FOREX MARKET UPDATE OPEC, stakeholders seek reliable ‘FBN Holdings unaffected by CBN’S dividend directive’ oil, gas data, sue for transparency
CRUDE OIL PRICE UPDATE Brent crude: $66.75 | WTI crude: $63.21 Interbank rate N305.90 | Parallel market: N363
•Others plan on oil price, asset consolidation, capital raising
THE Organisation of the Petroleum Exporting Countries (OPEC), and stakeholders in the Nigerian oil and gas sector, Monday in Abuja, insisted that there was a need for the country to improve on data availability to support investment decisions and transparency. While OPEC admitted that Nigeria has made significant improvement in oil and gas related data in the past three years, the Permanent Secretary, Ministry of Petroleum Resources, Folashade Yemi-esan, said there was an urgent need for reliable data in the country, especially in the oil and gas sector.
She said while the acknowledgement from OPEC on the progress made by Nigeria was laudable, it remained shame- ful for Nigerians to always resort to the oil producers data before they make business decisions.
Speaking at OPEC data management training workshop, hosted by the Petroleum Technology Development Fund (PTDF), for relevant agencies under the Federal Ministry of Petroleum Resources, and other key ministries, departments and agencies (MDAS), she said the Ministry would work with relevant agencies to improve on data availability, especially for use in Nigeria.
“Apart from OPEC data, we need credible data in the country. Why do we need to go to OPEC before we get data about Nigeria? We need to work hard to ensure that we have credible data here in Nigeria,” she stated.
She expressed the hope that the training, which was the first of its kind would help the country achieve projected objectives.
OPEC’S Head, Data Services Department, Research Division, Dapo Odulaja, applauding Nigeria’s efforts made in the past few years to supply data to the body, stressed that data transparency was critical if the industry would move forward.
He said capacity building also remained key for the sector to grow especially in data gathering.
The Executive Secretary, PTDF, Aliyu Gusau, who said the importance of the training cannot be overlooked, noted that the initiative will strengthen capacity in Nigeria.
He said the programme is also in line with the country’s national policy to ensure the development of centres of excellence to guarantee that value derivable from capacity building interventions was retained incountry.
OPEC Governor for Nigeria, Omar Ibrahim, said data accuracy from Nigeria has been good in OPEC, which he said are usually harmonised thereby avoiding situations where agencies present diverse figures.
“We have always lagged behind most OPEC member countries in data submission and accuracy. But in the last three years, things have changed. OPEC is very happy with us. The accuracy of our data has improved tremendously, and the timeliness has also improved. I believe we are to be about the third in the hierarchy of data submission,” Ibrahim said.
FBN Holdings, the parent company of First Bank of Nigeria Limited, will not be affected by the implementation of the current dividend policy of the Central Bank of Nigeria (CBN), analysts at Renaissance Capital have said.
The conclusion came after an analysis of the directive and the Group’s financial standing, amid mixed feelings, divergent understanding of the circular, and looming consequences for the banking industry.
Already, some banks’ stocks experienced price depreciation on Monday, as a run from the CBN directive. As a result, the Renaissance Capital analysis is reassuring for the teeming shareholders of the group, who may have lost the hope of dividend-payout based on unclarified trending reports. Besides, a competent source at the banking group, who preferred anonymity, told Theguardian that the policy would not affect the holding company because it is not a bank, but a financial holding company made up of subs id ia r ie s . “Dividends paid to the shareholders are from the subsidiaries of the holding company of which the commercial banking group (FBN) currently retains in its business to build stronger capital buffers to execute strategic initiatives,” the source said.
For analysts at Renaissance Capital, the circular has been issued since 2014, but now came with slight additions - banks that have Capital Adequacy Ratio (CAR) of at least three per cent above the minimum requirement; “Low” Credit Risk Rating; and Non-performing Loan (NPL) ratio of more than five per cent, but less than 10 per cent, shall have a dividend pay-out ratio of not more than 75 per cent of profit after tax.
“These restrictions only apply to the banking entity (the subsidiary bank), and not the Group. The (FBN Holdings), for instance, paid out 20 kobo per share (amounting to 51 per cent dividend pay-out) in 2016, despite an NPL ratio of 24.4 per cent. This was paid out of the other non-banking subsidiaries within the group,” they noted. Already, other banks affected by the additional provisions have turned more attention towards improving their NPL levels and shoring up capital buffers in order to ensure dividend payment.
Specifically, Diamond Bank sold off its West African operations, described by the Chief Executive Officer, Uzoma Dozie, as a profitable deal, for estimated $75.7million (N27.3billion). This would help to improve its CAR buffers.
Similarly, Union Bank recently concluded a N50billion rights issue in order to improve its capital base.
Dozie, in an interview, said the situation with the oil sector portfolios is gradually improving, giving banks added confidence for industry turnaround. “What has happened in the last few months was that we are beginning to see cash flow come back again. The people that own the rigs and the vessels are beginning to have new jobs, which had been stalled before. So things are much better. “The NPLS are beginning to perform and in fact, early this year, we had three or four customers that never had anything coming in 2017. So, we believe it’s a good one and it is going to impact the profitability of banks, including Diamond Bank and we believe that it will be sustained going forward,” he said.