Banking and Finance

Daily Market Update –September 16, 2013

Trading activities at the Nigerian Stock Exchange (NSE) was bearish, yesterday, as market capitalisation of equities depreciated by 0.65% or ₦75 billion to close at ₦11.42 trillion, from ₦11.49 trillion.

Also, the NSE’s All-Share Index fell by 0.65% or 236.19 basis points to close at 35,861.88 points.

With the exception of the NSE-ASeM, which closed flat at 962.31 basis points, all other indices closed lower.

Failed Banks: NDIC Recovers ₦24.68b From Debtors

The Nigeria Deposit Insurance Corporation (NDIC) said it recovered, in 2012, a cumulative sum of ₦24.68 billion from debtors of Deposit Money Banks that were liquidated by the Central Bank of Nigeria.

The ₦24.68 billion represents an increase of ₦2.42 billion over the ₦22.26 billion recovered in 2011.

It also said that a cumulative debt sum of ₦42.90 million was recovered from the debtors of closed microfinance banks in 2012, as against the ₦13.48 million realised in 2011.

Decline in External Reserves: CBN Dismisses Claims

The Central Bank of Nigeria (CBN) has dismissed claims that the nation’s external reserves were experiencing sharp decline, adding that the current value of $46 billion showed that the fundamentals of the economy remained strong.

Sanusi Lamido Sanusi, the CBN Governor, said this, on Monday, at the opening ceremony of the regional course on reserves and foreign exchange management.

Naira Weakens Further on Tight Dollar Supply

Despite attempts by the Central Bank of Nigeria to ensure that the naira continues to increase in value, the Nigerian currency weakens further on the back of strong demand for the dollar.

The naira had fallen to ₦163.6 to the dollar on Wednesday on the interbank compared with ₦162.95 a dollar the previous day.

According to a Reuters report, dealers said limited dollar supply from oil companies had weakened the naira along with the central bank’s decision, so far, not to sell dollars directly to lenders.

Equity Market Capitalisation Plunges Further

Trading activities on the floor of the Nigerian Stock Exchange (NSE) plunges further on Wednesday, with measuring parameters losing marginally.

The NSE market capitalisation of the listed shares depreciated by 0.1% or ₦5 billion from ₦11.496 trillion to close at ₦11.491 trillion on Wednesday.

Similarly, the NSE’s All-Share Index dropped by 0.1% or 15.26 units from 36,230.83 basis points to 36,215.57 points.

AMCON seeks buyers for Enterprise Bank

The Assets Management Corporation of Nigeria (AMCON) has formally invited interested buyers to express interests in acquiring its 100% stake in Enterprise Bank Limited, one of the three banks nationalised by the Federal Government in 2011.

The three banks that were nationalized in 2011 are; Afribank, Spring Bank and Bank PHB. AMCON then recapitalised them and changed their names to Mainstreet Bank, Enterprise Bank and Keystone Bank, respectively. AMCON holds the non-performing assets of troubled banks.

NDIC: Banks granted ₦8.15t loans in 2012

According to the Nigeria Deposit Insurance Corporation’s annual report and statement of account, the total loan portfolio of the banking sector rose by 12.10% from ₦7.27trillion in 2011 to ₦8.15trillion in 2012,

In the report, the corporation noted that inspite of increase in the loan portfolio, the industry’s volume of non-performing loans declined significantly by ₦73.98billion or 20.55% from ₦360.07billion in 2011 to ₦286.09billion in 2012.

Debt Accumulation: A Risk for the Future?

In the face of tight financial and monetary constraints, governments resort to various fundraising measures from development organisations and developed countries with the aim of stimulating economic growth. However, the redemption and interest repayments have not always taken place on schedule as a result of endogenous problems. Research reveals that advanced economies are at risk of significant and prolonged reductions in economic growth when public debt reaches levels of 90% of Gross Domestic Product (GDP).