The new economic direction for the next two months has already been seen as growth and investment inducer, notwithstanding the size. It is capable of creating loan renegotiations if sustained and is a test of rate cut environment.

Monetary Policy Committee (MPC) members had held on to the rates for nearly three years, despite calls by real sector operators in a three-fold fight against inflation, exchange rate manipulations and attraction of foreign inflows, as the economy slipped into and exited recession.

Their pessimism rode on the back of precedents and the recent remark by CBN Governor Godwin Emefiele that the issues that led to the economic crisis of 2015-2017 remained visible, hence the need to be alert to domestic and global developments.

But yesterday, he called the decision a “new direction” saying: “This rate cut is meant to signal that there is a need for us to move course a little further. To do so, we need to begin to look at money supply and liquidity to push growth.”

The Chief Executive Officer of Cowry Asset Management Limited, Johnson Chukwu, described the development as positive “ambush” of all projections, but more importantly, a sign of returning confidence in the economy.

He said that the decision has three immediate impacts: assurance to the private sector; boost to investments; and sustenance of foreign investments inflow.

“While structural issues constraining lending persist, we cannot rule out the impact of 50 basis points downward adjustment on cost of funding. That is a boost to investments and borrowing for economic activity. There is expected movement from fixed income segment to the equities segment by the rate adjustment. It is not enough to sway foreign inflow, because already, fixed income yields have compressed at about 12 and 13 per cent,” he said.

The research analyst at FXTM, Lukman Otunuga, said investors were caught completely off-guard with the unexpected cut in benchmark interest rate for the first time in years by CBN. “Today’s move by the CBN may open the doors to further rate cuts in the future, especially if macroeconomic conditions continue to improve and inflation cools further,” he said.

The Head of Research at FSDH Merchant Bank Limited, Ayodele Akinwunmi, said the decision was based on the relative stability in inflation rate and exchange rate but noted that it would only subsist if there is no adjustment in the pump price of petrol and electricity tariff.

“The cost of servicing the debt of the government may also drop. And with complementary fiscal policies to improve business environment, lending to the private sector may increase,” he said.

Analysts at Afrinvest Securities Limited were however not convinced that an easing cycle by the apex bank has begun, as the current move remains subject to global interest rate development and is tainted by “desperation to sustain and retain flows.”

They noted: “In addition, credit to private sector is not expected to improve on the back of rate reduction as structural bottlenecks and elevated business risk environment remain drags to credit creation.”

Stock market operators described the MPR cut as a positive development that would spur liquidity in the equities market.

The equities market has been on a downward note in the last few years due to the mouthwatering yield the fixed income market offers to investors. But with the cut, operators said the segment of the market would be depressed while the yield remains unattractive.

Specifically, a professor of capital market and head, banking and finance department, Nasarawa State University Keffi, Uche Uwaleke, said: “The reduced MPR will also be positive for the capital market as some of the increased liquidity that will ensue will flow into the equities market. Also, it will be cheaper for the government to issue bonds, given that part of this year’s budget deficit will be financed through domestic borrowing.”

The Head of Research in FSL Capital Limited, Victor Chiazor, said it is a good development as it is expected to propel inflow of funds into the equities market.

He said once yield in the fixed income market continues to nosedive, investors would be compelled to look for other investment securities for better returns.

“It is expected to cause a reduction in yield of securities in the fixed income market and once this happens, investors would have no other choice but to return to the equities market where stocks like Zenith Bank would offer a better dividend yield.

“But CBN must keep yield slightly depressed, so that investors would not pick interest in the fixed income market and this would attract more patronage of the equities market,” he said.

Speaking on the agreement, Mr. Damilola Ajayi, Group Executive Director at Vetiva, stated that “the signing of this MOU is another important step in facilitating flow of funding towards bankable, commercially viable and environmentally friendly energy projects in Nigeria and, indeed, the rest of Africa. This does not only provide alternative capital deployment channels for investors but seeks to contribute to addressing the energy deficit in Nigeria”.

