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Own share buy-back and circuit breakers yet to affect the market (2)

Hope you read my recent article on “own share buy-back yet to affect the market”, it would be good to emphasize the issue of buy back provisions and rules. In a Securities and Exchange Commission published circular, dated 11th September 2008, the “Amendments to rules and regulations of the Securities and Exchange Commission, Rules on share Buy-Back.”
Some of the features in the amended rule 109B – Rules Relating to Acquisition of Own Shares by Companies, summarily includes: (1) A company can only purchase a maximum of 15 percent of its own existing issued and paid up equity shares, within a given financial year; (2) An illiquid company is prohibited from own-share-buy-back operations, as such the company’s Residual debt to Equity ratio should not be greater than ratio 2:1; (3) shares can only be re-purchased out of Share premium or distributable profit; etc.

The eagerness and volume of own shares these Nigerian Stock Exchange listed mega companies are willing to buy, will be a very strong indication of how buoyant they really are in terms of spendable profit, giving a clearer view of their true worth. More importantly it will lessen their equity liability to share holders, thereby reducing the number of share ranking for dividend.
Previously, the position of the ‘Company and Allied Matters Act 2004’, on this issue as stated in sections 160, 161 and 162 prohibits any company from acquiring its own shares safe for some narrow provisions contained in subsection (2) of section 160 of this act. Section 160 subsection (2) states that a company may only acquire its own shares for such purpose(s) as: (a) settling or compromising a debt or claim asserted by or against the company; or (b) eliminating fractional shares; or (c) fulfilling the terms of a non-assignable agreement under which the company has an option or is obliged to purchase shares owned by an officer or an employee of the company; (4) satisfying the claim of a dissenting shareholder; etc. Enough of business law, the point is that there used to be a strong legal restriction on companies before now prohibiting them from ordinarily purchasing their own shares from any secondary market. It’s now time to distinguish the boys from the men within the Nigerian capital market.

Nigerian Stock Exchange. Banks agree to restructure loans.

Few days after the major world capital markets have had sustained upward movements, Nigerian banks have indicated their readiness to restructure loan facilities extended to investors.

This might come as good news to thousands of investors that have made serious losses and consequently incurred huge debts as a result of the down trend that has bewildered the stock market in the past 7 months. It is no news that the banking sector had given out billions of naira as margin facility to investors to purchase shares.
This singular action is believed by many as one of the major reasons behind the current market situation as share prices sored during the period the loans were made available. Stocks were therefore overpriced and the aftermath effect is what is been witnessed now.

The banks have now agreed to spread the existing loans between 6 months to a year in addition to the existing terms of loans already given. Although this action is a positive one, investors still insist that government should find a permanent solution to the stock market crisis as this is just a temporary one.

stcok market report for 28/08/2008

The bulls had another positive day as the All Share Index closed upward by 46,312.27 base points as against yesterday’s. A total of 7,187 deals, involving a volume 484,975,918 of unit shares valued at N5,152,414,346.24 were traded today; as against yesterday’s total of 8,672 deals involving a total of 1,054,205,586 unit shares, valued at N14,870,507,827.02. The Market Capitalisation also appreciated to N9,443 trillion as against yesterday’s N9.088 trillion.

The top traded shares of the day included: (1) IANSURE traded with a volume of 84,274,173 unit shares valued at N62,362,888.02; (2) ACCESS traded 69,179,403 unit shares valued at N876,503,036.01; (3) WEMABANK traded 46,456,410 unit shares valued at N696,846,150.00; (4) FTNCOCOA traded 42,400,000 unit shares valued at N93,306,000.00; while (5) FIDELITYBK traded 29,757,832 unit shares valued at N229,027,242.57.
The top price gainers of the day included: (1) CHEVRON which gained N21.00 to close at N441.00; (2) OANDO gained N6.06 to close at N127.26; (3) GUINNESS gained N5.99 to close at N125.88; while (4) FLOURMILL gained N3.09 to close at N65.08.
On the other hand, the top price losers of the day included: (1) MOBIL which lost N3.59 to close at N355.69; (2) RTBRISCOE lost N0.19 to close at N19.10; (3) DNMEYER lost N0.10 to close at N10.65; while (4) IPWA lost N0.04 to close at N4.76.

Afrinvest opens N5bn Equity fund

Afrinvest West Africa (Afrinvest), Member of the Nigerian Stock Exchange (NSE) has today August 11, 2008 opened its N5.0 billion Initial Public Offer (IPO) in the Afrinvest Equity Fund (Authorised and Registered in Nigeria as a Unit Trust Scheme).

This is contained in an electronic copy of the Offer made available to Proshare NI in Lagos Nigeria.

The company in the Prospectus affirms that the minimum investment one or joint Unit holder(s) may make in the Fund is N50, 000.00 representing 500 Units of the Fund at a price of N100 per unit. “The unit of sale is 500 Units and multiples of 100 Units thereafter” the Prospectus stated.

“Thereafter, additional Units in the Fund shall be issued in multiples of N10, 000.00 and shall be subscribed for in those multiples” the document further affirmed.

In the same vein, Afrinvest also confirmed that the fund is open-ended and investors will be free to subscribe to its units through the Manager or any other Agents approved by the Manager after the IPO.

“Therefore, although the Fund has an initial target size of 50,000,000 Units, the Fund Manager will issue additional Units of the Fund to subscribers on demand after the initial tranche of 50,000,000 Units has been fully subscribed, subject to Securities & Exchange Commission’s (SEC’s) approval of the additional units” the company said.

However, 10 percent of the Offer has been preferentially allotted to Afrinvest West Africa Limited.

This allotment is in compliance with current regulations issued by SEC that promoters of unit trust schemes in Nigeria must subscribe to a minimum of 10 percent of the initial issue of such schemes.

However, the Five-Year financial summary of the Fund Manager as contained in the Prospectus and extracted without adjustment from its audited financial statements for the nine months ended December 31, 2007 and Five-Years Ended March 31, 2007.

Gross Earnings of the company increased from N162.560 million in year 2003 to N1.433 billion in the nine months ended December 31, 2007 indicating an increase of 782 percent in the review period.

While Profit before Tax (PBT) also grew from N5.088 million in year 2003 to N259, 780 million in the nine months ended December 31, 2007 representing a growth of 5006 percent in the period under review.

Profit after Tax (PAT) also rose from N1.152 million in year 2003 to N236.695 million; also in the nine months ended December 31, 2007; showing a rise of 20446 percent.

Issuing House to the offer is Guaranty Trust Bank Plc (GTbank); application list opens today Monday August 11, 2008 and closes Wednesday September 17, 2008.

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NSE Weekly Market Report (August 1)

A turnover of 3.11 billion shares worth N38.16 billion in 72,680 deals was recorded this week, in contrast to a total of 4.05 billion shares valued at N43.75 billion exchanged last week in 73,782 deals.

There were no transactions in the Federal Government Development Stocks, State Government Bonds and Industrial Loans/Preference Stocks sectors.

The Insurance subsector was the most active during the week (measured by turnover volume), with 1.3 billion shares worth N2.05 billion exchanged by investors in 10,433 deals. Volume in the Insurance subsector was largely driven by activity in the shares of Investment and Allied Assurance Plc. Trading in the shares of the Insurance
Company accounted for 811.8 million shares, representing 62.7% of the subsector’s turnover.

The Banking subsector, boosted by activity in the shares of First City Monument Bank Plc and Fidelity Bank Plc, followed on the week’s activity chart with a turnover of 1.2 billion shares valued at N24.65 billion in 37,592 deals.

Last week, the Insurance subsector led on the activity chart and was followed by the Banking subsector.

Price Movement:
The All-Share Index rose by 4.04% to close on Friday at 52,641.55. The market capitalization of the 209 First -Tier equities closed higher at N10.55 trillion.
Eighty (80) stocks appreciated in price during the week, higher than the nineteen (19) in the preceding week. Mobil Oil Nigeria Plc led on the gainers’ table with a gain of N33.80 to close at N254.00 per share while Julius Berger Nigeria Plc followed with N25.91 to close at N146.24 per share. Other price gainers in the Top 10 category include:

• Flour Mills Nigeria Plc - N8.05

• Unilever Nigeria Plc - N4.97

• Benue Cement Company Plc - N4.85

• Cadbury Nigeria Plc - N4.70

• UACN Plc - N4.42

• PZ Cussons Nigeria Plc - N4.13

• Guinness Nigeria Plc - N4.00

• UACN Property Development Co. Plc - N3.99

Twenty – Six (26) stocks depreciated in price during the week, lower than the ninety-two (92) in the preceding week. Three Petroleum (Marketing) Stocks led on the losers table. Chevron Oil Nigeria Plc led dropping by N46.05 to close at N213.76 per share while Oando Plc followed with a loss of N17.99 to close at N170.01 per share. Other price losers in the Top 10 category include:

• Total Nigeria Plc - N9.50

• Nig. Enamelware Plc . - N8.61

• Nestle Nigeria Plc - N4.24

• 7-Up Bottling Co. Plc - N2.58

• G Cappa Plc - N1.47

• PlatinumHabib Bank Plc - N1.46

• Neimeth International Pharmaceuticals Plc - N1.43

• Ashaka Cement Plc - N1.00

Two equity prices were adjusted for dividend as recommended by the Board of Directors. Access Bank Plc was adjusted for dividend of N0.65 per share while NEM Insurance Plc was adjusted for dividend of N0.05 per share.

CONOIL PLC: Audited result for the year ended 31st December 2007 shows Turnover of N86.85 billion as against N90.52 billion in 2006. Profit after tax stood at N2.6 billion compared with N2.81 billion in 2006. The Directors are recommending a dividend of N2.75 per share. The date of closure of register of members is August 4, 2008 while payment date is September 19, 2008.

PZ INDUSTRIES PLC: Audited result for the year ended 31st May 2008 shows Turnover of N65.94 billion as against N54.22 billion in 2007. Profit after tax, exceptional items and minority interest stood at N3.95 billion compared with profit after tax and minority interest of N3.51 billion in 2007. The Directors are recommending a dividend of N0.62 per share. The date of closure of register of members is August 25, 2008 while payment date is September 11, 2008.

CAPPA & D”ALBERTO PLC: Audited result for the year ended 31st December 2007. The Directors are recommending a dividend of N0.50 per share. The date of closure of register of members is October 2, 2008 while payment date would be advised later.

