Banking Briefs
–
ZENITH Bank Plc on Monday, October 26, presented their nine months results ended September 30, 2014, recording a profit before tax of N86.8 billion and profit after tax of N71 billion. The results showed that Zenith Bank ended the nine months with gross earnings of N274 billion in 2014, up by seven percent from N255 billion posted in the corresponding period of 2013.
Interest income grew by 11 percent from N191 billion to N213 billion, while net interest income rose from N139 billion to 143 billion. Impairment charges declined from N5.9 billion to N4.8 billion. However, personnel expenses rose from N39 billion to N50 billion, while operating expenses fell from N59 billion to N55 billion.
Consequently, the bank ended the period with a profit before tax of N86.8 billion, showing an increase of 8.5 percent above the N80 billion reported in 2013. The profit after tax improved by 5.9 percent from N67 billion to N71 billion. The brand equity of Zenith Bank remained attractive as customers’ deposits grew by 13 percent from N2.034 trillion to N2.309 trillion.
As the bank is recording more deposits and profit, it is also increasing its lending to customers. The banks’ loans and advances rose by 37 percent from N1.109 trillion to N1.526 trillion. It shareholders’ funds stood at N524 billion, up from N483 billion, while total assets grew by 19 percent from N2.853 trillion to N3.408 trillion.
Market operators and analysts said the performance shows the impact of Peter Amangbo, its executive director, who took over in June from Godwin Emefiele, who is now the governor of the Central Bank of Nigeria, CBN.
As an executive director of the bank for nine years, Amangbo was responsible for the supervision of corporate and commercial banking, corporate finance, trade services and all the subsidiaries of the bank. He was said to have a demonstrable ability to motivate, mentor and lead talented senior professionals and to direct cross-functional teams. He was part of the team that drove the strategic planning and successful execution of positioning the bank as one of the best in the country. His leadership skills continue to make significant contributions to the bank’s growth.
–
CBN Restricts Banks from Borrowing Abroad
THE Central Bank of Nigerian, CBN, is worried over the increase in borrowings foreign lines of credit and issuance of foreign currency denominated bonds (Eurobonds) by commercial banks. To curb it, CBN has placed some restrictions on the raising of such funds by banks. The bank directed that the aggregate foreign currency borrowing of a bank excluding inter-group and inter-bank borrowing should not exceed 75 percent of its shareholders’ funds unimpaired by losses.
The CBN stated this in a letter posted on its website on Monday, October 26, titled: “Prudential Regulation for the Management of Foreign Exchange Risks of Banks,” signed by Tokunbo Martins, its director of banking supervision. The letter addressed to all banks, noted that the measures were part of prudential and hedging requirements to mitigate risks in the banking system and also to avoid losses that could pose material systemic challenges.
In terms of the prudential measures, the apex bank explained that the 75 percent limit supersedes the 200 percent specified in Section six (6) of the guidelines for foreign borrowing and for on-lending by Nigerian banks issued on November 26, 2001. The CBN stated that the Net Open Position, NOP, long or short of the overall foreign currency assets and liabilities taking into cognisance both those on and off-balance sheet should not exceed 20 percent of shareholders’ funds unimpaired by losses using the Gross Aggregate Method.
Also, it directed banks whose current NOP exceeded 20 percent of their shareholders’ funds to bring them to prudential limit within six months. “Banks are required to compute their monthly NOP using the attached template. The current NOP limit of one per cent of shareholders’ funds has been renamed as Foreign Currency Trading Position. This will continue to subsist in line with guidelines issued by the CBN. Banks are required to have adequate stock of high-quality liquid foreign assets i.e. cash and government securities in each significant currency to cover their maturing foreign currency obligations. In addition, banks should have in place a foreign exchange contingency funding arrangement with other financial institutions,” it stated.
In terms of hedging and other requirements, the apex bank stipulated that banks should borrow and lend in the same currency (natural hedging) in order to avoid currency mismatch associated with foreign currency risk. “The basis of the interest rate for borrowing should be the same as that of lending i.e. there should be no mismatch in floating and fixed interest rates, to mitigate basis risk associated with foreign borrowing interest rate risk. With respect to Eurobonds, any clause of early redemption should be at the instance of the issuer and approval obtained from the CBN in this regard, even if the bond does not qualify as tier-2 capital. Banks are required to adhere to the provisions of this circular with immediate effect.”
— Nov. 10, 2014 @ 01:00 GMT
|
Tags:
