Results for Economy

US Stocks Capsize, Worst in 2019

August 08, 2019


US Wall Street’s major indexes tumbled on Monday, with the benchmark S&P 500 dropping about 3%, as a fall in the yuan following U.S. President Donald Trump’s vow to impose additional tariffs on Chinese goods sparked fears of a further escalation of the U.S.-China trade war.
The Dow Jones Industrial Average .DJI fell 767.27 points, or 2.9%, to 25,717.74, the S&P 500 .SPX lost 87.31 points, or 2.98%, to 2,844.74.
The tech-heavy Nasdaq composite fell the most of the major indexes, losing 278 points, or 3.47%, to finish at 7,726, USA Today reported.
In value terms, the decline amounted to a $766 billion paper loss for the index, according to Refinitiv data. The S&P 500 has fallen for six consecutive sessions and is now about 6% below its record closing high on July 26.
China allowed the yuan to drop to seven per U.S. dollar, an 11-year low and a politically sensitive level. A weaker Chinese currency can help boost that country’s exports by making them cheaper while hurting foreign competition.
“Trade continues to trend in the wrong direction … any hopes of a quick resolution with China are fading quickly,” said Ryan Detrick, senior market strategist for LPL Financial.
US Stocks Capsize, Worst in 2019 US Stocks Capsize, Worst in 2019 Reviewed by worldforummedia on August 08, 2019 Rating: 5

2019 Nigerian budget inflation benchmark of 9.98% may be unattainable

January 14, 2019
As the National Bureau of Statistics (NBS) releases its December 2018 inflation figures this week, leading research firms in the country, FSDH Research and Financial Derivatives Company (FDC), said in their forecasts at the weekend that the nation’s inflation rate for December 2018 would increase.


The rising rate of Nigerian Inflation rate

FSDH Research expects the December 2018 inflation rate (year-on-year) to rise to 11.69 percent from 11.28 percent recorded in November, while FDC in its bulletin predicts that headline inflation will increase to 11.37 percent in December.

FSDH forecast represents a monthly increase of 0.41 percent between the two months and the highest monthly increase since November 2016.


The expected increase in the inflation rate will reflect higher price increases within the Food and Non-Alcoholic Beverages division and other non-food items due to end-of-year and festivity purchases.


The NBS is due to release the inflation rate for the month of December on Thursday, January 17, 2019, ahead of the Monetary Policy Committee (MPC) meeting scheduled for January 21 and 22, 2019.


The Food Price Index (FPI) report that the Food and Agriculture Organisation (FAO) published for the month of December 2018 remained relatively the same as November 2018.


However, the World Bank has hinted about a possible increase in food prices in 2019 because of severe weather conditions. This may accelerate the inflation rate in 2019 in Nigeria
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The FAO notes that the decline in the prices of dairy and sugar in December were largely offset by the increases in cereal, meat and oils
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FSDH Research’s analysis indicates that the value of the naira depreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) in December 2018, while it appreciated at the parallel market
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The value of the naira depreciated marginally by 0.01% at the NAFEX market to close at US$/N364.18 from US$/N364.16 in November, while it gained 0.14 percent in the parallel market to close at US$/N365.00 from US$/N365.50 in November 2018.


The value of the naira appreciated at the parallel market as a result of newly introduced special ‘Thursday sale’ to Bureau de Change (BDCs) operators.


The depreciation recorded at NAFEX between the two months under review increased the impact of foreign exchange on the prices of imported consumer goods in the domestic market
.


Read Also: Nigerian economy grew by 1.95% in Q1 of 2018


Analysts at FDC believe December is a period in which higher festive related spending pushes up aggregate demand in the economy as anecdotal and empirical evidence in December 2018 has validated.


Compounding the demand pull effect of festive spending was the surge in FAAC by 3.12 percent to N812.76 billion. This means that state governments and federal agencies had more liquidity during the period.


