Ecobank Nigeria, a member of the pan African banking Group has concluded plans to host its first Regional Trade Conference. The virtual forum with the theme “Facilitating Regional Trade in the emerging AFCFTA era” is slated for the 22^nd of September.

The conference, which will feature presentations and panel discussions by highly experienced subject matter experts and thought leaders in relevant industries, will provide an opportunity for exporters and importers within Africa to engage, creating a marketplace experience.

The Ecobank Nigeria ‘Africa Trade Conference 2020’ earlier slated for March was postponed due to the lockdown restrictions following the outbreak of the COVID-19 pandemic. Announcing the new date and movement of the conference to an online platform in line with current realities, Sunday Abah, Head, Trade Finance, Ecobank Nigeria stated that due to its unrivalled footprint across Africa, Ecobank is uniquely positioned to facilitate cross border trade within the region leveraging its comprehensive trade solutions and various payment methods available across its network within Africa.

According to him, “Ecobank’s unique intra-Africa trade solutions enable settlements of international transactions and mitigation of payment risk while providing regional solutions such as issuance of payment guarantees to exporters without the need for a letter of credit and its related costs to the importer. Ecobank works closely with clients in structuring transactions, settlements, financing and risk mitigation” he noted.

Further, he said “Our trade products and solutions are designed around two broad areas; trade finance and trade services. Trade Finance enables our customers benefit from adequate and well mitigated credit facilitation in the area of Import finance, export finance, bill discounting, trade loans, distributor finance, payables and receivables finance, structured trade and commodity finance amongst others while our trade services, offer our customers the advantage of speedy turn around and error free processing of their import letter of credits, import collections, avalised bills, Customs bonds, export collections as well as their local purchase orders and payment invoices, via our electronic trade platforms OMNI e-Trade and OMNI eFSC (electronic financial supply chain).

The Ecobank Regional Trade Conference, which will be moderated by Mr. Tedd George, the Founder and Chief Narrative Officer of Kleos Advisory, UK is privileged to have as its Special Guest of Honour, Mr. Segun Awolowo, Executive Director/ Chief Executive, Nigeria Export Promotion Council. Notable speakers and facilitators across the globe are also expected at the event.

As the economy gradually reopens amidst the impact of COVID-19 in the country, Stanbic IBTC Holdings PLC, a member of Standard Bank Group, has urged vital players in the education sector to create and explore possible collaboration opportunities.

Education has been one of the sectors severely affected by the coronavirus pandemic. Learning institutions have had to deliver lessons to students with varying levels of successes. However, some could not hold due to lack of infrastructure.

A few of the gaps in the education sector include requisite teachers’ training, lesson delivery, curriculum content and school infrastructure, and these provide an opportunity for collaboration in the education sector.

Remy Osuagwu, Executive Director, Personal and Business Banking, Stanbic IBTC Bank PLC, however, urged parents/guardians to give their children the best education, which they deserve regardless of the current challenges. He noted that good education with no financial interruptions is a significant legacy for a child and parents must invest in their wards’ education while kick-starting their financial journey.

According to him: “The COVID-19 pandemic was unprecedented, but it has reinforced the need to plan for the future of our children. Early planning helps to take the financial pressure off parents in the years to come; and in times like these, parents must ready to welcome opportunities that will amplify the value of their children’s education.”

Although some institutions successfully employed technology to make delivery of content through TVs, radios and WhatsApp groups, infrastructure deficit, and lack of electricity in the country pose a considerable challenge to the efforts being made.

“As a foremost financial institution that understands the importance of protecting a child’s future by saving for their education, the Stanbic IBTC Children Education Savings Scheme – CHESS account enables parents /guardians to set up and manage their child’s account just the way they want,” Remy said.

He added that this scheme is available for children between ages 0 and 17 years with additional benefits for parents/guardians who already have a Stanbic IBTC bank account. He said: “Asides paying an interest rate of 1 per cent above the interest rate earned on a savings account, and the CHESS account can easily be opened with a minimum opening deposit of N2,000.”

Requirements needed to open the CHESS account include a duly filled opening form, parent’s Valid ID, child’s birth certificate or international passport as well as two passport photographs of both parent and child.

Managing Director, Development Bank of Nigeria (DBN), Tony Okpanachi has commended the setting up of the MSME Academy, an initiative of the African Union Development Agency – AUDA-NEPAD in partnership with the Ecobank Group.

Okpanachi who was speaking at the virtual launch of the first Pan-African MSME Academy said the AUDA- NEPAD and Ecobank partnership must be lauded as the entrepreneurial potential and critical role of MSMEs in economic growth and development in Nigeria is clear. He noted that DBN will continue to collaborate with financial institutions to assist them with all necessary support to play their role in the economy.

