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Banks’ Instrumental to Nigeria’s Economic Recovery From COVID Impact

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All over the world, bank lending has remained the most common and significant source of external finance for many SMEs and entrepreneurs, who are often heavily reliant on traditional debt to fulfil their start-up, cash flow and investment needs.

While it is commonly used by small businesses, however, traditional bank finance poses challenges to SMEs, in particular to newer, innovative and fast growing companies, with a higher risk-return profile.

Almost every business with innovative ideas that later blossomed into thriving organisations/ conglomerates were aided or supported by financial institutions that saw the viability of their innovation and wasted no time in helping them actualise that dream or success.

Most especially in a time of crisis exacerbated by the COVID 19 pandemic, when economies all over the world were shut down with jolted by the crisis businesses across the world needed significant credit support like a fish craves oxygen and most understandably became distressed in the absence of it.

Nigeria was no exception as the economy slipped into recession for the second time in four years as oil prices plunged in the midst of the COVID-19 pandemic.

While bank financing will continue to be crucial for the SME sector, there is a broad concern that credit constraints will simply become “the new normal” for SMEs and entrepreneurs.

It is therefore, necessary to broaden the range of financing instruments available to SMEs and entrepreneurs, to enable them, continue to play their role in investment, growth, innovation and employment.

During the turbulent economic situation where businesses suffered under the weight of COVID, insecurity and other economic challenges, a few banks were upstanding and served as adequate life -line to businesses helping the economy surmount its numerous economic challenges.

One of the banks worthy of mention was United Bank for Africa (UBA) that was innovative enough to help weather the storm with several loan facilities that practically helped change the narrative and eventually catalyse growth.

Eight banks gave out loans and advances worth N760 billion in the first quarter (Q1) of 2021 in a bid to stimulate economic growth constrained by numerous headwinds, according to data seen by Daily Independent.

The banks are: United Bank for Africa (UBA) Plc Access Bank Plc, FBN Holdings Plc, FCMB Holdings Plc, Fidelity Bank Plc, Stanbic IBTC Holdings Plc, United Bank for Africa (UBA) Plc, Wema Bank Plc and Zenith Bank Plc.

UBA was ahead of its peers with N178 billion, in the three months under review to put its loan portfolio to customers at N2.733 trillion, from N2.555 trillion.

Stanbic IBTC gave out N105 billion loans to customers, making its total portfolio as at the end of Q1 to be at N730 billion, up from N625 billion in December.

FBN Holdings Plc gave out N82 billion as loans to customers, raising its portfolio from N2.217 trillion to N2.299 trillion, while FCMB lent N63 billion during the review period, thereby bringing the bank’s loan portfolio to N886 billion, up from N823 billion in December. Access Bank Plc accounted for N38 billion to bring its loan portfolio to N3.256 trillion compared to N3.218 trillion, while Wema Bank Plc gave out N8 billion in the Q1 to end with a loan portfolio of N368 billion, from N360 billion.

Mr. David Adonri of Highcap Securities Limited, while commenting on the credit to customers by banks, a financial expert and securities dealer, said short-term credit was required by businesses to finance their working capital.

“Banks are the source of this type of finance. As a result of risk management considerations, bankability of requests is a major factor in credit creation. Of course, banks will usually observe the canons of lending when granting credits. If the economic environment is conducive and prospects are bright, the confidence to grant credit to borrowers will be high because repayment is guaranteed,” he said.

According to him, the volume of credit granted in Q1, 2021 by banks rose because of an increase in economic activities.

“Fund users demanded more credit during the period to ramp up their products and services to cover increased consumer pull. The demand on banks for credit also resulted in increased borrowing by banks from the Central Bank of Nigeria (CBN) during the period.

“The supply gap in the economy is still huge and this will increase demand for bank credit. As a result, banks like UBA are poised to create more credit this year to meet the rising Gross Domestic Product (GDP) growth rate revised from 1.5 per cent to 2.7 per cent,” he added.