ASSOCIATED BUS COMPANY PLC: Audited result for the year ended 31st December 2007 shows Turnover of N3.13 billion as against N2.71 billion in 2006. Profit after tax stood at N141.25 million compared with N143.01 million in 2006. The Directors are recommending a dividend of N0.08 per share. The date of closure of register of members is August 7, 2008 while payment date is September 7, 2008.

ASO SAVINGS & LOANS PLC: Audited result for the year ended 31st March 2008 shows Gross Earnings of N7.1 billion as against N2 billion in 2007. Profit after tax stood at N1.1 billion compared with N276.62 million in 2007. The Directors are recommending a dividend of N0.05 per share. The date of closure of register of members is October 6, 2008 while payment date is October 24, 2008.

LASACO ASSURANCE PLC: Audited result for the year ended 31st December 2007 shows Gross Premium of N1.84 billion as against N1.6 billion in 2006. Profit after tax stood at N678.11 million compared with N171.35 million in 2006. The Directors are recommending a dividend of N0.08 per share. The date of closure of register of members is August 8, 2008 while payment date is September 4, 2008. The 28th Annual General Meeting (AGM) of shareholders is scheduled to hold on Thursday, September 4, 2008 by 11.00a.m. The venue would be advised later

ROYAL EXCHANGE ASSURANCE (NIG) PLC: Audited result for the year ended 31st December 2007 shows Gross Premium of N2.7 billion as against N2.14 billion in 2006. Profit after tax stood at N543.64 million compared with profit after tax and exceptional items of N178.71 million in 2006. The Directors are recommending a bonus of 1 for 10. The date of closure of register of members was June 30, 2008.

GREAT NIGERIA INSURANCE PLC: Audited result for the year ended 31st December 2007 shows Gross Premium of N608.04 million as against N289.74 million in 2006. Profit after tax stood at N90.25 million compared with loss after tax of N155.35 million in 2006.

GREAT NIGERIA INSURANCE PLC: Unaudited result for the half year ended 30th June 2008 shows Gross Premium of N563.7 million, as against N425.2 million in the comparable period of 2007. Profit after tax stood at N85.4 million compared with N75.85 million in 2007.

NEM INSURANCE PLC: Unaudited result for the half year ended 30th June 2008 shows Gross Premium of N2.32 billion, as against N1.31 billion in the comparable period of 2007. Profit after tax stood at N560.92 million compared with N213.8 million in 2007.

OASIS INSURANCE PLC: Unaudited result for the half year ended 30th June 2008 shows Gross Premium of N521.35 million, as against N158.01 million in the comparable period of 2007. Profit after tax stood at N138.05 million compared with N17.11 million in 2007.

CORNERSTONE INSURANCE PLC: Unaudited result for the half year ended 30th June 2008 shows Gross Premium of N2.13 billion, as against N1.7 billion in the comparable period of 2007. Profit after tax stood at N438.7 million compared with N330.52 million in 2007.

ASHAKA CEMENT PLC: Audited result for the year ended 31st December 2007 shows Turnover of N16.5 billion as against N16.8 billion in 2006. Profit after tax stood at N1.6 billion compared with N3.4 billion in 2006. The Directors are recommending a bonus of 1 for 6. The date of closure of register of members is August 25, 2008

ECOBANK TRANSNATIONAL INCORPORATED: Unaudited result for the half year ended 30th June 2008 shows Gross Revenue of N61.3 billion, as against N38.02 billion in the comparable period of 2007. Profit after tax stood at N9.0 billion compared with N6.6 billion in 2007.

OANDO PLC: Unaudited result for the half year ended 30th June 2008 shows Turnover of N124.41 billion, as against N106 billion in the comparable period of 2007. Profit after tax stood at N3.7 billion compared with profit after tax and exceptional items of N2.31 billion in 2007.

STERLING BANK PLC: Unaudited result for the third quarter ended 30th June 2008 shows Gross Earnings of N27.1 billion, as against N16.01 billion in the comparable period of 2007. Profit after tax stood at N4.6 billion compared with N2.5 billion in 2007.

RT BRISCOE (NIG) PLC: Unaudited result for the half year ended 30th June 2008 shows Turnover of N9.03 billion, as against N8.01 billion in the comparable period of 2007. Profit after tax stood at N391.1 million compared with N326.04 million in 2007.

IKEJA HOTEL PLC: Unaudited result for the half year ended 30th June 2008 shows Turnover of N3.22 billion, as against N2.5 billion in the comparable period of 2007. Profit after tax stood at N555.61 million compared with N397.84 million in 2007.

LAFARGE WAPCO PLC: Unaudited result for the half year ended 30th June 2008 shows Turnover of N22.2 billion, as against N19.9 billion in the comparable period of 2007. Profit after tax stood at N4.75 billion compared with N5.82 billion in 2007.

TRIPPLE GEE & CO. PLC: Unaudited result for the first quarter ended 30th June 2008 shows Turnover of N225.6 million, as against N161.82 million in the comparable period of 2007. Profit after tax stood at N26.14 million compared with N16.9 million in 2007.

FIRST ALUMINIUM NIGERIA PLC: Unaudited result for the half year ended 30th June 2008 shows Turnover of N4.28 billion, as against N4.3 billion in the comparable period of 2007. Loss after tax stood at N13.82 million compared with N171.7 million in 2007.

INVESTMENT & ALLIED ASSURANCE PLC: Audited result for the year ended 31st December 2007 shows Gross Premium of N675.7 million as against N159.2 million in 2006. Profit after tax stood at N304.65 million compared with N54.64 million in 2006. The Directors are recommending a dividend of 0.8 kobo per share. The date of closure of register of members is August 8, 2008 while payment date is September 8, 2008.

INVESTMENT & ALLIED ASSURANCE PLC: Unaudited result for the half year ended 30th June 2008 shows Gross Premium of N611.93 million, as against N354.2 million in the comparable period of 2007. Profit after tax stood at N252.9 million compared with N136.8 million in 2007.

A turnover of 371.63 million units worth N368.14 billion in 3413 deals was recorded this week, in contrast to a total of 232.62 million units valued at N232.6 billion exchanged in 2001 deals during the week ended July 24, 2008. As in the preceding week, the most active bond (measured by turnover volume) was the 5th FGN Bond 2018 Series 2 with a traded volume of 34.85 million units valued at N31.51 billion in 287 deals.

Starcomms & Cadbury Plc Updates.

Starcomms Plc blazes the trail on the telecommunication sub sector.

Starcomms Plc, a telecommunications outfit, was commercially launched in 1999 and its deployment of the world class CDMA technology in 2002 has exponentially taken the company to its current position of over 1,000,000 customers in Lagos, Kano, Maiduguri, Port-Harcourt, Ibadan, Abuja, Aba,Onitsha, Asaba, Kaduna, Zaria and Benin. In 2002 the company introduced a revolutionary marketing strategy aimed at permanently changing the fixed/wireless industry for the better. The strategy focused on the need to improve customer service quality and network performance.

The company took additional strides as the leading PTO in December 2003 when it deployed an Intelligent Network technology in Nigeria. History was made in December 2003 when Starcomms introduced its Intelligent Network, the next generation of wireless services, in Kano, Nigeria. Starcomms has maintained a distinct business approach that combines technological novelty and excellence with good customer orientation and a unique branding concept that stands it out amongst pairs. The company, which is managed by a team of professionals led by the Chief Executive Officer, Mr. Maher Qubain, holds strategic alliances with Qualcomm, CDG, Huawei, Hisense, Harris, Haier, LG and Nera to provide cutting edge technological equipments to deliver on its service promise.

Starcomms made its debut in the telecommunications sub sector of the Nigerian Stock Exchange last week by listing a total of 6.9 billion ordinary shares of 50 kobo each at N13.65 per share by way of introduction.

Cadbury Plc placed on full suspension

Recent developments have revealed that the last has not been heard of the Cadbury Plc’s financial misstatement saga that was uncovered about two years ago, involving its former Managing Director, Financial Controller and some other principal officers. The Investment and Securities Tribunal, last week enforced a full suspension sanction on the company’s shares. This sanction was initially intended by the Securities and Exchange Commission, but countered by the Nigerian Stock Exchange for lack of a legal backing. However, the Investment and Securities Tribunal, a court of competent jurisdiction on investment matters has imposed the penalty, leaving the Nigerian Stock Exchange with no other option but to consent.

Nevertheless, Cadbury Plc has stated that ever since the misstatement matters came into the limelight, the company had consistently cooperated with the regulators, and would continue to search for justice through the law courts.

First Registrars notifies investors on 17 offers of companies

-set to reissue certificates within 7 days
First Registrars Nigeria Limited had notified investors who took part in 17 different offers of its client companies; on the non-receipt of their share certificates, return money and interest warrants; as it is set to reissue certificates within seven days.

Niran Adetunji, Head, Finance & Accounts of the company affirmed this to Proshare NI today in Lagos Nigeria.

Adetunji affirmed that First Registrars is ready to package an indemnity to investors who had not yet received their share certificates from the recent offers handled by it for their various client companies.

“For those who have not yet received their share certificates for the various companies we have handled their offers as Registrars, they should send a formal letter and we would package an indemnity for them within seven days and issue them the duplicate” he said.

A list of the companies as published in First Registrars notice to investors in about 10 dailies; Adetunji affirmed include ARM Aggressive Growth Fund, Platinum Habib Bank Plc (Bank PHB) Costain West Africa Plc, DEAP Capital Management and FBN Heritage Fund offers of 2007 respectively.

Others are Fidelity Bank Plc’s 2005 offer and 2007 Rights/offer respectively, First Bank of Nigeria Plc’s (FBN’s) 2003 Rights and 2007 Rights/offers respectively.

On the list is also StanbicIBTC Ethical Fund offer of 2005, StanbicIBTC Bank offer 2005, Kakawa Guaranteed Income Fund offer 2007, Oando Plc’s Rights/offer of 2004.

There are also the Oasis Insurance Plc’s Rights/offer of 2007, Prestige Assurance Plc’s and Standard Alliance Insurance Plc’s offers of 2006 respectively and the IBTC Guaranteed Investment Fund offer of 2007.

The above is a total of 17 offers from different companies. Adetunji further affirmed to Proshare NI that First Registrars would reissue physical share certificates or direct crediting to the investors Central Security Clearing System Limited (CSCS) accounts; if furnished and indicated while filling the indemnity form.

