Banking

LAGOS (Capital Markets in Africa) — Olam International Ltd., one of the world’s largest food traders, will increase its rice-processing capacity in Nigeria by half as it moves to benefit from the country’s increasing investment in the food crop. The company plans to build a second line at its factory in the northern Nigerian state of Nassarawa to provide an additional 120,000 tons of million capacity per annum by 2021, Ade Adefeko, vice president, corporate…

JOHANNESBURG (Capital Markets in Africa) — The South African Reserve Bank will resist calls to finance the government’s growing budget deficit with aggressive quantitative easing because that could add even more strain on the National Treasury, Governor Lesetja Kganyago said. If the central bank were to buy 500 billion rand ($29 billion) of government bonds and then mop up the excess liquidity by issuing bonds at the current repurchase rate of 3.75%, it would be…

JOHANNESBURG (Capital Markets in Africa) — South African banks face the steepest earnings slump in half a century — with some posting losses — as measures to curb the coronavirus drag the economy deeper into recession and lead to a surge in bad debts. “I have looked at each and every crisis in the last fifty-odd years and there is nothing this severe,” said Corné Conradie, an actuary and partner at auditing and consultancy firm…

JOHANNESBURG (Capital Markets in Africa) — The average income of customers at South Africa’s First National Bank plummeted by about 20% during the nation’s lockdown as people took pay cuts or had less work to do. FirstRand Ltd.’s retail banking unit also experienced a “major drop off” in transactional activity and credit-card spending as businesses closed and people stayed home, FNB’s retail banking head Raj Makanjee said on a call with reporters on Tuesday. Credit growth suffered as South…

JOHANNESBURG (Capital Markets in Africa) — South Africa’s central bank ruled out helping the government fund its runaway budget deficit by paying for its spending through loans, as the ruling party debates using the institution to fund infrastructure and development. “We do not think it is prudent to finance government directly,” Kuben Naidoo, a Reserve Bank deputy governor, said on a conference call hosted by money manager Ninety One. “It would increase inflation risks. It…

NAIROBI (Capital Markets in Africa) — Kenya’s banks are likely to issue fewer loans this year and boost investments in government debt to safeguard earnings under threat from the fallout of the coronavirus. That’s the assessment of some analysts after the East African nation’s lenders released first-quarter results that showed lower profit, a surge in loan-loss provisions and a wave of debt restructurings. An economic slowdown is reducing demand for credit, leaving banks with little…

NAIROBI (Capital Markets in Africa) — Kenya’s central bank maintained its benchmark interest rate to allow the effects of four consecutive cuts filter to the economy. The monetary policy committee retained the rate at 7%, Governor Patrick Njoroge said in an emailed statement Wednesday. That matched the projection of one of the three economists in a Bloomberg survey. The panel has reduced the rate by 200 basis points since November. Key Insights: The decision was a “surprising…