In his presentation titled: “How MSMEs can access funding – opportunities from financial Institutions/banking sector”, Mr. Okpanachi, said to be bankable, the MSMEs should have accurate financial statement, collaterals, good credit history, viable business model and sound corporate governance, listing the sources of funding to include equity, grants and credit.

Also speaking, Managing Director, Ecobank Nigeria, Patrick Akinwuntan  pledged the bank’s support for small businesses operating in the country, stressing that the micro, small and medium enterprises (MSMEs) sub sector remains the most affected by the COVID-19 pandemic and needs support in the revamping of the nation’s economy.

Akinwuntan maintained that MSMEs are the drivers of post COVID-19 economic recovery for Nigeria, noting that the sub sector should take advantage of technology, financial services, and support from the government to drive the survival and growth of their businesses.

Further, Mr Akinwuntan said the MSME Academy which is an initiative of the African Union Development Agency – AUDA-NEPAD in partnership with the Ecobank Group provides easy access to practical training and resources on financing opportunities in various countries in Africa, how to build a digital presence for businesses and how to adapt business operations in the era of the COVID-19 pandemic.

In his words, “ as an MSME friendly bank, we have been helping them with capacity building; providing simple and easy access to loans  in various sectors including agriculture, creative industry, healthcare and commerce amongst others; access to markets via our e-commerce solutions and simple but robust digital platforms for collections and payments. We have also provided a channel to enable MSMEs to open various accounts via self-service on our webpage. I encourage all MSMEs in the country to avail themselves of this opportunity to grow their business. ”

Representing AUDA-NEPAD, Amine Idriss Adoum, Director, Programme Delivery & Co-ordination, explained that the MSME Academy aims to build the capacities of MSMEs across Africa through a combination of relevant content library, a network of institutions specialized in MSME support such as incubators and accelerators, and a community of peers, mentors, and advisors.

He noted that  the key objectives of the academy is to radically expand access to finance by aggregating smaller financial institutions such as micro-credit institutions and credit unions that have access to micro-enterprises, standardising their processes, and building trust in their capabilities.

“The MSME Digital Platform is a one-stop-shop for all MSMEs across Africa to access all these three programmes which jointly address MSMEs’ challenges with access to capacity building, markets, and capital”. He explained.

The first Pan-african MSME Academy is open to Medium, Small and Micro Enterprises in Nigeria and across Africa . The programme provides support to African MSMEs and is structured along three pillars, namely:  the MSME Academy, MSME Marketplace, and MSME Financing Support Programme to be delivered through an MSME Digital Platform.

The Academy provides easy access to practical training and resources on financing opportunities in various countries in Africa, how to build a digital presence for businesses and how to adapt business operations in the era of the COVID-19 pandemic.

It also offers free access to market intelligence, mentors with a diverse experience and assisting with access to funding opportunities.

Access Bank Plc released its H1-20 earnings recently which revealed that the bank recorded a marginal decline in profitability. On the EPS of NGN1.73 (-8.9% vs. H1-19), the bank’s board has proposed an interim dividend of NGN0.25/s (H1-19: 0.25/s), which equates to a yield of 3.9% based on the closing price of NGN6.40 as of the 3rd of September 2020.
The bank recorded an interest income decline of 9.6% y/y to NGN246.72 billion in the period, pressured by the decline in income from investment securities (-31.4% y/y to NGN74.00 billion).

According to Cordros Capital, the decline in income from investment securities was expected given increased capital allocation to risk asset creation given the CBN’s LDR policy, as well as the precipitous decline in yields on assets from the prior year.

This decline was steep enough to offset growth in other contributory lines, as income from loans and advances to customers (+0.3% y/y to NGN160.61 billion) and banks (+7,598% y/y to NGN6.72 billion), as well as cash and balances with banks (+11.5% y/y to NGN5.39 billion) all expanded over the period.
Interest expense expanded moderately over the period, advancing by 2.3% y/y to NGN120.52 billion, with the most pressure exerted by interest on deposits from financial institutions, which rose by 48.8% y/y to NGN34.07 billion, and offset the declines from  deposit from customers (-11.6% y/y) and debt securities (-31.3% y/y).

