Banks’ Recapitalisation: Foreign Investors Moving In — Cardoso

The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, yesterday disclosed that foreign investors are already moving funds into the country to invest in Nigerian banks under the ongoing recapitalisation exercise.

Cardoso who stated this at the Afrinvest 2024 Banking Sector Report Launch in Abuja, yesterday, said that his team was vigilant and would not allow illicit funds into the Nigerian banking industry or allow bad people to take it over.

The Governor who was represented by the Acting Director of Financial Policy and Regulations, Mr. John Onoja, said the recapitalisation exercise would bolster federal government’s efforts towards achieving the $1 trillion economy goal by 2030.

His words, “The recapitalization exercise of the Nigerian banking sector is a pivotal strategy aimed at further strengthening the resilience of the Nigerian banks and promoting sound financial systems in Nigeria.

“Importantly, it will support the government’s goal to achieve a GDP of $1 trillion by 2030. As I listened to the panelists today, we are glad that the capitalization drive has become a factor that has ignited a lot of activities in all the sectors already.

“The impact of the capitalisation program, we all know, is definitely going to increase the lending capacity of the banks, because liquidity definitely is going to empower them to lend more to the relevant sectors, even like the panelists have indicated to us.

“Definitely, there are going to be increases in foreign investments.

We are already seeing them; the foreign direct investments are already coming in. The banks can attest to that. Even the foreign exchange liquidity, we can see that a lot of them are through the certificates of capital importation; they are bringing in a lot of forex into the economy, which is going to also affect positively the liquidity situation in the forex market.

“We will rigorously enforce our Fit and Proper Persons criteria for new shareholders, for board members, for senior management, to ensure that there are no illicit funds that will flow into the system, there are no uncleared persons that will take possession of the Nigerian financial institutions, and also to ensure that even the valuation of a bank whose major balance sheets are assured by the Central Bank of Nigeria.”

The Governor said the exercise would positively impact the Gross Domestic Product of the nation, stressing, “It is going to contribute to the GDP growth that we are talking about supporting the present administration. Not to talk about better risk management tendencies, improved credit ratings for some of these banks, because of the forex credits they take, the credit ratings are very, very important.

Opportunity for retail investors

He added that there would be dilution of shares and ownership for those who are even smaller investors.

“Another opportunity has come for the smaller investors to be able to own  shares in the financial institutions, which we know have always been doing very well. The equity market also is already being boosted,” the CBN boss said.

Assurances to foreign investors

Cardoso assured that in the event that some of the capital brought in by foreign direct investors could not be taken up, such investors would not suffer any loss, as their funds would be immediately available to them for repatriation.

His words, “We are also conscious of the capitals that are going to be imported into the country especially from foreign direct investors.

And we are giving them assurance. We are working on the policy for that, that in the event that they are not able to be taken up, they will not suffer any form of devaluation loss. They’ll be able to go back home with their currency at the value that they brought them into the country.”

H1’24: MTN Nigeria records N887bn FX losses

By Peter Egwuatu

MTN Nigeria Plc has reported a foreign

exchange, FX net loss of N887.6 billion in its operations for the first six months of 2024.

This represents a sharp increase of N433 billion or a 95.2 percent year-on-year (YoY) loss compared to the N454.6 billion recorded in the first half (H1) of 2023.

According to the result sent to the Nigerian Exchange Limited (NGX) , the break down of the foreign exchange net loss, the company noted that  foreign exchange losses accounted for N367.9 billion, while unrealised foreign exchange losses amounted to N519.7 billion.

Commenting on the impact of naira devaluation on the company’s earnings, Karl Toriola, chief executive officer (CEO) of MTN Nigeria, said despite the strong topline performance, “the higher general inflation and significant naira depreciation impacted our cost p profile and eroded earnings.EBITDA Came under pressure, declining by 10.9%, and the EBITDA margin decreased by 17.4pp to 35.6%.

Ppp⁰Adjusting for the effects of forex on our operating costs, the EBITDA margin would have been 50.9%.

“The depreciation of the naira between the periods ended December 2023 and June 2024 also resulted in materially higher net forex losses of N887.7 billion (H1 2023 restated: N454.7 billion), arising from the revaluation of foreign currency denominated obligations.

“This led to a loss after tax of N519.1 billion compared to the restated loss of N85.6 billion in H1 2023 and a negative retained earnings and shareholders’ equity of N727.2 billion and N577.7 billion, respectively.”