He also confirmed to Proshare NI that the Committee set up by Securities & Exchange Commission (SEC) on the issue of Infrastructure upgrade and monitoring of Registrars to ensure market transparency; visited First Registrars unnoticed.

Adetunji further confirmed to Proshare NI that the Committee was satisfied with the infrastructure put in place by First Registrar to run its operations.

Some of the facilities on ground, Adetunji affirmed include three Data Capturing Machines, Scanner for converting forms to data and a Call Centre

Intl Energy Insurance to raise N10bn fresh funds

International Energy Insurance Plc (IEI) is to approach the Nigerian Capital Market to raise fresh funds of N10 billion. Jacob Erhabor, Managing Director/ Chief Executive Officer (MD/CEO) of the company made this affirmation to Proshare NI in Lagos Nigeria.

“IEI is proposing to raise additional funds of N10 billion, it is on the table and we are trying to conclude with the plans” Erhabor said.

He affirmed that the offer would likely open before the end of the current quarter. “Before the end of this quarter, we should actualise it” he said.

As at the time of filling in this report, Erhabor confirmed to Proshare NI that the offer price has not yet been fixed; as it is a function of a number of issues.

“I would not want to make a guess as regards the offer price; it has to be based on certain fundamentals” he affirmed.

He however, confirmed to Proshare NI that IEI has not gone to the Quotations Committee of the Nigerian Stock Exchange (NSE) to present its proposal of raising fresh funds. “There are so many things to be put in place” Erhabor said.

“Today, I can assure you that IEI has about N12 billion to do its business successfully” he affirmed.

The company was subsequently recapitalised to N500 million to meet with the challenges of its new business focus. IEI has since increased its authorised share capital to N6, 000,000,000 comprising of 12,000,000,000 ordinary shares of 50 kobo”

In the same vein, the insurance company has proposed to give its investors a 0.9 Kobo dividend payout in its current Financial Year End (FYE).

Erhabor further confirmed to Proshare NI, that the 0.9 Kobo dividend payout being proposed to investors; is the beginning of good returns to their investment in the company.

However, the 0.9 Kobo dividend is subject to the approval of the company’s Board at its forthcoming Annual General Meeting (AGM).

Also, as at the time of filling in this report, Proshare NI could not gather further details concerning the proposed N10 billion Public Offer (PO) of IEI.

NGC declares 45 kobo dividend

Nigerian-German Chemicals Plc has declared a dividend of 45 kobo, amounting to N69m for shareholders in its 2007 financial results.

This represents an increase by 29 per cent over the 35 kobo paid in 2006.

The company recorded a turnover of N2.63bn, representing an increase by 5.6 per cent over N2.49bn recorded the previous year. Its profit after tax, however, fell by 22 per cent to N56.9m from N73.3bn in 2006.

Speaking at the company’s annual general meeting on Tuesday, The National Chairman, Dynamic Shareholders Association of Nigeria, Mr. Alex Adio, congratulated the board of the company for its results, and hoped that by the next financial year, the company would perform better.

“Shareholders are impressed that although the profit you recorded this year was lower than that of last year, you still declared a higher dividend,” he said.

Also speaking, the President, Shareholders Solidarity Association, Chief Timothy Adesiyan, stated that the company should ensure the utilisation of its infrastructure in order to enhance productivity.

He urged the management to look into the amount spent on energy, stating that it was on the high side.

The company should look for a solution to the problem, he said.

The Chairman, NGC, Alhaji Shehu Idris, in his response, stated that the company had strategies in place for the next financial year to ensure profitability.

Idris, who was represented by the company’s Vice Chairman, Mr. Adeboye Shonekan, said , owing to this, the company would be seeking to raise fresh capital through a hybrid of rights and bond issues.

UBA Declares N28.85 Billion Profit After Tax

United Bank for Africa Plc (UBA)’s third quarter unaudited results for its 2008 financial year, shows that the Bank is well on track to meeting and surpassing the expectations of its numerous stakeholders.

Drawing inference from the disclosed figures, stakeholders of the bank can be certain of another rewarding year for their investments in the financial institution.

The unaudited results, recently released to the Nigerian Stock Exchange, show a 59.8 per cent increase in the bank’s earnings and growth in its market share. Gross Earnings for the 6 months under review was N120.25 billion, a N45 billion appreciation over the N75.25 billion recorded for the corresponding period last year. This significant increase in earnings, can be attributed to increased customer-patronage resulting from the quality of service and products offered by the bank.

Profit before tax appreciated by 68.31 per cent, with the bank reporting a N33.14 billion PBT in comparison with the N19.69 billion reported last year. The bank’s N28.85 billion profit after tax for the 6 months under review, is also a 6668.42 per cent appreciation over the figure reported last year.

According to financial analysts and industry watchers, the bank’s first quarter results are an indication of good times for its shareholders, if dividend payout for the last financial year are anything to go by.

Bank’s results with that of its peers, shows that it had emerged as the fastest growing in the country.

Nse Market Report For Week 28 (july 11)

A turnover of 5.8 billion shares worth N42.12 billion in 88,146 deals was recorded this week, in contrast to a total of 4.8 billion shares valued at N41.96 billion exchanged last week in 77,288 deals.

Transactions during the week included a total of 1,000 units of Access Bank Plc N13.5 billion Redeemable Bond 2010 valued at N1 million.

There were no transactions in the Federal Government Development Stocks, State Government Bonds and Industrial Loans/Preference Stocks sectors.

The Insurance subsector was the most active during the week (measured by turnover volume), with 3.83 billion shares worth N4.6 billion exchanged by investors in 16,880 deals. Volume in the Insurance subsector was largely driven by activity in the shares of Investment and Allied Assurance Plc. Trading in the shares of the Insurance Company accounted for 3.31 billion shares, representing 86.35% of the subsector’s turnover.

The Banking subsector, boosted by activity in the shares of Fidelity Bank Plc, Intercontinental Bank Plc and FirstInland Bank Plc, followed on the week’s activity chart with a turnover of 1.5 billion shares valued at N30.25 billion in 40,848 deals.

Last week, the Insurance subsector led on the activity chart and was followed by the Banking subsector.

Price Movement:
The All-Share Index dropped by 1.43% to close on Friday at 54,662.06. The market capitalization of the 208 First -Tier equities closed lower at N10.85 trillion.

Thirty - Two (32) stocks appreciated in price during the week, lower than the seventy-four (74) in the preceding week. Mobil Oil Nigeria Plc led on the gainers’ table with a gain of N20.17 to close at N217.04 per share while Chevron Oil Nigeria Plc followed with N16.51 to close at N372.00 per share. Other price gainers in the Top 10 category include:

• Guinness Nigeria Plc - N4.99

• Oando Plc - N3.99

• BOC Gases Plc - N2.91

• First Bank of Nigeria Plc - N1.91

• First City Monument Bank Plc - N1.85

• Ecobank Transnational Inc. - N1.72

• Eterna Oil & Gas Plc - N1.49

• PZ Cussons Nigeria Plc - N1.41

Eighty - One (81) stocks depreciated in price during the week, higher than the thirty-eight (38) in the preceding week. Dangote Sugar Refinery Plc led on the price losers’ table, dropping by
N4.01 to close at N29.99 per share while Presco Plc followed with a loss of N73.59 to close at N12.39 per share. Other price losers in the Top 10 category include:

• Cadbury Nigeria Plc - N2.30

• United Bank for Africa Plc. - N2.20

• Dangote Flour Mills Plc - N2.18

• Japaul Oil & Maritime Services Plc - N2.05

• Oceanic Bank International Plc - N1.78

• DN Meyer Plc - N1.68

• May & Baker Nigeria Plc - N1.58

• Prestige Assurance Co. Plc - N1.46

Four equity prices were adjusted for dividend and/or bonus as recommended by the Board of Directors. Big Treat Plc was adjusted for dividend of N0.10 per share. Prestige Assurance Plc was adjusted for dividend of N0.20 per share and bonus of 1 for 4. International Energy Insurance Plc was adjusted for dividend of N0.09 per share. Longman Nigeria Plc was adjusted for dividend of N1.00 per share.

…Supplementary Listings
A total of 429,996,932 shares were added to the shares outstanding in the name of Prestige Assurance Plc following the bonus of 1 for 4. Also, a total of 223,000,834 shares were added to the shares outstanding in the name of Access Bank Plc on Tuesday, July 8, 2008 following the conversion of part of the bank’s N13.5 billion Redeemable Bond 2010. Similarly, a total of 12,499,487,995 shares were added to the shares outstanding in the name of Fidelity Bank Plc on Tuesday, July 8, 2008 following the conclusion of hybrid offer made up of public offering of 5,501,100,421 shares, Rights offering of 498,899,579 shares and supplementary allotment of 6,498,899,579 shares.

Change of Name and Sector Reclassification
The name of Crusader Insurance (Nig) Plc was changed to Crusader (Nig) Plc following business restructuring. Also, the company was moved from the Insurance sector and listed in the “Other Financial Institutions” sector.

The N2.46 billion Special FGB Bond 2012 for Local Contractors Debt was delisted from the Daily Official List. By this action, the number of FGN Bonds and securities dropped to 41 and 316 respectively.

Technical Suspension
This was imposed on Eterna Oil & Gas Plc on Thursday, July 10, 2008 on receiving the Company’s application to undertake supplementary share offering. Also, it was imposed on First Aluminium Nigeria Plc on Friday, July 11, 2008 on receiving the Company’s application to undertake supplementary share offering.
INTERCONTINENTAL BANK PLC: Unaudited result for the first quarter ended 31st May 2008 shows Gross Earnings of N60.9 billion, as against N28.75 billion in the comparable period of 2007. Profit after tax stood at N7.82 billion compared with N4.7 billion in 2007.

C & I LEASING PLC: Audited result for the year ended 31st January 2008. The Directors had earlier recommended a final dividend of N0.06 per share. The date of closure of register of members is August 4, 2008 while payment date is August 28, 2008.

SOVEREIGN TRUST INSURANCE PLC: Audited result for the year ended 31st December 2007 shows Gross Premium of N2.5 billion as against N1.42 billion in 2006. Profit after tax stood at N357.8 million compared with N233.8 million in 2006. The Directors are recommending a dividend of N0.06 per share and bonus of 1 for 5. The date of closure of register of members is July 23, 2008 while payment date is September 7, 2008. The Annual General Meeting (AGM) of shareholders is scheduled to hold at Diamond Hall, Golden Gate Restaurant, 25B Glover Road, Ikoyi, Lagos on Tuesday, August 12, 2008.