Vetiva, in November 2018, announced the signing of a partnership agreement with Climate Bonds Initiative (UK) to develop a liquid green and climate bond market in Africa. This agreement, alongside Vetiva’s strategic partnership with Climate Finance Advisory Limited and African Guarantee Fund West Africa (AGF), is in line with Vetiva’s commitment to make the African continent more attractive to capital flows, in a sustainable and environmentally friendly manner, necessary for long-term infrastructure projects. Vetiva and its partners are proud of their shared vision to not only channel long-term funding into Africa, but also do so whilst addressing the challenges posed by climate change. It is Vetiva’s firm belief that Africa is positioned to lead the climate change conversation globally, whilst deepening the continent’s capital markets.

Ms. Adidja ZANOUVI, Managing Director of AGF West Africa reaffirmed African Guarantee Fund’s commitment in promoting a sustainable and environmental friendly economic growth in Africa. She stated “In 2016, AGF introduced a Green Guarantee Facility geared towards increasing financing for climate change mitigation and adaptation projects. In line with this, AGF West Africa is pleased, to be part of this tripartite partnership as a partial guarantor to enhance access to finance for climate and green growth-oriented SMEs in Nigeria and West Africa at large”.

Dr. Jubril Adeojo, Director and Chief Investment Adviser at Climate Finance Advisory Limited, speaking on the agreement, said that “the ultimate aim of the tripartite partnership is to create green asset portfolio in excess of $100million over a period of 5 years. AGF will provide up to 50% partial risk guarantee to enable green energy project developers access up to 10 years long-term local currency concessional loans to implement their green projects. The green energy projects that qualify are captive power and mini- grid power projects where renewables and gas are preferred sources of energy. On the final note, we are glad that the program has come when Nigeria is strategically making laudable moves to attain its nationally determined contributions (NDCs) to the Paris Agreement on combating climate change.”

Vetiva Capital Management Limited is a Pan-African Financial Services Company incorporated in Nigeria and duly regulated and registered by the Nigerian Securities & Exchange Commission (“SEC”) to carry on business as an Issuing House and Financial Adviser. Also, the company, through subsidiaries, is registered to act as Fund/Portfolio Managers, Trustees and Broker/Dealer by the Nigerian SEC. Vetiva has expertise working hand-in-hand with international advisers, having worked on a number of cross border transactions which include a dual listing on the Nigerian and London Stock Exchanges, listed GDRs for Nigerian Companies as well as other capital raising transactions with international components.

AFRICAN GUARANTEE FUNDis an AA- Fitch rated Pan-African non-bank financial institution. AGF contributes to the promotion of economic development, vital for prosperity, stability and poverty reductionin Africa through two lines of interventions.

• Provision of partial guarantees to financial institutions to facilitate access to finance for Small and Medium-sized Enterprises. AGF offers three types of guarantees: Loan Guarantees, Resource Mobilization Guarantees and Equity Guarantees.

• Provision of Capacity Development support to the Partner Financial Institutions to improve their ability to properly assess SME risks and to the Small and Medium-sized Enterprises to build their capacity for easier access to finance.

AGF West Africa is a subsidiary of the AGF Group and oversees the Group’s operations within the Economic Community of West African States (ECOWAS).

Climate Finance Advisory Limited is an indigenous advisory firm with Pan-African outlook, poised with the strategic direction to crystallize the flow of various forms of intervention funds and investment required to spur the development of Africa’s infrastructure and critical economic sectors via climate finance methodologies. CFAL has expertise in the areas of climate finance, renewable energy technologies deployment, sustainable agriculture, and Blockchain deployment for the financial services sector.

CLIMATE FINANCE ADVISORY LIMITED
8th March, 2019
Contact:info@climatefinanceadvisory.com
Website: www.climatefinanceadvisory.com

The Mental Health Foundation (MHF) charity commissioned the survey to look at the impact of Britain’s impending departure from the European Union on how people feel, their sleep and their relationships.

The poll found that Brexit had made 43 percent feel powerless, 39 percent feel angry and 38 percent feel worried.

Some 26 percent said Brexit had not caused them to feel any particular emotions in the last 12 months.

But 17 percent said it had caused them “high levels of stress”, while 12 percent reported that it had caused them sleeping problems.

Some said Brexit had made them feel hopeful (nine percent), happy (three percent) or confident (two percent).

In the 2016 referendum on Britain’s EU membership, 52 percent voted in favour of leaving while 48 percent backed remaining in the bloc.

MHF chief executive Mark Rowland told AFP that people who voted Remain were reporting three times the level of anxiety of Leave supporters.

