NLNG demands US$316m judgement debt from NIMASA: The Nigeria LNG Limited, on Monday, said it had formally issued a demand notice for US$316m judgment debt to the Nigerian Maritime Administration and Safety Agency. The NLNG said in a statement that the sum represented the payments it made under protest to the agency since 2013, as well as direct and shipping losses it incurred due to the initial two-day blockade of the Bonny Channel by NIMASA in May 2013. (Source: Punch)
Fidelity Bank Issues US$400m Eurobond, refinances US$256m of maturing notes: Fidelity Bank Plc, on October 11, 2017, returned to the international capital markets and priced a successful US$400m 5-year Eurobond at a 10.50% coupon. The transaction also included the US$256m repurchase of its existing US$300m Eurobond maturing in May 2018. The transaction, according to the bank, was part of a strategic liability management exercise designed to extend Fidelity Bank’s debt maturity profile and proactively refinance the maturing 2018 Eurobond. (Source: Thisday)
FBN Merchant Bank Partners with NESG at the 23rd Nigerian Economic Summit
In line with our commitment to drive economic growth strategies and national development, FBN Merchant Bank, the merchant banking subsidiary of FBN Holdings Plc, participated and sponsored the 23rd Nigerian Economic Summit.
The summit which held in Abuja from Tuesday October 10th to Thursday, 12th October, 2017 brought together national policy makers, regulators, government officials and industry experts to facilitate discussions around private sector led investments approach and how this is key to providing sector opportunities in a manner that becomes a holistic national strategy for growth and development with measurable outcomes.
The Conference, themed, “Opportunities, Productivity & Employment: Actualizing the Economic Recovery and Growth Plan” provided an enabling platform to discuss and deliberate on strategies from model markets and subject matter experts, towards re-emphasizing the value of public-private partnership, in driving the Nigerian economy. In his opening remarks Mr. Kyari Abba Bukar the Chairman of NESG described the summit as the most robust and credible platform to interrogate National policy direction. Mr. Bukar said since its first summit in 1993, the NESG has evolved into a leading advocate for national economic growth.
According to a statement by the Deputy Managing Director, FBN Merchant Bank, Mr. Taiwo Okeowo “FBN Merchant Bank is committed to enhancing growth and development in the industry by supporting platforms that offer opportunities for interchange of ideas, knowledge and capacity building in order to create jobs and improve productivity in all sectors of the Nigerian economy.” He commended the NESG for creating a platform that gave the opportunity for close interactions between the public and private sector players. He further emphasized that FBN Merchant Bank will continue to play a significant role in the development of the Nigerian economy.
Topics discussed at the event were: Agriculture & Food Security: Building the Competitiveness of Nigerian Agribusiness; Financial Inclusion & Financial Markets: Enabling Accessibility to Capital through Financial Inclusion and Alternative Funding; Human Capital Development: Job Creation and Economic Growth Through Human Capital Development; Infrastructure: Unlocking Opportunities Through Infrastructure and Urban Development; Science & Technology: Science & Technology as Key Drivers in Actualizing the Economic Recovery and Growth Plan
In collaboration with the Nigerian Economic Summit Group, FBN Merchant Bank and First Bank of Nigeria also hosted a dinner on ‘Entrepreneurship and Employability’ in conversation with a panel of young people on the 11th of October, 2017, where clients, customers and industry experts where able to deliberate and offer workable solutions on ways to reduce unemployment in Nigeria while promoting entrepreneurship skills. FBN Merchant Bank also collaborated with the NESG during the NES#22 themed ‘Made-in-Nigeria” in a mission to drive thought leadership and promote diversity in the Nigerian economy.