Kennedy Uzoka, Group Managing Director, while speaking on the bank’s recent loan position and consequent determination to buoy the nation’s SME sector, said: “Our passion for Small Businesses and great ideas has never been in doubt and is evident in the firm support given the business community as our loan products are tailored specifically to meeting the varying needs of all our customers.

Continuing, Uzoka said: “Despite the tumultuous impact of COVID-19 pandemic globally and across our 23 countries of operation, we created N519.0 billion additional loans as we continued to support our customers and their businesses. Customer deposits grew 48.1 per cent to N5.7 trillion, driven primarily by additional N1.8 trillion in retail deposits.

“As a global bank, we remain well capitalised and determined to successfully drive financial inclusion on the continent through our innovative products and vast network.

“Our capital adequacy and liquidity ratios came in at 22.4 per cent and 44.3 per cent, well above the respective regulatory minimum of 15.0 per cent and 30.0 per cent”.

Speaking on the bank’s strategy, Uzoka said: “Our primary strategy will continue to focus on providing excellent services from our customers’ standpoint, putting the customer first always. Looking ahead, I am inspired by the achievements we have made since the launch of our transformation programme.

“We have expanded market share considerably across the geographies where we operate and are consolidating our digital banking leadership in Africa. We will continue to leverage our diversified business model and dedicated workforce to further strengthen our position as ‘Africa’s Global Bank’.”

Ugo Nwaghodoh, the Group Chief Financial Official, said: “The persistent low interest rate environment in 2020 exerted significant downward pressure on margins. Notwithstanding, our interest income for the year grew by 5.7 per cent (to N427.9 billion), driven by 8.2 per cent and 7.5 per cent year-on-year growth on interest income on loans and investment securities respectively.

“Our interest expense declined by 8 per cent (to N168.4billion) driven largely by a 34.2 per cent decline in interest expense on customer deposits in our Nigerian operations, bringing down the Group’s cost of funds to 2.9 per cent, from 4 per cent in 2019”.

While giving an insight to the bank’s array of loan products changing the dynamics in the industry, Group Head Consumer Lending, Anant Rao recently spoke about some of the products and intrinsic benefits to customers as he said Click Credit is one of the bank’s vibrant facilities, which seamlessly supports customers.

“It is an automated loan with no form of documentation, paperwork or queue. Customers can get up to N1 million instantly and pay through a period of 12 months. This loan product of UBA is known for speed, efficiency and competitive rate. This product is available to all salaried customers. Customers can apply by dialling *919*28#, sending “Loan” to Leo and clicking on the “Click Credit” feature on the mobile app or Internet banking.

Anant further explained that no document was required to access the loans. There is also the UBA structured loans, personal loans, auto loans and asset finance mortgage.

As for personal loans, Anant said, “It is a product designed to aid the finance of the daily needs of our customers and it is available to employees of enlisted counter-parties whose salaries and other emoluments are being paid through UBA or are willing to transfer their accounts to UBA.

“Here, required documents include letter of introduction and awareness from employer, copy of customer’s staff ID, copy of customer’s Valid ID, duly accepted offer letter and duly filled loan application form.’’

He explained that asset finance, one of its products, was designed to facilitate the purchase of physical assets ranging from household appliances to alternative power solutions and devices by our retail customers through approved partnering vendors, giving them the convenience to pay over a period. Customers must be an employee of the bank’s approved counterparties.

The bank listed the required documents as letter of introduction and awareness from employer, copy of customer’s staff ID, copy of a customer’s valid ID, proforma invoice in UBA/customer’s name and duly filled loan application form as well as accepted offer letter.

UBA Mortgage Loan is a product designed to part-finance the acquisition of residential real estate by salary earners whose employers are listed on the bank’s approved counterparty list.

“The product is targeted at High Net worth Individuals (HNIs) with predictable and sustainable income. The product is to enable customers to buy fully developed properties or draw equity from their home as loans for specific purposes,” the bank said.