“But in relation to powerlessness, you actually see that the differences between Remain voters and Leave voters are very equal,” he said.

“So everyone across the political spectrum is feeling like their ability to control what happens is very small.”

Geographically, he added, “the closer you get to London, the more concerned people are. Despite the fact that probably the impact of Brexit is going to be less on metropolitan areas.”

The terms of Brexit are yet to be decided, with Britain due to leave the European Union in seven days’ time unless an extension is agreed between London and Brussels.

The MHF charity, founded in 1949, aims to help people understand, protect and sustain their mental health.

Rowland reflected on the small percentage saying they were losing sleep over Brexit.

“Most people are actually able to get on with their lives and separate their concern about Brexit from their own personal and emotional response,” he said.

Pollsters YouGov conducted the online survey of 1,823 British adults between March 12 and 13.

At a summit in Brussels, Prime Minister Theresa May was given until April 12 to push her divorce agreement through a fractious parliament next week. If she manages to get it passed, the exit date will be pushed back until May 22.

However, a third defeat by MPs would mean Britain crashes out on April 12, unless London agrees to take part in European elections, a move the prime minister previously has ruled out.

The announcement puts pressure on May to get her deal through Westminster, with French President Emmanuel Macron warning: “In the case of a negative British vote then we’d be heading to a no-deal.”

The sterling has come under pressure owing to the uncertainty in the past few days, falling to as low as $1.3004 Thursday, though it has recovered slightly and is still maintaining its position, helped by this week’s dovish outlook on interest rates from the Federal Reserve.

However, OANDA senior market analyst Jeffrey Halley remained wary.

“The investor community continues to price the pound as if a no-deal Brexit is not possible, looking for excuses to buy rather than sell,” he said in a note.

“A close look at the text of the EU announcement suggests this is not a guaranteed outcome.”

The Bank of England on Thursday expressed concern that further “uncertainties” over a “cliff-edge” no-deal Brexit “could have a significant effect on spending” by businesses.

Equities ended the week on a positive note but dealers trod warily as they weighed an indication from the Federal Reserve that borrowing costs will not rise this year with concerns about the slowing economy and stuttering China-US trade talks.

Tokyo, Hong Kong, Shanghai and Seoul all ended 0.1 percent higher, while Sydney added 0.5 percent and Wellington jumped one percent.

Singapore, Taipei, Manila and Bangkok were also well up.

Mumbai and Jakarta were slightly lower.

The next possible market-moving catalyst could be next week as top US officials head to Beijing on March 28-29 for a new round of trade talks, followed by a trip to Washington by China’s top negotiator in April.

While there is optimism a deal will eventually be struck, Donald Trump caused ripples when he said Wednesday that US tariffs on Chinese imports could remain in place for a “substantial period”, dampening hopes that an agreement would see them lifted soon.

In early trade, London fell 0.2 percent, though Frankfurt added 0.3 percent and Paris put on 0.2 percent.

– Key figures around 0820 GMT –
Tokyo – Nikkei 225: UP 0.1 percent at 21,627.34 (close)

Hong Kong – Hang Seng: UP 0.1 percent at 29,113.36 (close)

Shanghai – Composite: UP 0.1 percent at 3,104.15 (close)

London – FTSE 100: DOWN 0.2 percent at 7,337.53

Pound/dollar: UP at $1.3145 from $1.3102 at 2040 GMT

Euro/pound: DOWN at 86.63 pence from 86.77 pence

Euro/dollar: UP at $1.1388 from $1.1369

Dollar/yen: DOWN at 110.77 yen from 110.80 yen

Oil – West Texas Intermediate: UP five cents at $60.03

Oil – Brent Crude: UP eight cents at $67.94 per barrel

New York – DOW: UP 0.8 percent at 25,962.51 (close)

The bank’s audited results released to the Nigerian Stock Exchange (NSE), at the weekend, also indicated that gross earnings rose by 15 per cent to ₦528.7 billion in 2018, compared to ₦459.1 billion in 2017, with interest and non-interest income contributing 72 per cent and 26 per cent respectively.   According to a statement by the bank, its Profit Before Tax (PBT) for the period was ₦103.2 billion, showing 32 per cent growth from ₦78.2 billion in 2017, while Return on Average Equity (ROAE) stood at 19.0 per cent with a Return on Asset of 2.1 per cent in FY 2018.

