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Banks defy headwinds, earn more than N260 billion profits in Q1 2020

The performance by banks in Q2 2020 is expected to be much lower, mainly due to the economic fallouts from the COVID-19 pandemic.

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Q1 2020, Disrupting Nigerian banks, Evolution of Nigerian banks in 59-years , GTB, UBA, Zenith, Access Banks’ salary advance loans, Can a company operate without a website in 2019? , Banks refund N3.09 billion to customers over claims on excess charges, fraud, others  , Bank CEOs applaud NCC’s decision to suspend USSD charges, GTBank, Zenith, Access, FBN, 10 others spend over N8 billion on CSR, Banking: Evolving trends in the bankers’ market, GTBank, Access, FBNH, Standard Chartered wrestle over women entrepreneurs , GTBank, Access Bank, Zenith, FBN, 16 others disburse CBN’s N610.4 billion to farmers , Credit to government declines, as Credit to private sector hits N25.8 trillion, Banking sector NPLs down, loans up, Non-Performing Loans in Agriculture, construction, others rose to N143.76 billion, Asset seizure: Banks begins recovery of N6.125 trillion borrowed to the oil sector, Customer Experience: GTB, FCMB, Citibank, others emerge best banks in 2019, Nigeria’s top 5 banks spent more than N40 billion on adverts in 2019, Nigerian banks face risky future over low oil prices, coronavirus, Testing the financial strength of Nigerian banks

A total of twelve banks that are listed on the Nigerian Stock Exchange (NSE) collectively reported a profit after tax of N260.983 billion in Q1 2020. While this is impressive, there are strong indications that banks’ Q2 2020 profits will be significantly lower.

See the top performers

According to checks by Nairametrics Research, Nigeria’s tier-1 banks (or FUGAZ as they are often called), dominated the list of top performers. As always, Zenith Bank Plc recorded the most profit during the period with N50.5 billion. This is followed closely by Guaranty Trust Bank Plc, which reported a profit after tax of N50.1 billion. Access Bank Plc recorded N40.9 billion, while United Bank for Africa reported N30.1 billion. FBN Holdings Plc also reported a profit after tax of N25.7 billion.

The Q1 2020 profit after tax for the rest of the banks is detailed below:

  • Stanbic IBTC Holdings: N20.6 billion
  • Ecobank Transnational Incorporated: N24.3 billion
  • Fidelity Bank Plc: N5.8 billion
  • Sterling Bank Plc: N2 billion
  • Union Bank of Nigeria Plc: N6 billion
  • FCMB Group Plc: N4.7 billion
  • Wema Bank Plc: N977.3 million

READ ALSO: WTO discloses nomination window for DG selection

Some banks under-performed

Further analysis of banks’ Q1 2020 financial statements revealed that the likes of Ecobank, Fidelity, Sterling, and Wema Bank witnessed slight declines in their profit after tax year on year. For instance, Ecobank’s profit declined by as much as 10% when compared to some N30.5 billion that was recorded in Q1 2019. Fidelity Bank’s profit of N5.8 billion is less than N5.9 billion that was reported in Q1 2019. Similarly, Sterling Bank reported N3.2 billion worth of profit in Q1 2019, whereas its profit declined to N2 billion in Q1 2020. Also, Wema Bank’s profit in Q1 2019 was N1.1 billion. This is more than N977.3 million that the bank reported in Q1 2020.

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In the meantime, the likes of Jaiz Bank Plc, Aso Savings, Unity Bank Plc, and Aso Savings and Loans Plc are yet to release their Q1 2020 financials. Aso Savings has not released any financial statement since 2013. Unity Bank’s last-released financial statement was for Q3 2019. Jaiz Bank, on the other hand, recently released its audited full-year 2019 financial statement.

Lesser performance in Q2?

Recall that the Coronavirus pandemic officially hit Nigeria in March 2020. What this means is that many businesses (including banks) began feeling the negative impacts as far back as then. Yet, some of them managed to record relatively positive performances. However, there have been forecasts suggesting that banks’ performance in Q2 (and the rest of the year) not be so positive after all.

READ MORE: Analysis: Nestlé strong but exposed.

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As Nairametrics reported, a recent report by Augusto & Co noted that Nigerian banks’ earnings and profitability are expected to decline drastically in 2020. In specific terms, banks’ earnings from their core business are projected to decline in the short term due to an expected rise in impairment charges and lower yields on their loan books. More so, the contractionary monetary policy stance, exacerbated by discretionary Cash Reserve Requirement (CRR) debits by the CBN, is expected to affect banks’ overall performance this year.

Just last week, the CBN debited some banks a total of N459.7 billion for failure to meet CRR requirement. A report on this development by Nairametrics explained how this would affect banks’ ability to generate profits for their shareholders.

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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Companies

Naira devaluation, FX scarcity caused increase in cost of goods – Nigerian Breweries

Nigerian Breweries has revealed that Naira devaluation, FX scarcity caused increase in the cost of its goods in 2020.

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Jordi Borrut Bel, Nigerian Breweries Plc

The Finance Director of Nigerian Breweries Plc, Rob Kleinjan, has revealed that the increase in the brewer’s costs of goods was due to the devaluation in naira and FX scarcity, which led to the increase in the cost of inputs such as sorghum and sugar, as they are not fully produced locally.

