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UBA delivers N70bn profit in H1 2022, up by 16%

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United Bank for Africa Plc has released its interim consolidated and separate financial statement for the period ended June 2022.

The report shows that the bank raised its profit in the first half of the year by 16 per cent to record N70.33 billion from the N60.58 billion in the first half of last year.

This is in the face of increasing inflation which the economy continues to battle.

Recall  that Nigeria’s inflation rate in the month of July 2022 rose to a 17-year high of 19.64 per cent compared to 18.6 per cent recorded in the previous month of June 2022, according to the National Bureau of Statistics (NBS).

During the period, the bank increased interest income by 15.6 per cent to stand at N257.4 billion against N222.6 billion in the same period of 2021 as investment securities in treasury bills, bonds and others rose.

The interest expenses was valued at N79.9 billion in the first half of 2022 from the N74.6 billion in the first half of 2021 as the banks recorded more deposits from customers during the period while the net interest income stood at N177.46 billion.

Fees and commission income grew to N96.4 billion in H1 2022 from N74.1 billion in H1 2021 on the back of rise in credit-related fees and income, electronic banking income, and trade transaction income amongst others.

Notably, credit-related fees and commission income exclude the amount included in determining effective interest rates on financial assets carried at amortised cost. Credit-related fees are taken over the life of the related facility, whilst transaction-related fees are earned when the service is rendered.

Also, Electronic banking income represents income taken on transactions processed via electronic channels such as ATM, POS, mobile banking as well as credit and debit card transactions while trade transactions income entails one-off charges as related to letter of credits and other trade businesses which are excluded from those included in determining effective interest rates on those carried at amortised cost.

Similar to this, the group recorded an increase in terms of E-banking expenses and trade-related expenses, pushing the Fees and Commission expenses to N36.5 billion in H1 2022 from N28.3 billion in H1 2021.

Operating income was valued at N9.15 during the study period from N9.5 in 2019. This consists of dividend income at N3.5 billion, other income at N5.19 as well as rental income and gains on disposal of property and equipment. Meanwhile, the other operating income of the Group includes the sum of N3.883 billion remeasurement gain from the initial 49 per cent investment in UBA Zambia.

The employee benefit expenses rose to reach N52.3 billion in H1 2022 from N42.6 billion in H1 2021 as the group noted that it continues to invest in staff training.

It stated, “The Bank encourages participation of its employees in arriving at decisions in respect of matters affecting their well-being. To this end, the Bank provides formal and informal opportunities where employees deliberate on issues affecting the Bank and employees’ interest, with a view to making inputs to decision thereon.

“The Bank places premium on the development of its manpower. In addition to the routine online Executive Chat, wherein employees interact with the Management to discuss issues of customer and employee satisfaction, the GMD/CEO operates an open-door policy and encourages employees to channel suggestions and complaints to him as may be required.

Other operating expenses such as Fuel, repairs and maintenance was up from N13 billion to N16.7 billion, banking and sector resolution cost was up to record N31 billion from N27 billion amongst others.

Total assets increased from N8.54 trillion in H1 2021 to N9 trillion in H1 2022.

Basic and diluted earnings per share was up from N1.69 in H1 2021 to N1.98 in H1 2022.

Money market

CBN to hold first MPC meeting under Yemi Cardoso

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By Sodiq Adelakun

The Central Bank of Nigeria (CBN) is set to hold its first Monetary Policy Committee (MPC) meeting under the leadership of Yemi Cardoso as Governor on Monday and Tuesday.

Economic experts are predicting that the benchmark interest rate, known as the Monetary Policy Rate (MPR), will likely be increased in order to combat inflation and stabilise the value of the Naira.

The previous MPC meeting was held in July 2023 and was chaired by the then acting CBN governor, Folashodun Shonubi. During that meeting, the committee raised the MPR by 25 basis points to 18.75 per cent from 18.50 per cent. Professor Ken Ife, an Economist, believes that interest rates are likely to continue tightening for the foreseeable future.

He suggests that the MPR may either remain unchanged or be raised further in the upcoming meeting.

