E-Financial
Dollar On Standby Ahead of NFP
FXTM Research Analyst Lukman Otunuga comments on the vulnerable Euro received a lifeline during trading on Thursday with prices springing above 1.0600 following the hawkish surprise from the European Central Bank that caught markets off guard.
The ever-rising expectations of the Federal Reserve raising US interest rates in March have made the Greenback king this trading week. Although the Dollar Index has found itself under some selling pressure below 102.00 during early trading on Friday, this technical correction could simply provide a foundation for bulls to install fresh rounds of buying in the future.
With the blockbuster ADP report boosting the bullish sentiment towards the Dollar, further appreciations could be expected if today’s NFP exceeds estimates. Bulls remain in firm control moving forward and it may take an extreme anomaly in the pending US jobs report to abruptly cool the heated expectations of the Fed taking action next week.
From a technical standpoint, the Dollar Index is bullish on the daily charts. A weekly close above 102.00 could encourage a further incline higher towards 102.50.
Euro Gifted A Hawkish Lifeline
The vulnerable Euro received a lifeline during trading on Thursday with prices springing above 1.0600 following the hawkish surprise from the European Central Bank that caught markets off guard. Although key interest rates were kept at record lows as expected, the optimism radiating from Mario Draghi regarding the recovery of the European economy simply inspired the Euro bulls.
With the central bank no longer seeing a “sense of urgency” to take further action on monetary stimulus, markets may acknowledge this as a potential inflection point for the ECB to gradually change its monetary stance.
The fact that policymakers are already anticipating that it will not be necessary to lower interest rates further in the future could signal a gradual end to an era of negative rates if the European economy continues to stabilize.
Although the outlook for Europe is starting to look somewhat encouraging amid the positive economic data, the uncertainty gravitating around the elections in Europe continues to weigh heavily on sentiment.
The threat of political developments overshadowing the positive macroeconomic factors could expose the Euro to sharp losses in the short to medium term.
While the current upside momentum on the EURUSD is impressive, gains could be swiftly surrendered today if NFP meets or exceeds expectations. From a technical standpoint, the EURUSD remains trapped in a wide 150 pip range. Bears remain in control below the tough 1.0650 resistance.
Commodity Spotlight – Gold
Gold has been sold off incessantly this week with prices crashing below $1200 as speculations heighten over the Federal Reserve raising US interest rates this month.
Bears have exploited the Dollar’s stability to pressure the yellow metal further during trading on Friday as prices currently trade around $1195. With Gold’s sensitivity to US interest rate hike expectations reaching shocking levels this quarter, more downside could be expected as expectations mount over the Fed raising US rates repeatedly in 2017.
Although risk aversion from the political uncertainty in Europe, Brexit woes and Trump developments could support the metal in the longer term, bears remain in firm control this month.
From a technical standpoint, the zero-yielding metal is firmly bearish on the daily charts and a solid NFP report this afternoon could encourage a steeper decline towards $1190 and potentially lower.
E-Financial
Fidelity Bank Reports N124.3Bn Pre-Tax Profit for 2023
Fidelity Bank Plc has recorded a profit before tax of N124.3 billion for the year ended December 31, 2023, indicating a 131.5 per cent increase from N53.7 billion posted in the 2022 financial year.
The bank disclosed this in its 2023 full year audited financial statement issued to the Nigerian Exchange Ltd. (NGX) on Tuesday in Lagos.
Fidelity Bank said it would also pay investors a final dividend of 60k per share and a total dividend of 85 kobo per share for the reporting period.
This represents a 70 per cent increase compared to the 50 kobo per share paid to its shareholders in the previous year.
The financial institution stated that this led to an increase in return on average equity of 26.5 per cent in the year under review from 15.6 per cent in the corresponding year.
According to the financial statement, the bank’s gross earnings increased by 64.9 per cent year over year to N555.83 billion.
The bank stated that this was driven by 81.6 per cent growth in net interest income which increased from N152.7 billion in year 2022 to N277.37 billion in the 2023 financial year.
This led to a profit after tax of N99.45 billion, representing a 112.9 per cent annual growth.
Commenting on the performance, Nneka Onyeali-Ikpe, managing director of Fidelity Bank, said the financial institution closed the financial year with strong double-digit growth across key income and balance-sheet lines.
Ms Onyeali-Ikpe stated that the bank’s performance in 2023 was an attestation of its capacity to deliver superior returns to shareholders despite the difficulties in our operating environment.