Also worth mentioning is that the slope of the inflation curve is getting steeper, suggesting that the 2019 budget inflation benchmark of 9.98% may be unattainable. The average inflation rate in 2018 was 12.14 percent down from 16.54 percent the 2017 average
.
2019 Nigerian budget inflation benchmark of 9.98% may be unattainable 2019 Nigerian budget inflation benchmark of 9.98% may be unattainable Reviewed by worldforummedia on January 14, 2019 Rating: 5

Too bad for Nigerian economy to become the world's second largest rice importer in 2019 - US agency

November 15, 2018

Bags of Rice

Nigeria will emerge the world’s second-largest rice importer after China with a projected 13% jump next year to 3.4 million metric tons. This is according to a revelation from a US Department of Agriculture report.


“China and Nigeria are projected to remain the largest rice importing countries in 2019, followed by the EU, Cote d’Ivoire, and Iran,” the USDA said in its latest Rice Outlook released Tuesday, 12th of November.
“Nigeria and Egypt are projected to account for the bulk of the 2019 import increase,” reports Bloomberg.

There are reports that production had increased more than 50% since 2012 to 3.7 million tons last year. Domestic demand rose 4% to 6.7 million tons in the 2017 to 2018 year that ended in May.

 It had been earlier warned by Minister of Agriculture and Rural Development, Audu Ogbeh that Nigeria may face shortages in the supply of rice, due to the flood that embattled the country recently.

Currently, global production exceeds consumption by 2.3 million tons, according to USDA, with 2018-2019 “global ending stocks” projected to reach 163 million tons That is, 17.8 million tons more than previously forecast.
Too bad for Nigerian economy to become the world's second largest rice importer in 2019 - US agency Too bad for Nigerian economy to become the world's second largest rice importer in 2019 - US agency Reviewed by worldforummedia on November 15, 2018 Rating: 5

NBS Latest Report Says Nigeria Economy Grew By 1.95% In Q1 2018

May 21, 2018

Nigeria’s Gross Domestic Product grew by 1.95 per cent year-on-year in real terms in the first three months of this year.

The National Bureau of Statistics stated this on Monday (21st of May) in its GDP report for the first quarter of 2018.


“This shows a stronger growth when compared with the first quarter of 2017 which recorded a growth of -0.91 per cent, indicating an increase of 2.87 per cent points,” the NBS said.


It said compared to the preceding quarter, there was a decline of -0.16 percentage points from 2.11 per cent.


“Quarter on quarter, real GDP growth was -13.40 per cent,” the bureau said, adding that the oil production estimates for the third and fourth quarters of 2017 had been revised and oil GDP for those quarters had been adjusted accordingly
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California now 5th largest economy, surpassing UK

The NBS said, “Still on the first quarter of 2018, aggregate GDP stood at N28,464,322.01 million in nominal terms. This performance is higher when compared to the first quarter of 2017, which recorded a nominal GDP aggregate of N26,028,356.03 million, thus presenting a positive year-on-year nominal growth rate of 9.36 per cent.

“This rate of growth is, however, lower relative to growth recorded in Q1 2017 by -7.70 per cent points at 17.06 per cent but higher than the proceeding quarter by 2.14 per cent points at 7.22 per cent. To give a clearer depiction, the Nigerian economy has been classified broadly into the oil and non-oil sectors.”
NBS Latest Report Says Nigeria Economy Grew By 1.95% In Q1 2018 NBS Latest Report Says Nigeria Economy Grew By 1.95% In Q1 2018 Reviewed by worldforummedia on May 21, 2018 Rating: 5

California - Now World's 5th Largest Economy, Surpassing UK

May 07, 2018

SACRAMENTO, Calif. — California's economy has surpassed that of the United Kingdom to become the world's fifth largest, according to new federal data made public Friday.

California's gross domestic product rose by $127 billion from 2016 to 2017, surpassing $2.7 trillion, the data said. Meanwhile, the UK's economic output slightly shrunk over that time when measured in U.S. dollars, due in part to exchange rate fluctuations.


