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The CBN dollar rain has left some people hurting

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Bureau De Change (BDC) operators in the country are unhappy with the rate at which the Central Bank of Nigeria (CBN) sells foreign exchange to them, which is higher than that given to banks. This has led to a drop in BDC participation in a weekly auction held by the CBN.

“Many BDCs no longer participate in the weekly forex bid sessions because clients are no longer coming forward to buy dollars from us as frequently as they used to do in the past.
“The reason is not just that the CBN is flooding the market with dollars, but it has to do with the fact that it (CBN) is selling dollars at a discount to the banks

Why the BDC operators are unhappy

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The apex bank currently sells foreign exchange to banks at N305 to the dollar, and N360 to the BDCs. Customers in need of foreign exchange, thus prefer to buy from the banks due to the cheaper rate. The move has left BDC’s struggling to get patronage.

Why the CBN has done this

The CBN, a few months ago began the direct sale of foreign exchange to commercial banks, in a bid to alleviate the foreign exchange scarcity, and pressure on the black market which pushed the exchange rate to as high as N450 a dollar. The bank is also aiming at a convergence of exchange rate, in other words having just one exchange rate across all sellers. BDC exchange rates have in recent times being prone to abuse, with many of them selling way higher than the approved rate. The CBN has sold over $7 billion in the markets in a bid to keep the exchange rate within its preferred band, and has shown no sign of slowing down.

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Patricia

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via [email protected]

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Energy

Just in: NNPC announces top management appointments as top official resigns

The NNPC has effected a major shake-up to enable the corporation to live up to its expectations.

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NNPC

The state-owned oil giant, the Nigerian National Petroleum Corporation (NNPC) has effected some major reorganization in the firm. They have announced some new appointments and redeployments as part of the ongoing efforts to strengthen and reposition NNPC for greater efficiency, transparency and profitability in line with the next level agenda of President Muhammadu Buhari’s administration.

This was disclosed in a press release by NNPC on Sunday, July 5, 2020, and signed by the corporation’s Group General Manager Public Affairs Division Dr Kennie Obateru.

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In the statement released by the oil giant, Mr Adokiye Tombomieye, the Group General Manager, Crude Oil Marketing Division (COMD), is now the new Chief Operating Officer (COO), Upstream while Mr Mohammed Abdulkabir Ahmed, the Managing Director of the Nigerian Gas Marketing Company (NGMC), has been appointed the new Chief Operating Officer, Corporate Services, following the retirement of Engr. Farouk Garba Sa’id, last week.

Dr Kennie Obateru stated that reorganization includes the redeployment of Engr. Adeyemi Adetunji, the Chief Operating Officer, Upstream, to the Ventures & Business Development Directorate as COO, following the voluntary resignation of Mr Roland Onoriode Ewubare, from the position last week.

The top-level staff movement also affected Sir. Billy Okoye who has been redeployed from the NNPC Downstream Company, NNPC Retail Limited, as Managing Director, to replace Mr Tombomieye as the Group General Manager, Crude Oil Marketing Division; while Mrs Elizabeth Aliyuda, the General Manager, Sales and Marketing NNPC Retail Limited, takes over from Sir Okoye as Managing Director.

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Similarly, Mr Usman Farouk, Executive Director Asset Management and Technical Services at the Nigerian Gas Marketing Company (NGMC) takes over from Mr Ahmed as Managing Director

The statement from NNPC also explained that President Buhari has accepted the resignation of Mr Roland Ewubare, who was the immediate past Chief Operating Officer, Ventures and New Business Directorate of the National Oil Company while the retirement of the immediate past Chief Operating Officer, Corporate Services, Engr. Farouk Garba Said had also received the approval of President who thanked the two former COOs for their meritorious service to the corporation.

The Group Managing Director of NNPC, Mele Kyari, said the new appointments would enable the corporation to live up to the expectation of her shareholders, Nigerians, and give impetus to the ongoing restructuring within the Corporation, which, he said, was in line with the corporate vision of Transparency, Accountability & Performance Excellence (TAPE).

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Financial Services

Zenith Bank and GTBank are considering paying interim dividends despite COVID-19

Analysts earlier predicted that banks may hold off on dividend payments as a way of cutting down on costs in view of COVID-19.