She said, “A review of the financial performance showed that the bank grew its net interest income by 81.6 per cent to N277.4 billion. This was driven by a 55.5 per cent increase in interest income, thus reflecting a steady rise in asset yield throughout the year.
“The average funding cost dropped by 20bps to 4.4 per cent due to increased low-cost funds that grew from 83.6 per ent in 2022 to 97.4 per cent in 2023.
“The combination of higher asset yield and lower funding cost led to an increase in net interest margin of 8.1 per cent from 6.3 per cent in 2022 financial year.”
According to her, the total customer deposits crossed the N4 trillion mark, as deposits grew by 55.6 per cent from N2.6 trillion in 2022.
She noted that the increase was driven by 81.1 per cent growth in low-cost funds.
Mrs Onyeali-Ikpe explained that despite the challenging operating environment, the bank reaffirmed its devotion to helping individuals grow and inspiring businesses to thrive.
She said the bank also committed to empowering economies to prosper by increasing net loans and advances to N3.1 trillion from N2.1 trillion in the 2022 financial year.
The managing director stated that despite the growth in its loan portfolio, regulatory ratios were maintained well above the required thresholds.
Mrs Onyeali-Ikpe noted that the bank liquidity ratio stood at 45.3 per cent in the year ended 2023, from 39.6 per cent in the year 2022, while the capital adequacy ratio rose to 16.2 per cent, compared to the minimum requirement of 15.0 per cent.
“We recognise the changing dynamics in the Nigerian banking space and the need to monitor and proactively manage evolving risks. The proposed final dividend of 60 kobo per share reflects our commitment to strong value creation and returns to our shareholders.
“Fidelity Bank has consistently paid dividends since 2006,” she said.
E-Financial
ClaimBuddy Bags $5m to Streamline Insurance Claims for Hospitals, Patients
ClaimBuddy, insurancetech startup has raised $5 million in its Series A funding round led by Bharat Innovation Fund (BIF), with participation from Japanese VC firm CAC Capital, Chiratae Ventures, and Rebright Partners.
The Delhi NCR-based startup plans to utilize the capital to enhance its tech infrastructure, onboard skilled talent, and diversify its product offerings.
Founded in 2020 by Khet Singh Rajpurohit and Ajit Patel, ClaimBuddy aims to streamline the insurance claims process for both patients and partner hospitals through its digital platform.
ClaimBuddy has already assisted over 35,000 patients and collaborated with more than 250 hospitals nationwide, establishing itself as a comprehensive solution for medical insurance claims.
CEO Rajpurohit expressed confidence in leveraging the investment to introduce innovative financial tools and further improve healthcare experiences. ClaimBuddy’s focus aligns with addressing fundamental issues in insurance claim settlements and patient experiences, as highlighted by BIF’s Ashwin Raguraman.
ClaimBuddy faces competition from other insurtech startups but aims to disrupt the Indian insurtech sector, which is witnessing a surge in digital-first solutions and increased investor interest.
The Indian insurtech space is projected to be a significant segment within the larger fintech opportunity by 2030.
E-Financial
Recapitalisation: UBA Seeks Shareholders’ Nod to Raise Capital
United Bank for Africa (UBA) has said that it will seek shareholders’ approval at the company’s 62nd annual general meeting (AGM) to raise capital.
The AGM is scheduled to be held on May 24.
UBA disclosed this in a statement filed on the Nigerian Exchange Limited (NGX) on Monday.
The development is coming after the Central Bank of Nigeria (CBN), on March 28, directed commercial banks with international licences to raise their capital base to N500 billion, while national and regional financial institutions’ capital bases were pegged at N200 billion and N50 billion, respectively.
UBA said the board will propose the capital be raised in the Nigerian or international capital markets by way of public offerings, private placements, rights issue or other transaction modes.
The bank said the decision to raise the capital is subject to regulatory approval after consent from shareholders.
According to UBA, the instruments “can either be as a standalone issue(s) or by the establishment of capital raising programmes, whether by way of public offerings, private placements, rights issues and/or other transaction modes, at prices, coupon or interest rates determined through book building or any other acceptable valuation method or combination of methods, in such tranches, series or proportions, within such maturity periods and at such dates and upon such terms and conditions as may be determined by the board of directors of the company subject to obtaining the requisite approvals of the relevant regulatory authorities”.
The company said the board would also propose increasing its issued share capital, from N17,099,710,683 to N22,500,000,000.
UBA, with a capital base of N115.82 billion, needs to raise N384.19 billion to meet the minimum capital requirement for international licence holders.
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