The data demonstrate the sheer immensity of California's economy, home to nearly 40 million people, a thriving technology sector in Silicon Valley, the world's entertainment capital in Hollywood and the nation's salad bowl in the Central Valley agricultural heartland. It also reflects a substantial turnaround since the Great Recession
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"We have the entrepreneurial spirit in the state, and that attracts a lot of talent and money," said Sung Won Sohn, an economics professor at California State University Channel Islands. "And that's why, despite high taxes and cumbersome government regulations, more people are coming into the state to join the parade."


All economic sectors except agriculture contributed to California's higher GDP, said Irena Asmundson, chief economist at the California Department of Finance. Financial services and real estate led the pack at $26 billion in growth, followed by the information sector, which includes many technology companies, at $20 billion. Manufacturing was up $10 billion
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California last had the world's fifth largest economy in 2002 but fell as low as 10th in 2012 following the Great Recession. Since then, the largest U.S. state has added 2 million jobs and grown its GDP by $700 billion. California's economic output is now surpassed only by the total GDP of the United States, China, Japan and Germany. The state has 12 percent of the U.S. population but contributed 16 percent of the country's job growth between 2012 and 2017. Its share of the national economy also grew from 12.8 percent to 14.2 percent over that five-year period, according to state economists.

California's strong economic performance relative to other industrialized economies is driven by worker productivity, said Lee Ohanian, an economics professor at University of California, Los Angeles and director of UCLA's Ettinger Family Program in Macroeconomic Research. The United Kingdom has 25 million more people than California but now has a smaller GDP, he said.California's economic juggernaut is concentrated in coastal metropolises around San Francisco, San Jose, Los Angeles and San Diego.


"The non-coastal areas of CA have not generated nearly as much economic growth as the coastal areas," Ohanian said in an email.


The state calculates California's economic ranking as if it were a country by comparing state-level GDP from the Bureau of Economic Analysis at the U.S. Department of Commerce with global data from the International Monetary Fund
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California - Now World's 5th Largest Economy, Surpassing UK California - Now World's 5th Largest Economy, Surpassing UK Reviewed by worldforummedia on May 07, 2018 Rating: 5

FG targets N5tn from non-oil export

November 05, 2017

The Federal Government through the Nigerian Export Promotion Council plans to grow the country’s non-oil export revenue from N1.5tn per annum to N5tn within the next three to four years.
Executive director of Nigeria Export Promotion Council, Mr Olusegun Awolowo
The Executive Director/Chief Executive Officer, Nigerian Export Promotion Council, Mr. Olusegun Awolowo, confirmed the figure to our correspondent in Abuja.
To achieve the target, he said the agency was implementing an export competency development programme that would offer the Small and Medium Enterprises the needed capacity to add value to their products to attract higher profit margins.
He said under the export competency programme, three products would be focused on at the pilot stage. They are cashew, cocoa and sesame.
The NEPC boss explained that adding value to raw materials would not only create higher profit margins, but it would also generate more income and jobs.
Awolowo said through the programme, the Federal Government would depend less on oil revenue in the next few years.
He said, “We are at a critical point in Nigeria’s history, which requires bold and decisive action to restructure and reposition our economy to survive without crude oil.
“The council’s goal is to grow Nigeria’s non-oil export revenues from N1.5tn per annum to N5tn within three to four years and over N10tn over the longer term. The economic consequences are sure for our country to keep crude oil as its primary source of export revenue.”
He said the Federal Government was committed to the development of the non-oil export sector.

See: Don't anticipate commodity shake-up next year, World Bank tells Nigeria
This, he added, became imperative owing to the huge revenue loss caused by the decline in oil prices.
He said, “Our export outlook in 2017 shows some positive developments. In cashew, for example, a lot of cashew plantations with jumbo varieties are springing up. From a raw cashew production of about 150,000 tonnes, 15,000 tonnes are processed in Nigeria, which is about 10 per cent.
“We see the enormous potential in processing. The Federal Government is strongly committed to the development of the non-oil export sector. Just last month, the National Economic Management Team established the National Committee on Export Promotion to ensure effective coordination of the zero oil plan in all the 36 states of the federation.