The bank seems to have now optimised its deposit base and is taking advantage of the synergy with Diamond bank, as cost of deposits declined by 27.9% from the Q4-19 standalone period to the Q2-20 period. While there was a moderate growth in expense on deposits from customers q/q in Q2-20 (+4.2%), the run rate would still be well below expense in 2019FY.
Non-interest income grew by 194.5% y/y to NGN138.85 billion, supported by strong growth in income from investment securities (3,152% y/y to NGN134.84 billion), primarily driven by derivative instruments, which offset the substantial FX revaluation loss recorded (+988.7% y/y to NGN57.6 billion).
Operating expenses increased substantially during the period by 40.0% y/y to NGN174.29 billion, given the effects of the consolidation with Diamond bank. Consequently, all major contributory lines recorded spikes, with regulatory charges – AMCON levy (+56.5% y/y to NGN35.44 billion) and NDIC premium (+28.8% y/y to NGN7.54 billion) –, personnel expenses (+16.0% y/y to NGN36.25 billion), and other expenses (+49.2% y/y to NGN77.70 billion) all expanding.

Given the significant year-on-year expansion in operating expenses, the bank’s cost-to-income ratio (after accounting for LLEs) deteriorated to 70.1% from 66.1% and 55.0% in the previous quarter and corresponding period of the prior year, respectively.
Consequent on the growth in income relative to expenses, the bank recorded a profit before tax growth of 1.8% y/y to NGN74.31 billion, while PAT settled 1.4% lower y/y at NGN61.03 billion, given the higher income tax expense (+19.7% y/y).

Ebenezer Onyeagwu

MD/CEO

Zenith Bank Plc

The 2020 half-year (H1) financial report of Zenith Bank Plc reveals a mixed bag of decline and strong growth in certain market fundamentals.

On the EPS of NGN3.30 (+16.6% vs. H1-19), the Board has proposed an interim dividend of NGN0.30/s (H1-19: 0.30/s), which equates to a yield of 1.7% based on the closing price of NGN17.20 as of the 3rd of September 2020.
Analysis by Cordros Research shows that interest income grew by 1.1% y/y to NGN216.95 billion, supported primarily by the income from loans and advances to customers (+11.6% y/y to NGN128.37 billion) as risk asset creation has been strong in the year so far (+13.8% YTD to NGN2.62 trillion).

The other contributory line recorded a decline – investment securities (-18.1% y/y). The decline in income from investment securities was expected, as yields across assets have pared significantly from the prior year.
Also, interest expense declined by 17.4% y/y to NGN59.55 billion, reflecting lower interest cost on borrowings over the corresponding period of the prior year (-50.7% to NGN17.00 billion) and despite the increased cost on deposits from customers (+13.3% to NGN42.54 billion).

Consequent to the decline in interest expense, net interest income settled higher by 10.5% y/y at NGN157.41 billion. After accounting for credit impairment charges (+74.2% y/y to NGN23.92 billion), net interest income (ex-LLE) settled 3.7% higher year-on-year.

The exponential growth in LLE is in line with our expectations, given the application of the ECL model and the expected impact of the pandemic on the bank’s risk asset quality both at present and going forward.
Continuing the trend during the year, non-interest income (NII) was strong, settling 6.2% higher y/y at NGN116.49 billion. The strong growth recorded was supported by expansions in FX revaluation gains (+239.6% y/y to NGN22.02 billion), and gains on investment securities (+30.4% y/y to NGN58.83 billion). This expansion in NII, alongside the growth in net interest income, led to an expansion in operating income of 4.8% y/y to NGN249.97 billion.
Operating expenses growth was moderate, as the bank continued to focus on cost management in the face of moderate gross earnings growth. Opex grew by 7.1% y/y to NGN135.85 billion, with the most pressure exerted by other operating expenses (+16.6% y/y to NGN21.22 billion) such as I.T, and maintenance costs.

Consequent to the Opex growth relative to operating income growth, the bank’s cost-to-income ratio (ex-LLE) settled higher at 54.3% relative to 52.7% and 50.9% in the prior quarter and the corresponding period of the prior year.

Also, profitability was stronger, with profit-before-tax settling 2.2% higher year-on-year. However, profit-after-tax settled 16.8% higher year-on-year, on account of a 54.8% decline in income tax expense.
In our view, the bank’s macro-prudential ratios remain strong, as all ratios settled within statutory limits. The bank’s non-performing loans ratio improved to 4.7% from 5.0% in the prior quarter, although this may be adduced to the significant YTD expansion in loans to customers, as well as regulatory forebearance for distressed restructures.

Similarly, the bank’s capital adequacy (20.0%) and liquidity (43.8%) ratios remained strong after expanding quarter on quarter and signifies that the bank has ample headroom for growth over the medium-term.

“Also, we note that the bank’s current loans-to-deposits ratio (66.1%) is now above the minimum LDR of 65.0%.”