings will see an expansion in its issued share capital from N17,772,612,811.00 , divided into 35,545,225,622 ordinary shares, to N26,658,919,216.50.

This expansion is facilitated by the creation of an additional 17,772,612,811.00 ordinary shares, each priced at N0.50 Kobo, which will rank pari-passu with the existing shares of the company.Existing shareholders are to purchase one ordinary share for every two existing shares held.

The recapitalisation plan set by the CBN requires minimum capital of N500 billion, N200 billion, and N50 billion for commercial banks with international, national, and regional licenses respectively.

Likewise, the CBN also raised capitalisation baseline for Merchant Banks (N50 billion) and Non-interest Banks (National: N20 billion and Regional: N10 billion).

The options for the banks include  private placement, which allows lenders to seek new funds from pre-selected private investors and rights issue, which authorises them to invite existing shareholders to purchase additional shares in the bank at a discounted price relative to the current market price, among others.

Shareholders give nod to Rights Issue

Different groups of shareholders associations expressed their optimism on the ongoing rights issue by Access Holdings Plc.

They described Access Holdings as a forward-thinking financial institution with the right leadership and customer services to drive growth and profitability.

Shareholders said the ongoing capital raising exercise by the bank would lead to significant growth in operations and create higher value for all shareholders. The shareholders outlined Access Holdings’ track record of success as Nigeria’s most profitable lender, noting that the additional capital would scale up the output of the bank.

They described Access Holdings as a great financial institution that has consistently delivered good returns to shareholders.

They expressed their confidence that the bank will sustain its success trajectory success and payment of good returns to shareholders.

Founder and former National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Chief Sunny Nwosu, advised Access Holdings to continue to live up to shareholders and other stakeholders’ expectations through quality services delivery and good returns on investment.

According to him, the rights issue will be oversubscribed given the bank’s records of performance and delivery on set targets.

Nwosu said Access Holdings remains a solid institution, which has over the years surpassed shareholders expectations and has what it takes to keep the flag flying higher.

“I do not think that Access Holdings will disappoint investors. They have consistently delivered and exceeded investors’ expectations, and this current offer will not be an exception,” he said.

He projected that the Access Holdings shares would record significant appreciation whereby investors will have something significant to take home now, and in the many more years to come.

Nwosu said he expects investor confidence to be sustained, as  the institution’s track record guarantees acceptance and investments anytime it comes to raise new funds from the market.  

Also speaking, the National Coordinator, Pragmatic Shareholders Association (PSAN), Bisi Bakare, said Access Holdings had what it takes to attract the right investors, and it is already doing so with ease.

She highlighted the bank’s consistent dividend payments and robust financial performance, making it an attractive investment.

Bakare expressed her association’s support for the Rights issue, expressing the optimism that the offer will be over-subscribed at the end of the day. 

She said members of her association have been advised to take up their rights because the bank had all it takes to continue to declare profits and dividends.

She said: “I am going to take my rights, and we have advised other shareholders to do so. Investors should also see the opportunities the offer presents, based on the track record of success that is synonymous with Access Holdings. The Rights Issue is very good, and attractive to savvy investors”.

Taiwo Oderinde, also a member of the Proactive Shareholders Association, said Access Holdings has really added value to the economy and investors.

According to him, the company has surpassed projections in terms of how it has grown from its humble beginning to the status of a global brand.

He said the bank had been able to grow through mergers and acquisitions, and investors should take advantage of the rights issue.

According to him, anyone that invests in the offers will count huge gains in the years to come. “I predict great returns to investors in the rights issue,” he said.

National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, said the bank’s expansion into new markets will begin to pay off now, which presents good opportunities for investors of all classes.

He advised the bank to continue to equip its branches in the domestic market and offshore with the right technology to enable them continually to deliver quality services and bountiful returns to shareholders and all stakeholders.

He said investors are investing at the right time, because all the years of expansion and opening in new markets will begin to produce the right results.

He said the subsidiaries within the holding company structure should also be strengthened to ensure they continue to be profitable.

Okezie advised Access Holdings to show more interest in funding the real sector to support the economy and sustain growth of businesses.

“Overall, Access Holdings is a great brand, that has stayed the course of time. Its ability to deliver to customers and all stakeholders is not in doubt, and we believe that that track record of great achievements will be sustained,” he said.