Related: ExxonMobil Q3 earnings rise to $4B
“Nigeria lost over $30trn of nation export revenues between 2015 and 2017 due to the crash in oil prices. Nigeria must replace these lost revenues in order to sustain economic growth, stabilise the naira, sustain the federal and state governments’ income and boost employment. There is therefore the urgency to rapidly ramp up non-oil exports as our future earnings for crude oil are facing significant headwinds.”
FG targets N5tn from non-oil export FG targets N5tn from non-oil export Reviewed by worldforummedia on November 05, 2017 Rating: 5

AfDB cancels $400m loan to Nigeria

October 31, 2017

The African Development Bank has called off a loan to Nigeria that would have helped fund the country’s budget, the Vice-President for Power, Energy, Climate Change and Green Growth, AfDB, Amadou Hott, has said.
Mr Akinwumi Adesina, President of African Development Bank
He said the bank would likely be redirecting the money to specific projects in Nigeria rather than give to the country to fund its budget.
Hott spoke on Monday in an interview with Reuters during a Nordic-African business conference in Oslo, Norway.
The AfDB had been in talks with Nigeria for around a year to release the second tranche of $400m of a $1bn loan to shore up its budget for 2017, as the government tried to reinvigorate the stagnant economy with heavy spending.
But Nigeria refused to meet the terms of international lenders, including the World Bank, to enact various reforms such as allowing the naira to float freely on the foreign exchange market.
Rather than loan Nigeria money to fund its budget, the AfDB is likely to take at least some of that money and “put it directly into projects,” Hott explained.
Because prices for oil, on which the Federal Government relies for about two-thirds of its revenues, have risen and the naira-dollar exchange rate has improved, the country is relying less than expected on external borrowing, Hott said.
No one from the Ministry of Finance was immediately available to comment.
Call made to the Special Adviser on Media to the Minister of Finance, Mr. Oluyinka Akintunde, did not go through as of the time of filing the report.
Nigeria’s N7.44tn 2017 budget is just one in a series of record budgets that the government has faced obstacles funding, pushing it to seek loans from overseas.
In late 2016, the AfDB agreed to lend Nigeria a first tranche of $600m out of $1bn. But negotiations over economic reform later bogged down, blocking attempts to secure the second tranche of $400m million, sources told Reuters then.
Now, AfDB’s loans will be more targeted, Hott said.
“It’s hundreds of millions of dollars, just in one go, that we were supposed to provide in budget support, but we will move into real projects,” he added.
Earlier this month, the head of Nigeria’s Debt Management Office said the country was still in talks with the World Bank for a $1.6bn loan, which will help plug part of an expected $7.5bn deficit for 2017.
The administration is also trying to restructure its debt to move away from high interest, naira-denominated loans and towards dollar loans, which carry lower rates.
AfDB cancels $400m loan to Nigeria AfDB cancels $400m loan to Nigeria Reviewed by worldforummedia on October 31, 2017 Rating: 5

Naira trades flat at 363/dollar

October 27, 2017

The naira is expected to remain stable across its multiple exchange rates as the currency hit a resistance level for investors and the Central Bank of Nigeria continues to intervene on the official market.

According to Reuters, the local unit has hit resistance at 360/dollar for investors as banks are not willing to bid the United States currency below that level and as foreign investors continue to buy bonds at attractive yields, boosting dollar liquidity.
On the official market the naira has been quoted at around 305 per dollar for more than three months and is expected to trade at this level next week.
The Federal Government sold bonds at an auction on Wednesday while the CBN was offering treasury securities on Thursday to draw foreign inflows.
The naira has traded flat on the parallel market at around 363, mirroring rates for investors.
Reuters reported that Kenya’s shilling is expected to trade sideways as markets await the outcome of its presidential election re-run, while the Zambian kwacha is likely to gradually weaken on the back of importer demand for hard currency.
The Kenyan shilling was trading at 103.70/90 per dollar in Tuesday’s session. Markets were closed on Wednesday and Thursday to let voters cast their votes in the election, which was marked by running battles between police and opposition supporters in some areas.


