22 Feb

Daily Watch – PIB set for March final reading, Nigerians bump Shoprite’s margins

  • Nigeria’s distributable government revenues rose in January by 16 percent to ₦465.19 billion ($1.5 billion) as it brought in more oil royalties, the accountant general’s office said in a statement on Tuesday. Distributable revenue is government income that is shared at various levels of government including the federal government, state governments and local government councils. Average oil prices rose from $47.30 to $49.57 per barrel during January, while the total crude export volume rose 1.49 million barrels, the statement said. The country, which last year entered its first recession in a quarter of a century, relies on crude oil sales for two-thirds of its government revenue but has been hit hard by the fall in global crude prices since mid-2014. Militants have carried out attacks on oil and gas facilities in the southern Niger Delta energy hub for a year, cutting oil production – which stood at 2.1 million barrels per day at the start of 2016 – by as much as a third, though output has since mostly recovered. Repairs on damaged facilities are underway, but force majeure stoppages remain in place at the Forcados, Qua Iboe and Brass oil terminals.
  • The Senate aims to present an oil governance bill for its third and final reading by the end of March, a leading senator said on Tuesday, as part of a series intended to overhaul the oil sector. The legislation is part of proposed reforms that make up the sprawling PIB, which has been in discussion for over a decade and redrafted many times but has yet to be passed into law. Its backers say Nigeria’s oil sector is in dire need of change, with power currently concentrated in the NNPC and the oil ministry. The overarching bill’s latest iteration aims to tackle everything from an overhaul of the NNPC to taxes on upstream projects in a sector riddled with corruption. “We hope to present the (governance) bill for the third and final reading not later than the end of March 2017,” said Senator Tayo Alasoadura, who coordinates committees handling the passage of the Petroleum Industry Governance Bill. Bills need the support of both houses of parliament and the approval of the President before becoming law. However, there has been little agreement over the years on what the oil sector changes should be.
  • As a follow up to its commitment to ease the difficulties Nigerians encounter in funding foreign exchange transactions, the CBN on Tuesday intervened in the interbank market by injecting a total of $370.9 million to the wholesale market through 23 deposit money banks to help them meet customer demand. According to a Premium Times report, the qualified bids for the U.S. dollars ranged from ₦315 to ₦360, with seven banks receiving full allotments of their respective bids valued at $37.5 million each. The allotments for other banks ranged between $46,512.50 million and $15.578 million. CBN spokesperson, Isaac Okorafor said the bank’s intermediation effort in the forex market was the first wholesale intervention to ease the pressures by Nigerians to access foreign exchange towards meeting various obligations under visible and invisible needs categories. He explained that the regulator had initially offered $500 million for sale to the banks, but not all the banks provided sufficient naira backing to pay up for their respective bid amounts.
  • South African retailer Shoprite reported a 15.5 percent jump in half-year profit, buoyed by sharp sales growth in Angola and Nigeria. Shoprite, which just scrapped plans to merge with Steinhoff International on Monday, sells mostly groceries, and has grown rapidly outside its home market with sales in other African countries now accounting for more than a fifth of the retailer’s total revenue. A merger with Steinhoff International would have created an African retail giant, but the plan was called off after minority shareholders complained that the proposed deal would offer little value for Shoprite, Reuters reported. Shoprite reported diluted headline earnings per share of 460 cents for the six months to end-December in line with forecasts and compared with 398.2 cents a year earlier. Sales in Angola surged 155 percent from a year ago, while Nigerian revenue jumped 60 percent. Both are important growth markets for the retailer but experienced a shortage of foreign exchange as oil revenues remained under pressure affecting economic growth.
  • Coronation Merchant Bank sustained an impressive financial performance across all indices, posting a 128 percent increase in profit before tax in 2016 despite a challenging operating environment. The group’s result, the first to be announced in the banking industry for 2016, is also riding on its goals of “first to market” and efficiency aspirations. According to the lender, net interest income increased by 86 percent from ₦4.3 billion in 2015 to ₦8 billion in 2016 because of increased efficiency in the overall funding mix and significant growth in the bank’s balance sheet. It also recorded a Profit Before Tax of ₦5.3 billion in 2016, which represents an increase of 128 percent over the last year’s performance of ₦2.3 billion. The Group Managing Director/Chief Executive Officer of Coronation Merchant Bank Limited, Abu Jimoh, said that the impressive results of the bank in the last two years of business operation demonstrate the “effectiveness of our strategy as we continue to grow our market share in key segments of the economy. We will continue to maintain a disciplined and prudent approach in our exposures to dollar-based assets in line with our overall risk management framework. As at December 31, 2016, our Non-Performing Loans ratio stood at zero percent,” he said. Total assets rose to ₦106.6 billion in 2016 from ₦78.3 billion in December 2015. Shareholders’ funds increased to ₦25.8 billion from ₦20.24 billion. The bank has a 40 percent capital adequacy ratio, above the regulatory minimum of 10 percent.