STACO INSURANCE PLC: Audited result for the year ended 31st December 2007. The Directors earlier recommended a dividend of N0.12 per share. The date of closure of register of members is July 21, 2008 while payment date is August 4, 2008.

MAY & BAKER NIGERIA PLC: Audited result for the year ended 31st December 2007. The Directors are recommending a dividend of N0.40 per share. The date of closure of register of members is September 4, 2008 while payment date would be advised later.

ASSOCIATED BUS CO. PLC: Audited result for the year ended 31st December 2007 shows Turnover of N3.13 billion as against N2.71 billion in 2006. Profit after tax stood at N141.25 million compared with N143.01 million in 2006. The Directors are recommending a dividend of N0.08 per share. The date of closure of register of members is August 7, 2008 while payment date is September 3, 2008.

ASSOCIATED BUS CO. PLC: Unaudited result for the first quarter ended 31st March 2008 shows Turnover of N830.3 million, as against N716.3 million in the comparable period of 2007. Profit after tax stood at N62.9 million compared with N50.2 million in 2007.

CONSOLIDATED HALLMARK INSURANCE PLC: Audited result for the year ended 31st December 2007 shows Gross Premium of N1.51 billion as against N508.4 million in 2006. Profit after tax and deferred tax stood at N230.01 million compared with N56.9 million in 2006.

RED STAR EXPRESS PLC: Audited result for the year ended 31st March 2008 shows Turnover of N3.1 billion as against N2.7 billion in 2007. Profit after tax stood at N195.7 million compared with N118.5 million in 2007. The Directors earlier recommended a dividend of N0.25 per share. The date of closure of register of members is July 24, 2008 while payment date is July 29, 2008.

EKOCORP PLC: Audited result for the year ended 31st December 2007 shows Turnover of N532.75 million as against N457.7 million in 2006. Profit after tax stood at N72.2 million compared with N65.61 million in 2006. The Directors are recommending a dividend of N0.15 per share. The date of closure of register of members is August 25, 2008 while payment date is September 8, 2008.
STOKVIS NIGERIA PLC: Audited result for the year ended 31st December 2007 shows Turnover of N2.31 million as against N1.22 million in 2006. Loss before tax stood at N0.714 million compared with N4.3 million in 2006.

NAMPAK NIGERIA PLC: Audited result for the year ended 30th September 2007. The date of closure of register of members is July 21, 2008

CHEVRON OIL NIGERIA PLC: Unaudited result for the first quarter ended 31st March 2008 shows Turnover of N8.6 billion, as against N18.34 billion in the comparable period of 2007. Loss after tax stood at N190.63 million compared with profit after tax of N531.24 million in 2007. The company’s result was affected by the strike action embarked upon by the Transport union that lasted for about two months. The company is back into full operations and efforts are being made to recover lost volume.

A turnover of 206.9 million units worth N210.65 billion in 1505 deals was recorded this week, in contrast to a total of 280.3 million units valued at N281.2 billion exchanged in 2120 deals during the week ended July 3, 2008. The most active bond (measured by turnover volume) was the 3rd FGN Bond 2009 Series 11 with a traded volume of 38.7 million units valued at N42.73 billion in 387 deals.

Source: Nigerian Stock Exchange

A Timely Intervention

The Securities and Exchange Commission and Nigeria Stock Exchange take swift actions to halt continued downward slide in the value of stocks in the market

June was a frantic month for the regulators of the Nigerian stock market. During the month the Securities and Exchange Commission, SEC, and the Nigeria Stock Exchange, NSE, struggled to halt the slide that was speedily eroding the market’s capitalisation. The stock market lost N1.215 trillion when the market’s capitalisation crumbled from N11.631 trillion to N10.416 trillion between June 2 and June 25. The slide was precipitated by an unconfirmed report that the Central Bank of Nigeria, CBN, had banned banks from engaging in margin trading. The apex bank later denied issuing such a directive.

The first step taken by SEC and NSE was to empanel a committee that would review the practice of margin trading, known also as financier account in the capital market. A financier account enables investors and stockbrokers to borrow money from financial institutions for the sole purpose of buying shares in the stock market at a predetermined interest rate.

Members of the committee were selected from SEC, CBN, NSE and the Nigerian Deposit Insurance Corporation, NDIC. On June 9, the NSE followed this up with the introduction of the circuit breaker, an artificial support system that does not allow stocks to trade below their previous day’s closing price.

The NSE also directed that a stock must trade up to 100,000 units before its price could either move up or down. It also went further to lift the ban it placed on the financier account, on June 11, and renamed it as custody account. Sola Oni, NSE’s spokesperson, said, “that the lifting of the suspension was with immediate effect. Under this system, the purchased stock acts as collateral and cannot be sold without the knowledge of the lending institution. This arrangement empowers the investors and sustain demand in the market.

Ndi Okereke-Onyiuke, NSE’s director-general, explained that it was expedient for the market regulators to intervene and restore confidence to the market. Said she: “There is no stock market in the world where the managers will sit down and watch the market crash. If we see something going wrong in the market, we must intervene.”

In a bid to sustain investors’ confidence, SEC announced its plan to further cut down the cost of doing business in the capital market. Earlier in April, the apex capital market regulator succeeded in bringing down transaction cost in the market by 40 percent. Lanre Oloyi, corporate affairs manager of SEC, explained that the move was intended to attract foreign and local investors into the market. “Already, there is an in-house committee working on this and as soon as it concludes its business, the outcome would be made available to the federal government for approval before its implementation,” he said.

The above measures appeared to have restored investors’ confidence as the market capitalisation soared from N10.950 trillion on June 6 to N11.721 trillion on June 13. But the revival was only momentary as the market plunged into another wave of decline with share prices dropping on daily basis between June 16, and June 25, from N 11.416 trillion to N10.416 trillion.

As the share prices crumbled, the question of concerned observers was why the market’s downward curve was so steep in June. Onyenwechukwu P. Ezeagu, chief executive of Solid-Rock Securities and Investment Limited, Lagos, told Newswatch that there are three major determinants of share price movement in the stock market. They are a company’s performance, the interplay of the forces of demand and supply as well as market’s hearsay. All these factors, he explained, contributed to last month’s bearish mode of the market.

“The market was reacting to the pronouncements of market’s regulators, particularly the rumour on margin trading, which stampeded stock brokers into selling off stocks in order to meet obligations to their bankers,” he said.

The stampede, he explained, disrupted the market equilibrium as supply rose above demand to precipitate the fall in share prices. Ezeagu also attributed the drop in prices of shares at the market to government’s delay in releasing the capital budget and the distraction caused by SEC’s directive that stock brokers should increase their capitalisation from N75 million to N1 billion or loose their operational license.

David Obi, a member of the governing council of the Manufacturers’ Association of Nigeria, MAN, told Newswatch that the downward trading in the Nigerian capital market mirrors the economic recession afflicting the global market. He said that even as low as the Nigerian market may appear at the moment, it was still performing better than most other countries’ capital markets.

“The slow down in the stock market was even good for us, so that we can ponder on the way we invest. Also, an ever-rising market is not always possible. It is normal for the market to pulsate sometimes,” Obi said. He, however, noted that the important thing is for the country to be serious in the manner it manages its economic activities because in the final analysis “it is the investors’ confidence in the economy that drives the capital market.”

Bismarck Rewane, head of Financial Derivatives, has warned regulators to be more careful with their pronouncements because of the sensitive nature of the market. He said that their actions were capable of increasing the anxieties of investors, “and when investors are anxious, they do only one thing: stop bringing money in and might start to take money out.”

Rewene was right. The withdrawal of the directive for brokers to increase their capital base on June 26, coupled with the lifting of the ban on financer account, has seen the market bouncing back and becoming more bullish. Consequently, the market capitalisation has grew from N10.416 trillon on June 25 to N10.920 trillion on June 30.

Nigerian companies set to woo UK investors

Some 20 Nigerian companies cutting across all sectors of the economy will be in London from 8-9 July to woo international investors as a way of attracting international funding to support their businesses, according to the Nigerian Stock Exchange (NSE) and Renaissance Capital, an international investment bank which is packaging the business trip.

The interactive session, which will provide first time opportunity to non-financial services sector companies from oil, gas, manufacturing, fast moving consumer goods, telecommunication and real estate, will hold at Mandarin Oriental Hotel, London.

“The recent boom in the Nigeria financial services sector has led to increased capacity to support the development of other sectors,” said the Chief Executive Officer of Renaissance Nigeria, Andrew Cornthwaite.

He said many of the companies were seeking ways of attracting the necessary funding to expand their businesses, hence the need to reach out to foreign investors.

“We are delighted to be able to offer them (companies) the first opportunity to meet with prospective international investors,” he added.

Nigerian Stock Exchange can’t collapse — Swiss-based Nigerian economist

FEW days ago, a Nigerian owned Swiss-based firm, AME &T Group, organised a four-day seminar on Private Wealth Management (PWM) for top executives of banks and other professionals in the country. The resource persons were experts drawn from leading management institutes in Switzerland.
In exclusive interviews with Financial Vanguard, the President of AME & T (the Nigerian that organised the seminar) and three of the resource persons spoke on the seminar and various other economic issues. Could you give us a brief resume of AME & T Group that just organised the seminar on private wealth management in Nigeria?

It is basically an enterprise development management, an investment advisory firm. We do a lot of risk management in wealth management as well as sustainable enterprise development practice.

We have done a lot of jobs managing clients, both institutional and private, as well as government, especially governments from Africa in area of maximizing their wealth with Europe, especially Switzerland, whereby they could tap into Switzerland’s private banking practice as well as investment banking practice viz a viz the growing trend in African countries to tap into strong countries in terms of project management like currently, the Federal Government of Nigeria is trying to raise bonds.

They are doing that by approaching international financial institutions, not only on the investment banking, but also on private banking. There is need for that exchange of knowledge and expertise. We have advised a lot of multinationals as well. So, basically, that is our core practice.

AME &T Group is structured into three key products and services. One is Enterprise Development and Management. We have advisory services and then the training arm. These three components actually dictate the way we operate and our core practice. Then there are some services under our advisory.

