Business Fri, 26 May 2017 14:58:44 +0000 Joomla! - Open Source Content Management en-gb S&P Assigns BB-/B Rating To UBA S&P Assigns BB-/B Rating To UBA

Per Second News - International rating agency, Standard and Poor`s (S&Ps) Global Ratings assigned its “BB-/B” long- and short-term counterparty credit ratings to the United Bank for Africa Plc (UBA) with a stable outlook. 


These ratings on the pan African financial institution, United Bank for Africa (UBA) Plc, are at par with S&P ratings on the Nigerian Sovereign. More so, S&P's 'B' rating is the highest rating currently assigned to any Nigerian-based financial institution, thus reinforcing the respectable quality and strength of UBA, the third largest Nigerian-based bank by total assets, deposits and profits.

The rating agency noted that UBA's market position is supported by its good franchise in the corporate and retail segments in Nigeria as well as geographic diversification, with operations in nineteen African countries (Nigeria inclusive). More so, UBA is the only West-African bank with operations in the United States, in addition to its presence in the United Kingdom and France. Recognizing the strong profitability and capitalization of UBA, S&P noted; "We expect that UBA's earnings will be resilient despite the economic slowdown in Nigeria. We believe the bank's capital and earnings under our risk adjusted capital and earnings framework will remain moderate over the next 12-18 months, with its capital adequacy ratio remaining well above minimum regulatory requirements."

UBA's capital adequacy ratio was 19.7% at year-end 2016, which is well above the regulatory minimum of 15%, and we believe it will remain stable over the next 12-18 months. Notably, the well capitalized position of UBA reflects its  strong profitability as well as the Bank's sound and prudent risk management practice. S&P assesses UBA's risk position as adequate and posits that the ratings of 'B' reflects its expectation that the group will exhibit broadly stable asset quality in the next 12 months. The global rating agency anticipates that UBA's credit losses will decline to about 1.0% in 2017-2018.

Reflecting UBA's continued market share gain in low cost, stable deposits, which account for 79% of total customer deposits as at 31 December, 2016, UBA's funding and liquidity continue to wax stronger, as reflected in the average liquidity ratio of 42% in 2016, amidst the tight market conditions in Nigeria. S&P considers the bank's funding to be above average and its liquidity as adequate, owing to its stable and relatively low-cost, retail-deposit-based funding profile. Despite tightening monetary policy in Nigeria in 2015-2016, the bank has been able to maintain a stable cost of funding at about 3.7% as of December 31, 2016". The Group reported a net stable funding ratio of 143% as of the same date and exhibits one of the lowest levels of loan leverage among Nigerian peers. Broad liquid assets covered short term wholesale funding about 4x as of the same date.  

United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than fourteen million customers across over 1,000 business offices and customer touch points in 19 African countries. With presence in New York, London and Paris, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross border payments and remittances, trade finance and ancillary banking services.


]]> (Super User) Business Mon, 22 May 2017 11:15:12 +0000
Dangote launches new affordable pasta to substitute rice consumption in Nigeria Dangote launches new affordable pasta to substitute rice consumption in Nigeria

Shareholders at the weekend in Lagos applauded the Dangote Flour Mills return to profitability after posting a profit before tax of N11.82bn for its financial year ended December 31, 2016.


The Chairman of Dangote Flour Mills, Asue Ighodalo, while addressing shareholders at the 11th Annual General Meeting in Lagos said “Despite the tough business environment, I am delighted to announce that your company delivered an impressive turnover of N105.7 billion during the financial year, representing 120 percent increase over turnover recorded in the previous financial year and a 556 percent increase in gross profit rising from N4.4 billion in the previous financial year to N29.3 billion in the current year.”

The company achieved a complete turnaround on its bottom line, recording a profit after tax of N10.6 billion compared with a loss of N12.7 billion in the prior year.

A shareholder rights activist, Alhaji Muktar Muktar commended the Flour Mills management for returning the company to profitability as well reopening the shuttered Kano Mills. According to him, the reopening of the Kano Mills contributed to the increase in sales volume recorded by the flour mill.

He said that with return to profitability after years of losses, shareholders are encouraged that the board will recommend dividend payment in the coming years. He stated, “I want to commend you for this result. It clearly shows that this board is highly proactive and ready to tackle the problems of this company. You have significantly reduced the accumulated losses and reduced borrowings, I believe that under your leadership we should be able to receive dividends in the next couple of years.”

Executive Director, Sales & Marketing, Halima Dangote at the post AGM interview attributed success recorded by Dangote Flour Mills in the current financial year to change in leadership and product innovation. She highlighted strategic and bold move by the company to grow its market equity in Africa by relaunching a new and improved pasta product, ‘Ecccellente’ with a great taste and in new pack. She said “The new improved and affordable pasta, is expected to reduce the dependency on rice consumption by Nigerians”

On the inability to pay dividends, Ighodalo said “Unfortunately, despite the good performance of the company in the current financial year, we are unable to recommend dividend payment because financial standards and regulatory considerations only allow payment of dividends from accumulated profits.” 

Ighodalo however assured shareholders that the Board will continue to focus on sustaining high product quality, improving customer engagement strategies and strengthening supply chain capabilities.

“We will continue to work extremely hard to enhance the value of your investment in our company. With your unalloyed support, we look forward to consolidating on these gains in the coming year.”