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Bitcoin Rallies Towards $52K, Ethereum Consolidates, Altcoins In Uptrend

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Bitcoin price gained bullish momentum above USD 50,000. Ethereum is consolidating below USD 4,000, XRP surged above the USD 1.30 resistance. QNT and FTM are up over 28%.

Bitcoin price remained well bid and it started a fresh increase above the USD 50,000 resistance. BTC gained nearly 4% and it even broke USD 51,500. It is currently (11:35 WAT) consolidating gains below the USD 52,000 resistance zone.

Besides, most major altcoins are also rising. ETH is holding gains, but it is facing resistance near the USD 4,000 zone. XRP is up over 6% and it broke the USD 1.30 resistance. ADA is still struggling to clear the USD 3.00 resistance zone.

Bitcoin price

After a successful close above USD 50,000, bitcoin price gained bullish momentum. BTC broke many hurdles near USD 51,000 and USD 51,200. It even traded close to USD 52,000 before the bears appeared. It is now consolidating gains below the USD 52,000 resistance. If there is an upside break above USD 52,000, the price could rise towards the USD 53,000 level.

On the downside, the price could find support near the USD 51,200 level. The main support is now forming near the USD 50,500 level.

Ethereum price

Ethereum price made another attempt to clear the USD 4,000 resistance, but it failed. As a result, ETH corrected lower below USD 3,950.

However, the bulls were active near the USD 3,850 level. The price is now consolidating above USD 3,900, with many hurdles near USD 3,980 and USD 4,000.

If there is another downside correction, the price could find support near USD 3,850. The next major support is near the USD 3,800 level.

ADA, LTC, DOGE, and XRP price

Cardano (ADA) failed to stay above USD 3.00 and corrected lower. However, downsides were limited below USD 2.85. The price is now stuck in a range below the USD 3.00 resistance. A close above USD 3.00 could start a stronger increase.

Litecoin (LTC) broke many hurdles near USD 200 and USD 212. LTC even cleared USD 220 and it is now consolidating gains. An immediate resistance is near the USD 230 level. A clear break above USD 230 and USD 232 could open the doors for a move towards the USD 250 level.

Dogecoin (DOGE) is up over 4% and it broke the USD 0.312 resistance. The next major resistance is near the USD 0.320 level. Any more gains might lead the price towards the USD 0.335 level. If not, there might be a downside correction towards the USD 0.300 level.

XRP price gained pace above the USD 1.30 resistance. It is up over 6% and it even cleared the USD 1.32 resistance. There was a spike towards the USD 1.34 level, where the bulls faced resistance. XRP is now consolidating around USD 1.32, with support near USD 0.305 and USD 0.300.

Other altcoins market today

Many altcoins are up over 5%, including QNT, FTM, FIL, OMG, LINK, LUNA, QTUM, AMP, HT, ICP, ALGO, ATOM, CRO, EOS, and COMP. Out of these, QNT rallied over 41% and it surpassed the USD 335 level.

Overall, bitcoin price settled well above the USD 50,000 resistance zone. If BTC continues to rise and clears USD 52,000, there could be a move towards USD 53,000 or USD 53,500.

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Bitcoin Above USD 50K, Ethereum Eyes USD 4K, SOL Extends Rally

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Bitcoin price recovered losses and it climbed above USD 49,200. BTC is currently (11:46 UTC) trading above USD 50,000. A close above this level could push the price higher in the near term.

Besides, most major altcoins are trading in a positive zone. ETH regained strength and it broke the USD 3,900 level. XRP is consolidating near the USD 1.265 support. ADA could regain momentum if it settles above the USD 3.00 resistance.

