IR’s Message on Nigeria: Economy is falling only to rise

Mark Mobius, the 77 year-old emerging markets Guru who is executive chairman of Templeton Emerging Markets had described Nigeria, along with some emerging and frontier markets, as ‘the next big thing’. In this optimism on Africa’s largest economy, he is in elite company. Investor relations professionals and indeed all marketers of the Nigerian economy should own this message.

Though recent external shocks and local policy bungling helped cast doubts on the country’s prospects, the economy can only rebound.

Mark Mobius

Before the tumbling of oil prices, Nigeria’s main foreign exchange earner, the International Monetary Fund (IMF) had forecast growth of the country at 7.3 percent on the back of rising oil prices, strong external position, rising internal reserve and fiscal buffers among several other factors.

This wild growth projection was recently reviewed downwards to 4.8 percent citing the global sink in crude prices occasioned by the supply glut orchestrated by the Oil producing Countries (OPEC).

Back track to the mid 2000s, Jim O’Nill was a lone champion of the country’s prospect as a likely challenger of the BRICS with potential to cause concern for the more developed economies. He had dared coined the N-Eleven consisting of cohort economies including Nigeria, The Philippines, Indonesia, Turkey, South Korea, Mexico, Egypt, Vietnam, Bangladesh, Pakistan and Iran, declaring that several countries in this group could rival the G7 in time.

Since identifying the N-11, the economies have boomed and gone on to become investors haven, attracting sizable foreign inflows, Nigeria for instance attracted over $24 billion net inflows in 2014.

IR Pros should understand and let it be known that following every boom is a burst where macro economic conditions take a turn for the worse. Indeed for oil producing countries including Venezuela, Russia and Nigeria these are very bad times.

Venezuela has been in deep recession owing to the slump in oil prices. There is a balance of payments problem and a yawing foreign exchange gap.  Foreign exchange outflows now substantially exceed inflows and reserves are down to $22bn and falling fast. Not a few analysts believe that the Venezuelan economy is headed for the rocks what with the Caa3 rating by moody’s. This is only one step above default.

Russia, though a superpower, is caving-in to the oil price hick-ups as it is crawling under the hammer of a US led sanctions for interfering in the Ukraine.

Reserves have since fallen from $510.5 billion to $386.2 billion, GDP is down year-on-year and the Russian ruble has tremendously depreciated against major world currencies such as the US Dollar and the Euro. The drop is despite The Russian Central Bank raising interest rates by 6.5% to 17%, hoping that it would, if not reverse the current trend, slow down the free fall of the Ruble against the US Dollar.

A decrease in exports resulted in a reduction of the foreign currency flow in the country, and falling oil prices accelerated this process.

Bursts for Nigeria, as other oil exporters have meant more than 50 percent drop in prices since last year’s peak in June. Beyond the downside of the oil cycle, which are considered exogenous are other value eroding factors including poor handling of monetary controls, fears that the Boko Haram sect would further cause damage to the social system and what is generally perceived as a bungling of the electoral process as government pushes national votes from February 14 to March 28.

                                                     ...to be continued

Why Organise an Earnings Conference Call?

I did a quick search and quickly came to a conclusion that the earnings conference calls as an Investor Relations activity is catching on in Nigeria.

An earnings conference call is used by quoted companies to discuss financial and operation information with the investment community. In these calls, a presentation team discusses recent financial results, issues guidance regarding expected future performance, and responds to questions. In Nigeria, it would mostly mean quarterly reports and full year reports

Aliko Dangote,President/CEO, Dangote Group

Leading this form of IR communication, however, are the banks.

Why the Banks are the champions of this form of communication may not be unconnected to the fact that they are heavy on institutional investors who are domiciled in foreign countries where such activities are already well established.

The presence of institutional investors immediately demands accountability and establishment of best practices of the financial institutions.

Banks such as First Bank, GT Bank, Access Bank Ecobank, and StanbicIBTC are actively organising regular conference calls. Other banks in this category are, Skye Bank, Fidelity Bank and Diamond Bank. Still others are UBA and Zenith Banks.