For instance, we have Investment Advisory section that deals with energy industry. We advise quite a lot of multinationals on raising finance may be from private equity clients of our investment outlet. It could be loan or whatever has to do with their investment banking-related issue. That is in the oil and gas sector. We also handle telecom investment advisory.

Basically, what we do is work with institutions that are willing to maximise profitability. We also provide some finances in terms of arranging loans as well as helping them to structure their finances in a way whereby they could tap into foreign funds. Thirdly, on the training aspect, which is part of the advisory also, is where we bring our expertise to bear in an environment like Nigeria that is evolving. So, that is the way we are structured as a Swiss firm.

We are a decade old. We are more than that in actual sense, in that AME & T Group came as a result of an acquisition of a Swiss company which is about 50 years old. We re-structured it and repositioned it to meet the needs of our immediate clients in the investment banking-related field. Our passion for wealth management came as a result of our expertise in that field. We try to impart that expertise and knowledge to our clients and various institutions - be it a non-governmental organisation (NGO) or individuals - depending on what they want. So, that is the way we are structured.

The training we conducted in Nigeria was the first of its kind. We had a similar event in Geneva, private banking training, which we did in 2004. We had some institutions that attended that. But this was a bit tailor-made for the Nigerian audience.

That of Geneva was more of an international event. We had coordinated and organised series of teachings and lectures for top executives from Africa. An example was the one we had with the Swiss Stock Exchange in Zurich about three years ago.

So, we are well known in the Swiss environment to provide qualitative training as well as in-house training for clients especially those from emerging or transiting economies like Nigeria. So, one of the reasons we decided to do it here in Nigeria is because of the post-consolidation of the banks knowing full well that a lot of banks are diversifying into private banking. A lot of them need the expertise.

We managed to have one-on-one discussions with some of the top chief executive officers (CEOs) of these banks. From our researches and findings, we realised that a whole lot of them do not have solid background on private banking practice.

It was as a result of this research that we decided that we should provide this training capacity to these top level executives from these institutions. This, to us, is a welcome development and from the response that we have received so far, we believe that there is definitely going to be a lot of follow up on this subject.

Agreed that Nigeria is a transiting or emerging economy, there was a recent prediction by the United States intelligence agency that the Nigerian economy would collapse in 20 years time. What do you think about that report?

Well, that is more of a political statement than economic statement. Political because it basically came from the CIA’s intelligence report on Nigeria. Economic indices state that definitely, Nigeria has a growing pattern and that pattern will continue to grow as long as the nation remains the same. That is, if it does not disintegrate, we will continue to have the economy. From the economic point of view, there is no basis for that. They have to match that prediction up or such analysis and forecast with current trend in the economy.

There is another prediction and anxiety that the Nigerian Stock Exchange will soon collapse. Did you hear about that and what do you think about it?

Yes, we heard that and we are following it. But I have to tell you that the Nigerian Stock Exchange will not collapse. It will correct itself. The collapse of an exchange in a way is impossible especially in a regulated economy and also in a liberal economy, in that you have an all-share-index. Basically, you do not expect a nation’s stock exchange to collapse.

It means all the companies will collapse. That is what they are saying in essence, which is impossible. Right, there will be bubble and there will be effect of such bubble. But that does not mean that a nation’s stock market will collapse as a result of that bubble. There will be some fundamental adjustments and changes.

You do not expect that the market has to be perfect all the time. I tell you, there is no perfect market or perfect economy. Even the New York Stock Exchange, London Stock Exchange, definitely they experienced this kind of bubble. There is always this kind of upward and downward trend in any market economy. It is correcting itself because, the Nigerian economy was only just of recent opened up and also, it is just of recent that you are witnessing that kind of inflow of funds from investors.

Definitely, that would affect your trading pattern. It will affect the market itself. The stock market in every way, is regulated. For instance, three years ago, we were here and met with stock exchange leadership led by the Deputy Director-General, we realised some of these abnormal trends.

Even the trading volume at that period was extremely low and what we were even clamouring for was a higher trading volume to attract foreign investors and make the exchange more liquid. Now with post-consolidation of the banks, you have seen that a lot of those banks have brought in a lot of liquid cash into the stock which has made the stock exchange a little more vibrant, more dynamic and more attractive. That is why you see a lot of people coming in.

That is what is affecting the market now. There is too much influx of funds and this is giving it that level of vibrancy that was not the pattern years back. It is shaky.

That is why we call it bubble. Right now, there is a redefinition of the whole market. Someone like me who never believed in the market, now I have a lot of funds invested in various Nigerian stocks. The consolidation of banks, other financial institutions, that itself has created a lot of transformation in both the financial services sector as well as the stock market.

You as a Nigerian, you have a company in Switzerland. Nigerian government is clamouring for Nigerians in the diaspora to come home and invest in the economy. When are you going to do that?

We are doing our best to come back. Like I met with President Yar’Adua, during his visit to Davos. We made a presentation, our firm was among what they called Zurich 9. I had my foreign associates with me. We really talked with the president about a whole lot of investments in Nigeria rather than chasing contracts. Our approach is really to try to drive volume of funds and investments to Nigeria. So, we set up, that is our other practice, a First African fund which we are going to launch very soon and this was part of the presentation that we made to Mr. President.

The fund will invest in both listed equities as well as conduct private equity bills. We are looking at bringing quite a lot of investments into the Nigerian investment arena. That is my own part of driving volume and helping the economy to grow. But to come physically, I think Nigeria still needs me there to help bring the money. When I am here, you will not have that access anymore.
What is discouraging you from coming back to Nigeria?

Nothing whatsoever except that it is just an issue of mindset and what I consider to be my comfort zone. I am comfortable there. At the moment, I do not have any comfort zone here.

If for example, there is stable electricity, will you come?
You are bringing a whole lot of political issues that I would not want to talk about. Well, that is part of infrastructural development.

That is actually an aspect we will be willing to participate in and we will like to advise the government. I will say to you as an African firm based in Switzerland, for 40 years the Nigerian government never owned a property in Switzerland. We advised the government and a new Chancery in Switzerland was acquired through us for the government of Nigeria. The Swiss Government is indeed very grateful about this.

So, we have been advising the government. This is one of the things we have been doing to improve the nation’s image there. So, the first Chancery of the Nigerian Government, owned by the Federal Government, was bought last year, moved in last year by the Nigerian Government. They now own a property and they are no longer in a rented property.

They had been in Switzerland for 40 years without owning a property and wasted money for 40 years in Geneva which sits almost 70 per cent of all United Nations agencies. It was a disgrace at a point. So, we had to come in to bail out. So, it is one of our success stories.—Vanguard

NSE approves 25% absorption of Costain WA 2007 offer oversub

The Nigerian Stock Exchange (NSE) has approved the absorption of the 25 percent allowed by regulatory authorities on oversubscription of Public Offers (POs) by Construction Giants Costain West Africa Plc (COSTAIN).

Phil Wharton, Managing Director/Chief Executive Officer (MD/CEO) of the company affirmed this in Lagos Nigeria at the NSE; while addressing members of the Capital Market Correspondence Association of Nigeria (CAMCAN).

“We have just received the final words from the NSE towards taking over the 25 percent maximum allowed in the event of oversubscription in Public Offer” Wharton said.

He confirmed that Costain’s 2007 hybrid offer by way of subscription and Rights Issue were 240 percent and 140 percent oversubscribed respectively.

Wharton further confirmed that the shares were listed on the Floors of the NSE a few weeks back.

On the issue of share certificates, he affirmed that Costain has dispatched same to investors; taking into consideration the complaints as regards the issue.

“We are very concerned on the bad publicity as regards the issue of dispatch of share certificates to investors. Therefore our advisers had informed us that all share certificates had gone to shareholders, anyone who is yet to receive should get back to us” Wharton said.

Also on the issue of return money, He confirmed that this has been returned to investors with interest.

Though as at the time of filling in this report, he could not confirm the exact amount in figures returned to investors. “I do not really have the information now, but in due time we would furnish you with same” Wharton affirmed.

He further confirmed that Costain West Africa delivered a return of over 250 percent in a six month period with its 2007 Public Offer (PO).

“Costain have delivered a return of over 250 percent in a six month period with our offer at N13.00 in December and a share price of almost N30.00 today” Wharton said.

As earlier reported, Costain West Africa, late 2007 by way of subscription and Rights offered to the Nigerian investing public 178,162,966 and 519,740,000 Ordinary Shares of 50 Kobo each at N13.00 and N11.00 per share respectively

CBN denies halting margin lending

The Central Bank of Nigeria on Friday publicly declared that it neither issued nor contemplated to stop commercial banks from their practice of margin lending or lending for investment in securities

The CBN Governor, Prof. Chukwuma Soludo, stated this at a Breakfast Forum for the Bankers’ Committee and financial system regulators in Lagos. On the price volatility witnessed on the Nigerian Stock Exchange in recent weeks, Soludo said market volatility was a major feature and common phenomenon in the global market system. He said this was not peculiar to the NSE alone.

He said, “We are still surprised ourselves to hear the rumours making the rounds that we stopped margin lending by banks. There was no letter issued or discussion in this regard. It was not even contemplated by the CBN. We did not know where it came from, but certainly not from us. We make bold to categorically state that there was no basis for it. The CBN will not and does not prescribe to the banks on which sector they should lend to and which sector they should not. The banks are free to lend at whatever direction their management wishes them to.”

Also speaking at the session, the Minister of State for Finance, Mr. Remi Babalola, expressed faith and optimism in the economy, saying the position of the capital market at the moment was one that should attract more foreign direct investment. He said, “We expect that contrary to speculations, this is the right time for investment both domestically and internationally. Foreign direct investments should quadruple yearly and this is what we expect. The market is still in the right direction.”

On the controversies surrounding the operation of custody accounts and margin accounts by stockbrokers, the Director-General, Nigerian Stock Exchange, Prof. Ndidi Okereke-Onyiuke, said the NSE did not stop custody account operations as perceived by market watchers. She said the Central Securities and Clearing System simply issued a letter to the authorities to the effect that the margin accounts be maintained, adding that the controversy was because people were more used to the facility. She said the nomenclature was simply changed from custody accounts to margin accounts.

