Be informed and take necessary actions before it is late!!!
As of today, GT Bank Plc is offering 1% interest rates on all fixed term deposits up to 50m Naira! Your heard me right sir/ma!
- Meanwhile, same term deposit in a bank in Canada or US can get you at least 2.5%. At least, I said…. You may cross-check this assertion for your own good.
- Nigerian Treasury bill (NTB) rates went down as low as 2.5%! From 10-16% in the past.
- Stanbic-IBTC circular of today confirmed that long term instrument - FGN Bond rates in the secondary market is down to almost 6%.
- FGN bond primary auction results as at 19th February 2020 and the bid for the highest tenure bond is almost 600% higher than the allotted securities, which shows a lot of parties are scrambling to buy these securities with no success. Scrambling to buy Bond @ 6% interest rate because banks are paying just 1% on deposits. So, many Banks and other Financial Institutions have billions of Naira sitting idle!
- Nigerian inflation rate as at this morning is 12.13%...
So if you have Naira sitting idle in a bank account or even in a fixed deposit, you are losing value and very fast!
Reason: Effect of FGN borrowing Trillions from the Pension Fund @ reasonable (one digit) interest rates instead of borrowing from the public.
If this trend continues, there will be a lot of Naira chasing the USD and other stable currencies and this means the eventual market devaluation of the Naira; it is an inevitable thing to happen! Don’t get emotional about it please.
Individuals with Cash Deposits who are depending on interest payouts from such deposits for their livelihood should take heed that they will sooner than later be forced to dip into the principal to pay bills, in addition to suffering the devaluing effect of a 12.13% inflation.
Concluding and the Urgent Action to take:
The Federal Government tough monetary policy thrust is crystal clear - Anyone with free cash should use the money to build businesses and create employment. A noble thrust BUT the environment is a tough one to risk one's money building a business that will not likely survive the vagaries of the economy.
So, review your situations and take appropriate decisions/actions before it is too late.
It's a tough economic world in Naija of today.
*NSE DELISTING OF DANGOTE FLOUR*
The need to inform us that Dangote Flour has been delisted as a public quoted company on the Nigerian Stock Exchange.
*As a result,they're paying off all shareholders.*
This exercise will last for just two years after which you will not have value again.
*If you have or knows some shareholders of the above stated company,kindly inform them to locate 'EDC Registrars' @ 23,llusoji ldowu Street behind 'Aret Adams House' along Ikorodu Road,Lagos.*
Please,if knows any shareholder concerning the above,kindly spread the information,because it was not given adequate publication.
Thanks
*#RadiantShareholders*
*Earnings soar on trading gains*
Zenith Bank Plc (ZENITHBANK: TP 28.14 - BUY) has reported an 8.1% YoY increase in EPS to N6.65 for FY’19 (audited), largely supported by a 29.0% YoY growth in non-interest revenue (NIR). The bank also proposed a final dividend of N2.50 per share which translates to a dividend yield of 12.6% based on last close price.
*Some positives:*
ZENITHBANK grew loans (+22.1%) for the first time in three years. Despite the loan growth, credit quality improved as reflected in the 60 bps moderation in NPL ratio to 4.3%, although cost of risk inched marginally higher to 1.1% (+20bps)
NIR improved by 29.0% YoY. The growth in NIR was largely supported by the strong trading gains (+46.9% YoY) posted during the period. Noticeably, the bank recorded a 47.1% growth in bonds and T-bills trading gains that likely resulted from the fall in yields during the latter part of FY’19. For context, in Q4’19, ZENITHBANK more than doubled its trading income from the previous quarter (Q4’19: N50.9 billion; Q3’19: N21.8 billion)
Although operating expenses rose 2.8%, we note the improvement in efficiency as cost to income declined by 100bps
ROE and ROA came in relatively flat at 23.8% and 3.4% respectively. In addition, both liquidity (57.3%) and capital adequacy (22.0%) ratios remained above regulatory thresholds in the review period.
*Some concerns:*
Interest income declined 5.6% YoY likely due to falling asset yields. Interest income from loans and advances was noticeably impacted, falling 14.7% from the previous period. In contrast, interest income from investments rose 9.4% YoY, mostly impacted by a two-fold increase in income from placements.
Net interest income was weakened (-9.7% YoY), largely reflecting the fall in NIMs. This, in our view, suggests increasing asset yield pressure given that cost of funds was relatively flat at 3.0%. We also note the 7.5% fall in investment securities which could also have constrained the bank’s interest earning capability during the period.
Cost of risk rose 20bps to 1.1%. While we believe this is mild, it lends credence to our initial view that an aggressive approach to lending could have possible implications for risk measures. It is still early, however, to assess the full implication of the loan growth on asset quality, given that majority of loan growth occurred towards the end of the year.
Notwithstanding the growth in loans, our assessment suggests that loans to deposit ratio, at 56.3%, was shy of the CBN’s guideline of 65.0% as at December 2019.
