…as banks adopt cautious loan growth strategy
By Kayode Tokede and Olabode Jegede
Close to N6trillion in total assets, Zenith Bank Plc leads all Nigerian banks listed on Nigerian Stock Exchange (NSE). This includes Guaranty Trust Bank Plc and Stanbic IBTC Holdings among others.
From 2018 audited result and accounts to The Nigerian Stock Exchange (NSE), five commercial banks reported increase in total assets despite banks planning on lending to customers.
With seven per cent increase in customers’ deposits, Zenith Bank reported N5.96 trillion total assets in 2018 from N5.59 trillion reported in 2017.
Access Bank reported 20.77 per cent increase in total assets to N4.95 trillion in 2018 from N4.1trilliojn reported in 2017 while UBA reported 19.7 per cent increase in total assets to N4.87 trillion from N4.07 trillion in 2017.
GTBank also reported increase in total assets to N3.35 trillion, 7.5 per cent increase over N3.12 trillion reported in 2017 as Stanbic IBTC Holdings reported the least total assets of about N1.66 trillion in 2018 from N1.39 trillion reported in 2017.
Findings by our correspondent revealed that banks’ strategy lending due to political uncertainty of 2019 general elections led to loans and advances to drop.
However some analysts said banks in Nigeria could be motivated to extend credit to the economy if the macroeconomic condition improves this year.
The head research, PanAfrican Capital Plc, Mr. Moses Ojo in a chat with Nigerian NewsDirect during the weekend attributed weak loan growth to increasing Non-Performing Loans (NPL).
According to him, “The issues are hike in NPL, weak asset of the banks that have made some banks to cut down their ability to create loans to customers.
“Then, all of them are strengthening their risk management framework. So, as a result of that, their ability to grant credit to people especially in the real sector has been curtailed because the NPL is now gradually increasing. Quite a lot of them still have a higher NPL which is above the Central Bank of Nigeria’s five per cent threshold.
He noted that liquidity ratio of some of the banks has dropped and the capital adequacy ratio has also come down a bit.
“So, as a result of that, the ability to grant credit to people especially in the real sector has be down drastically in that regard,” he said.
GTBank in a statement noted that its loan book contracted by 12.9 per cent due to scheduled pay-downs by some foreign exchange loan customers on account of improved foreign exchange liquidity in the market as well as impact of IFRS 9 implementation.
“The USD loan repayments resulted in a 24.5 per cent growth in Money market placements. The dip in loan book also enabled the Group to redeem its Eurobond,” the bank explained in its report to investors and analysts.
Analysts at CSL Stockbrokers Ltd are of the view that banking sector credit the real economy will remain subdued for as long as yields on government instruments remain as attractive as they are. Even in the event of a moderation in yields on fixed income instruments.
“Many banks believe that as long as yields remain above 10per cent, they still remain attractive considering that fixed income instruments have no Capital Adequacy Ratio (CAR) implications, are tax free and do not result in NPLs. Little wonder NPLs are moderating with decreasing loans to the real economy,” said analysts at CSL Stockbrokering Ltd.
Yields on one year security stood at 17.12 per cent, but this compares with 22 per cent in 2017.
The fastest loan growth was recorded in 2013 and 2014 when loans and advances were up 21.78 per cent, a period before the recession.
Also, analysts at Vetiva Capital Management Ltd said, “Partly driven by the impact of IFRS 9 implementation on credit portfolios (following the one-time write off), as well as a still cautious stance on risk asset creation, average loan book growth across our coverage was negative for most of 2018, with loan portfolios down –four per cent on average as at 9M’18.”
Meanwhile, a group of analysts at Investment One Securities had predicted that macroeconomic environment would remain challenging and as such much improvement was not expected in banks’ asset quality.
According to Investment One report “Worthy of note however, given the potential for policy inertia due to the outcome of the elections in February and increased uncertainty, both globally and domestically; as global oil prices remain increasingly subject to declining global growth and demand, and the end of the five-year tenure of the incumbent CBN governor, Godwin Emefiele, we remain cautious on the direction of asset quality in 2019.
“We opine that the macroeconomic environment would remain challenging and as such we may not see much improvement in asset quality or cost of risk going forward,” the report entitled, “2019 Banking Outlook – Slightly Positive but Risks Remain Lopsided to the Downside” had explained.
NIMASA DG calls for contributory pension for dockworkers
…As agency hosts maiden ‘day of the dockworker’ event
By Seun Ibiyemi
It was a milestone event for the local maritime industry as the Nigerian Maritime Administration and Safety Agency (NIMASA) hosted the maiden edition of the ‘Day of the Dockworker’ in Lagos recently.