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Zenith Bank’s board of directors is set to meet on July 23rd, 2020 to consider the tier-1 bank’s audited financial statements for half-year 2020. The directors will also consider “the proposal for recommendation of interim dividend for shareholders,” said a notice that was sent by the company to the Nigerian Stock Exchange.

In a similar development, Guaranty Trust Bank Plc said in a statement to the NSE that “issues relating to half-year dividend may also be discussed” when its board of directors meet later this month.

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Zenith Bank and GTBank, which are two of the most profitable banks in Nigeria, have always paid interim dividends to their shareholders. However, analysts earlier predicted that many banks may hold off on dividend payments as a way of cutting down on costs, in view of COVID-19 and its attendant economic implications. It is, therefore, fascinating to see that Zenith Bank and GTBank are considering interim dividends nonetheless.

Elsewhere, banks around the world have either been warned not to pay dividends at all or to be careful with dividend payouts. In April, The Economic Times reported that the Reserve Bank of India advised Indian banks to suspend dividend payments in order to conserve their capital amid the pandemic. In a similar development, regulators in Europe also banned European banks from paying any dividend in 2020. In Australia, banks were advised to slash their dividend payouts. Meanwhile, over in North America, the US Federal Reserve announced in late June that it will temporarily restrict dividend payouts by some of the country’s biggest banks, the New York Times reported.

As Nairametrics had repeatedly reported, the COVID-19 pandemic is expected to adversely impact different sectors of the Nigerian economy, including the financial institutions. An earlier report by Nairametrics quoted Augusto & Co to have predicted how the pandemic would weaken Nigerian banks’ assets. An April report by PwC also highlighted some of the ways COVID-19 could impact Nigerian banks.

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In the meantime, the Banking Industry Risk Indicator (BIRI) in Nigeria stands at a score of 12.14 out of 100, according to a recent analysis by Fitch Solutions, as Nairametrics reported.


Do note that Zenith Bank Plc has declared a closed period for the trading in its stock starting from July 6th, 2020. The closed period will last until 24 hours after the company’s half-year 2020 financial report is released to the public. In the meantime, all persons with inside knowledge of Zenith Bank’s affairs shall be prohibited from buying and selling the company’s stock during the closed period. 

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Financial Services

GTBank declares closed period as directors meet July 22nd to consider H1 result

GTBank reported a net interest income of N64.28 billion in Q1 2020 as against N53.58 billion in Q1 2019.

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GTBank H1 2020 result

Guaranty Trust Bank Plc (GTBank) has declared a closed period ahead of the release of its audited half-year 2020 financial statements.

A corporate disclosure that was signed by the Company Secretary (Erhi Obebeduo) and sent to the Nigerian Stock Exchange said the closed period commenced on July 3rd, 2020. In line with the listing rules of the NSE, the closed period is expected to last until twenty-four hours after the bank’s financial statements have been released to the public.

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Note that the implication of the closed period is that all persons with insider knowledge of the company’s affairs are hereby prohibited from trading the company’s stock.

READ ALSO: Fidelity Bank announces closed period as it readies to release unaudited Q1 2020 result

Meanwhile, members of GTBank’s board of directors are scheduled to meet on July 22nd to consider the audited HI 2020 financial statements. A separate notice that was sent to the NSE said:

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“Pursuant to the post-listing requirements of the Nigerian Stock Exchange for quoted companies, Guaranty Trust Bank Plc hereby informs you that the board of directors of our bank is scheduled to meet on Wednesday, July 22, 2020, to consider the audited financial statement for the half-year ended June 30, 2020. Issues relating to half-year dividend may also be discussed at the meeting.”

The audited financial statements for half-year 2020 shall be sent to the Central Bank of Nigeria for approval prior to being made public through the Nigerian Stock Exchange.

READ ALSO: Analysis: GTB is minting profits but CBN is squeezing its cash.

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Recall that GTBank reported a net interest income of N64.28 billion in Q1 2020 as against N53.58 billion in Q1 2019. In the same vein, the tier-1 bank’s profit before tax grew by 2.1% to N58.2 billion, up from N57 billion in Q1 2019. Profit after tax also grew from N49.3 billion in Q1 2019 to N50 billion in Q1 2020.

GTBank closed last week’s trading on the Nigerian Stock Exchange with a share price of N20.80, according to trading reports seen by Nairametrics. Year to date, the stock has lost by more than -19%.

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