He further advised the bank to continue to hire great talents and sustain a quality reward system to ensure that the entire workforce is motivated to surpass targets and deliver bountiful returns to shareholders.

Benefits of the Rights Issue

Chairman, Access Holdings Plc, Aigboje Aig-Imoukhuede, said the group decided on a rights issue as a commitment to the bond between the group and its shareholders.

According to him, shareholder value was at the core of the group’s business vision and the group decided shareholders, who had endured to build the group to its enviable status should reap the benefits.

At the “Facts Behind the Rights Issue” session at the NGX, Aig-Imoukhuede said the group is moving to a new phase of its phenomenal growth where shareholders would reap bountiful returns on their investments.

He urged shareholders to pick their rights as they stand to gain more from their investments.

According to him, the additional capital will enable the group to maximise emerging opportunities and deliver long-term value to shareholders.

He said the group was committed to strengthening ties with shareholders and enhance value creation.

Funding for infrastructure to rise

Access Holdings Plc reaffirmed its commitment to addressing infrastructure deficit and capital access challenges not only in Nigeria but across the continent.

Managing Director, Access Bank Plc, Roosevelt Ogbonna, said the bank’s focus on improving infrastructure at this time is informed by its desire to bridge the gap and connect Africa with the rest of the world.

 “As one of the continent’s largest and most diversified financial services groups, the Group is poised to   tackle Africa’s integration into global markets, which remains a significant challenge, hindering the continent’s economic growth and development, particularly in an era, where globalisation is rapidly reshaping economies worldwide.”

The Access Bank’s chief, who spoke in the light of the bank’s ongoing Rights Issue presentation at the Nigerian Exchange (NGX), said: “we are positioning ourselves to be one of the most respected banks globally,” adding, “our focus is on superior service across all the continents and countries we are operational in.”

Access Bank’s customer base, he stated, is expected to grow to 125 million by 2027, further cementing our market leadership.

This ambitious growth plan, in his words, “is part of the broader strategy to drive organic growth through strategic acquisitions, partnerships with international banks, and substantial investments in infrastructure and technology,”

Access Holdings’ ambitious five-year strategic plan, Ogbonna highlighted, aims to establish a presence in at least 26 countries by 2027, including the Organisation for Economic Co-operation and Development (OECD) countries, the United Kingdom, France and the USA.

To support this growth, he said, “Access Holdings plans to develop a cutting-edge digital platform and automated self-services to better serve its customers, as well as open cost-effective branches in strategic locations within and beyond Africa.”

According to him, building on this key aspect of Access Holdings’ growth strategy is the formation of strategic partnerships with major players in the financial sector. One of which is the Group’s partnership with Safaricom Plc and M-PESA Africa to expand cross-border money solutions in Africa.

As he put it, “this partnership will leverage Access Bank’s extensive network and presence across 15 African countries, including Nigeria, Kenya, Ghana and Tanzania, to provide affordable remittance solutions to key markets.”

He said Access Holdings is extending its cross-border money solutions in Africa through strategic alliances with Safaricom Plc and M-PESA Africa, leveraging its broad network of 15 African nations to provide competitive remittance options.

Besides, he said , the financial services group is collaborating with MasterCard to create a payment infrastructure that integrates a single cross-border money transfer system across multiple African markets.

This solution, Ogbonna emphasised, will enable businesses and consumers to make and receive international payments in over 150 countries, thereby enhancing the accessibility and efficiency of cross-border payments.

He stressed that Access Holdings’ strategic expansion plan could position Africa as a global economic leader, expanding financial and credit services to remote areas of the continent.

“The opportunities for African integration and economic progress are vast,” adding that by capitalising on its extensive network, large customer base, geographic reach, and market leadership, “Access Holdings is well-equipped to unlock new opportunities for African businesses and consumers, enhancing the continent’s interconnectedness.

Ogbonna said Access Bank has experienced significant growth, particularly following its merger with Diamond Bank, pointing out that this merger has positioned Access Bank as one of the largest retail banks in Africa by customer base and the largest by total assets.

He said Access Bank currently serves its markets through Retail, Business, Commercial and Corporate, saying over the past 18 years, the bank has demonstrated strong growth potential, solidifying its position as a leader in the African banking space.

The goal of becoming Africa’s gateway to the world, he said, is driven by the company’s plan to be the continent’s preferred trade financier and payment solutions provider.

