CAPITALDIGEST DAILY NEWS, 19/6/2023

FG ISSUES TWO OIL EXPORT TERMINAL LICENCES, EYES $11BN The Federal Government, on Tuesday, issued and signed licences for the establishment of two crude oil export terminals, capable of generating $11bn revenue annually for the country. It issued the licences through the Nigerian Midstream and Downstream Petroleum Regulatory Authority to Belema Sweet Export Terminal Limited and NNPC Exploration and Production Limited in Abuja. Speaking at the event in Abuja, the Chief Executive, NMDPRA, Farouk Ahmed, said the signing of the terminal establishment licences for the two crude export terminals would lead to the addition of more than four million barrels of oil capacity to Nigeria’s export storage. “Our activities today are pursuant to the provisions of the PIA (Petroleum Industry Act), which has stipulated new provisions for the establishment of new export terminals. “According to PIA Section 174(1) (a) ‘Except in accordance with an appropriate licence issued by the Authority, a person shall not undertake the following activities with respect to midstream petroleum liquids operations — (a) establish, construct or operate a terminal or other facility for the export or importation of crude oil or petroleum products.’ “The authority has processed and hereby approves Terminals Establishment Licences for: (a) NNPC Exploration and Production Limited to establish 2,179,747 barrels Crude Oil Terminal at Offshore Akwa Ibom State within the waters of the Exclusive Economic Zone Nigeria. “(b) Belema Sweet Export Terminal Limited to establish a 2,000,000 barrels Crude Oil Terminal at 20 Nautical Miles of Kula Southern Part of Exclusive Economic Zone Nigeria,” Ahmed stated. He noted that subsequent to these licences, terminal establishment notices were to be published in the Federal Government gazette. “The terminals are required to operate within the provisions of the conditions of the licences as contained in the licence documents. Kindly note that the authority is committed to ease of doing business in the industry,” the NMDPRA boss stated. The President and Founder Belema Oil Producing Limited, Tien Jack-Rich, said the facilities would generate over $11bn annually for Nigeria, adding that Belema Oil would work hard to get its terminal ready within six months. BANKS’ FEES, COMMISSION INCOME RISE 17.5% TO N365BN Leading banks in Nigeria recorded a 17.5 percent Year-on-Year (YoY) increase in fees and commission income, amounting to N365 billion, in the first quarter ended March 31, 2023. Available data shows that the banks raked in N364.72 billion during the period as against N310.48 billion recorded in the corresponding period in 2022. The banks are Zenith Bank Plc, Access Holdings Plc, FBN Holdings Plc, Stanbic IBTC Holdings Plc, United Bank for Africa (UBA) Plc, Guaranty Trust Holding Company Plc (GTCo), Fidelity Bank Plc, Unity Bank Plc, Wema Bank Plc, FCMB Group Plc, Ecobank Transnational Incorporated (ETI) and Union Bank of Nigeria (UBN) Plc. Vanguard’s findings from the banks’ fees and commission income showed that tier-2 banks recorded the highest growth rate in the three month period. Fidelity Bank recorded the highest percentage growth as its net fees and commission income for the period rose by 50.3 percent to N11.9 billion from N7.92 billion in the corresponding period in 2022. This was followed by FCMB Group, posting a 40.9 percent increase amounting to N14.41 billion from N10.23 billion. Wema Bank ranked third with 39.4 percent increase to N14.45 billion from N10.08 billion, while Unity Bank, GTCo and FBN Holdings followed with 34 percent to N2.02 billion from N1.5 billion; 33.2 percent increase to N32.43 billion from N24.35 billion and 27.2 percent increase to N42.87 billion from N33.71 billion, respectively. United Bank for Africa recorded a 24 percent increase to N52.19 billion from N42.1 billion in the corresponding period in 2022. On the other hand, UBN and Zenith Bank recorded decline. UBN posted a 5.4 percent decline to N4.05 billion from N4.28 billion, while Zenith Bank recorded a 4.0 percent decline to N39.76 billion from N41.4 billion in Q1’22. Meanwhile, Ecobank, Access Holdings and UBA led the banks in size of income, recording N63.36 billion, N61.26 billion and N52.19 billion, respectively. Commenting on the outlook for the banking industry in a report titled, “Nigerian Banks: A Year of Resilience and Grit”, analysts at Coronation Asset Management, said: “In 2023 we expect the Nigerian banking industry to face pressures stemming from stringent regulations, high inflation, continuous dollar shortages and even asset quality issues. “Nonetheless, we expect modest earnings growth, driven by rising interest rates, a strong contribution from non-interest revenue derived from FX revaluation gains, and growth in non-bank businesses and digital banking.” NAIRA DEPRECIATES TO N664.04/$ AS CBN LIFTS RESTRICTIONS THE Naira yesterday lost almost half of its value in the official market as the exchange rate in the Investors and Exporters, I&E window rose to N664.04 per dollar from N471.67 per dollar on Tuesday, as the Central Bank of Nigeria, CBN announced measures to liberalise the market including the elimination of multiple exchange rates, and freedom for banks to buy and sell foreign exchange at any rate based on a willing buyer and willing seller arrangement. Announcing the new measures in a statement titled, “Operational Changes to the Foreign Exchange Market”, Director, Financial Markets, Dr. Angela Sere-Ejembi, said: “The Central Bank of Nigeria (CBN) wishes to inform all authorized dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange (FX) Market: “Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters (I&E) window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks “Re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window. Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FMD/DIR/CIR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window. “The operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places. “Proscription of trading limits on oversold FX positions with permission to hedge short positions with Over-The Counter-futures. Limits on overbought positions shall be zero. “Re-introduction of order-based two-way quotes, with bid-ask spread of N1. All transactions shall be cleared by a Central Counter Party (CCP). “Reintroduction of Order Book to ensure transparency of orders and seamless execution of trades. The operational hours of trades shall be from 9am to 4pm, Nigeria time. BANK STOCKS PUSH MARKET HIGHER Shares of Nigeria’s listed banks continued on Wednesday to lead the bull race at the Lagos bourse. As at 11 am on Wednesday, June 14, Access Corporation was trading at a 52-week high of N15.65, gaining N1.35 or 9.44 percent. As at the time of filling this report, GTCO was trading at a new high of N33, up by N2.2 or 7.14 percent. The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and equities Market Capitalisation increased further on Wednesday from the preceding day’s low of 58,163.59 points and N31.670 trillion respectively to 59,232.67 points and N32.252trillion. UBA was also seen trading at a year high of N11.95, up by N1.05 or 9.63 percent, while Zenith Bank rallied to N33.15, up by N2.35 or 7.63 percent. Also, FBN Holdings was also trading at N15 per share, up by 50kobo or 3.45 percent, while FCMB Group was trading at N5.3, rising by 30 kobo or 6 percent. In the same manner, Fidelity Bank trades at a new high of N6.34, up by 25kobo or 4.11 percent. Read also:UK firm celebrates Mrs Chinwe Iloghalu’s appointment as Executive Director at Polaris Bank While the banking stocks rallied on the back of the anticipated reforms by the new administration, Vetiva Research analysts said they expect to see a similar trading pattern, as sentiment is expected to remain positive. “However, we do not rule out profit taking in some of the counters that have experienced significant upside in recent sessions,” the analysts added. According to Lagos-based analysts at Coronation Research, “On Monday a key adviser to President Bola Ahmed Tinubu told Bloomberg news that the Naira’s multiple foreign exchange rates would be merged within three months. “FX rate unification was a feature of the President’s inaugural address on May 29, and we think it follows logically from his termination of fuel subsidies”. Meanwhile, the equity market rose by 3.99 percent Monday “in response and there are huge implications for different sectors and stocks,” they added. STOCK MARKET LOSES MOMENTUM OVER PROFIT TAKING Nigeria’s stock market lost momentum for the first time since the suspension of former Governor of the Central Bank of Nigeria, Godwin Emefiele, as investors chose to take profit following the recent two-day rally. Access Corporation saw much of its shares sold as the share value dropped N1.45 or 9.24 per cent, from N15.70 to N14.25. Cornerstone Insurance topped the laggards list, as its share price lowered from N1.13 to N1.02, down by 11 kobo or 9.73 per cent. Thursday’s dip means investors could not consolidate the recent rally which was largely triggered by Emefiele’s suspension and the decision of the CBN to float the naira. UBA, Access Corporation, Fidelity Bank, GTCO and Sterling Bank ranked as some of the most actively traded stocks. Consequently, the Nigerian Exchange Limited All-Share Index and equities Market Capitalisation decreased from 59,985.10 points and N32.662tn respectively on Wednesday to 59,195.21 points and N32.232tn on Thursday. This came a day after banks led top gainers on Wednesday which analysts attributed to critical economic decisions by the Bola Tinubu administration. In a development that followed Tuesday’s bullish trading day, the All-Share Index traded 3.99 per cent higher to close at 59,985.10 index points, up from the 58,163.55 index points recorded in the previous day’s trading session. The market capitalisation also appreciated by N992bn, closing at N32.662tn. This represented a 3.13 per cent gain against the N31.670tn recorded in the previous trading session.International Breweries (10.00 per cent) led the gainers while Pharm Deko (-9.65 per cent) led the losers. UBA Plc was the most traded equity by volume at the end of Wednesday’s session. Other top gainers included Sterling (10 per cent), Transcohot (10 per cent), Dangote Sugar (10 per cent) and First Bank Nigeria Holdings (10 per cent).