With the theme of the event being “Healthy Dockworker, Better Productivity,” it was an opportunity for stakeholders gathered to not just appreciate the efforts of Nigerian dockworkers at the center of the nation’s import-dependent economy, but also to focus on ways of improving their health and general well-being.
Delivering his welcome address at the event, the NIMASA Director General, Dr. Bashir Jamoh OFR, charged employers of labor to ensure all dockworkers are enrolled on contributory pension schemes, while also emphasising the need for operators of Oil and Gas Terminals to allow only approved stevedores aboard their installations, to ensure compliance with relevant international guidelines and conventions.
According to Dr. Jamoh, “As we celebrate today, it is important to put in perspective the plight of dockworkers who spend the greater part of their working life at the ports, with little or nothing to show for it. As employers of labour, you must endeavour to put in place a Contributory Pension Scheme for dockworkers and ensure prompt remittances of both Employers and Employees contributions at the end of each month.”
Speaking on compliance with stevedore inspections, he stated, “This occasion presents me with an opportunity to express the need for operators in the private jetties and Oil & Gas Terminals to grant operational access to the Stevedoring Contractors appointed by the Honorable Minister of Transport, to carry out stevedoring activities in assigned operational areas.”
On his part, the President General of the Maritime Workers Union of Nigeria (MWUN), Comrade Adewale Adeyanju, in his address, thanked the NIMASA Management for organising the event to celebrate Nigerian dockworkers in recognition of the important role played by them.
In attendance at the event were representatives from the Federal Ministry of Labour and Productivity; Nigerian Ports Authority; Seaport Terminal Operators Association and the National Association of Stevedoring Operators (NASA).
Internationally, July 7th is marked as ‘The Global Day of Action’ and is organized by the International Dockworkers’ Council (IDC) and International Transport Workers’ Federation (ITF). It aims to raise awareness of port working conditions and emphasize the importance of collective bargaining rights.
LCCI tasks govt on transparent FX regime, multinationals’ engagement
The Lagos Chamber of Commerce and Industry (LCCI) has implored the government to create a more flexible and transparent foreign exchange policy to address scarcity issues.
Its Director-General, Dr Chinyere Almona, gave the advice on Thursday in Lagos, in reaction to the recent announcement of Procter & Gamble to transition its Nigerian operations to an import-only model.
Recall that the Chief Financial Officer of Procter & Gamble, Andre Schulten, had said this move would effectively dissolve its on-ground presence in the country.
Almona noted that over the last few months, there had been a consistent increase in exit plans or a reduction in involvement in the Nigerian market by multinationals, saying the trend was worrisome.
She stated that the country’s lingering foreign exchange scarcity, poor power supply, port congestion, multiple taxation, insecurity, and poor infrastructure, among others, had taken a toll on many businesses in the country.
She recommended that the government should implement measures to stabilise and ensure the availability of foreign exchange for businesses, particularly those operating in dollar-denominated environments.
“Further, the chamber urges the government to engage multinational corporations and the business community to understand their challenges and gather input and feedback on policy decisions to collaboratively develop solutions that would forestall the exodus of businesses from Nigeria.
”The Central Bank of Nigeria (CBN) should prioritise the stability of the country’s currency and adopt the right policy mix to ensure price stability,” she said.
Tinubu appoints Omatsola Ogbe as new ES of NCDMB
President Bola Tinubu has approved the appointment of Engr. Felix Omatsola Ogbe as Executive Secretary of Nigerian Content Development and Monitoring Board (NCDMB).
The President in a statement by his Special Adviser on Media and Publicity, Ajuri Ngelale appointed new board members for the NCDMB.
According to the Spokesperson to the President, the President in conformity with Sections 71(1), 72, and 73 of the Nigerian Oil and Gas Industry Content Development Act (2010) approved the appointment of qualified Nigerians to serve on the Governing Council and Management team of the Nigerian Content Development and Monitoring Board (NCDMB).
The newly appointed board members include:Sen. Heineken Lokpobiri — Chairman / HMS, Petroleum Resources, Engr. Felix Omatsola Ogbe — Executive Secretary, Oritsemyiwa Eyesan — Member / EVP Upstream, NNPC Ltd, Gbenga Komolafe — Member / CEO, NUPRC, Bekearedebo Augusta Warrens — Member, Nicolas Odinuwe — Member, Rapheal Samuel — Member, Sadiq Abubakar — Member, Olorundare Sunday Thomas — Member.
Ajuri noted that the President expects the new appointees to discharge their duties with his patriotic resolve to significantly enhance indigenous industry participation in the energy sector as part of the Renewed Hope Agenda’s mandate to achieve the goal of 70 percent indigenous content and participation in the nation’s energy industry during the lifespan of this administration.
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