]]> (Super User) Business Mon, 22 May 2017 11:54:21 +0000
DMO: Mobilising The Grassroots For National Development DMO: Mobilising The Grassroots For National Development

From Isaac Olutaya---Financial literacy is abysmally low in Nigeria, and I am sure, as well as other African countries. It can never be taken for granted that an average Nigerian with some extra cash knows what to do beyond buying stuff or just throwing it in some bank accounts. The average Nigerian hardly knows how to invest in the financial market.


That is why I am impressed with what the Debt Management Office, DMO, is doing with the Federal Government Savings Bond, FGSB.  The Savings Bond is an Investment Product issued by the Federal Government of Nigeria through the DMO. It is an addition to the FGN Securities Market and is a retail savings product accessible to all income group.
 The purpose of the bond is to encourage national savings culture and create an avenue for investors to benefit from the favourable returns available in the capital market. The minimum subscription amount is N5000, with additional subscriptions in multiples of N1, 000.00, subject to a maximum of N50, 000,000.00.

Like all FGN Bonds, the Savings Bond is backed by the full faith and credit of the Federal Government of Nigeria. Investors are to subscribe through Dealing Member Firms of the Nigeria Stock Exchange (NSE) who have been duly accredited by the DMO to act as Distribution Agents. And there are up to one hundred of them.
Interest on investment, which is announced by the DMO every month, will be paid directly into investors’ bank accounts every quarter.
Since it was first rolled out in March, the scheme has created such buzz in the investment community that it has been successfully embraced by the target groups, especially those on the low income level. At its first listing on March 13, N2, 067,961,000 was raised from the retail market at 13.01 percent coupon. About 2.067 billion units were allotted to 2,575 people, and 75 percent of these are ordinary Nigerians.
A major reason more Nigerians are embracing the Savings Bond is the passion with which the DMO under Dr Abraham Nwankwo has carried on its advocacy. Before the roll out in March, Dr Nwankwo never spared any air time to talk about it on television and radio. He also talked and has been talking to the press on the uniqueness of this product and why Nigerians must embrace.
Recently, the DMO and Nwankwo have embarked on nationwide tours to sensitise Nigerians, especially those at the grassroots about this new produce, which seeks inclusiveness of our national economic growth. The DMO has been traveling to all the corners of the country, organising workshops and town hall meetings to sell the idea of the FGSB.
While in Ibadan a few days ago on a one-day advocacy and sensitisation workshop on the Bond to talk to representatives of major interest groups, including market association, labour unions and many cooperatives in Nigeria, Nwankwo noted: “We are here in Ibadan to enlighten the public about the Federal Government of Nigeria Savings Bond. The government of Muhammadu Buhari has an economic philosophy of making sure that the economic process is inclusive. As Nigeria recovers from recession and grows, nobody should be left behind. Which means every Nigerian, no matter their income level will have an opportunity to participate in the process of re-activating the economy, and also benefit from the progress that is being made. “
At a similar gathering in Onitsha, where the DMO met leaders of market unions and middle income earning organisation, Nwankwo said the FGSB was designed purposely to favour the poor and give them a stake in government.
Before now, bond issuance, like the monthly locally auctioned FGN Bond and the just concluded $1 billion Eurobond, were restricted to institutional investors and high net-worth individuals. The Savings Bond is expected to help develop and introduce new debt instruments into the fixed income securities’ market to accommodate low income individuals and groups.
Financial market operators have also hailed the bond as innovative. Many believe the product will stimulate savings, especially because of the high returns on it, and give the government the opportunity to fund critical projects with cheaper funds. It is cheaper for government, especially at this period of recession, to borrow cheap funds domestically since it will pay in Naira. Domestic debts do not react to exchange rates.
While there are fears that the interest paid on the Savings Bond (as announced by DMO monthly) could divert savings away from banks which pay a meagre 5 percent, such possibilities are remote. The volume and value of the Savings Bond is not large enough to threaten the banking sector. The DMO is not unaware of this fear, and appeared to have doused it. That perhaps explains why financial institutions in the country are lining up behind the DMO.
The savings bond will no doubt help the government get access to funds available for investment in the economy, thereby facilitating gross capital formation and economic growth. It equally enables the individual investors enjoy those benefits which accrue to big investors in the capital market.
The Savings Bonds are protected because they are secured by the government, and tax on the interest is usually waived while the principal and earned interest is registered with the DMO.
Nwankwo, who has lauded the Federal Executive Council’s approval of the Debt Management Strategy (2016 – 2019), is positive that the strategy would be implemented in such a way as to guide against unsustainable foreign exchange exposure. This is why the Savings Bond is an innovative product from the stable of the DMO. 
Nigeria’s low debt to GDP ratio has cleared the road for the country to borrow more to fund its budget, infrastructure and other essential projects that will stimulate the economy and create jobs for the citizenry.
As Nwankwo said during a recent interview: “Sovereign borrowing from the domestic debt market encourages the development of a functional bond market, with the scope to introduce different instruments, which will encourage the habit of domestic saving, intermediation and investment. Such a functional domestic bond market will be tapped by the private sector to raise long-term funds for investment in the real sector and infrastructure projects. Nigeria has developed a deep and liquid domestic bond market where funds of up to 20 years tenor can be raised.” 
While investment in the FGN Saving Bond gives personal benefits, it also mobilises the people for national development. This, to me, is why the DMO is mobilising all Nigerians to join and participate in this administration’s philosophy of shared prosperity that the FGN Savings Bond symbolises.
Olutayo wrote in from Ibadan
]]> (Super User) Business Thu, 18 May 2017 12:51:32 +0000