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UBA grows its loan portfolio by N605bn

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By Olumide David

The United Bank for Africa on Wednesday said it had grew its loan portfolio by N605billion in the 2022 financial period.

The bank disclosed this on Tuesday during its audited 2022 results conference call (Strategic review and outlook), which was addressed by the Group Managing Director/Chief Executive Officer, Oliver Alawuba.

According to Oliver, while speaking, told investors during the event that the growth in UBA’s loan portfolio was in line with the overall objective of stimulating growth in the real sector.

He said, “We grew our loan portfolio by N605billion, or 21.4 per cent, from the prior year.

“We continue to maintain a close focus on cost efficiency and strictly control operating expenses across the Group, including our new strategic investments. Consequently, our reported cost-to-income ratio stood at 59.1 per cent.”

Meanwhile, in terms of capital adequacy, UBA says it maintained a Capital Adequacy Ratio of 28.3 per cent, which was above the regulatory requirement of 15 per cent.

The bank also expressed its commitment to improving performance in the years ahead, adding that the feats accomplished were done despite volatile market conditions and many operational challenges it faced during the financial year.

Oliver Alawuba, said in the current financial year, that it would be a driving revenue up across its business segments, as well as focusing on its customers.

“However, our primary business strategy is to continue to focus on the customer — the ‘undisputed employer,’ while leveraging the key pillars driving our customer first philosophy i.e. people, process and technology, in delivering positive experiences across all our touchpoints – physical and virtual,” he said.

“In addition, our dedicated workforce (People) is very critical to us. We will constantly strive to simplify and streamline our processes, ensure systems stability and reliable IT architecture to support our operations.”

Alawuba added, “Despite the global headwinds across all markets, we commit to doing more this year by driving up revenues across all major business segments, coupled with the relentless pursuit of efficiency group-wide.”

Money market

Naira holds N1,500/$ line amid EFCC clampdown

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The naira held its ground on the unofficial market, appreciating against the dollar on the parallel market as the dollar index posted some losses amid profit-taking.

The value of the naira was N1,500 on Friday, compared to N1,510/$1 on Thursday on the black market.

The naira settled at N1,482.8 on Friday, up from N1,485.7 on Thursday in the Nigerian Autonomous Foreign Exchange Market (NAFEM).

The Economic and Financial Crimes Commission (EFCC) has increased its efforts by adopting stronger new laws on Bureau de Change (BDC) and foreign exchange transactions on the black market to combat speculation against the weak naira.

EFCC agents recently arrested illegal currency traders in Abuja, Lagos, Kano, and Port Harcourt as part of their ongoing crackdown on street trading. The EFCC has already frozen more than 300 accounts connected to illegal foreign exchange trading.

The country’s financial watchdog, the Securities and Exchange Commission (SEC), also plans to work with the EFCC to mitigate forex trading manipulations within the digital space. According to CBN head of risk management, Blaise Ijebor, foreign exchange trading on the street is prohibited.

The CBN significantly increased the capital requirements for the nation’s BDCs, citing the need to regulate the sector and ensure that it isn’t undermining the value of the naira.

The apex bank increased the capital requirements for tier one BDCs operating nationwide from N35 million to N2 billion, while tier two BDCs operating in a single state saw an increase from N35 million to N500 million. The sector has six months to comply.

The umbrella group of the BDCs has requested a delay and a reduction in the new thresholds from the authorities.

This action follows the Federal Government’s announcement of plans to outlaw the trading of cryptocurrencies between individuals in naira as part of a larger crackdown on cryptocurrency platforms, which they claim is exacerbating the volatility of the local currency.

The naira has lost more than two-thirds of its value to the dollar since last year’s liberalisation of Nigeria’s FX market.

The haven currency declined against major currencies on Friday as investors booked profits following recent gains, but the US currency was still in a solid position to rise further due to encouraging U.S. economic data that caused markets to reduce their expectations for interest rate reductions.

Data released on Friday showed shipments and new orders for important capital goods made in the United States surged in April, surpassing expectations and pointing to a possible increase in business equipment spending in the first part of the second quarter.

This followed statistics released on Thursday revealing that U.S. manufacturers were reporting rising input prices and that U.S. business activity in May increased to the highest level in just over two years.

This week’s release of the minutes from the Federal Reserve’s most recent meeting revealed a heated discussion among decision-makers about whether the current interest rates were tight enough to curb inflation.

Following five straight trading sessions of gains, the dollar index saw a 0.3 percent decline on Friday, closing at 104 index points against a basket of major currencies. However, the dollar index increased by 0.2 percent for the entire week.

