Last week the Central Bank of Nigeria removed the directors of First Bank of Nigeria, but reinstated its managing director, in a move that grabbed headlines. It raises the issue of corporate governance and of governance overall in Nigeria. What is the cost of poor governance and what are the benefits of good governance? We …
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Author Archives: merchant-bank
Transparency and Foreign Direct Investment
Oil prices to the rescue?
It was in April last year when oil prices hit multi-year lows, the price of Brent crude dipping down to US$19.33/bbl late in the month and West Texas Light hitting negative US$37.63/bbl for a day as stocks rose and storage capacity became scarce. Then the United States convened a meeting of oil producers, the Organization …
More →The CBN and interest rates
Last week the fixed income markets received two important indicators as to the likely direction of market interest rates. One was the fact that a few members of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee voted to raise the Monetary Policy Rate, even though a majority voted to keep it at 11.50%. The …
More →Monetary Policy Rate decision
The Monetary Policy Committee (MPC) of the CBN meets today and tomorrow to decide upon its Monetary Policy Rate (MPR). We estimate that it will keep the MPR on hold at 11.50%, but amplify its commentary on inflation, singling it out as the next economic threat to be dealt with. This would leave the way …
More →Coronation Merchant Bank records 15% growth in PBT for 2020 FY
… declares PBT of N5.784bn. Coronation Merchant Bank Limited has announced its Audited Financial Results for the year ended 31 December 2020 and declared a PBT of N5.784 bn. Commenting on the financial results, Banjo Adegbohungbe, the Managing Director of Coronation Merchant Bank said that “despite the challenges in our operating environment, we navigated the …
More →Inflation and interest rates
Inflation continues to rise, with February inflation reported at 17.33% year-on-year after 16.47% y/y in January, and food inflation at 21.79% y/y. Policymakers believe that structural issues are the core problem, but we sense that they include market interest rates in the mix when it comes to considering all the drivers of inflation. This could …
More →The US 10-year bond and Nigeria
Nigerian markets are famous for not correlating with global markets, but recently it has been wise to pay attention to global bond markets. The rise of the US government 10-year bond yield has attracted a lot of attention over the past few weeks and led to nervousness in certain equity markets. The wisdom of taking …
More →Q4 GDP and the implications for markets
Q4 2020 GDP was reported last week and it showed Nigeria leaving recession – just. Q4 2020 growth was 0.11% year-on-year (y/y). The non-oil economy reached a respectable level of growth, up 1.69% y/y. The implications for market interest rates are that these can rise if: a) this help get inflation under control (it was …
More →Interest rates: how much higher?
How much higher are Nigerian Treasury Bill rates going to rise this year? We think that there are several months of rising rates ahead of us and that we should not be surprised to see 1-year Treasury Bill rates of 10.0%, or more, by mid-year. If we are right, then it will mean good news …
More →Eurobonds and foreign financing
What will be the Federal Government of Nigeria’s (FGN) next move when it comes to financing its deficit? Movements in the foreign exchange and open market operation (OMO) markets last week prompted market comment that Nigeria is courting foreign portfolio investment (FPI) to participate in Naira instruments. This may be true, but today’s market conditions …
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