Based on the performance, the bank has proposed a final dividend of 25 Kobo per share bringing total dividend for the year to 50 Kobo per share.

The asset base of the bank remained strong and diversified with growth of 21 per cent year-to-date (YTD) in total assets to ₦4.95 trillion in December 2018 from ₦4.10 trillion in December 2017.

Loans and Advances totalled ₦2.14 trillion as at December 2018, in contrast to ₦2.06 trillion in the previous year, while customer deposits increased by 14 per cent to ₦2.57 trillion in December 2018, from ₦2.25 trillion in December 2017. Capital Adequacy (CAR) stood at 20.8 per cent, taking into consideration the regulatory transitional arrangement of IFRS 9 implementation.

“On a full impact basis, CAR stood at 19.9 per cent. Similarly, Liquidity ratios of 50.9 per cent (December 2017: 47.2 per cent), remained well above regulatory requirements,” the bank said.

The  Group Managing Director/CEO, Herbert Wigwe, was quoted: “2018 marked a significant year of progress for the Bank amidst an unfavourable macro climate. We made solid progress throughout 2018 in line with our 2018-2022 five-year strategy.

“We remain committed to the achievement of our strategic imperatives going forward; as we continue to invest in our people and technology in order to improve operational efficiency and service touch points with earnings growth in 2019.”

The bank’s audited financial results for 2018 showed that profit after tax (PAT) witnessed an impressive growth of 11 per cent year-on-year to N193 billion from N174 billion.

Also, in demonstration of its commitment to its shareholders, the bank has proposed final dividend payout of N2.50 per share, bringing the total dividend to N2.80 per share, representing a yield of 11.2 per cent.

According to a statement by the bank yesterday, the pre-tax profit was achieved through the group’s optimisation of its cost of funds, cost-to-income ratio and cost of risk, ensuring that earnings per share strengthened by 11 per cent to ₦6.15.

“Despite the challenging macro-environment, the Group mitigated the knock-on effects through growth of its net interest income and operating income by 15 per cent and eight per cent respectively, as it was able to ensure improved cost efficiencies across the business. This focus on cost efficiencies is yielding tangible benefits as the Group recorded its lowest ever cost-to-income ratio at 49.3 per cent from 52.8 per cent in 2017.

“The bank’s balance sheet remains shockproof as loan to deposit ratio, liquidity ratio and capital adequacy ratio were 44.2 per cent, 72.0 per cent and 25.0 per cent respectively and all above the regulatory threshold. Our risk-centric approach also ensured that cost of risk reduced significantly by 79 per cent from 4.3 per cent in the prior year to 0.9 per cent in 2018.

“This was reflected through the drop-off in impairment charges by 81 per cent (₦80 billion) compared to 2017, re-affirming the Group’s enhanced asset quality. In the same breadth, coverage ratio increased by 34.2 per cent from 143.4 per cent to 192.4 per cent over the same period, reflecting a prudent disposition to credit risk management.

“Cost of funds also moved in the positive direction, declining by 41 per cent from 5.2 per cent in 2017 to 3.1 per cent for the year, supported by a 33 per cent decrease in interest expense (₦72 billion) over the same period, demonstrating a robust treasury and liquidity management.”

The bank noted that the group’s efforts to deepen its roots in the retail segment have started yielding benefits.
According to the bank, this has resulted in a remarkable increase in the volume of transactions across various electronic platforms as well as significant customer acquisitions.

“This growth in transactions on its digital channels continues to support its retail push as fees from e-products increased by 44 per cent over 2017, with retail deposit balances also growing by 25 per cent. Consistent with this superlative performance and in recognition of its track record of excellent performance, the bank was recently ranked as the Most Valuable Banking Brand in Nigeria in 2018 by The Banker Magazine.”

The ECB is facing growing pressure to address the question of how to protect the euro zone economy from a protracted slowdown.

Expectations that the central bank will delay hiking interest rates until next year and soon re-launch long-term loans to banks have put pressure on the euro, which has fallen 1.2 per cent against the dollar this year.

“The euro’s losses may be down to the fact that the ECB’s new projections on Thursday might paint a more subdued picture than before,” Antje Praefcke, an analyst at Commerzbank, wrote in a note to clients.