Event: United Bank for Africa (UBA) reports Q3 2017 results
Implications: Limited revisions to consensus PBT forecasts; Neutral reaction from the market
Positives: Loan loss provisions were well below our expectations
Negatives: Opex grew 25% y/y
This morning UBA published its Q3 2017 results which showed that PBT declined by -14% y/y to N20.8bn. The key drivers behind the y/y decline in earnings were a 25% y/y rise in opex and 52% y/y increase in provisions for loan losses. Although pre-provision profits grew by 12% y/y, the negatives on those two lines proved significant. In terms of the revenue split, non-interest income was the major driver of the expansion in pre-provision profits. However, funding income was also up by 6% y/y. Moving down the P&L, the decline on the PAT line was greater at 26% y/y, because of a 35% y/y increase in income taxes and base effects on the OCI line. Sequentially, PBT fell by 35% q/q. In contrast to the y/y trends, the non-interest income line declined by -39% q/q (because of base effects) and drove the marked decline in PBT. The weakness on the non-interest income line also led to a 16% q/q drop in pre-provision profits. Compared with our forecasts, PBT missed by 15%. This was primarily due to a negative surprise in opex (+11% more than what we were modelling).
We note that UBA’s opex was also up, by around 20% y/y, in Q2 2017. Given the persistent rise in opex, we expect this line to come under scrutiny by investors. In terms of balance sheet trends, UBA’s loan book and deposits grew by 2% q/q and 3% q/q respectively, better than the 1% and -6% respectively in Q2.
UBA’s 9M PBT of N78bn tracks broadly in line with consensus PBT forecast of N103bn for 2017. As such, we expect to see limited revisions to consensus earnings estimates and a broadly neutral reaction from the market.
We rate UBA Neutral. Our estimates are under review.
UBA Q3 2017 results: actual vs. FBNQuest Research estimates (N millions)
Lawmakers enjoy free treatment at Aso Rock clinic –Presidency
$5.5bn loan: FG not borrowing to pay salaries, says APC
Reps summon NBC, Seven-Up, Cadbury, 88 others over harmful soft drinks
2017: NPA to spend N278bn of N288bn revenue
We source 75% of raw materials locally – Guinness MD
Ailing minister returns from US medical trip
FRSC refers 4,000 traffic offenders for mental evaluation
Alaafin picks Gani Adams as new Aare Ona Kakanfo
Gunmen kill three NDLEA men, steal guns
Police sergeant, retired ASP arrested for ‘robbery’ in Lagos hotel
Kidnapped zoo director, Ehanire, regains freedom
Niger civil servants remanded for forging promotion letters
Alleged adultery: Mob beats man to death in Abia community
Gully threatens Calabar-Ikom road, motorists groan
Ondo gets special court for illegal structure builders
Fulani herdsmen, farmers sign peace accord in Nasarawa
Police nab 14-year-old girl, others for beheading man
Akwa United win 2017 Aiteo Cup
Vaccine: IPOB tells pupils to return to school
No $25 billion contract was awarded by NNPC, says Osinbajo
Fed Govt borrowing to save jobs, says minister
ALGON, 16 foreign partners to create 5.9m jobs from new agriculture scheme
Army ends Operation Python Dance in Southeast
AGF urges court to dismiss suit seeking Magu’s sack
Obasanjo, Yar’ Adua, Jonathan, Buhari are accidental leaders, says Na’Abba
SON reduces product registration time to 60 days
Gunmen kill three NDLEA operatives
Evans: police took my N55m, $10,000, 29 vehicles, others
I don’t know where Kanu is, says governor
Al-Makura hails female team for winning National League
Ugwuanyi, Ekweremadu hail Fed Govt on 41km Enugu-Ebonyi road
Fayose gives cars to aides over EFCC detention
Six dead, five injured in Plateau attack
Kano records 98,000 malaria cases
Police arrest 16 kidnap suspects in Akwa Ibom
Labourer jailed 10 months for stealing tyres
$5.5bn Loan Request: PDP, APC At War As FG Explains Borrowings
Southern Leaders Tackle Buhari Over Directive To World Bank
Nobody Should Kill Nigerians In South Africa— Jacob Zuma
African countries should replicate Obasanjo’s library —Mbeki
Aso Rock Clinic received zero allocation for capital project in 2017 – Perm Sec.
