The recent NBS report has stated that a total sum of $1.2 billion capital inflow funds were received through Standard Chartered Bank, Stanbic IBTC Bank, CitiBank and Rand Merchant Bank.
A capital inflow of the sum of $1.46 billion was received by Nigeria in the third quarter of 2020 (Q3 2020), compared to $1.29 billion in the previous quarter (Q2 2020), as contained in the latest capital importation report released by the National Bureau of Statistics (NBS).
Out of $1.46 billion, $1.2 billion representing 79.5%, was received through Standard Chartered Bank (SCB), Stanbic Bank, Citibank, and RAND Merchant Bank as follows: Standard Chartered Bank, $438.98million (30%); Stanbic Bank, $279.68million (19%); CitiBank, $380.74million (26%); and Rand Merchant Bank, $62.61million (4%).
According to the report…
- The total Capital inflows recorded a growth of 13% (QoQ) compared to $1.29b received in Q2 2020 and a dip of 74%(YoY), compared to $5.6b received in the corresponding period in 2019 (Q3 2019).
- Investment through Foreign Direct Investment (FDI), 28% of the capital inflow for the quarter, recorded a growth of 179% (QoQ) and 101% (YoY) compared to $148.59m received in Q2 2020 and $206.58m in the corresponding period in 2019(Q3 2019), respectively.
- Other Investment vehicles i.e. trade credits, loans, currency deposits and other claims, accounting for 44% of the capital inflow for the quarter, recorded a decline of 16% (QoQ) and 73% (YoY) compared to $761m received in Q2 2020 and $2.4b in the corresponding period in 2019 (Q3 2019), respectively.
- The portfolio investment, 28% of the capital inflow for the quarter, recorded a growth of 6% (QoQ) and a dip of 87% (YoY) compared to $385m received in Q2 2020 and $3.03b in the corresponding period in 2019 (Q3 2019), respectively.
- The FUGAZ Banks i.e. First Bank, UBA, GTB, Access Bank and Zenith bank received only $139.6million, representing 9.6% of the capital inflows for Q3 2020, as follows: First Bank $55.79million, UBA $12m, GTB $9.93million, Access Bank $10.55million, Zenith Bank $51.33million.
Other Key highlights
- Standard Chartered Bank (SCB) and 3 others recorded a growth of 13% QoQ and a dip of 60% YoY, compared to $2.91b received in the corresponding period in 2019 i.e. Q3 2019.
- In Q3 2020, SCB, Citibank and Rand Merchant Bank recorded QoQ growth of 3%, 72% and 72% respectively while Stanbic Bank dipped by 19%.
- SCB, Stanbic, Rand Merchant bank dipped by 13%, 83%, 85% (YoY) respectively while only Citibank had a growth of 8%, compared to the corresponding period in 2019 (Q3 2019),
- The FUGAZ banks recorded a decline of 2% QoQ, compared to $142.26million received through them in Q2 2020 and a further dip of 90% YoY, compared to $1.37billion received in the corresponding period in 2019 Q3 2019.
Why this matters
- There seems to be stronger confidence by the foreign investors in the foreign-owned banks in Nigeria (SCB and 3 other banks), as about 80% of the capital inflows for the quarter were received through them while only paltry 20% went through the local banks, 23 in number.
- This is a sharp indicator that most foreign investors do not have enough confidence in the local banks. No doubt, that could be related to trust in the local banks, as trust is so vital in winning the confidence of the customers and banking is also all about trust – without trust, no bank!
- Trust is a major pillar and lack of it can inhibit banking business and prevent customers from patronizing the banks. Therefore, it is imperative that the local banks as well as all the operators in the financial services ecosystem improve upon their image and perception to win back the confidence of the foreign nations and investors and this initiative should be championed by the Central Bank of Nigeria (CBN).