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Business News

Based on results released so far, here’s an overview of Nigerian banks’ performance

Nigerian banks did well to keep costs low in 2019, according to information gleaned from some of their financial statements that have been released.

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Based on results released so far, here’s an overview of Nigerian banks’ performance

Nigerian banks did well to keep costs low in 2019, according to information gleaned from some of their financial statements that have been released so far. The Regional Head of Equity Research at Standard Bank Group, Muyiwa Oni, made this observation when he recently joined CNBC Africa’s Esther Awoniyi to talk about the banks’ performances last year.

Focusing on Zenith Bank Plc, which reported a profit after tax of N208.8 billion last year, Oni stated that the tier-1 bank’s performance was better than expected. He, however, noted that it was somewhat surprising to see such a significant material reduction in the bank’s net interest income, which decreased by 9.7% to N267 billion, down from N295.6 billion.

Zenith Bank GMD and CEO Mr. Ebenezer Onyeagwu

Zenith Bank GMD and CEO Mr Ebenezer Onyeagwu

Oni went ahead to explain that perhaps the surprise came from the fact that the impacts of the LDR yield on asset were not factored in during their initial financial modelling of the bank.

Do note that Zenith Bank’s yield on assets dropped considerably during the year under review. And this was caused by volatility in the interest rate environment, according to Oni. He said:

“Zenith Bank’s numbers were better than expected. I think we were looking at a 4% earnings increase, but the number came out at 8%. Suppose we didn’t really factor…should I say we didn’t expect such material reduction in interest income. So, I suppose in our modelling, we, at the time, hadn’t modelled in as much the impact of the LDR yield on the asset.”

[READ MORE: Dangote Cement retains BUY status despite weak revenue)

Meanwhile, Oni observed that it was interesting to see the increase in Zenith Bank’s non-interest income, which was driven mainly by e-banking fees. There was also an increase in trading income, which Oni noted was influenced by the drop in yields that forced the bank to restrategise and come up with an alternative way of making money.

Commenting further on Zenith Bank’s performance, Oni stated that it was pleasantly surprising to see gross loan increase by about 22%. He said this is positive because it helped to push up the bank’s loan to deposit ratio over 68%. Of course, this can mainly be attributed to pressure by the Central Bank of Nigeria which had recently mandated banks to lend to the real sector of the economy.

Recall that virtually all the banks that have released results for FY 2019 reported an increase in profit after tax. FBN Holdings Plc grew its profit after tax by 3.93%, just as Stanbic IBTC Holdings grew its own profit after tax by 0.8%. Fidelity Bank’s profit after tax increased by 28.5%, just as First City Monument Bank grew its own PAT by 18.4%.

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You may watch the full interview by following this link.

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Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Business News

Senate calls for the liberalization of cement policy to crash the price of the commodity

The Senate also tasked the FG on providing more industrial incentives to bring new players into the cement industry.

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BUA Cement

The Nigerian Senate has called for the liberalization of Nigeria’s cement policy to boost production and subsequently crash the price of the commodity in the country.

This motion was raised by Senator Lola Ashiru at today’s senate plenary, the senator also tasked the Federal Government on providing more industrial incentives to bring new players into the cement industry, in addition to the liberalization of the cement policy in Nigeria.

Ashiru explained that to reduce the price of cement and in extension, other building materials in the country, the Federal Government needs to provide an enabling operating environment that will encourage new entrants in the country.

The Senate in conclusion called on the FG to provide more industrial incentives and protections such as concessionary loans and larger tax incentives to encourage new entrants and expand the national cement production infrastructure, as this boost in production will lead to a downward review of cement price in Nigeria.

What industry leaders are saying

Earlier this year the founder of BUA Group, Abdulsamad Rabiu, called for the liberalization of Nigeria’s cement policy to boost production and reduce the price of the commodity.

The billionaire philanthropist faulted the belief that Nigeria is self-sufficient in terms of cement production, noting that recent statistics and figures on Nigeria’s population and cement production do not support this status of sufficiency in cement production as stated by some individuals.

He attributed the high price of cement products in the country to the supply gap which exists in the country, as the few producers who currently operate in the country are unable able to meet the country’s huge and growing demand.

The Group Executive Director, Strategy, Portfolio Development and Capital Projects, Devakumar Edwin, explained that the demand and consumption of cement in the nation currently outstrips supply, and this can be pegged on the growth in the country’s population, and the strong appetite for real estate investment and construction in the country.

He revealed that a supply gap of about 40% exists in the country’s cement market and that all players in the industry are working hard to level production with the rising demand in the country.

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Paypal’s Venmo now permits cryptocurrency trading

Venmo will support four different cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.

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Venmo, a mobile payment service owned by PayPal has announced that it has started allowing users to buy, hold and sell cryptocurrencies on its app. Just like PayPal, Venmo will support four different cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, and users can carry out transactions with as little as $1 on the app

Founded in 2009, Venmo has over 70 million users and it is one of the most popular payment channels in the US. The payment platform processed around $159 billion in payments last year.

Since the app functions like a social network, adding cryptocurrency will offer a more user-friendly feel for people who love buying and selling crypto.

READ: 28 million merchants to be granted crypto usage on PayPal

As bigger companies show more interest in cryptocurrency, there will be wider adoption of virtual currencies in future. Venmo is the latest payment app that is offering support for cryptocurrency on its platform.

Paypal, the parent company of Venmo is one of the most active companies in the crypto space as it allows users to buy, sell and hold cryptocurrencies in their digital wallets. Paypal users can also spend their coins at millions of merchants globally.

Crypto on Venmo is enabled through PayPal’s partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services.

What they are saying

Darrell Esch, Venmo’s Senior Vice President and general manager said “Our goal is to provide our customers with an easy-to-use platform that simplifies the process of buying and selling cryptocurrencies and demystifies some of the common questions and misconceptions that consumers may have.”

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