According to Prof. Ken Ife, an Economist, “We are likely to see rates tightening for some time. Either the MPR is kept steady, or it goes up a little more.

“The CBN says it is going for inflation targeting, but there should be more support from the fiscal authorities because a lot of the issues with the economy are not really monetary.

“We have N500 billion going for social intervention annually, the money does not go into the productive sector,” he said.

A past president of the Chartered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, also said that the rates are likely to go up.

Unegbu, however, said that the MPC decisions are not likely to impact the economy in the short-term.

“I expect that the MPC will further tighten the rates, but that might not have any serious impact on the economy.

“President Bola Tinubu has already taken some sensitive policy decisions, even before appointing the CBN governor and the finance minister.

“Floating the Naira was a major error that has caused the nation so much pain,” he said.

He urged the government to try operating outside the purview of the Organisation of Petroleum Exporting Countries (OPEC), and pricing the country’s major revenue earner, crude oil, in Naira.

“Nigeria should do something about pricing its oil in Naira. We should leave OPEC, price our oil independently,” he said.

Unegbu also advised that the government should learn to ignore most economic prescriptions by the World Bank and the International Monetary Fund (IMF) as such prescriptions had never helped the country to grow.

An Economist and Managing Director of Financial Derivatives, Bismarck Rewane, a business management consultancy firm, also suggested that the MPR would be tightened.

According to Rewane, loose monetary conditions are totally different from tight monetary policy.

“We have no choice. They must tighten and tighten well. I suggest nothing less than 200 basis points.

“You fight loose monetary conditions by tightening monetary policy.

“There will be an effect because interest rate will increase, people will save more and consume less, and the currency will stabilise over time. There is no quick-fix,” he said.

Meanwhile, the Nigerian Senate on Thursday confirmed Cardoso as Chairman and 11 other members of the MPC forwarded to it by President Bola Tinubu.

Also confirmed as members of the MPC were Muhammad Abdullahi,  Bala Bello, Emem Usoro and Philip Ikeazor, all deputy governors of CBN.

Others were Lamido Yuguda, (DG Securities and Exchange Commission), Jafiya Lydia Shehu, (Permanent Secretary, Ministry of Finance), Murtala Sagagi (CBN director), Aloysius Ordu, Aku Odukemelu, Mustapha Akinwunmi, and Bamidele Amoo.

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FG plans to disburse loans to MSMEs within 14 days

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By Sodiq Adelakun

In a bid to reduce the mortality rate of businesses waiting for loan approvals, the Federal Government is considering implementing solutions that will ensure the disbursement of loans to Medium, Small, and Micro Enterprises (MSMEs) within 14 days.

This announcement was made by the Senior Special Assistant to the President, Temitola Adekunle-Johnson during the Inaugural Job Creation and MSME Quarterly Communications Forum held in Abuja.

The government’s objective is to achieve a single-digit loan interest rate for MSMEs and make it the standard for small enterprises.

Adekunle-Johnson emphasised the importance of providing seamless and easy access to funding for SMEs. The current lengthy loan approval process, which can take up to six months, poses a significant risk to businesses, as they may fold up during this waiting period.

According to Adekunle-Johnson, the end point is to achieve a single-digit loan for MSMEs and ensure a single-digit loan becomes the norm for small enterprises.

He said, “We are trying to achieve a target of being able to guarantee seamless and easy access to funding for SMEs. We want SMEs to be able to apply for a loan and get it approved within 14 days at worst, and not in six months because some of these businesses can fold up within those six months of waiting for loan approval.

“The disbursements will be quick after the loan assessment is processed. That would help us reduce the bottlenecks of MSMEs running from pillar to pole looking for funding and not even having the collateral to achieve the loans.

“The end point is to achieve a single-digit loan for MSMEs. We aim to ensure single-digit loans become the norm for MSMEs.”

The government has announced a partnership with Access Bank to set aside N50 billion to support skills acquisition by five million Nigerians under the job creation initiative of the Federal Government called ‘YouThrive’ by Access.

The initiative is looking at empowering MSMEs in different ways by building their capacity, and access to affordable finance as well as digital, technical, and skill acquisition training for them.