FCMB launches Alpha fund for investors

AS part of measures to assist investors minimise the volatility of their investments and manage their risks, First City Monument Bank Plc (FCMB) in partnership with International Consortium, has introduced a $100 million multi strategy hedge fund, called legacy African Alpha fund into Nigerian financial markets.

The hedge fund, which is the first of its kind involving a Nigerian institution is being introduced at a period when investors in the Nigerian Capital Market are experiencing volatility in their investments.

Addressing journalists in Lagos, yesterday, the Executive Director, Investment Banking, FCMB Group, Mr. Gboyega Balogun said that the legacy Africa Alpha Fund is a $100 million multi strategy hedge fund focusing primarily on Africa’s high growth opportunities with limited exposure to the middle East and Asia.

According to him, the hedge fund seeks opportunities to reduce risk through hedging strategies by shorting a stock or asset class with a target return of 22 per cent per year in dollar terms on any equity with less than 10 per cent risk or volatility.

The fund, which will be invested exclusively in Africa and Middle East debt and equity will be structured as an absolute return fund. Specifically, a minimum of 70 per cent of the fund will be invested in Africa while a maximum of 30 per cent will be invested in the middle East.

He also noted that International Consortium, which currently manages investments worth over two billion dollars for bluechip financial institutions such as American Express will be providing the funds, which FCMB will sense as advisers in successfully deploying the strategies.

On the strategies involved, Mr. Balogun said that the organisation will observe a top down macro strategy in channelling investments in the country till it reaches the fundamentals.

He said: “We will begin by looking at macro economic story in each country within its universe to decide allocation to these countries after which we look at sectors benefiting or from macro story in favoured countries before filtering down to fundamental analysis on chosen asset class.”

He also added that the fund is only available for institutional and professional investors with limit of $100,000 minimum investment in equities, fixed income and currency.

On its future outlook, Balogun said that the organisation is building a legacy family of funds with long-term security by introducing four more products into the market so as to increase its assets to $500 million in the next 12 months and one billion dollars in the next 18 months respectively.

“Currently, we have two funds launched; Legacy Nigeria Equity Fund managed by CSL and Legacy African Alpha Fund managed by INTIL consortium. We have four more to come in the next 12 months. The franchising model allows us to grow very fast while retaining high quality, top performing managers and consistent governance. We expect to get to over N120 billion assets under management within 24 months, making us; possibly the largest asset manager in the region,” he added.

On its human capital development drive, he said that FCMB and International Consortium are engaging in exchange programmes to ensure that the fund is managed independently by FCMB.—Guardian

Equity Assurance plc records 722 percent profit.

Equity Assurance plc has recorded a profit after tax of N445 million in its 2007 financial year. These was made known by the chairman of the company, Mr Olufemi Somolu during the company’s 21st annual general meeting held in Lagos on Monday. The profit after tax rose compared to the N54.1 million it recorded in 2006 shows an increase of 722 percent. Profit before tax for the company was also impressive as it stood at N498.7 million compared to N55.8 million in the 2006 financial year, indicating an appreciation of 793 percent.
Turnover during the period under review grew by 572 percent from N225.6 million in 2006 to N1.5 billion in 2007. While attributing the impressive outcome of the result to the merger that occurred in the company during the last consolidation exercise in the insurance company, he announced that the company was going to give a dividend payout of 35 kobo per share.

Nigerian Stock Exchange for July 1st, 2008.

The Nigerian Stock Exchange continued on its recovery path today as the Market price indicator, the All Share Index again edged up again to 55,949.00 base points as against yesterday’s 54,905.36 base points. The total market shares valuator, the Market Capitalisation also went up to N10,920,315,601,242.56 as against yesterday’s N10,716,615,132,199.71.

There was a total of 10,459 deals involving a volume of 573,179,540 unit shares valued at N9,381,974,978.27; as against yesterday’s 13,658 deals involving the trading of 1,236,774,565 unit shares volume, valued at N12,739,794,993.53.
The stocks with the most traded unit shares in a descending order includes: (1) PLATINUM which traded with a volume of 95,846,363 unit shares, valued at N2,828,708,971.90; (2) FIDELITYBK traded with 58,123,359 unit shares valued at N589,790,903.50; (3) IANSURE traded with a volume of 50,285,588 unit shares worth N52,297,011.52; (4) FIRSTBANK traded with a volume of 26,988,405 unit shares worth N1,154,294,081.85; (5) NIGERINS traded with a volume of 20,092,026 unit shares valued at N136,640,966.80.
The top price gainers of the day includes: (1) MOBIL which gained N9.84 to close at N206.71; (2) JBERGER gained N5.73 to close at N120.33; (3) ACCESSRDB3 gained N4.00 to close at N104.00; (4) WAPCO gained N2.55 to close at N54.15
While the top losers of the day includes: (1) CHEVRON lost N16.92 to close at N321.67; (2) TOTAL lost N12.00 to close at N238.00; (3) OANDO lost N8.74 to close at N195.25; (4) 7UP lost N2.46 to close at N52.00

Law Union drives NSE volume

Law Union and Rock Insurance Plc drove the market volume on the floor of the Nigerian Stock Exchange last Friday by recording a transaction volume of 252.815 million shares valued at N1.206 billion in only 23 transactions inching by 3 kobo to close at N4.93 per share.

Aso Savings and Loans Plc emerged the second volume driver having pulled a transaction volume of 154.034 million shares worth N574.918 million executed in 89 deals dropping 19 kobo to close lower at N3.61 per share.

Investment and Allied Assurance Plc occupied the third position with 126.388 million shares exchanged by investors in 432 deals at N137.763 million easing 5 kobo to close at N1.09 per share.

Goldlink Insurance Plc followed from a distance with 78.407 million shares equivalent to N164.006 million exchanging hands in 81 trades while Platimum Habib Bank Plc trailed with 67.691 million shares valued at N1.895 billion in 698 deals adding 5 kobo to close at N28.50 per share.

Other volume drivers in the market last Friday include Fidelity Bank Plc 46.161 million shares, Sterling Bank Plc 37.767 million shares, First Inland Bank Plc 35.013 million shares, Intercontinental Bank Plc 32.951 million shares and United Bank for Africa Plc 29.610 million shares.

In all, investors staked N12.740 billion on 1.237 billion shares in 13,658 deals as against 983.537 million shares worth N17.294 billion in 17,112 trades recorded the previous day.

Analysis of the two days’ record showed that though the transaction rose when compared to the previous day’s, the market value, and number of deals which measures investors’ interest in shares dropped, an indication that investors are still treading cautiously.—The Tide

Chinese fund manager pays $2m for lunch with Buffett

Omaha, Nebraska - A Chinese investment fund manager has won the chance to have lunch with US billionaire Warren Buffett, by bidding $2.1 million (R16 million) in the most expensive charity auction held on eBay.

Zhao Danyang of the Hong Kong-based Pureheart China Growth Investment Fund won the auction, which ended on Friday. The auction will provide a significant boost to the Glide Foundation, which receives all the proceeds from event.

The foundation provides social services to the poor and homeless in San Francisco. Denise Lamott, the spokesperson for Glide, said it operated on a $12 million annual budget.

“It almost feels like a miracle,” said the Glide Foundation’s founder, Cecil Williams. “We are amazed and ready to continue our work of breaking the cycles of poverty.”

Last year’s lunch brought in $650 100. Zhao and up to seven friends will dine with Buffett at the Smith & Wollensky steakhouse in New York.

The investment philosophy Zhao’s fund describes on its website is similar to Buffett’s approach of finding companies with an enduring competitive advantage.

Buffett, the chairman and chief executive of Berkshire Hathaway, is primarily known for his investing success. Berkshire owns more than 60 subsidiaries, including insurance, clothing, furniture, jewellery and candy companies, restaurants, natural gas and corporate jet firms.

He has major investments in leading companies such as Coca-Cola, Anheuser-Busch and Wells Fargo.

But Buffett is also known for his philanthropy. In 2006, he announced his plan to give away the bulk of his fortune of nearly $49 billion over time.

Most of his Berkshire stock will go to five charitable foundations, with the largest going to the Bill & Melinda Gates Foundation.

Lamott said eBay officials had confirmed that this year’s lunch with Buffett was the most expensive charity item the site had sold.

Buffett has been auctioning off lunches online for six years, but began auctioning the lunches for Glide off line in 2000. He offers only one lunch a year.

Williams called Buffett’s dedication to the charity lunches amazing. “Thank you, Warren Buffett, for your deep compassion and sensitivity that empower us to transform the lives of so many people in need.” - Busrep

Cost income ratio of Nigerian banks too high—Yomi Adeola

•Spend too much money buying all sorts of things that are not needed

Recently, Yomi Adeola, Managing Director Sterling Bank PLC had an interactive session with journalists in his office in Lagos and spoke on a wide range of issues in the banking industry in Nigeria.

Is Sterling Bank coming to raise more funds from the capital market, how much are you targeting and when should we expect this to happen?

We are looking at the September/October timing for going to the market. On the issue of how much capital we need, I am not a believer in too much capital, I imagine we would go for between N50 and N75 billion in capital for the kind of bank we want to run, I do not need N250 billion in capital, I do not need N300 billion in capital. Experience has also shown that those people who have raised huge capital have been unable to deliver the return on the capital. I will not mention names but we know banks that have raised N300 billion in capital and all they made today in profit before tax is N30 billion, that’s 10 per cent return, it’s not good, it’s not exciting. So why beat the drum and deceive the whole public to come and invest and at the end of the day, the return on equity is nothing to write home about? I know another one with about N180-200 billion capital, same thing.

If Sterling Bank at N25 billion capital is able to deliver between 30 and 40 per cent return, that’s better for investors than the one that is raising N300 billion and delivering 10 per cent. So you see, there’s this bandwagon effect in Nigeria and I think it’s madness, so if Bank A has raised N200 billion, I must go for N250 billion, Bank B has raised N50 billion, let me go for N300 billion; they are not looking at ratios anymore. This is capital in absolute terms or just air capital, capital is just in the air, it’s not working for you. Of what use is that kind of capital? So, by the time I am raising N50 to N75 billion, I should be able to predict the kind of return I can give on that capital and it will not be far away from the kind of return I am giving on the capital that I have today so that doing 20-25 per cent profit on my N25 billion, by the time I get to N100 billion, let it not be less than the same 20-25 per cent, otherwise I’m not being fair to my investors and I won’t be fair to the people I have taken money from. That’s my attitude to the issue of capital; it won’t be too high, raise what you truly need and also when you have too much capital, the tendency is for you to see waste. Look at the cost income ratio of Nigerian banks today, it’s just too high - they spend too much money buying all sorts of things that are not needed, I won’t name them, you know some of the things they buy. I don’t think I want to run that kind of bank.
Going to the market can’t just be for fun, what would you do with this capital you intend to raise?