NAICOM Commences Review Of Companies’ Capital Base
FG settles 73 ex-militants with fish, crop, poultry farms
Dangote Employs Youth Graduates For Rice Farming In Kogi
Lagos Has Broken Culture Of Silence Around Sexual, Domestic Abuse — AMBODE
Tension As Ile-Ife Youths Accuse Modakeke Of Encroachment
2018: My deputy’s selection was divine arrangement —Fayose
Commissioner Points Hypertension, Diabetes As Major Causes Of Blindness
Delta inaugurates 8-man c’ttee on mining
Sokoto Earmarks N1.5bn For Road Projects
Anambra Judiciary Sets Up C’ttee On Nkerehi, Umuchukwu Dispute
I refuse to live my life in fear. – Fela Kuti
Lower current-account surplus due to MCP
The balance of payments for Q2 2017 shows that the current-account surplus narrowed from the equivalent of 3.2% of GDP to 1.6%. The explanation lies in a decline in the trade surplus from 2.7% to 2.4% of GDP, along with a larger widening of the services outflow from 2.4% to 3.8%. Fx availability has been enhanced by the CBN’s multiple currency practices (MCP). Importers have benefited, which is evident from manufacturing PMIs, and retail has also been able to meet its requirements. In a forthcoming daily note we will examine trends on the capital account.
- The share of oil and gas exports in GDP crashed from 25.0% in Q1 2012 to just 9.6% in Q4 2016. A modest recovery to 10.9% in both Q1 and Q2 is attributable to a pick-up in oil production and the contraction in GDP.
- Merchandise imports increased by US$1.0bn q/q in Q2: if we strip out oil and gas, the increase rises to US$1.3bn. This underpins our point about fx availability and masks any benefits from the FGN’s import substitution policies.
- The same is self-evident when we drill down into the outflow on services in Q2 2017. The debits on travel and other business services rose by US$900m and US$400m q/q respectively. Fx ix available at the CBN’s various windows if the user is comfortable with the price.
- Net current transfers, which are overwhelmingly workers’ remittances, have held up better than expected, at more than 5% of GDP for four successive quarters.
· We are comfortable with the smaller surplus on the current-account because offshore investors have returned to local equity and debt markets, and because the FGN is to revisit the Eurobond market this quarter.
Nigerian Economic Summit Group (NESG) urges review of sold power assets, electricity tariff
The Nigerian Economic Summit Group (NESG) has recommended a review of the privatisation of the power sector.Minister of State for Budget and National Planning, Zainab Ahmed, disclosed this at the end of summit yesterday that the Federal Government would raise a committee to implement the recommendations.
The summit, which also recommended a review of electricity tariff, said it was necessary to make the sector attractive to investors, just like the telecommunications sector.
The NESG added that the proposal would ensure the attainment and the optimisation of the summit’s theme “Opportunities, productivity and employment, actualising the economic recovery and growth plan (ERGP)
Ahmed explained that a review of the electricity tariff would increase the sector to what investors refer to as cost recovery level to attract investments.She added that a review was needed in the distribution sub-sector, because it had remained epileptic due to inadequate injection of capital by the current concessionaire.
According to her, the poor funding has made it difficult for effective metering and other infrastructure to enhance delivery and supply of power and to boost productivity and wealth creation in the country.The minister disclosed that the review would begin with the Electricity Distribution Companies (DISCOs), which has been noticed to be problematic.She said: “The recommendations would require the stakeholders coming together to agree on what stake they would give off to the new investors.
“As you are aware, we have not had investors in the petroleum sector for almost seven years because of the non-passage of the Petroleum Industry Bill (PIB), because investors feel that the prices are not cost reflective enough.’’
Among other recommendations is the removal of all regulations stifling the development of off-grid electricity solutions, to encourage the use of renewable energy and increase electricity access and reduce poverty
The NESG urged also canvassed the promotion of willing buyer and seller agreements for gas without government interventions on prices, and acceleration of investment in gas and renewable energy by providing fiscal incentives like 10 years or more tax holiday.
Meanwhile, the immediate past President of the Federation of African Engineering Organisations (FAEO), Mustapha Musa has explained the cause of power outage.
According to him, the inability of the DISCO’s to remit money collected to Market Operators (MO) and Nigeria Bulk Electricity Trading (NBET) is hindering stable power supply in the country.
