E-Financial
Oil Prices Slip as Global Economic Outlook Darken
By Lukman Otunuga, Senior Research Analyst, FXTM
The taps on oil prices are set to leak in the week ahead due to growing evidence of a global slowdown and rising fears of falling demand for Crude oil.
Disappointing economic data from the US coupled with gloomy outlooks from major institutions like the World Trade Organisation, Organisation for Economic Co-operation and Development and International Monetary Fund are fanning fears over a coordinated global slowdown.
Although the commodity is attempting to rebound on Monday morning, this has nothing to do with a change of sentiment towards the commodity but Dollar weakness. Given how the dynamics influencing Oil markets have certainly swung back to demand-side factors, the path of least resistance for Oil points south. A flare up in US-China trade tensions is likely to re-ignite concerns over the global economy – ultimately strengthening the demand-side drivers. While geopolitical tensions may spark negative supply side shocks, this most likely will be countered by global growth fears and trade uncertainty.
What do weaker Oil prices mean for Nigeria?
Weakening oil prices will not only reduce Nigeria’s government revenues but also the ability for the nations to move forward with its 2020 budget which pegged Oil prices at $57 per barrel. If the Central Bank of Nigeria is unable to defend the Naira amid falling external reserves, hopes of an interest rate cut will fall as inflationary pressures return, especially after Nigeria’s central bank governor stated that inflation needs to slow to 9% or less before easing monetary policy.
Some light at the end of the tunnel for emerging markets?
There is still some light at the end of the tunnel for emerging markets, but this will depend on the outcome of the high-level US-China trade talks this week. Given the unfavourable global macroeconomic conditions, there is a lot at stake. While a breakthrough US-China trade deal is unlikely, an interim agreement to delay further tariff increases will be warmly welcomed by financial markets.
Another week packed with major data releases
This will be another week packed with data releases from major economies with US PPI in sharp focus on Tuesday. Investors will comb through the FOMC meeting minutes on Wednesday for further clues on rate cut timings in 2019. Markets are predicting an 80% probability of a rate cut in October. In the United Kingdom, there will be more Brexit drama served with UK GDP and manufacturing production figures. Across the Atlantic, the US CPI and Michigan consumer sentiment could influence rate cut speculations beyond October.
E-Financial
Nigerians Pay Five Levies for Electronic Transactions
A bank customer in Nigeria pays as much as five different charges electronic transactions on one account and Netizens are not happy about it.
Only on Monday, Central Bank of Nigeria (CBN), added another 0.5 per cent cybersecurity levy to be charged on select bank transactions.
However, the apex bank exempted loan disbursements and repayments, salary payments, intra-account transfers within the same bank or between different banks for the same customer, and intra-bank transfers between customers of the same bank from the levy.
Also exempted from the levy were inter-branch transfers within a bank, cheque clearing and settlements, Letters of Credits, and Banks’ recapitalisation-related funding only bulk funds movement from collection accounts, savings, and deposits, including transactions involving long-term investments, among others.
But below is the list of charges Nigerians have to pay whenever they make electronic transfers.
- Cybersecurity levy
N5 is charged on the transaction of N1,000
N50 is charged on the transaction of N10,000
N500 is charged on the transaction of N100,000
N5,000 is charged on the transaction of N1,000,000
N50,000 is charged on the transaction of N10,000,000
- Transfer fee
N10 is being charged on the transaction below N5,000
N25 is being charged on the transaction between 5,001 and N50,000
N50 is being charged on transactions above N50,000
- Stamp duties
N50 is being charged on transactions between N10,000 and N10,000,000
- Short Messaging Service (SMS)
N4 is being charged on each electronic transfer notification
(Customers who use e-mail-only notification are not charged for this service)
- Value Added Tax (VAT)
N0.75 is being charged on the N10 transfer fee
N1.875 is being charged on the N25 transfer fee
N3.75 is being charged on the N50 transfer fee.
E-Financial
AMMBAN Decries CBN Directive on CAC Registration of PoS Operators
Association of Mobile Money and Bank Agents of Nigeria (AMMBAN) has frowned at the recent directive by Central Bank of Nigeria that Point of Sale terminal operators should register with Corporate Affairs Commission by July 7, 2024.