First and foremost, we would like to get our technology right or should I say, improve on our technology; that is key. We want to do consumer banking big time. We really want to reach out to the consumers, the masses, the middle income earners. The way to do consumer banking is to deploy technology appropriately so we would be spending a lot on technology. Number two is to expand our branch network. Today, we have 100 branches, the level of sophistication in Nigeria is such that you still need brick and mortar, you still need to put branches all over. You don’t need to build branches that are too elaborate but you must have the branches so we would build the branches.

Don’t forget we have a major shareholder and this happens to be the largest bank in India-, the State Bank of India (SBI), we would partner with them, identify other locations outside Nigeria where we believe between Asia and Nigeria, we would be able to derive some synergy in partnering with SBI and having pockets of locations outside Nigeria so this is also a game plan and above all, our single obligor limit will go up because this is usually the percentage of your shareholders’ fund so these are the key areas we would be focusing on. We have about six subsidiaries that are profitable, doing good business; we would capitalise some of these subsidiaries that can do more. We have the Sterling Asset Management, they need more capital and we’ll give them more capital. We have Sterling Capital, we have a few subsidiaries that require more capital. We would also set up some additional subsidiaries for specialisation and we would also use part of this new capital for some of these initiatives.

With the mutual agreement between Sterling and ECOBANK to discontinue the merger, a lot of investors particularly people that bought your shares as well as your shareholders, would be worried that there were no indications in terms of the direction the bank is headed. Could you throw more light on this?

If a merger does not work or does not go through, it’s not because management does not want it, it’s because shareholders don’t believe they are getting value. At a time a merger is called off, shareholders don’t believe they are getting value. And that is what happened in this case. For the shareholders - what was on the table was not giving them enough value and they called it off, not management. Now, when you are calling off a merger, it means you are looking at the opportunity cost of moving on as Sterling than pursuing a merger. There must be something positive they see in Sterling moving on for them to have called the merger off. And for me, that thing is very clear, they see a bank with great potential; they see a bank that is beginning to put legacy issues behind and is beginning to do well.

They see the numbers, at least the quarterly numbers improving and they are telling themselves, ‘why should we go and play second fiddle? Why should we be bought cheap when the bank is doing well?’ So in terms of direction, there’s no other pointer to a positive direction than the numbers. Immediately the merger was called off, we published our half year results, much better than the half year result of the prior year. Management believes the third quarter result will further confirm and corroborate this. And by the time we get to the year end, we’ll be posting the kind of return on equity that would be among the top three in the banking industry. What other direction could be better than that?

What typically happens in most Nigerian banks is that people make so much noise and that has permeated the system that if you are not a noise-maker, it now appears as if you don’t know what you are doing. Whereas in many economies, it is not noise-making that determines success, it is numbers, it is customer satisfaction, it is employee satisfaction, it is shareholders’ satisfaction and I don’t have a doubt that we are on course in all these three areas.

In what particular area of business do you think Sterling Bank has an edge given the fact that former NAL Bank, of the five legacy institutions used to be an authority in investment banking?

Several things are happening in Sterling Bank at any given time, let’s start with capital market. You know we set out to focus on three areas in addition to several other areas: capital market activities, consumer finance and trade finance, these are the three primary areas. We have several other areas that we would talk about. Let me start with capital market activities. Several peer reviews have been done in the market and it’s been established that Sterling Capital is one of the three leading investment banking outfits in Nigeria today. In the past fifteen months, we’ve taken more than 23 companies to the market including at least six banks out of the 17 banks that have gone to the capital market to raise capital and this hasn’t stopped. We have in the pipeline, another five or six companies we are about to take to the market. So this is one area we set out to be a leading player and we’ve established beyond doubt that we are a leading player as far as capital market activities are concerned in Nigeria.

If I go into the area of consumer finance, we are making waves quietly. We are very dominant in the acquisition and sale of most of the flats in 1004 (Housing Estate). Today, there are many projects on the Lekki-Epe axis and we are giving mortgages to deserving Nigerians thereby changing the face of this economy, allowing the middle class to evolve once more. From mortgage finance, to asset base finance, cars, refrigerator name it. We did a promo on laptops that was a huge success. We are doing one now on generators and you would not believe the number of customers we have acquired through this generator promo. On a daily basis, they troop in because they are interested in financing. You see, developed economies survive on credits and we must introduce that here and that is what we are doing.

We are very active in consumer finance, we are going to do much more but I can tell you we are happy with what we are doing. You mentioned the issue of embassy collection, it’s not just one embassy, we collect for several embassies but in the nature of the contract that we signed, this is not a business we want to make too much noise about. But all the embassies that we collect for are happy with the bank. Now, collection transcends the private sector, we also do a lot of collections for government, including Power Holding Company of Nigeria (PHCN), FIRS, Lagos Water Corporation and many more.

The AutoReg in Lagos and other states are asking us to come and replicate what we did in Lagos for them and right now, we are in about three or four states. We are doing collections. We are very active in this area and if we are to move to the third area of focus, which is trade finance - trade is the main stay of the Nigerian economy; if you look across the water, you’ll see all the goods coming in- these goods are being financed by banks. We’ve financed a lot of imports for our customers and we set out to do this, we are doing it, we are getting more and more lines from international banks on a daily basis. We started with just about two banks- State Bank of India (SBI), they are our partners and the largest shareholders in the bank and I believe CitiBank.

Today, we have trade finance lines from about seven international banks to finance imports, so we are doing very well in this area too. We have moved away from just import finance. We are beginning to carve a niche for ourselves in the area of maritime business. The number of vessels we have financed in this bank in the last 15 months cannot be less than 25. We actually opened a maritime centre in Apapa where everybody who is interested in maritime business from vessel financing, to crude boats, and we have built the expertise in this area. If you are talking about oil and gas, there is a local content support fund. A few banks have been put together to do this and we are very happy to do this in this area. So for us, business is good and we keep on seeing more and more business opportunities in Nigeria as the economy is opening up, as the GDP is growing by the day, we are seeing opportunities.

By the time we add more capital, it can only get better but I must concede we haven’t made enough noise by Nigerian standards. And I think it’s a function of two things: one, banking ordinarily is supposed to be a conservative business. It’s not a business that you do by noise-making but here if you don’t make the noise; people believe you are not doing anything. So, we may not have a choice but to make some noise, but we would make whatever noise we are making within the professional ambit so that we would not go overboard as long as noise-making is concerned. The best selling point for any company is the number.

Just put the numbers on the table and every other thing would fall in place. In terms of products, we are dishing them out everyday; in terms of acceptability by the market, by the regulation, by the competition, we are getting fully on board. In treasury, they have a peer review that they do among themselves (all the treasuries of banks in Nigeria) and they did one recently. They would rate themselves and come up with the results and Sterling came out 4th of the 24 treasuries in Nigerian banks but these are not things you put in newspapers, so the treasurers of banks know themselves; they know where the good people are.

Are you challenged by the increasing need for training and more qualified personnel in the banking industry?

Banks come here first whenever they want to raid, whenever they are looking for good people, they say go to Sterling. We’ve been able to stem the tide because our people and staff are beginning to see a very good future and they are saying why should we go? There’s hope here we would stay. If anything, we are beginning to see the reverse; more and more people from the so-called big banks wanting to come to Sterling and we’ll hire some of them, we would because we also need to inject some fresh blood into the system and this would happen within the next few months. We would hire people from some other institutions. For now, we are happy with our size and like I told you in the beginning of this interview, banking is not about size, banking is about efficiency, banking is about return on investment, banking is about employee satisfaction, customer satisfaction, shareholders’ satisfaction, which is the ultimate.

Once you have satisfied employees, they would go all out to satisfy their customers. If your customers are satisfied, they would go all out to do the bulk of their business with you and this would translate into revenue and once the revenue is there, shareholders would be satisfied. When you satisfy the shareholders, what else would you be asking for? So we would not at this stage play the size game, we don’t believe that is priority. Priority today is to play the efficiency game, it’s to play the ration game, it’s to play the return game and we are playing that in a very calculating manner.

What is the message to your numerous shareholders who have endured till this moment and what would be the keyword to them at your AGM coming in about a fortnight?

Let me start by saying that it’s been proven in the world of business that you stabilise mergers in three years, it’s usually between three to five years to have relative stability. We’ve done two and a half and we are happy to tell our shareholders that they have a stable bank. They have a bank whose capital is unimpaired by losses anymore. Once your capital is unimpaired, it means whatever profit you make you can declare a dividend. We’ve made enough profit by half year to be able to wipe off the goodwill on our books because we carry a goodwill of about N3 billion but we’ve made enough profit in half year to wipe it off. So all that is left is for the board or their board to decide on the amount on dividend they want to pay and it would be paid. There’s no reason whatsoever, why Sterling Bank would not be able to pay dividend by end of year three, which is December this year, absolutely no reason and once the dividend starts rolling in, it can’t stop, it would become a regular feature of the institution. And that is the message for shareholders. They have a stable bank, they have a stable management, they have a stable board, they have a bank whose profitability is increasing quarter by quarter and things can only get better for them. They have sacrificed enough and I believe that the returns on investment will start coming from the end of this year.

Given the fact that about 70 per cent of Nigerian households now spend more than 50 per cent of their income on food and given the high food prices and inflation, how do you operate in this kind of environment and how has this impacted on your business?

The cost of doing business in Nigeria is huge and I must tell you that it is very tough, you must be able to provide your own security, if you are in the banking industry, not only security for your branches, but as you move your cash from location to location, you must have heard what is happening in the East today, the bullion vans are being shot down using all sorts of gadgets and grenade to blow up bullion vans. You must generate your own electricity. You have ATMs and they operate on electricity so you can’t even say when you close you would shut down because customers want to use your ATM, so you generate your electricity, you know how much you pay for diesel these days.

