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”African banks in Position of strength”

”African banks in Position of strength”

Negative sentiment around Western banks continues to affect financial counters on many sub-Saharan equity markets, including South Africa, but the market mood is often at odds with African banking realities, according to analysts’ reports from Imara, the pan-African financial services group. Imara Asset Management CEO John Legat notes: “We have seen banking results and management statements

released in Egypt, Nigeria, Kenya, Mauritius and Botswana. There’s no sign of any credit crunch in any of these countries, which is what we had expected, although Nigeria’s inter-bank market is becoming less liquid.” Legat believes banks in most parts of the world will try to de-leverage until their capital is adequate to support their asset bases.

But “banks in Africa start from a position of strength where there has been little bank lending to begin with and hence no real damage from the global credit crunch”. He adds: “In Africa we don’t have a banking system that requires repair.” Imara monitors key sectors to assist international fund managers and professional investors as it markets and manages several funds with positions in African equities. Jonathan Chew, the portfolio manager of the Imara Nigeria Fund, says in his Nigerian market review: “In common with the rest of the world, inter-bank rates have risen. “The main asset quality problem faced by Nigerian banks is a home-grown one stemming from excess margin lending to people for them to bet on the stock market.”

A few of Nigeria’s top-tier banks have been caught with large margin loan exposures, which are small enough for the country to deal with since no bank in Nigeria is too big to fail. But, in general, the rest of the Nigerian banks are in good health in comparison with some northern hemisphere institutions. Imara says most of Nigeria’s big banks have now reported quarterly earnings to the end of December 2008. The laggards were UBA and First Bank where net profits grew by 17.8% and 26% respectively. Ahead of these were Fidelity Bank (+32%), Zenith Bank (34%) and PHB (+38%). Leading the pack was Diamond Bank (+65%). Across the continent in East Africa, the banks are also doing well. “The region’s banks themselves largely fund themselves from deposits and when they do lend, interest rate spreads are wide,” says John Legat.

According to Imara’s East Africa fund report: Equity Bank, a micro-lending specialist, increased after-tax profits by 107%. Net loans and advances rose 102% with deposits up 59%. The loan to deposit ratio is 87.6%. Asset quality is being maintained. Non-performing loans remain a stable 6%. Net profit at Kenya Commercial Bank (Kenya’s largest bank) was up 41%. Loans rose 45.5% with deposits up 34.2%. The loan-to-deposit ratio rose from 68.1% to 73.8%. NIC Bank reported a net income increase of 39%. Deposits increased by 42% and loans by 35%. In the throes of a change in strategy, Barclays Bank of Kenya posted a 12.5% increase in profits after tax. To illustrate the contrast with the doom-laden mood in Western banking circles, Legat spotlights the latest results from the Mauritian bank, MCB. He points out: “MCB grew after-tax earnings by 36.5%, but predicted that the second half of the year would be ‘more subdued’. That was as negative as they could get.”  

 President Umaru Yar’Adua and Vice-President Goodluck Jonathan are billed to return to Ekiti State for another round of campaign

President Umaru Yar’Adua and Vice-President Goodluck Jonathan are billed to return to Ekiti State for another round of campaign for the Peoples Democratic Party governorship candidate in the April 25 rerun election, Mr. Segun Oni, according to the Punch newspaper .   ‘’A competent party source in Lagos said that the second leg of the President’s campaign in the state was being planned to be a much more elaborate rally than what the party had in Igede-Ekiti on Saturday. The source, who is a member of the party’s Board of Trustees, said that the rally might hold a few days before the rerun poll ordered by the Court of Appeal on February 17’’.

public outcry over Dimeji Bankole’s statement that soldiers would be deployed in Ekiti State

The public outcry over House of Representatives Speaker Dimeji Bankole’s statement that soldiers would be deployed in Ekiti State for the April 25 governorship rerun election grew yesterday. An interest group the Conference of Nigeria Political Parties (CNPP) and the Non-Academic Staff Union of Universities (NASU) said the statement evoked memories of the “rape of the country” by military adventurers. Bankole has claimed that his remark was taken out of context. Calling for Bankole’s prosecution in a letter to the Attorney-General of the Federation (AGF) and Minister of Justice, Mr. Michael Aondoakaa (SAN), EDA accused the Speaker of committing electoral offence by his statement. The group said the Speaker should be prosecuted for wilful breach of Section 98 (1) of the Electoral Act, 2006.