They argued that implementing the directive will put over 70 percent of PoS operators out of business thereby frustrating financial inclusion initiative of the federal government.
Mr. Fasasi Atanda, national president, AMMBAN, said that the directive contradicts the current CBN agent banking regulations which clearly allow individuals to be onboarded as agents under the sub-agent category.
“Currently Nigeria has over 1.8 million agents in which over 70 percent are sub-agents without registered businesses, operating under agent network – super agent arrangements. They are the most penetrating channel of financial inclusion. Now, we want to eliminate them with CAC registration,” he stated.
It would be recalled that the Federal Government through the Corporate Affairs Commission on Monday issued a two-month registration deadline to Point of Sales companies, to register their agents, merchants, and individuals with the commission in line with legal requirements and the directives of the Central Bank of Nigeria.
The agreement was reached during a meeting between Fintechs and the Registrar-General CAC, Hussaini Ishaq Magaji, in Abuja.
Speaking at the meeting, the CAC boss said the measure aims at safeguarding the businesses of Fintech’s customers and strengthening the economy.
He further stressed that the action was equally backed by Section 863, Subsection 1 of the Companies and Allied Matters Act, CAMA 2020 as well as the 2013 CBN guidelines on agent banking.
The CAC boss said the timeline for the registration, which will expire on July 7, 2024, was not targeted at any groups or individuals but genuinely aimed at providing protection for businesses.
E-Financial
UBA Consolidates Gains as Gross Earnings Rise by 110 Percent, Profit Hits N156Bn
United Bank for Africa Plc (UBA), Africa’s Global Bank , has released its financial results for the first quarter ended March 31st, 2024, showing very strong growth across key performance measures.
The Group’s results, which were released to the Nigerian Exchange Limited (NGX) on Friday May 3rd, 2024, saw outstanding year-on-year increases: Gross Earnings rose by 110%, from N271.1billion to N570.2 billion; Interest Income grew by 130%, to N440.7 billion. Operating Income increased by 115%, from N175.7 billion in 2023, to N378.59 billion.
Further consolidating the record performance delivered in the Group’s 2023 Full Year Audited Financials, UBA again saw Profit Before Tax rising significantly by 155% from N61.7 billion in Q1 2023, to N156.34 billion in Q1 2024; while Profit After Tax jumped from N53.5 billion to N142.5 billion, representing an impressive rise of 165% year-on-year.
Commenting on the results, Oliver Alawuba, group managing director, UBA, said the Group delivered strong first quarter performance, building on the solid momentum of 2023, as well as the ongoing execution of its long-held strategy of customer focus, geographic diversification and effective risk management and governance.
He said, “Our record Q1 profit before tax was delivered with triple digit gross earnings growth, supported by very strong interest and non-interest income. Fees and Commissions rose by 118% year-on-year on the back of improved efficiencies and continued digital adoption. This has helped drive improvement in efficiency and customer satisfaction, with the Group’s cost-to-income ratio held at 57.8%.”
“The Group’s balance sheet grew steadily with Total Assets increasing by 23% to N25.4 trillion. Customer deposits closed at N18.4 trillion, recording a 23% increase year-on-year, largely attributed to growth in current accounts and savings accounts.”
“Our unwavering commitment to sound governance, robust risk management, and financial strength positions us for continued growth, while we contribute meaningfully to inclusive economic development across our network.”
Also speaking on the performance, Ugo Nwaghodoh, executive director, Finance and Risk, said the Group’s operating results for the quarter showed the actions taken to enhance the Group’s performance continued to deliver.
He said, “Our first quarter results highlight our relentless customer focus and the strength of UBA’s geographic and product diversification, with good performance across all our regions. We continue to differentiate ourselves across all key financial metrics, with a keen focus on high-quality risk adjusted revenues and cost discipline, while maintaining very sound asset quality.“
“We remain committed to reducing both interest expense and operating expenses and expect to make steady progress as we move through the year toward our stated profitability targets,” Nwaghodoh stated.
United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than twenty-five million customers , across over 1,000 business offices and customer touch points, in 20 African countries and across 4 continents.
With presence in the United States of America, the United Kingdom, France and the United Arab Emirates , UBA connects people and businesses across Africa through retail; commercial and corporate banking; innovative cross-border payments and remittances; trade finance and ancillary banking services.
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