This disclosure was made during the Nigerian Breweries’ Fact Behind Figures results presentation today.

However, Kleinjan explained that the increase in cost could not be fully attributed to currency devaluation and foreign exchange scarcity, which exerts pressure on imported input materials.

He said the increase in Nigerian Breweries’ costs of goods sold, as reported in its unaudited financial results, could also be linked to the volume of goods sold, as the company’s sales volume in Q3 increased by almost the same percentage as the cost of goods sold.

However, Mr. Kleinijan reiterated that to mitigate further losses, it was important for the company to focus on the supply chain and seek ways to mitigate price increases.

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What they are saying

The Managing Director of Nigerian Breweries, Mr. Jordi Borrut, while speaking at the virtual event said:

In 2020, the results of Nigerian Breweries were adversely impacted by COVID, VAT increase, FX devaluation and scarcity of foreign exchange. The year started with a promising 1st quarter, which was heavily impacted in Q2. The Nigerian market, however, rebounded in Q3.”

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Mr. Rob Kleinjan, while explaining the factors behind the increase in Nigerian Breweries’ cost of goods sold in the first nine months of 2020, said:

It is also clear that the increase in cost is due to the devaluation and the FX scarcity which has put pressure on our input cost. If you look into the main elements we use, which are sorghum and sugar – they are not fully produced locally, so when the currency is devalued, the prices of these inputs will soar.

That’s why it’s important that we are focused on the supply chain, and seek for ways we can mitigate any of the price increases, because the increase in cost comes from the input prices, which come from FX scarcity.”

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Companies

United Securities Limited changes name to Coronation Registrars Limited

United Securities Limited formally notifies its numerous customers and stakeholders of a change of name to Coronation Registrars Limited.

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In line with section 30(3) of the Companies and Allied Matters Act 2020 (CAMA), United Securities Limited has formally notified its numerous customers and stakeholders that it has obtained regulatory approval from the Corporate Affairs Commission to change its name to Coronation Registrars Limited.

The disclosure is contained in a verified post on Linkedln, signed by the firm’s Secretary, Omotoyosi Kola-Ojo, and seen by Nairametrics.

What this means

In line with the recent corporate action and according to section 30(5) of the Companies and Allied Matters Act, the company has been issued a new Certificate of Incorporation by the Registrar General of the commission, evidencing the change of name.

What they are saying

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A verified post by the Firm read thus: “The Public is hereby informed that United Securities Limited having passed the necessary Special Resolutions in line with Section 30(3) of Companies and Allied Matters Act 2020 (CAMA) and obtained the necessary regulatory approval of the Corporate Affairs Commission, has changed its name to CORONATION REGISTRARS LIMITED.

The public is further informed that pursuant to Section 30(5) of the Companies and Allied Matters Act, the company has been issued a new certificate of incorporation by the Registrar General of the Commission evidencing the change of name. All stakeholders are requested to take note of the above information.”

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Companies

We have exported 7 clinker vessels to other African countries since June – Dangote Cement

Dangote Cement says it has exported 7 clinker vessels to other African countries since June.

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Dangote Cement reveals share buyback plans, DANGOTE CEMENT records loses as ASI decline by 0.39%

The Group Executive Director of Dangote Cement, Michel Pucheros, announced that Dangote Cement, Africa’s leading cement producer with nearly 48.6Mta (Million Metric Tonnes Annually) capacity across Africa, has exported 7 clinker vessels to date to other African countries.

This statement was disclosed by Mr. Pucheros in a press release issued on the Group’s performance in the third quarter.

  • The cement maker exported 2 vessels of clinker per month to Cameroon in the third quarter of 2020 via the Apapa export terminal, which takes the Group’s clinker export for the quarter to 6 vessels.
  • In addition to its maiden shipment vessel to Senegal, which is a total of 27.8Kt of clinker, took its clinker exports to other African countries from June to date to 7 vessels.

In his statement, Mr. Pucheros said, “We continue to focus on our export strategy and are on track to ensure West and Central Africa become cement and clinker independent, with Nigeria as the main supply hub.

“Clinker exports have steadily been ramping up in Q3 after our maiden shipment in June 2020, whilst land exports have also resumed.”

However, as the Group ramp-up production across all segments and regions to reach its cement production and bagging capacity of 48.55 Mta, he said,

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“Dangote Cement’s strategy to offer high-quality products at competitive prices is meeting customers’ expectations in Nigeria and across the continent, where we continue to deploy excellent marketing initiatives and operational excellence across the continent.”

About Clinker

  • Clinker is a nodular material which is used as the binder in cement products. Clinker is produced inside the kiln during the cement manufacturing process.
  • The primary use of clinker is to manufacture cement, as cement is produced by grinding clinker.

What you should know

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Nairametrics had reported that Dangote Cement Acting CFO, Guillaume Moyen, during a virtual event in September disclosed that the cement producer is set to commence clinker export to other African countries within the next few weeks.

He reiterated that the Management of the company is on course to sell more clinker across West Africa, and commence shipment to Central Africa in H2 2020.

Why it matters

The export of clinker to countries where limestones are not available in huge quantities gives these countries a chance to produce its cement for construction purposes.

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