Infrastructure remains the major problem in Nigeria and if you are talking about the cost of doing business, it is usually the cost of infrastructure. Any business for that matter would immediately transfer these costs to the consumer. So when people talk about interest rates in Nigeria, service charges, they can actually go down if the cost of doing business goes down but I don’t know when the cost of business would go down in Nigeria. So what we try to do here is to manage cost to the best of our ability. There are some that you can’t do anything about but the ones we can manage, we manage them and we also try as much as possible electronically, telephone and what have you, instead of wasting useful man-hour in traffic; diesel, there isn’t much we can do, security, there isn’t much we can do.

So when you look at top line of many banks in Nigeria, earnings are huge but by the time you look at the expense line, it’s so huge. But that is the point we are making that it affects the bottom-line and all you can do is to build efficiency into the system in every area where you can be more efficient. We have introduced electronic statements so our customers get their statements online. That reduces the cost of postage, paper and so on. We also have the SMS notification, whenever anybody does anything to your account; you are immediately advised by SMS whether it’s a debit or a credit, you’ll get that. We also have a situation where customers can access their accounts online, access their balances, do internal transfers, of course these would help in reducing the cost of telephone and making enquiries. But I think the government has a lot to do as far as infrastructure development is concerned in Nigeria and if they play their role, it’ll probably reduce the cost of doing business in Nigeria.

What is your assessment of the economy in the past one year, especially under the new administration, has anything changed at all?

Well, the economy has been doing very well at the macro level. GDP is on the increase, the amount in reserve is huge, the CBN has been able to play its role well in the area of fiscal policies; the price of crude has helped a lot even without anything. What is left is strategic direction. Strategic direction is the function of the government. Only a stable mind can give strategic direction; when you have presidency or gubernatorial elections with cases all over the place at the tribunals, when is the Supreme Court going to rule on this, there can’t be stability in terms of direction.

But I think we are getting to that tail end when we would be able to say okay, no more litigations so the president is there for four years, what next? I think the president needs to independently appoint competent people to his cabinet. A political cabinet will not augur well for any country. I think the president has the discipline, the focus, the education and what it takes to take serious decisions but I think his cabinet is questionable and this is a function of how the cabinet emanated, it’s a political cabinet. You could live with that for a year, maybe maximun18 months, then you start taking decisions that it’s enough of this political game. Let’s move this nation forward because history will not forgive me with all the resources at my disposal, with all the strong economic fundamentals. If you don’t have the right people to manage the economy as well as to take charge of governance, then we’ll be drifting. I think we’ve drifted a bit but I also believe they’ve done a few good things: they’ve reversed some of the questionable policies of the previous administration but you don’t keep on reversing for ever, you must apply the grace.

How about the performance of the banking industry?

The banking industry in terms of hype, we’ve seen a lot. In terms of real contribution, we’ve also seen a lot. People are able to work with Nigerian banks now and get mortgage facilities and buy houses…three years ago, middle income earners would not dream of owning their own houses because the Nigerian banking industry has been able to build capacity and they have capital. Also, some of the loans given out to oil and gas industry, the telecoms industry three, four years ago - those loans would be coming from international banks abroad. You have a situation where three, four banks today would syndicate multi-billion dollar transactions without going out. And foreign banks that didn’t want to look at Nigeria, foreign banks that would not come near the shores of this country four years ago, are now looking for banking license. Look at the growth in the stock market, look at the growth in the telecoms market, look at the oil and gas market, look at the price of crude:

Nigeria is an economy to be reckoned with in Africa. Every telecoms company is now interested in license here. Every serious bank wants a piece of the action even as far as Russia - the Renaissance are here and they are interested in doing more. Banks are lobbying to influence the Central Bank to relax the rule on foreign ownership - it means something positive has happened and I think the Nigerian banking industry has contributed a lot to the growth of the Nigerian economy in the last two years. The bulk of the growth to the Nigerian economy in the past two years has not been from oil, it’s been from non-oil sector; it’s because of the funding and financing and the role of banks in Nigeria and it’s not about to stop as I hinted you earlier…banks are looking for opportunities and this is how economies grow all over the world.

Deposit Money Banks are showing interest in micro finance…is Sterling thinking along this line or maybe acquiring any of the existing micro finance institutions?

Let me put it differently: We used to have SMIES whereby every bank must put 10 per cent of its PBT in SMIES. Whether truly this worked or not, we leave it to the judgment of history for we no longer have SMIES for several reasons. I personally believe it didn’t work because the banks did not have the expertise to do this equity investment. Two, most of the owners of these small scale enterprises are so afraid thinking that the banks would come and hijack their projects, so it didn’t work. So we resolved at the Bankers’ Committee level that instead of doing SMIES, let us put 5 per cent of our PBT into micro finance by partnering with state governments who would also put some equity. So whether you like it or not, for as long as you are making money, you must play a role in micro finance. Now, some banks would go into this heavily, some would do it at moderate level; it’s all about your strategy. I believe that banks should focus on the top side of the economy and leave that side to others so you create more employment, you diverse ownership and you make it easy for others to function. If as a bank you want to play a top role, you also want to be the one doing micro finance, you want to be jack of all trades, at the end of the day, you may end up being master of none. But play your role, whatever the percentage of your profitability you have put in to help them grow but in terms of running it or owning it 100 per cent, I’m not sure we want to do that now. I think we should leave that to others, the more, the merrier, let more people be able to play a role in the economic development of Nigeria. That is my view on that.

What kind of management structure do you run in Sterling Bank?

We are professionals first and foremost and professionals go by ideas and it’s the superior idea more often than not that is taken. We have three executive directors and a managing director. We have an executive management team of four; we meet on a monthly basis as executive management but we also have several other meetings like the ALCO, where treasury decisions are taken, like MPR, where profitability issues are discussed, Management Credit Committee (MCC), where credits are approved, we listen to ourselves as colleagues with experience in various places, with expertise in various areas, with diverse background, international favour; we have a representative of the SBI as part of the executive management - they bring best practices from other parts of the world, we bring best practices from here; we deliberate, we discuss but we yield to superior arguments, superior ideas, something that is in the best interest of the organisation.

What would you want to be remembered for at Sterling Bank?

Very simple! Someone who inherited a mountain of problems and within the shortest possible time, was able to level all these problems, turn challenges into opportunities, create an enabling environment for employees, somebody who was able to build an institution that has become the attraction of all stakeholders in the industry - employees, shareholders, regulators, staff and customers. I want to build an institution that everybody will be proud of and then I’ll have paid my dues. I’m passionate about doing that, it’s not easy but we are determined to do it.—Vanguard

Stability returns to stock market

There are indications that stability is returning to the stock market after a protracted domination of bears in the past few weeks as more stocks experienced price appreciation.

Although, analysts are of the view that the market remained weak in momentum, the market outlook at the end of last week portends the gradual return of stability as evidenced by the increase in the basis points of All Share Index as well as the continual reduction in the number of losers.

Reasons for the return of the bulls have also been mixed because of the coincidence in market recovery with the suspension of recapitalisation of capital market operators by the Securities and Exchange Commission (SEC).

Indeed, the bulls had staged a comeback on Thursday, a day after the decision by the SEC to suspend the recapitalisation exercise, prompting some market watchers to affirm that majority of the stockbrokers were actually overwhelmed by the need to source the N1 billion hitherto stipulated as minimum capital base for stockbrokers before December 31, 2008.

It was gathered that SEC’s reluctance to shift ground and the withdrawal of margin loans by the banks took a toll on the position of some stock broking firms who had to sell shares in their portfolios in order to meet the deadline.

One of the operators volunteered that, “stockbrokers do not have other assets apart from the shares they buy into their box, they contributed to the market downturn when they began to sell off these shares in order to meet the N1 billion capital base, but now that the decision has been suspended, things are beginning to look up because there is hope that they would remain in business”

At the close of trading on Friday, the Nigerian Stock Exchange (NSE) all share index increased by 205 basis points to close at 53,910.37 and market capitalisation inched up N234 billion from the previous day’s N10.482 trillion to N10.716 trillion.

Although, there is also an increase in the number of stocks closing flat, analysts noted that “it is too early to predict when the market will bottom out or reverse.”

The downward trend of the market had persisted in the past three months with the market capitalisation dropping further to N10.416 trillion and all share index of 53,366.53 points on Wednesday, June 25. On Thursday, June 26, 2008, the market was sort of re-jigged by new developments. Therefore, capitalisation moved to N10.4 trillion and all share index of 53,705.30 basis points.

This also had tremendous impact on the number of gainers on the price movement table as at Thursday, June 26 when 40 listed stocks made it to the gainer’s chart as against the 23 that gained on June 24. The tempo continued on Friday, June 27 with 66 listed stocks comprising mostly the blue chips appearing on the gainer’s table.

Akamobi ECM, managing director, Star Insurance Brokers Limited, said that the recapitalisation in the stock-broking firms forced the traders to chase every kobo that comes their way with the intention of adding to their funds for capitalisation.

He said that most of the stockbrokers have started buying stocks on the exchange resulting in the increase in the volume of transaction on daily basis.

For the first time in the week, banking sector stocks lifted the activities in the market, as Intercontinental Bank plc traded over 193 million units (representing over 30 percent of volume traded in the banking sector); though a huge proportion of the total volume traded was cross deals. Similarly, Investment and Allied Insurance plc (IAA) lifted the activities in the insurance sector, as it traded over 103 million units representing over 40 percent of volume traded in the insurance sector for the day.

C&I Leasing plc Friday released its audited full year result for the period ended January 31, 2008. Gross Earning grew by 64.78 percent to N2.658 billion, from N1.613 billion; PBT grew by 165.7 percent to N437.645 million, from N164.737 million, Profit Ater Tax also grew by 9.79 percent to N375.363 million, from N341.887 million, in the corresponding period of 2007. The company also proposed final dividend of six kobo. This result did not have positive impact on investors as the stock closed strongly on offer of over five million units.

Index was up by 64 basis points on 17,112 trades. Average size of trade was $8,664.67 with total value of $148.27 million. Market capitalisation closed at $89.87 billion.

Overall, there were 40 gainers and 58 losers and 55 unchanged. The banking sector led the volume chart followed by the insurance sector and both accounted for 89.97 percent of total volume traded.

Intercontinental Bank plc traded 193.70 million shares to top the overall volume chart. Other stocks that closed in the top echelon were Bank PHB, Investment and Allied Insurance, FCMB and Fidelity Bank plc.- BusineesDay.
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