He stated this in Abuja yesterday while speaking at a lecture with the theme “Energy Situation In Africa: Opportunities and Challenges” at the 26th Nigerian Society of Engineers (NSE).
He added that the failure of Generating Companies (GENCOs) to pay for fuel have denied suppliers the needed funds to maintain their plants.He added that the failure of GENCO’s to pay for fuel denied the suppliers the needed funds to maintain their plants and expand their networks adding that most of the operators have delinquent credit exposures to banks.
Healthy growth at the PFAs
The Assets under management (AUM) of the Nigerian regulated pension industry increased by 20.2% y/y in August to N7.09trn (US$23.2bn). Market valuations were not the principal driver. This is a healthy increase when we consider the arrears in pension (and salary) payments to employees of state governments and public agencies. The FGN’s several initiatives to bolster state government finances notwithstanding, one reputable independent research body has estimated that at least 20 states were in arrears of some description as of June this year.
· Holdings of FGN paper amounted to 72.1% of AUM in August, compared with 69.3% one year earlier. There has however been a subtle shift: the share of FGN bonds has declined in line with a reported sharp fall in the PFAs’ bid at the monthly auctions while that of NTBs has risen from 12.1% to 18.6%.
· The PFAs were finally drawn to the stop rates of more than 22% that the CBN was setting at the time at its primary auctions and open market operations (OMO). The market has recently turned, guided by the CBN.
· PenCom’s latest data capture the first three months of the surge on the stock market, driven by new money from offshore investors.
· Nigeria’s reformed pension industry, shaped by legislation in 2004 and 2014, has been a success story. As such, we should not be surprised by moves to undo the good work in the National Assembly and by calls from officials for the AUM (the legal property of savers under contributory schemes) to be invested in government programmes.
· We welcome the monthly data releases from PenCom. We would also welcome independent industry analysis allowing investors to compare the performance of the pension funds.
Electricity tariff shortfalls hits N460bn, Discos mull force majeure: The current revenue shortfalls that have accumulated from the inability of the Nigerian Electricity Regulatory Commission (NERC) to allow 11 electricity distribution companies (Discos) to have cost reflective tariffs have now shot up to N460bn (US$1.3bn), thus burdening the operations of the Discos, the Association of Nigerian Electricity Distributors (ANED) has disclosed. (Source: Thisday)
Cement – backward integration saves Nigeria N240bn annually: Backward integration in the cement industry is saving the country up to N240bn (US$666.1m) annually, Lafarge Africa Plc has said. According to the firm, local manufacture of cement has also seen installed capacity increase from 2 million to 32 million metric tonnes since backward integration began in the sector in 2002. (Source: Punch)
Cross River, Siemens, others in 750MW power pact / FG approves transaction advisor for C’River deep seaport: The Cross River State Government has announced the signing of a Memorandum of Understanding with a consortium of energy firms led by Siemens to deliver a 750-megawatt (MW) power plant in the state. The state government said in a statement on Wednesday that the project would be deployed through ship-mounted turbines, with an 18-month timeline. The government stated that 40MW of electricity would be delivered in the next three months through a truck-mounted turbine as an emergency measure. In addition, the federal government (FG) has approved a transaction advisor for the Bakassi Deep Seaport project in the state. (Source: Punch)
Ikeja Electric, Mojec sign MoU for DT meters: Ikeja Electric Plc has signed a Memorandum of Understanding (MoU) with Mojec International Limited for the supply of distribution transformer meters. The acting chief executive officer, Anthony Youdeowei, Ikeja Electric, said at the signing ceremony of the MoU on Wednesday that energy accountability had been the bane of the nation’s energy sector. (Source: Punch)
FG proposes model to end estimated electricity billing in three years: The federal government (FG) has initiated a business model to end estimated billing for every electricity customer in the next three years. The proposed business model provides for the licensing of Meter Services Providers (MSP) by the Commission who would, on a competitive basis, provide for the financing, procurement, installation, maintenance and replacement of electronic prepaid meters for end-users of electricity. (Source: Guardian)