According to him, this strategy leverages the enormous potential in trade and payment, including Africa’s $24 billion electronic payments market, growing at an annual rate of 30 per cent; the $950 billion in cross-border trade; and $100 billion in cross-border payments and remittances.

QUOTE

“Access Holdings’ ambitious five-year strategic plan, aims to establish a presence in at least 26 countries by 2027, including the Organisation for Economic Co-operation and Development (OECD) countries, the United Kingdom, France and the USA. To support this growth, Access Holdings plans to develop a cutting-edge digital platform and automated self-services to better serve its customers, as well as open cost-effective branches in strategic locations within and beyond Africa.”

Kayode Tokede 

The Nigerian Exchange Limited (NGX) has reiterated its commitment to enhancing investor protection measures, reinforcing its dedication to maintaining a secure and transparent trading environment.

At a recent event, NGX highlighted its efforts to implement robust mechanisms designed to safeguard investors and uphold market integrity. This renewed focus addresses evolving market dynamics and the growing need for comprehensive safeguards in the investment landscape.

 “At NGX, our primary goal is to ensure that investors can engage the market with confidence,” said Jude Chiemeka, Chief Executive Officer, NGX, during a panel session at the Afrinvest 2024 Banking Sector launch in Abuja, themed “Recapitalisation: Catalyst for a $1 Trillion Economy?” Chiemeka underscored the exchange’s commitment to reforming listing rules and encouraging more companies to go public as part of a broader strategy to fortify the capital market.

 “Our dedication to investor protection is integral to our mission of maintaining a fair, transparent, and efficient market,” the CEO added.

NGX is collaborating closely with regulatory bodies to refine and enforce regulations that protect investors from potential risks and fraudulent activities. This includes enhancing disclosure requirements and improving oversight mechanisms.

The Exchange is also investing in advanced technology to upgrade surveillance and monitoring systems, aiming to detect and prevent market manipulation and ensure the integrity of trading practices.

To promote informed decision-making, NGX is expanding its investor education programs. The NGX X-Academy, a specialized learning centre, offers tailored capital market courses to equip business leaders with the knowledge needed for sustainable business growth. X-Academy provides a broad range of courses designed to bridge knowledge gaps for capital market professionals, investors, and the general public, thereby promoting financial literacy and inclusion.

Additionally, NGX is improving its processes for handling investor complaints and disputes, including establishing dedicated channels for addressing concerns and ensuring timely resolutions.

In 2023, NGX Regulation Limited (NGX RegCo), a sister company of NGX under the NGX Group umbrella, introduced the “Code of Conduct for Approved Persons of Trading License Holders.” This code aims to promote high professional standards and ethical conduct within the capital market, fostering professionalism, integrity, and fairness in interactions with clients, employers, regulators, and other stakeholders.

NGX is reinforcing its code of conduct to ensure the highest standards of ethical behaviour among market participants, including stringent measures to address conflicts of interest and ensure transparency in transactions.

 The Exchange’s ongoing commitment to these initiatives reflects its broader vision of creating a resilient and trustworthy market environment. NGX’s proactive approach underscores its role as a key player in the Nigerian financial sector, dedicated to enhancing investor confidence and market stability.

As NGX continues to strengthen its investor protection efforts, the Exchange remains focused on supporting sustainable market growth while upholding principles of fairness and transparency.

Kayode Tokede

The Nigerian stock market recovered from a bearish run yesterday, as investors’ investments went up by N66.13 billion, propelled by the demand for Seplat Energy Plc and 18 others.

The Nigerian Exchange Limited All-Share Index (NGX ASI) gained 116.13 basis points or 0.12 per cent to close at 95,895.92 basis points from 95,779.79 basis points, to bring the stock market Month-till-Date (MtD) and Year-till-Date (YtD) performance to -1.9per cent and +28.3per cent, respectively.

Also, market capitalisation rose by N66.13 billion to close at N54.448 trillion from N54.448 trillion the stock market opened for trading.

Sectoral performance was mixed, as the NGX Banking Index (+0.4per cent), NGX Oil & Gas IIndex (+0.4per cent) and NGX Insurance Index (+0.2per cent), while the NGX Consumer Goods Index (-0.1per cent). The NGX Industrial Goods index closed flat.