“People will be cautious but if things turn out right, we will see a major rally,” said a senior trader at a commercial bank.
He said the outcome would be clear once the final result is announced.
The Zambia kwacha is likely to remain under pressure due to sustained demand for hard currency by importers stocking up for the festive season.
At 0835 GMT on Thursday, the commercial banks quoted the currency of Africa’s number two copper producer at 10.0000 per dollar from a close of 9.7200 a week ago.
Naira trades flat at 363/dollar Naira trades flat at 363/dollar Reviewed by worldforummedia on October 27, 2017 Rating: 5

FG, Dangote, others sign $1.1bn pact for 540MW plant

October 27, 2017

The Federal Government and the developers of the 540-megawatts Qua Iboe Power Plant signed a Power Purchase Agreement for the development of the $1.1bn electricity generation station on Thursday.
Aliko Dangote
The Dangote Group, Nigerian National Petroleum Corporation and Black Rhino Group, an African energy infrastructure company, signed the PPA with the Nigerian Bulk Electricity Trading Plc, an agency of the Federal Government, in a ceremony that was presided over by the Minister of Power, Works and Housing, Babatunde Fashola, in Abuja.
The 540MW power plant, located in Akwa Ibom State, is being  jointly developed by the three firms following the purchase of the rights from Mobil Producing Nigeria Unlimited, a joint venture between ExxonMobil subsidiary, Mobil Producing Nigeria, and the NNPC.
The developers stated that the plant would be one of the lowest cost thermal power plants in Nigeria due to its efficient combined cycle design and competitive gas price.
The plant, according to them, will receive gas from Mobil Producing Nigeria under a 20-year Gas Sales Agreement via a new 400 million standard cubic feet per day undersea gas pipeline from MPN’s existing offshore production facilities.
They also noted that the power plant would unlock investment in transmission infrastructure, including a new 58-kilometre transmission line to be built by the QIPP.
The Chairman, Black Rhino Group and Emir of Kano, Muhammad Sanusi II, said the project would have real socio-economic impact on Nigeria.
“The Qua Iboe Power Plant will utilise Nigeria’s gas resources to increase our electricity generation capacity and reduce the cost of power. The plant is an example of how the Federal Government and private investors can work together to develop infrastructure that has a real socio-economic impact on our country,” he said.


The Qua Iboe Power Plant is the most advanced project jointly developed by the Black Rhino Group and Dangote Group since the firms announced their partnership to invest in African energy projects.
The Chief Executive Officer, Dangote Group, Aliko Dangote, said, “The Black Rhino Group and Dangote Group partnered to develop transformational projects such as the Qua Iboe Power Plant. By closing the gap between Nigeria’s generation capacity and the energy required to underpin economic growth, we are supporting Nigeria’s future industrial growth.”
It was gathered that the power plant was benefitting from a World Bank-approved $150m Partial Risk Guarantee, and Environmental Impact Assessment and Resettlement Action Plan approved by the Federal Ministry of Environment.
FG, Dangote, others sign $1.1bn pact for 540MW plant FG, Dangote, others sign $1.1bn pact for 540MW plant Reviewed by worldforummedia on October 27, 2017 Rating: 5

Don’t anticipate commodity shake-up next year, World Bank tells Nigeria

October 27, 2017

The World Bank says the big drop in export commodity prices that led to significant economic shocks last year in commodity exporting countries including Nigeria may not occur in 2018.