Axxela submits EIIJ feasibility study to NNPC: Axxela Limited, a Sub-Saharan Africa gas and power portfolio company, has completed and submitted a feasibility study to the Nigerian Gas Processing and Transportation Company (NGPTC), a subsidiary of the Nigerian National Petroleum Company (NNPC), to build a 510 kilometre ELPS-Ibadan-Ilorin-Jebba (EIIJ) pipeline network across the Western and Central states of Nigeria. (Source: Guardian)
NDDC, NEXIM Bank plan N2.5bn Export Development Fund: The Niger Delta Development Commission (NDDC) has assured that it will set up a N2.5bn (US$6.9m) export development fund in conjunction with the Nigerian Export-Import Bank (NEXIM). This was announced by the NDDC managing director, Nsima Ekere. (Source: Guardian)
Nigeria submits treaties ratification on copyright protection: As part of the country’s response to the challenges of copyright protection in emerging digital technology, Nigeria has deposited Instruments of Ratification of four Copyright Treaties at the 57th Assembly of member states of the World Intellectual Property Organisation (WIPO), Geneva, Switzerland. (Source: Thisday)
FBNQuest FI-FX Daily Watch 13 October 2017
Opening market liquidity on Thursday was N244bn (negative). OMO bills of N127bn matured. Meanwhile, at an OMO auction, the CBN raised N64bn from the sale of the 196-day paper at a stop rate of 17.85%. (The rate was 17.93% at the auction of 28 September.) A downward trend was observed on selected tenors.
The FGN bond market was relatively active, and yields contracted at the mid to long end of the curve. Fidelity Bank raised US$400m in the Eurobond market in a refinancing exercise.
The CBN’s daily fx intervention was again US$0.5m, at N305.05. Turnover on NAFEX rose from US$253m on Wednesday to US$341m. Indicative rates ranged from N310 to N362. Oil prices slipped on Thursday as US fuel inventories rose. OPEC is widely expected to extend its accord on supply cuts beyond the current expiry date of March 2018.
FG restructures Bank of Agriculture: The federal government (FG) on Thursday announced the commencement of the restructuring of the Bank of Agriculture in order to ease credit facility to Nigerian farmers. It made the announcement at a press briefing in Abuja as it celebrated the 2017 World Food Day. (Source: Punch)
NERC fines Ibadan Disco N50m for misuse of CBN loan: For allegedly giving out a loan worth N6bn (US$16.7m) from the N11.4bn it received from the Nigeria Electricity Market Stabilisation Fund (NEMSF) granted by the Central Bank of Nigeria (CBN) to its core investor group, the Nigerian Electricity Regulatory Commission (NERC) has levied a fine of N50m on the Ibadan electricity distribution company (Disco). (Source: Thisday)
Interbank lending rate drops to 20% on cash squeeze ease expectation: The nation’s overnight lending rate dropped to 20% on Thursday on expectation that a cash squeeze will ease after money market rates more than doubled previous session.(Source: Punch)
NNPC invites investors to partake in oil search in seven inland basins: The Nigerian National Petroleum Corporation (NNPC) yesterday disclosed that it plans to invite investors to participate in its search for oil in seven inland basins of Nigeria and was developing modalities for this. Its group managing director, Maikanti Baru, disclosed that as part of strategies to build up Nigeria’s oil reserve base, the corporation will revive exploratory activities in the seven hydrocarbon basins in the country with prospective investors’ participation. (Source: Thisday)
Buhari reappoints Orji NSIA boss: President Muhammadu Buhari has reappointed Uche Orji as managing director of the Nigeria Sovereign Investment Authority. Orji was first appointed in October 2012 for an initial term of five years, renewable for another term of five years. (Source: Punch)
Stakeholders unveil new funding initiative for mortgage banks: Stakeholders in the housing finance industry have inaugurated the Mortgage Warehouse Funding Limited (MWFL), a special purpose company set up to provide short-term local currency and competitively priced funding to mortgage banks. The MWFL, a private-sector driven initiative to enhance mortgage banks’ origination capacity, was incorporated in December 2014 and initially sponsored by a group of eight mortgage banks. (Source: Punch)