The leader of the Movement for the Survival of Ogoni People (MOSOP),

The leader of the Movement for the Survival of Ogoni People (MOSOP), Mr. Ledum Mitee, has urged the Federal Government to find a replacement for Shell Petroleum Development Company (SPDC) for oil exploration in Ogoniland. He said since the government had recognised the wishes and desires of the Ogoni people, a replacement should be made to continue with the exploration. Mitee said:”We want a replacement. It must not be Shell, because the relationship between the company and Ogoni people has broken down. It must not be Shell again. “The company requires legal and social licence to operate in Ogoni land. But the Ogoni people have withdrawn the social licence. That is why Shell cannot operate in the area.” The MOSOP leader lamented that although Ogoniland had the largest deposit of petroleum resources in the country, “our people have yet to start reaping the benefit”.

Maurice Iwu and INEC to be joined as parties in a suit

A federal high court in Abuja on Monday granted an application brought by chairman of the Independent national Electoral Commission (INEC), Maurice Iwu and the commission to be joined as parties in a suit seeking the probe of Iwu over an alleged N25 billion fraud. The Conference of Nigeria Political Parties (CNPP), which instituted the suit, is asking for an order of mandamus compelling the Economic and Financial Crimes Commission (EFCC) to prosecute Iwu over allegations of fraud, contract splitting, diversion of public funds and obtaining money under false pretence in the award of contracts for the 2007 general elections.  Justice Adamu Bello had on March 11 granted leave to the plaintiffs to place the request before the court. The plaintiffs in the suit, Balarabe Musa (CNPP Chairman), Osita Okechukwu (Publicity Secretary) and two others, had, through their counsel Shola Egbeyinka, asked the court to compel the EFCC to prosecute Iwu over allegations that he misappropriated over N25 billion belonging to the commission.

 Fayose granted the permission to travel abroad for medical treatment

Former governor of Ekiti State, Mr. Ayodele Fayose, was on Monday granted the permission to travel abroad for medical treatment by Justice Tijani Abubakar of a federal high court in Lagos. The approval came just as the court dismissed the opposition of the Economic and Financial Crimes Commission (EFCC) to Fayose’s request. In his ruling, Justice Abubakar held that the ex-governor had placed before the court, sufficient materials to enable the court exercise its discretion in his favour. According to him, “the counsel for the EFCC, Mr. Rotimi Jacobs, did not controvert the fact in the medical report and I cannot agree that this application was a design to slow the pace of trial. “I do not think that it is proper to refuse the application.” Justice Abubakar, however, ordered that Fayose must return to Nigeria within 50 days from the day of the ruling. Trial is expected to continue in the matter on June 2. It will be recalled that the EFCC charged Fayose with a 51-count charge of allegedly laundering of about N1.4 billion of the state’s funds.

Nigerian businessman purchase the copy of an autobiography of the Asantehene

A Nigerian businessman has paid $350,000 in cash to purchase the copy of an autobiography of the Asantehene, Otumfuo Osei Tutu II at the launch of the book. The businessman, Sir Dr Chief Gabriel O. Igbenidion was the special guest at the launch last week of the book on the Asantehene’ 10 year reign and his achievements during the period. He also placed an order for 50,000 copies of the book to be distributed to schools in Nigeria. The 96-page book titled, “Otumfuo Osei Tutu II: The King on the Golden Stool” was written by Mr. Kojo Yankah, a journalist, former editor of the Daily Graphic and founder of the Africa University College of Communication (AUCC).

Petrol tanker has crashed into a bus carrying a group of women to a church service

A petrol tanker has crashed into a bus carrying a group of women to a church service in Nigeria killing 19 people.  The minibus was pulling out of a petrol station when it was hit by the tanker in the central Nigerian state of Benue. The women were on their way to a Palm Sunday church service. Seventeen people were killed instantly and two more died in hospital later. More than 4,000 people die in accidents every year in Nigeria, according to official figures. Police in Benue said the driver of the petrol tanker was in a critical condition in hospital.