According to the World Bank, countries trading in export commodities next year should look for small upticks in oil and crops prices.
But overall, raw-material prices may get stuck in a bit of a lull.
This was the summary of a report issued on Thursday by analysts for the Washington-based World Bank, Bloomberg reported.
The bank forecasts an index of energy products to climb by four per cent in 2018, while agricultural goods are expected to rise by 1.2 per cent and metals and minerals to drop by about 0.7 per cent.
The forecast came on the back of a rather ho-hum period for the asset class.
The Bloomberg Commodity Index tracking 22 products is down about two per cent this year and a measure of 60-day volatility has been waning since late July.
Prices have remained subdued by large stockpiles, a trend that may be poised to continue.
“Last year and this year, most commodity markets are well supplied,” a senior economist at the World Bank, John Baffes, said in a telephone interview with Bloomberg.
“We’ll not see a sort of major price increase for next year.”
Nigeria-based economic analyst, Mr. Johnson Chukwu, said the era of $100/barrel for oil price was over and that Nigerians should not expect that.
He said most analysts had predicted that oil price, Nigeria’s main source of foreign exchange and revenue, would hover around $53/barrel next year.
The World Bank forecasts in this latest report that oil price will average $56/barrel in 2018.

Related: FG, Dangote, others sign $1.1bn pact for 540MW plant
Chukwu said, “Well, if you look at where we were coming from last year when oil price averaged $45/barrel, the new forecast by the World Bank analysts is not too low for economic management in Nigeria.
What we should try to maintain is a good production level which fortunately is approaching two million barrels per day. But the 2.4mbpd output forecast by the Federal Government is optimistic, to me.”
According to the World Bank report, here are some of the bank’s expectations in terms of oil price next year.
Crude oil is expected to extend recent gains amid stronger use, moving from an average of $53 a barrel in 2017 to $56 next year, the bank forecasts.
Increases in production from nations outside the Organisation of Petroleum Exporting Countries will gain at about the same rate as global demand, leaving stockpiles without a “meaningful” reduction.
After a strong year for coal prices because of reductions in Chinese supply, prices may drop ahead amid “environmental headwinds.”
For natural gas, demand is expected to be strong as chemical and fertilizer plants boost capacity and amid rising United States exports to Mexico and other countries.
Prices are expected to climb three per cent next year, the report said.
For precious metals, platinum may rise by four per cent next year as mine output wanes.

Related: Naira trades flat at N363/dollar
Meanwhile, gold and silver will face pressure from expected US interest rate increases.
Base metals surged this year amid strong demand from China and supply challenges.
Prices are expected to ease next year as declining iron-ore prices offset strength in other commodities, including lead, nickel and zinc.
Don’t anticipate commodity shake-up next year, World Bank tells Nigeria Don’t anticipate commodity shake-up next year, World Bank tells Nigeria Reviewed by worldforummedia on October 27, 2017 Rating: 5

ExxonMobil’s Q3 earnings rise to $4 bn

October 27, 2017

Higher oil prices significantly boosted ExxonMobil’s third-quarter earnings, more than offsetting the hit to operations from US hurricanes, the oil giant reported Friday.
ExxonMobil
ExxonMobil reported earnings of $4.0 billion, up 49.8 percent from the year-ago period. US hurricanes resulted in a hit of $160 million. Revenues were $66.2 billion, up 12.8 percent.
ExxonMobil’s earnings from exploration and production more than doubled those of the year-ago period, mostly due to moderately higher commodity prices during the quarter and in spite of $238 million loss in the US upstream.
The oil giant also saw earnings rise in its downstream division, which is responsible for refining crude oil into gasoline and other petroleum products.
Better refining margins more than compensated for added expenses from Hurricane Harvey, which flooded the Houston area and resulted in temporary plant closures.

