04 Apr

Daily Watch – Power exports to neighbours to rise, Banks to demand more collateral in Q2

  • Export of Nigerian electricity to Niger and Benin is expected to increase to 1,540MW by 2025 from 387MW in 2020, the Punch reports citing a document. The document, entitled: ‘Transmission Expansion Plan’, obtained from the Ministry of Power, Works and Housing, revealed that 780MW and 760MW would be exported to Niger and Benin respectively by 2025. According to the document, between 1973 and 2015, peak electricity generation in Nigeria was increased from 385MW to 4,884MW, reflecting an average growth rate of about 6.3 percent. It noted that peak generation reached 4,883.9MW in 2015 and peak output reached 5074.7MW on February 2, 2016.
  • The CBN says commercial banks have increased the collateral requirements demanded from all business sizes on new loan applications. In its Credit Conditions Survey report for Q1 2018, the regulator said banks will demand more collateral in the next quarter. “More collateral requirements were demanded from all firm sizes on approved new loan applications in Q1 2018. Similarly, lenders will demand more collateral from all firm sizes in the next quarter,” the report read. Demand for corporate lending from all business sizes increased in the current quarter and was also expected to increase in the next quarter. Demand for overdrafts/personal loans in Q1 2018 was higher in comparison with other loan types. The apex bank said households demand lending for house purchase decreased in Q1 2018, but was expected to increase in the next quarter.” According to the report, banks experienced a greater level of default on personal loans, a situation it says will improve in the second quarter.
  • The Cement Company of Northern Nigeria recently released its financial statements for the year ended December 2017. Revenue was up 35 percent from ₦14 billion in 2016 to ₦19.5 billion in 2017. Profit before tax jumped 141 percent from ₦1.7 billion in 2016 to ₦4.2 billion in 2017. Profit after tax increased by 157 percent from ₦1.2 billion in 2016 to ₦3.2 billion in 2017, the highest in the company’s history. The CCNN has declared a dividend per share of ₦1.25 per share amounting to ₦1.57 billion. The company’s superlative results were majorly due to an increase in sales price. The average price per tonne rose by 46 percent from ₦28.8 billion in 2016 to ₦41.9 billion in 2017. This more than offsets the slight drop in production and cement deliveries. Production for the year fell slightly from 486,655 tonnes in 2016 to 466,220 tonnes in 2017. Cement deliveries were dipped from 488,495 tonnes in 2016 to 467,707 tonnes in 2017.
  • Mutual Benefits Assurance appears set to break its 9-year dividend drought. In a recent notice sent to the NSE informing it of board approval for its 2017 results, the company hinted at the possibility of a dividend payment. Mutual Benefit last paid a dividend in 2008. Listed Nigerian insurance companies have a history of poor performance in terms of price appreciation and corporate governance. The recent shift in the minimum price floor to ₦0.01 left many insurance stocks hard hit. This may have been an impetus for the proposed dividend payment. Mutual Benefits shares are currently trading at ₦0.33 in today’s trading session, down 2.94 percent. Year to date, the stock is down 34.94 percent. The company’s results for the 9 months ended September 2017 show gross premium written increased from ₦9.8 billion in 2016 to ₦10.5 billion in 2017. The company made a profit before tax of ₦1.1 billion in 2017 as against a loss before tax of ₦324 million in 2016.