As measured by market breadth, market sentiment was negative, as 19 stocks gained relative to 24 losers. Learn Africa emerged the highest price gainer of 9.94 per cent to close at N3.87, per share.

Oando followed with a gain of 9.90 per cent to close at N43.30, while Cutix advanced by 9.85 per cent to close at N2.90, per share.

R.T. Briscoe Nigeria rose by 9.63 per cent to close at N2.05, while University Press increased by 8.57 per cent to close at N2.66, per share.

On the other side, Thomas Wyatt Nigeria led others on the losers’ chart with 9.71 per cent to close at N1.58, per share. Omatek Ventures followed with a decline of 6.85 per cent to close at 68 kobo, while FTN Cocoa Processors shed 6.80 per cent to close at N1.92, per share.

Neimeth International Pharmaceuticals lost 5.00 per cent to close at N1.90, while The Initiates Plc (TIP) depreciated by 4.44 per cent to close at N2.15, per share.

The total volume of trades declined by 71.41 per cent to 1.014 billion units, valued at N7.688 billion, and exchanged in 8,295 deals.

Transactions in the shares of Jaiz Bank led the activity with 651.290 million shares worth N1.497 billion. Sterling Financial Holdings Company followed with an account of 53.944 million shares valued at N218.412 million, while International Breweries traded 28.411 million shares valued at N127.991 million.

FCMB Groups traded 21.865 million shares worth N165.997 million, while Access Holdings traded 20.294 million shares worth N384.087 million.

Kayode Tokede

In the bid to bridge the 2024 budget deficit, the federal government, through the Debt Management Office (DMO), has borrowed a whooping N4.73 trillion in eight months using the Bond market, market data has revealed.

Analysis of the FGN bond issuance data showed that between January and August 2024, the DMO offered to raise N5.15 trillion, but got N5.64 trillion total subscription.

President Bola Tinubu had in his budget presentation at the joint session of the national assembly in November 2023, titled, “Budget of Renewed Hope” stated that 2024 budget deficit is projected at N9.18 trillion or 3.88 per cent of Gross Domestic Product (GDP).

“This is lower than the N13.78 trillion deficit recorded in 2023 which represents 6.11 per cent of GDP. The deficit will be financed by new borrowings totalling N7.83 trillion, N298.49 billion from Privatization Proceeds and N1.05 trillion drawdown on multilateral and bilateral loans secured for specific development projects,” he added.

Since the beginning of 2024, THISDAY gathered that investors have shown interest in the long-term FGN Bond, a major factor contributing to the amount raised in the period.

The eight months auction by DMO revealed a shift in investor preferences towards higher-yielding and longer-tenor bonds, amidst a backdrop of cautious market sentiment.

The DMO between January and August 2024 has continually re-open some FGN Bonds and steadily hike its interest rate to attract investors amid double-digit inflation rate.

The FGN bond market this year consistently witnessed increased participation by Pension Funds Administrators (PFAs) as double-digit inflation rate eroded investment in money and capital market instruments.

According to National Pension Commission (NAICOM), pension funds industry portfolio in the FGN Bonds increased to N12.22 trillion as of June 2024, contributing about 59.66 per cent of the N20.48 trillion of the industry assets.  

In the latest auction for August 2024, the DMO disclosed that it has raised N374.751 billion for the federal government, of which it offered N190 billon to investors. The month under review recorded N460.182 subscription as rate on the three auctions stood above 20 per cent.

The N190 billion raised from the bond market in August 2024 marks its lowest bond offer in 2024, as this offer amount is 37 per cent less than the N300 billion it offered July 2024.

These bonds, which were originally issued in earlier years, are being offered to investors once again under attractive terms designed to ensure strong participation.

The bonds include a N70 billion reopening of the 19.30% FGN APR 2029, a 5-year bond that will mature in April 2029.

Also, the DMO offered another N70 billion through the 18.50% FGN FEB 2031 bond, which is a 7-year instrument maturing in February 2031 and the third bond in the offering was the 19.89% FGN MAY 2033, a 9-year bond with a reopening value of N50 billion, set to mature in May 2033.

Finance analysts attributed the strong demand for FGN bond to attractive yield, which offers investors high returns on their investments, stressing that the oversubscriptions also revealed that investors have confidence in the federal government’s ability to meet its debt obligations.

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf had stated that the federal government notified the general public of borrowing more in 2024.