But it is not only the banks that observe this ritual, which is already the norm in more advanced economies. Guinness Nigeria plc, ConocoPhillips, Oando, Nigeria Breweries, Dangote Group, and Seplat Petroleum are also in the game.

Also known as analysts call, a conference call provides opportunity for investors and analysts and sometimes, journalists to call in over the phone to hear a company's management comment on the financial results of a recently completed quarter. Most public companies hold four calls per year, usually two to five weeks after the completion of a quarter.

The primary participants in the earnings call are the CEO and CFO. They discuss all of the financial and operational results and projections (if any) of the business. The investor relations officer (IRO) may be involved in the introduction to and conclusion of the earnings call, but otherwise operates in the background or as a discussion moderator.
Earnings calls are usually handled by third party conference calling services that set up phone lines and handle the queue of callers who have questions for the management team. They also typically provide a recording of the entire call; consider posting this recording in the investor relations section of the company website, so that those unable to attention the call can still listen to it at a later date. These posted recordings are usually taken down once a reasonable period of time has passed, so that investors are not listening to out-of-date earnings calls.

References

http://www.accountingtools.com/investor-conference-calls

http://www.investopedia.com/articles/02/022702.asp

First Bank is Number One Banking Brand in Nigeria- The Banker

For the fourth consecutive year, First Bank of Nigeria has been ranked number one banking brand in Nigeria by The Banker magazine of Financial Times and Brand Finance, London, United Kingdom in their annual 2015 The Top 500 Banking Brands.
According to a press release by the Country Representative of The Banker magazine - Nigeria, Mr. Kunle Ogedengbe, First Bank moves from being number 382 in 2014 to 336 this year.
Other Nigerian banks that made the ranking moved up. They are Zenith Bank, Guaranty Trust Bank and Access Bank. Zenith Bank moves to number 388 from 453 in 2014, Guaranty Trust Bank moves to 417 from 422 while Access Bank made first entry into the ranking.

Bisi Onasanya, First Bank MD/CEO

Brand value of First Bank increases to $300 million in 2015 from $228 in 2014 and according to the Economics editor of the magazine, Silvia Pavoni, the brand value is “the licensing rate that a third-party would need to pay to use that company's brand.”
Commenting on the methodology of the ranking, Pavoni said Brand Finance obtained brand-specific financial and revenue data; modeled the market to identify market demand and the position of individual banks in the context of all other market competitors; established the royalty rate for each bank; calculated the discount rate specific to each bank, taking account of its size, geographical presence, reputation, gearing and brand rating and discounted future royalty stream (explicit forecast and perpetuity periods) to a net present value which is the brand value.
This approach, the Economics editor noted “is used for two reasons: it is favoured by tax authorities and the courts because it calculates brand values by reference to documented third-party transactions and it can be done based on publicly available financial information.”
Globally, Wells Fargo of the United States of America retains the number one banking brand in the world for the third consecutive year and was followed by banks in China, United Kingdom and Spain in the first ten. Wells Fargo’s brand value for 2015 is $34.9 billion as against $30.2 billion in 2014, an increase of $4.7 billion.
The first ten banks in the world are Well Fargo (USA); ICBC (China); HSBC (UK); China Construction Bank; Citibank, Bank of America, Chase (USA); Agricultural Bank of China; Bank of China; and Santander (Spain).
On the rise of Chinese banks, the chief operating officer of Brand Finance, Mr. Bryn Anderson noted that “the Chinese economy has been doing well for a number of years but I think this has been the first year, in terms of brand value, when Chinese banks have climbed up the tables and stood out.”
The Banker, a publication of Financial Times Newspaper which is regarded as the most influential newspaper in the world, is a global financial intelligence magazine published since 1926. It is the definitive publication that provides guide to bank ratings and analysis globally and the definitive reference on international banking for finance experts, governments, chief finance officers, CEOs, Central Bank Governors, Finance Ministers, and other decision makers globally.
The Banker’s Top 500 Banking Brands ranking measures the value of financial services firms across the world, analysing specific sectors and geographies, and identifying the brands that have improved the most, as well as those that have suffered the greatest setbacks