Speaking on the initiative, the Head of Non-Financial Services, Access Bank, Chioma Ogwo, said participating small businesses would be empowered in different ways, including building their capacity and giving them access to affordable finance, besides providing them with the digital, technical, and skill acquisition training to thrive and create wealth.

“We are giving them affordable loans at 15 percent and free grants to deserving SMEs, who have done very well. We have a business exchange programme for the beneficiaries that would enable the SMEs to go and exchange ideas with their counterparts in other countries.

“We are looking at empowering four million in four years – one million yearly. 700,000 would be given as access to finance every year. We have also earmarked N50bn for this intervention and it will be reviewed after one year,” she enunciated.

Meanwhile, the Director-General of the Small and Medium Enterprises Development Agency of Nigeria, Charles Odii, disclosed that three million jobs were lost to flooding in Nigeria in 2023.

He did not give details on specific figures about the flooding that wreaked havoc on lives and properties.

He said the government had developed a technology to alert of an impending danger of flooding across the states, a development he said would help the government to take proactive measures to evict potential victims.

He said SMEDAN was helping to mitigate the challenges faced by MSMEs, especially production costs and low rent to enable them to be productive and support the economy.

According to Senator Ibrahim Hadejia, who is the deputy chief of staff to President Tinubu, MSMEs provide resilience and agility to any economy.

He added that a country with a robust MSME sector would have a buoyant economy and be able to adapt to some of the current global shocks.

“This kind of partnership with Access Bank is very important to growing SMEs. It is also important to look at the impact of technology on agriculture as a major contributor to the nation’s GDP growth rate.

“If we get it right, our yields on some of even our most common crops will improve. We need that to improve our output. It will also encourage the younger generation to participate,” he remarked.

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BDC operators to disclose sources of forex for transactions above $10,000 — CBN

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By Sodiq Adelakun

The Central Bank of Nigeria (CBN) has introduced new regulations for Bureau De Change (BDC) operators in an effort to curb excesses and bring stability to the foreign exchange market.

Under the revised regulatory framework, foreign exchange sellers dealing in amounts equivalent to $10,000 or more will be required to disclose the sources of their forex.

Additionally, these sellers must comply with all Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations.

The guidelines aim to improve the regulatory framework for BDC operations and include provisions for permissible activities, licensing requirements, corporate governance, and record-keeping and reporting requirements.

These measures are part of ongoing reforms in the Nigerian foreign exchange market.

He said that the guidelines would significantly enhance the regulatory framework for the operations of BDCs as part of ongoing reforms of the Nigerian foreign exchange market.

According to him, the guidelines revises the permissible activities, licensing requirements, corporate governance and AML/CFT provisions for BDCs. “It also sets out new record-keeping and reporting requirements, among others,” he said.

Recall that the guidelines also specify that no person shall carry on the business of BDC in Nigeria except with the prior authorisation of the CBN.

It described BDC as a company licensed by the CBN to carry on only retail foreign exchange business in Nigeria.

It banned commercial, merchant, non-interest and payment service banks, Other Financial Institutions (OFIs), including holding companies and payment service providers from promoting BDCs.

It also precluded serving staff of financial services regulatory and supervisory agencies, serving staff of regulated financial services providers, governments at all levels, among others, from promoting BDCs.

The guidelines permitted BDCs to acquire foreign currency from authorised sources like tourists, returnees from the diaspora and expatriates with foreign exchange inflows from work, travel, investment or their domiciliary accounts.

Other permissible sources are International Money Transfer Operators (IMTOs), embassies, hotels that are authorised buyers of foreign currencies, the Nigerian Foreign Exchange Market (NFEM) and any other source that the CBN may specify.

It warned the BDCs not to engage in street-trading, maintaining any type of account for any member of the public, or accepting any asset for safe keeping/custody.

It said that the BDCs were also not permitted to take deposits from or grant loans to members of the public in any currency and in any form.

“Retail sale of foreign currencies to non-individuals, except for BTA, international outward transfers, engaging in off-shore business or maintaining foreign correspondent relationships with any foreign establishment are also not permissible,” it said.

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