He said, “With all the volatility and foreign exchange issues, it makes sense to borrow at the domestic market rather than borrowing from the international market. It is all a reflection of our macro economy environment challenges and weak fiscal policy of the government. All this borrowing also is a reflection of the weak financial position of the government and it will continue like that.”

“The appetite for FGN bonds indicates that PFAs, and Nigerian investors prefer investment instruments with less volatility that assures them of their capital returns albeit with low yield on investment.

“But some analysts attributed the under subscription to some issuances to fear of interest rate risk, “as investors are full well informed that economy is still very much challenged and that inflationary pressure remains unabated.

“So, investors expect higher yield for this particular issuance, while the government does not wish to borrow at higher interest rate,” said CEO, Wyoming Capital and Partners, Mr. Tajudeen Olayinka.

Meanwhile, in recent years, Nigeria’s rising debt profile has been a topic of concern, as Vice President, Highcap Securities Limited, Mr. David Adnori, warned that the country’s debt levels are unsustainable.

According to Adnori, “Ways and means” refer to the CBN’s lending to the federal government. The DMO said that the “securitization of ways and means” is not unusual and is a common practice in many countries, but it is not a decision that can be made by the DMO alone.” Adnori expressed concerns that Nigeria’s rising debt levels could become unsustainable if not managed properly.

Kayode Tokede

The stock market segment of the Nigerian Exchange Limited (NGX), yesterday depreciated by N749.7 billion in market capitalisation, attributable to investors profit-taking in Dangote Cement Plc and 18 others.

As Dangote Cement dropped by 10 per cent, the overall market capitalisation moved from N55.132 trillion the stock market opened for trading to N54.382 trillion yesterday, dropping by 1.4 per cent or N749.7 billion.

Consequently, the All-Share Index (NGX ASI) shed 1,320.52 basis points or 1.36 per cent to close at 95,779.79 basis points, the lowest point since January 22, 2024.

The stock market decline yesterday brings NGX ASI Month-to-Date and Year-to-Date performance to -two per cent and +28.1per cent, respectively.

Analysing by sectors, the NGX Industrial Goods Index (-five per cent), NGX Insurance index (-0.7per cent) and NGX Consumer Goods Index (-0.7per cent) recorded losses, while the NGX Banking Index (+0.2per cent) and NGX Oil & Gas Index (+0.1per cent) posted gains.

However, market breadth closed positive, as 31 stocks gained relative to 17 losers. Skyway Aviation Handling Company, Cutix and R. T. Briscoe Nigeria emerged the highest price gainer of 10 per cent each to close at N26.40, N2.64 and N1.87 respectively, per share.

Oando followed with a gain of 9.90 per cent to close at N39.40, while FTN Cocoa Processors appreciated by 9.57 per cent to close at N2.06, per share.

On the other side, Dangote Cement led others on the losers’ chart with 10 per cent to close at N532.00, per share. Secure Electronic Technology followed with a decline of 9.76 per cent to close at 37 kobo, while Africa Prudential declined by 9.68 per cent to close at N8.40, per share.

Beta Glass lost 9.43 per cent to close at N48.00, while Caverton Offshore Support Group depreciated by 6.38 per cent to close at N1.32, per share.

The total volume traded increased by 916.19 per cent to 3.546 billion units, valued at N7.649 billion, and exchanged in 9,291deals. Transactions in the shares of Standard Alliance Insurance led the activity with 3.141 billion shares worth N31.408 million. Guaranty Trust Holding Company (GTCO) followed with account of 59.255 million shares valued at N2.728 billion, while Wema Bank traded 25.351 million shares valued at N155.065 million.

Access Holdings traded 24.697 million shares worth N471.224 million, while United Bank for Africa (UBA) traded 23.360 million shares worth N529.571 million.

Looking forward, United Capital Plc said “the equities market is expected to show mixed performance as investors adopt opportunistic investment strategies. We foresee selective buying of fundamentally strong stocks continuing into the week.

“Market activity is anticipated to rise due to ongoing banks’ recapitalization efforts and anticipated corporate actions in the near term. Conversely, elevated interest rates in the fixed income market are likely to exert a negative pressure on the equities market as investors capitalize on higher fixed income yields. Overall, fund managers and investors are advised to maintain an opportunistic approach to capitalize on prevailing market opportunities.