Related: AFDB cancels $400m loans to Nigeria

Read: How to start E-Commerce (online marketing)
“A 50 percent increase in earnings through solid business performance and higher commodity prices is a step forward in our plan to grow profitability,” said ExxonMobil chief executive Darren Woods.
“For the fourth-consecutive quarter, we generated cash flow from operations and asset sales that more than covered our dividends and net investments in the business.”
Shares of ExxonMobil rose 0.8 percent in pre-market trading to $84.14.
ExxonMobil’s Q3 earnings rise to $4 bn ExxonMobil’s Q3 earnings rise to $4 bn Reviewed by worldforummedia on October 27, 2017 Rating: 5

Zenith Bank’s Total Assests Hit N5.1trn

October 20, 2017
Zenith Bank’s total assets increased to N5.1trillon from N4.7trillion as at September 30, 2017.
With about 40 per cent increase in gross earnings to N531.27 billion, Zenith Bank Plc on Thursday announced 31 per cent growth in Profit Before Tax (PBT) for nine months ended September 30, 2017 on The Nigerian Stock Exchange (NSE).



Despite macro environment challenges and current policy direction, the Group recorded PBT of N152.55 billion in nine months ended September 30, 2017 as against N116.6 billion reported in nine months ended September 30, 2016. From Zenith Bank income statement, Profit After Tax (PAT) rose by 35.5per cent to N129 billion against N95.4 billion reported in nine months of September 30, 2016.
However, interest income and interest expenses gained 26.6 per cent and 67 per cent to N361 billion and N160 billion respectively to leverage 6.2 per cent increase in Net interest income to N201.49 billion in nine months ended September 30, 2017. The group’s Loans and advances moved to N2.15 trillion, 5.8 per cent drop from N2.29 trillion reported in full year ended December 31, 2016.
On the contrary, the group Customers’ deposits increased by 2.6 per cent to N3.06 trillion as at September 30, 2017 from N2.98 trillion in 2016. In all, the group total assets rose by 8.2 per cent to N5.1 trillion as at September 30, 2017 from N4.7 trillion reported in full year ended December 31, 2016.
The financial institution in statement had said, vowed to continue to grow its retail business especially in liability generation, stressing its commitment to be a dominant player in the money market space to drive up income and profitability going forward.

Related: ExxonMobil's Q3 earnings rise to $4bn
Analysts at FBNQuest Research, noted that, “Zenith Bank’s profit before provisions of N114billion showed a greater decline (-eight –per cent y/y), those on the provisions and opex lines proved significant, helping to limit the decline on the PBT line.
Both revenue lines contributed to the decline in profit before provisions: while funding income was flattish, non-interest income fell -16per cent y/y because of base effects.
“Also on a q/q basis, because of base effects again, the bank recorded a marked fall of -42 per cent q/q for non-interest income. Notwithstanding, non-interest income actually surprised positively, coming in much stronger than we had expected. Given a lackluster performance in funding income however, the impact of the better-than-expected non-interest income result was not felt. A significant positive surprise in loan loss provisions was the main reason for Zenith’s better-than-expected PBT (and PAT) result.

Related: Zenith, FB, Gtb, 4 others, raise N2.14 trn in 6 months
“The market is likely to take some time to digest these results. On the one hand, the y/y comparables show declines on revenues and earnings. And the q/q changes in revenue are also weak, similar to what we have observed for other tier 1 banks. On the other hand, the positive surprise on the provisions line is significant. Some will argue that Q4 may throw up some major negative surprises on this line in particular – effectively a justification to discount the surprise in Q3.”
Zenith Bank’s Total Assests Hit N5.1trn Zenith Bank’s Total Assests Hit N5.1trn Reviewed by worldforummedia on October 20, 2017 Rating: 5