Total market capitalization

Source: www.tradingview.com

Bitcoin price

After a short-term downside correction, bitcoin price started a fresh increase above USD 49,000. BTC surpassed USD 49,500 and USD 50,000. A successful close above USD 50,000 could start a fresh rally. The next major resistance is near USD 52,000. An intermediate resistance might be USD 51,200.
If there is a downside correction, the price might find support near USD 49,200. The next major support is now forming near the USD 48,500 level.

Ethereum price

Ethereum price started a fresh rally above the USD 3,800 resistance. ETH is up almost 6% and it traded close to the USD 4,000 level. If there is a break above USD 4,000, the price might rise towards the USD 4,200 level.
If there is a downside correction, the price might find bids near the USD 3,900 level. The next major support is near the USD 3,850 level.

ADA, LTC, DOGE, and XRP price

Cardano (ADA) corrected lower below the USD 3.00 level. It even tested the USD 2.90 level and is consolidating in a range. If there is a fresh increase, the price could accelerate higher towards the USD 3.10 and USD 3.12 levels. The next major resistance is near the USD 3.20 level.

Litecoin (LTC) is gaining pace and it cleared the USD 188 resistance zone. The main hurdle is now near the USD 200 level. A close above USD 200 could start another increase. If there is a downside correction, the price might find support near USD 185. The next major support is now forming near the USD 180 level.

Dogecoin (DOGE) is struggling to clear the USD 0.300 resistance. If the bulls succeed, the price could rise towards the USD 0.312 level. The next major resistance is near the USD 0.320 level. On the downside, the price may possibly remain stable above the USD 0.280 level.

XRP price failed to clear USD 1.295 and USD 1.300. It corrected lower and it traded below USD 1.280. The price is now stuck near USD 1.265. The next major support is near USD 1.25, below which there is a risk of a major decline. Conversely, the price could visit the USD 1.30 resistance zone.

Other altcoins market today

Many altcoins gained over 5%, including SOL, REV, NEAR, CEL, AUDIO, MIOTA, AVAX, BTT, HOT, ALGO, ZIL, LINK, and ICX. Out of these, SOL rallied over 20% and it trades near USD 140.

To sum up, bitcoin price is now attempting an upside break above USD 50,000. If BTC succeeds, it could rise further towards the USD 52,000 level.

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Apple plans to loosen App Store payment policy

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Apple announced on Wednesday it will loosen some of its App Store policies, allowing media apps to steer customers directly to their websites without paying commission.

The change, to be implemented early next year, is being introduced to end an investigation by the Japan Fair Trade Commission.

The modification will spare so-called reader apps that provide digital content such as newspapers, books, music or video from having to use the App Store payment system and thus avoid paying a 30 percent commission.

“We have great respect for the Japan Fair Trade Commission and appreciate the work we’ve done together, which will help developers of reader apps make it easier for users to set up and manage their apps and services while protecting their privacy and maintaining their trust,” Apple Fellow Phil Schiller said in a blog post.

Developers of the digital content apps will be able to link to their websites where users can create or manage accounts, according to Apple.

While the change resulted from an agreement with the JFTC, it will apply globally to all reader apps at the App Store, the Silicon Valley tech giant said.

Apple has come under fire for its tight control of the App Store, where developers are required to use its payment system.

Apple charges a commission of as much as 30 percent on sales of digital content or subscriptions at the App Store, with the payment system making certain the company gets its piece of the action.

“Because developers of reader apps do not offer in-app digital goods and services for purchase, Apple agreed with the JFTC to let developers of these apps share a single link to their website to help users set up and manage their account,” Apple said in a post.

Apple last week agreed to loosen payment restrictions on its App Store, a major change announced in a settlement with small developers as the US technology giant faces growing scrutiny and legal challenges over its tightly controlled online marketplace.

The change will allow small developers to inform their customers of alternative payment options beyond the official App Store.

In a class-action lawsuit, the developers had accused Apple of monopolistic distribution practices by operating the sole gateway to get apps or other content onto iPhones and other devices powered by iOS software.

The proposed settlement is pending court approval.

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