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Money market

FX turnover surges by 231.99%

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…As CBN raises N1.16 trillion from OMO bill auction

Nigeria’s foreign exchange market has seen the turnover on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window surge by an astonishing 231.99 percent on May 24, 2024. This development coincides with the Central Bank of Nigeria (CBN) successfully raising N1.16 trillion through its Open Market Operation (OMO) bill auction on Friday, aimed at mopping up excess liquidity in the financial system.

Data obtained from FMDQ shows that the naira appreciated slightly against the dollar on the NAFEM window, closing at N1482.81/$1, reflecting a 0.19 percent increase from the previous day’s rate of N1485.66/$1.

This marginal appreciation comes after the naira snapped its four-day winning streak, depreciating by 1.55 percent to close at 1485.66/$1 on the official market on Thursday.

The surge in FX turnover to $556.25 million from the previous day’s $167.55 million represents a remarkable 231.99 percent increase, underscoring the heightened activity and investor participation in the market.

The dramatic increase in FX turnover is likely attributed to the CBN’s aggressive liquidity management strategy, which saw the apex bank raise a substantial N1.16 trillion from the OMO bill auction. This move forms part of the CBN’s efforts to control inflationary pressures and stabilize the naira amidst ongoing economic challenges.

On May 23, 2024, the naira experienced a slight depreciation of 1.55 percent, closing at N1485.66. However, the market responded positively to the CBN’s intervention, resulting in a modest appreciation of 0.19 percent the following day.

The significant increase in FX turnover suggests a surge in dollar supply, likely driven by the proceeds from the OMO auction, which bolstered investor confidence and market liquidity.

The surge in FX turnover comes barely three days after the 295th meeting of the Monetary Policy Committee/ (MPC) of the CBN. The CBN increased the monetary policy rate (MPR) by/ 150 basis points, to a new unprecedented 26.25 percent.

This is a lower hike compared to the 200 basis points at 24.75 percent after the previous meeting. The decision announced by the CBN governor, Yemi Cardoso, propels the MPR to its highest point ever, reaffirming the CBN’s aggressive stance on monetary tightening in response to inflationary pressures. The policy rate was raised to curb inflation and attract foreign investment, theoretically supporting the Naira.

Also, the CBN offered a total of N508.98 billion during the Nigerian treasury bill (NTB) auction held on May 22, 2024, with subscription levels significantly surpassing the initial offer, highlighting the continued appetite for fixed-income securities amidst a volatile economic landscape.

Despite the oversubscription of N1.5 trillion, only about N638.98 billion was allotted to the treasury bill investors. The heightened interest in treasury bills can be attributed to the recent increase in the MPR, which has made government securities more attractive to yield-seeking investors.

The substantial increase in FX turnover and the successful OMO auction are pivotal in the CBN’s broader strategy to maintain price stability and support economic growth.

By mopping up excess liquidity, the CBN aims to curb inflation, which has been a major concern for policymakers. The raised N1.16 trillion will help mitigate inflationary pressures by reducing the amount of money in circulation, thereby supporting the naira.

Moreover, the increased FX turnover indicates robust market activity and investor confidence, which are essential for a healthy foreign exchange market. This heightened activity is likely to have positive ripple effects on various sectors of the economy, particularly those dependent on foreign exchange for imports and other transactions.

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Money market

Why we sacked over 200 staff — CBN Governor

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By Matthew Denis

For organisational and Human Capital enhancement, the Central Bank of Nigeria (CBN) has retrenched nearly 200 employees across various departments in a bank-wide restructuring exercise.

Recall that the apex bank sacked some directors a few months ago.

The drastic action of job cuts across several departments, including: Human Resources; Development Finance; Trade and Exchange (including a prominent director, Dr. Hassan Mahmud); Financial Policy and Regulation and Procurement and Support Services (All service coordinators in the PSSD who predominantly can be found in the state branches were laid-off on Friday).

Many of the affected staff were reportedly surprised to receive termination letters on Friday afternoon with their employment ending immediately.

The CBN attributed the layoffs to a “significant organisational and human capital restructuring process” aligned with the bank’s recently publicised strategic direction and its new mission and vision.”

A sample termination letter obtained by NewsDirect states: “In line with our new mission and vision, the Bank is currently undergoing a significant organisational and human capital restructuring process.

“As a result of this review, I have been directed to notify you that your services will not be required with effect from Friday, 24th May 2024. Your final entitlements will be calculated and paid to you in due course.”

The full impact of these job cuts remains to be seen. While the CBN emphasises alignment with its new strategic direction, the sudden nature of the layoffs has likely caused concerns and disruption for the affected staff.

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