CRR: Zenith, First Bank, GTB, 4 Others Raise N2.14trn In 6 Months

October 20, 2017


With the Cash Reserve Ratio at 22.5 per cent, a total of seven Deposit Money Banks (DMBs) deposited N2.14 trillion with the Central Bank of Nigeria (CBN) between January and June 2017, LEADERSHIP can report.
CRR is the amount of funds that DMBs have to hold as reserves either in cash or as deposits with the apex bank. The CBN uses the CRR to drain out excess liquidity from the DMBs. The Monetary Policy Committee (MPC) of the CBN in March 2016 had resolved to raise the CRR to 22.5 per cent from 20 per cent, in a move aimed at tightening liquidity from the system.
The committee towards the end of 2015 reduced the CRR from 25 per cent to 20 per cent with a view to channeling the liquidity arising there to the real sector while in July 2015, the CRR was pegged at 31 per cent.
The seven DMBs had deposited a total sum of N2.1 trillion with CBN in 2016 and the funds are not available for use in day-to-day operations. According to LEADERSHIP investigations, Tier-I banks deposit with CBN continued to rise despite drop in customers’ deposit in the period under review.
Of the N2.14 trillion CRR with CBN, First Bank of Nigeria Holdings Plc, Guaranty Trust Bank Plc (GTBank) Plc and Zenith Bank Plc deposited estimated N1.2 trillion or 58.1 per cent. The breakdown revealed that, GTBank’s mandatory deposit (CRR) with CBN moved to N350.9 billion as at June 30, 2017 an increase of 7.3 per cent from N327 billion reported in 2016.
Zenith Bank’s CRR rose by 4.4 per cent to N467 billion as at June 30, 2017 from N447.49 billion in 2016 while First Bank of Nigeria Holdings Plc reported a drop of 22 per cent in mandatory deposit with CBN to N424.5 billion from 543 billion in 2016. The likes of United Bank for Africa Plc (UBA) deposit with CBN rose by 6.3 per cent to N342 as at June 30, 2017 from N321.9 billion in 2016.

Related: Zenith bank total assets hit N5.1Trn
Access Bank Plc restricted deposited with CBN gained 8.7 per cent from N250.8 billion reported in 2016 to N272.7 billion as at June 30, 2017. Stanbic IBTC Holdings and Fidelity Bank Plc deposited N127.6 billion and N154 billion to CBN, an increase of 43.8 per cent and 9.98 per cent over N88.77 billion and N140 billion reported last year.
While commenting on the MPC decision to increase the CRR to 22.5 per cent, the CBN governor, Mr. Godwin Emefiele noted that the committee noted that the excess liquidity in the banking system was contributing to the current pressure in the foreign exchange market with a strong pass-through to consumer prices.
“The committee further noted that, previous efforts to reflate the economy in order to spur growth, did not elicit the required response from DMBs, hence the surfeit of liquidity in the interbank market.
“Obviously, the attendant low rates at that market have not transmitted to the term structure of interest rates. Concerned about the need for low interest rates to support growth and employment, the committee urged the CBN to explore innovative ways of ensuring the unhindered flow of credit at low cost to key growth sectors, even as monetary policy has to, under the circumstance, address the liquidity surfeit in the banking system as well as the pressure on exchange rate and consumer prices.
“The committee hopes that fiscal and other structural policies would soon be deployed to strengthen the overall response of macroeconomic policy to the shocks.” The CBN has continued to invest the deposited funds to key sectors of the nation’s economy.

Related: FG targets N5Trn from non-oil exports
Hitherto, the managing director, Highcap Securities Limited, Mr. David Adnori said the mandatory deposit by Banks into CBN’s has sustained liquidity in the economy. He noted that the CBN had to strike a balance of how many public funds that include government deposit that are being accessible by the banks.
He said, “The major reason CBN increased CRR to 2.5 per cent is for banks to discharge their obligations to customers efficiently. The CRR increased from 20 per cent to 22.5 per cent is to safe guide customers deposit with CBN. A lot of money is borrowed out by banks and the mandatory deposit with CBN is to protect cash withdrawal.”
CRR: Zenith, First Bank, GTB, 4 Others Raise N2.14trn In 6 Months CRR: Zenith, First Bank, GTB, 4 Others Raise N2.14trn In 6 Months Reviewed by worldforummedia on October 20, 2017 Rating: 5

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