Foreign investment outflows rise, says NSE

Foreign investment outflows rise, says NSE

Sunday, 29 March 2015 / No Comments

The flow of foreign divestments compared against investments has increased in recent period as edgy foreign investors appeared to ignore the significant undervaluation of Nigerian equities and the new earnings season to sustain negative foreign portfolio investment trend.

The latest Foreign Portfolio Investment (FPI) report of the Nigerian Stock Exchange (NSE) indicated that there was “significant increase in foreign portfolio investment outflow”. The report showed that nearly three-quarters of the transactions on the Nigerian stock market were done by foreign investors during the period, highlighting the dominant negative trend orchestrated by the foreign divestments.

The report, obtained at the weekend, showed that foreign portfolio investment outlook has so far this year been negative, with year-to-date deficit of more than N32 billion. The latest available data were transactions in February 2015.

According to the NSE, foreign outflows totalled N81.60 billion last month as against inflow of N52.35 billion, indicating a significant increase on the downtrend that started the year when foreign portfolio outflow was N51.08 billion against inflow of N48.03 billion.

Year-to-date, total foreign inflow stood at N100.38 billion compared with outflow of N132.68 billion, representing net deficit of N32.3 billion. The report underlined concerns that foreign investors were downsizing their portfolios. Nigeria recorded negative net foreign portfolio position of N154.14 billion in 2014 as against a positive net position of a modest N20.48 billion in 2013.

The latest report also showed continued dominance of the foreign investors in the Nigerian market with foreign transactions accounting for 72.61 per cent of total transactions in February compared with 27.39 per cent contributed by domestic investors. Foreign investors had contributed 52.24 per cent while Nigerian investors accounted for 47.76 per cent in January.

Altogether the proportion of foreign transactions to domestic transactions so far this year stood at 62.28 per cent and 37.72 per cent respectively.

The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers. Nigeria presently operates a mono stock exchange, which makes the NSE the sole gateway to the nation’s stock market and the NSE’s benchmark indices, the country indices for Nigeria.

The NSE report used two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.

Amid concerns that increased foreign divestments and resultant pressure on the national  currency, the Central Bank of Nigeria (CBN) recently reassured that it would not impose any restriction on the current financial market’s regime of “free entry, free exit”.

But the CBN said in spite of the pressure, the apex bank would not resort to imposition of capital control, which last vestiges were removed in 2009.

Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, said capital control is not an option in the bank’s fiscal and monetary management.

According to him, Nigeria wants to maintain its current status of a “free entry, free exit” market, where foreign investors will not be impeded in their legitimate decisions to invest their funds in the country and also to take profits, repatriate their dividends and capital gains or outright divestment.

The 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014, representing a net deficit of N154.14 billion. In 2013, total foreign inflow stood at N531.26 trillion compared with outflow of N510.78 trillion, leaving a positive balance of N20.48 billion.

The report showed a notable spike in foreign transactions, although the negative colouration indicated that the propensity was towards divestment rather than investment. Total foreign transactions rose by 52.5 per cent to N1.54 trillion in 2014 as against N1.01 trillion in 2013.

Meanwhile, foreign investors remained the dominant bloc at the Nigerian stock market. Foreign transactions accounted for 52.52 per cent of total transactions in 2014 while domestic investors accounted for 42.48 per cent. In 2013, foreign investors had accounted for 50.80 per cent while Nigerian investors accounted for 49.20 per cent. Domestic investors traded N1.137 trillion in 2014 as against N1.009 trillion in 2013.

Market analysts said investors were anxious about Nigeria’s macroeconomic and monetary outlook in the light of the declining global oil prices and rising economic risks. They also cited political risk.

Skye Bank declares N102b gross earnings in third quarter

Skye Bank declares N102b gross earnings in third quarter

Tuesday, 29 October 2013 / No Comments

SKYE Bank Plc leveraged on its increasingly efficient cost management and stable market share to optimize profitability in the third quarter as gross earnings rose to N102 billion within the nine-month period, from N94 billion in the corresponding period in 2012.
   The bank’s net interest margin increased by 12 per cent from 47 per cent to about 59 per cent underlying the success of its focus on core commercial banking operations and investments in services delivery.
    Interim earnings report for the third quarter ended September 30, 2013, which was prepared in compliance with the International Financial Reporting Standards (IFRS), showed that the bank sustained steady growth in top-line earnings and made impressive growth in core banking profitability but its net bottom-line was constrained by regulatory costs.
    The nine-month report showed that while interest income grew by 13.5 percent, net interest income rose by 42.04 per cent. Net interest margin, which measures the profitability of the core banking operations, had increased from 47.08 per cent in third quarter 2012 to 58.88 percent in third quarter 2013.
   The strong core profitability muted the adverse impact of industry-wide cost headwinds on the net bottom-line of the bank. Various regulatory policies and tightened liquidity including the introduction of 50 percent Cash Reserve Ratio (CRR) on public sector deposits have generally put pressure on profitability margins of banks.
    The group results showed that gross earnings increased to N102.04 billion in 2013 as against N94.13 billion in comparable period of 2012. Interest income had increased from N76.41 billion to N86.76 billion. Net interest income rose from N35.97 billion to N51.09 billion. Group operating profit also rose by 21.6 per cent from N50.79 billion to N61.74 billion.
    However while depreciation and amortization dropped from N3.92 billion to N3.46 billion, other operating expenses-including regulatory costs and fees, increased from N 7.19 billion to N33.89 billion. This resulted to an increase in total operating expenses to N47.17 billion in 2013 as against N34.24 billion recorded in comparable period of 2012.
   With these, profits before and after tax stood at N14.56 billion and N11.65 billion respectively.  It had recorded pre and post-tax profits of N16.55 billion and N13.23 billion in 2012. With earnings per share at 88 kobo, the net profit still shows robust return outlook for Skye Bank. Earnings yield at current market price is more than 19 per cent.
  Commenting on the results, Group Managing Director/Chief Executive Officer, Kehinde Durosinmi-Etti, said the results have demonstrated the capacity of the Bank to sustain continuous improvement in major performance indices.
According to him, the moderate growth was commendable in the context of the several regulatory policies and tightened liquidity, which has constrained profitability margins across the industry.
    He noted that with the tightened regulatory policies, increased levies and general operating costs, the Bank will continue to improve on its processes and cost reduction strategies while it continuously explores other ways of generating revenues and enhancing value for shareholders.
   He said the bank would continue to deepen existing relationship with its customers by providing convenient and innovative service that is tailored towards their business needs.
    “We will use more of our electronic platforms and distribution channels, while we invest more in technology to serve our customers better. Our customers will continue to experience secure and convenient service with our newly launched Customer Service Charter, which was pivoted on transparency, accessibility accountability and reliability,” Durosinmi-Etti said.
    He pointed out that as part of efforts to continuously use technology in improving operational process and providing exceptional service; the bank is currently upgrading its core-banking application software (Flexcube) which involves the migration from Flexcube6.0 to the latest technology which is Flexcube12.0 version.