Nigeria Content Online

Despite
the low performance recorded in the financial reports of most quoted
companies at the Nigerian Stock Exchange (NSE), particularly the
banking sector, some operators said investors’ confidence at the
capital market remains positive.

Emmanuel
Olugbenga, finance analyst at WealthZone Company, an investment
management company, said the bold moves by the Central Bank of Nigeria
(CBN), last year, “to revamp and sanitise the banking industry has
really helped restored investors’ confidence in the market regardless
of the continuous poor results being posted. Investors are still very
much active at the capital market, especially those with long term
plan.”

Also,
Jide Oke, chairman, Lagos chapter of the Nigerian Institute of Quantity
Surveyors, said confidence has been restored to the banking sector, “as
could be seen with the sanctity of the results declared by the banks in
recent times. The era of bubble capitals and bogus profits, which later
turned as farce is gone in the banking sector and for the first time in
recent times, banks in Nigeria declared losses, truly in line with
their performance. And if banking is based on trust and integrity, then
we have seen the first gain of the reform,” Mr. Oke said.

Low turnover

The
financial results of Union Bank of Nigeria for the first quarter ended
March 31, 2010, presented to the NSE on Monday, shows a 33.21 per cent
decrease in turnover and a 96.60 per cent decline in profit after tax
were recorded. The bank’s unaudited result shows turnover of N34.235
billion as against the N51.255 billion recorded in 2009. Profit before
tax stood at N3.560 billion compared with N93.273 billion in the
preceding year, representing a 96.18 per cent decline. Also, the profit
after tax recorded stood at N3.326 billion compared with N97.883
billion in the previous year.

The
directors of the bank said they have intensified loan recovery efforts.
“With the support of the CBN and increasing success in the loan
recovery drive and the restructuring effort, the bank should be
operating profitably going forward,” they added. Oluremi Oyepeju,
chairman of Ibadan Zone, Shareholders Solidarity Association, said,
“The result of Union Bank is encouraging. It has proved that Nigerian
managers and investors are capable of resuscitating these troubled
banks. There is, therefore, no need for the Central Bank to sell the
banks to any foreign investor.”

Improper behaviour

Meanwhile,
as some operators believe recovery is gradually coming back to the
global market, Arunma Oteh, director general of the Securities and
Exchange Commission (SEC) warned of the challenges that are capable of
reversing the gains already made in the market. She said this at the
International Organisation of Securities Commission, in Canada, last
week.

“The challenge of improper behaviour driven at this time by the
morbid desire to recover incurred losses from the financial crisis is
on the increase,” she said. “As regulators, we need to remain on top of
the situation and developments in our markets and refuse to take our
feet off the important throttle of effective surveillance of the
markets. Enforcement actions must also be taken where necessary if the
markets are to remain stable and continue to command investor
confidence.”