“The market may already be pricing in a slightly more cautious ECB, which is why the euro is already aiming for the 1.13 dollar mark,” he said.

The euro dipped 0.2 percent to 1.1318 dollar. It had brushed a 7-day low of 1.1309 dollar on Monday.

Elsewhere, the Canadian dollar fell to its lowest in more than five weeks on expectations that the central bank was approaching a policy turning-point and as concerns grew over a political scandal that has triggered cabinet resignations.

The currency was down a quarter per cent against the U.S. dollar at 0755 GMT after touching three-week lows on Monday.

The Bank of Canada is expected to hold rates steady this week and many reckon it could be edging towards a cut later in the year.

The dollar stood close to a two-week high against key peers on Tuesday, shored up by a resilient U.S. economy.

The greenback has enjoyed some support from higher U.S. Treasury yields as recent data has eased fears of a potentially rapid loss in economic momentum.

The index measuring the dollar against a group of six major currencies was 0.1 per cent higher at 96.726 after going as high as 96.816 the previous day, its strongest since Feb. 19.

Price volatility in the world’s most-traded currencies has subsided recently as a dovish shift by major central banks reversed a brief revival at the end of 2018.

Volatility is crucial for traders, who can wring out more profits when prices move wildly. But the euro/dollar exchange rate — the world’s most-traded currency pair — is stuck in its narrowest quarterly trading range since the euro’s inception.

Deutsche Bank’s Currency Volatility Index on Tuesday dropped to 6.73, close to a record low of 6.66 hit in January 2018.

From the special resolutions, following the scheme of arrangement dated January 24, 2019, the shareholders approved that all assets, liabilities and undertakings, including real property and intellectual property rights of Diamond Bank be transferred to Access Bank.

Also, shares of Access Bank be issued and allotted and credited as fully paid to Diamond Bank shareholders on the basis of two scheme shares for every seven Diamond Bank shares held by Diamond Bank shareholders.

The Shareholders further approved that a cash considerations of N1.00 for every Diamond Bank share be paid by Access Bank to Diamond Bank shareholders.

More so, they recommended that the entire issued share capital of Diamond Bank comprising 23,160,388,968 ordinary shares of 50 kobo be cancelled, while Diamond Bank is dissolved without being wound up.

Specifically, the Founder, Independent Shareholders Association, Sunny Nwosu, urged the management of Access Bank to ensure that there is a robust mechanism in place to manage the enlarged shareholders.

He stressed the need for Access Bank to reward existing shareholders with a special dividend upon completion of the exercise to cushion the effect of the dilution.

“You must intensify efforts in pursuing the recovery of loans to ensure a robust balance sheet for the merger to be successful. We do not want bonus issue, we need a special dividend for existing shareholders of access Bank.”

The President, Pragmatic Shareholders Association, Mrs Bisi Bakare, commended the management of Access Bank on their swift intervention to rescue Diamond Bank, which ultimately protected shareholders from losing their investment.

“The benefits of the merger have been accentuated; we want to see the growth of a new bank and a bank that is configured to take challenges of this century. We appreciate the management from not allowing shareholders investment to go down the drain like some other banks.”

The Chairman, Access Bank, Mosun Belo-Olusoga, said the merger with Diamond Bank enables Access Bank to acquire a bank with 17 million retail customers and a most viable mobile payment platform.

Belo-Olusoga who was represented by Dr Ajoritsedere Josephine Awosika, said: “The combination will allow Access Bank to accelerate its prospects of becoming the leading retail bank in Nigeria and Africa, Access Bank will benefit from Diamond Bank’s unparalleled retail banking expertise and strong digital offering.”

The Group Managing Director, Access Bank, Herbert Wigwe, while fielding questions from shareholders assured that the consummation of the merger between the two banks would add more value to shareholders’ investment.

He added that the enlarged Access Bank’s balance sheet post-merger would be equipped with the capacity to provide credit lines to a more diversified client base, while the bank will become stronger with enhanced liquidity profile and capital base.

Figures obtained from the CBN on Monday revealed that of the total number of projects, 34 were in respect of state governments.

It revealed that a total of N852.15m was guaranteed to 5,454 farmers under the Agricultural Credit Guarantee Scheme in the fourth quarter of 2018.

The amount represented a decrease of 40.1 per cent and 5.9 per cent below the levels in the preceding quarter and the corresponding period of 2017, it added.

Sub-sectoral analysis showed that food crops got the largest share, amounting to N369.54m (43.4 per cent), guaranteed to 2,373 beneficiaries; followed by mixed crop sub-sector, which received N162.75m (19.1 per cent), guaranteed to 1,710 beneficiaries, N138.44m (16.2 per cent) was guaranteed to livestock sub-sector in favour of 564 beneficiaries; while cash crop, fisheries and “others” sub- sectors got N105.28m (12.4 per cent), N58.82m (6.9 per cent), and N17.32m (2.0 per cent), guaranteed to 542, 175 and 90 beneficiaries, respectively.

Analysis of the states showed that 30 states and the Federal Capital Territory benefited from the scheme with the highest and lowest sums of N95.83m (11.3 per cent) and N1.99m (0.2 per cent) guaranteed to Ogun and Bayelsa states, respectively.

According to the apex bank, the cessation of rainfall led to widespread dryness across the country.

It stated that, “Agricultural activities in the review quarter, were dominated by harvest of tubers, grains and vegetables. In the livestock sub- sector, farmers continued with the breeding of poultry birds and fattening of cattle in anticipation of the end of the year sales. End-period headline inflation, on year-on-year and 12-month moving average bases for the fourth quarter of 2018 stood at 11.44 and 12.10 per cent, respectively.”

According to the report, the cessation of rainfall led to widespread dryness of severe- to-extreme intensity across the country in the fourth quarter of 2018.

Generally, it added that the predominant agricultural activities during the review quarter were the harvesting of tubers, grains and vegetables. It stated, “Pre-planting operations in preparation for dry season planting commenced. In the livestock sub-sector, farmers engaged in the fattening of cattle and stocking of broilers to take advantage of Yuletide season sales.”

The bond, which is unsecured with a tenor of seven years at a fixed rate of 16.50 per cent is part of a N65 billion Debt Issuance Programme of the bank to enable it finance its new business strategy and digital banking. Under the new business strategy, Sterling Bank will build expertise in the sectors at its heart, which include Health, Education, Agriculture, Renewable energy and Transportation, because of the strong belief that this will positively impact the society.

Speaking at the NSE and FMDQ, the Managing Director and Chief Executive of Sterling Bank, Abubakar Suleiman, said the success of the bond reflected the increasing appetite of local institutional investors for long-term debt instruments.He noted that investors are happy with the very strong outcome, which shows investors’ confidence in Sterling Bank, and further strengthens and diversifies our corporate funding strategy.

He said the bank looked forward to same peerless support for its future bond issues, and appreciated FMDQ for its strategic role in deepening the Nigerian DCM by facilitating active secondary market trades, and promoting the transparency of the listed instruments.

Suleiman also appreciated stockbrokers for supporting the bank, adding that share price has reflected the true value of the bank.The Associate Executive Director, Capital Markets, FMDQ, Ms. Tumi Sekoni, congratulated the issuer for having successfully raised ₦32.90 billion from the Nigerian debt market.

She also commended the issuer for yet again joining the league of corporate entities whose debt profiles have been raised via the value-packed listing, quotations and noting service offered by FMDQ, for the second time.  She said the listing would contribute to the growth of the Nigerian corporate bond market, and consistently injecting renewed confidence into the debt market.

The Partner/Head, Investment Banking, Constant Capital Partners Limited,  Niyi Omojola, said: “Constant Capital, the lead  issuing house in this transaction, crafted a unique and innovative investment structure, which enabled the  Sterling SPV Bond share in the same investment grade rating as Sterling Bank Plc, thereby enlarging the range of potential investors in the bond.”  He said the innovative structure, protects investors by providing bond-backed credit enhancement while investing in the Tier II capital of Sterling Bank Plc.

The Associate Executive Director, Corporate Development, FMDQ, Ms. Kaodi Ugoji, congratulated the issuer and sponsor of the issue for the remarkable feat in the DCM, and expressed the FMDQ’s gratitude for the issuer’s decision to list the bond on FMDQ. According to her, being listed on FMDQ will avail the bond unprecedented market transparency, unrivalled information disclosure, efficient price formation and improved global visibility, among other benefits.