Banking

LAGOS (Capital Markets in Africa) A sustained period of low oil prices will weaken dollar liquidity and elevate asset risks for Nigerian lenders as their “balance sheets are partially dollarized,” Moody’s Investors Service said. “Foreign-funding contributes about 25% of total funding and low oil prices translate to lower foreign currency receipts for the Nigerian government,” analysts including Peter Mushangwe said in a note to clients on Thursday. Banks will come under pressure from a drop in foreign…

JOHANNESBURG (Capital Markets in Africa) – South Africa’s biggest banks are increasingly relying on the rest of the continent to make money as an economic recovery at home ebbs ever further away. The Big Four make the bulk of their profit in Africa’s most industrialized country, where power shortages, incoherent government policies, corruption and ailing state-owned companies have drained the fiscus and resulted in two recessions in as many years. None of the top bankers…

KAMPALA (Capital Markets in Africa – Uganda’s central bank pointed to “abnormally low” rates for U.S. Treasury securities as a major reason behind the reported loss of 2 trillion shillings ($545 million) in the past 15 years.   Over 90% of Bank of Uganda’s earnings are from interest income on foreign-reserve assets, spokeswoman Charity Mugumya said in an emailed response to questions, after lawmakers last week raised concerns about the bank’s ability to deliver on its…

LAGOS (Capital Markets in Africa) – Dwindling reserves and lower oil prices will probably force the Nigerian central bank to devalue one of the world’s most stable currencies by next year, according to a Bloomberg survey of investors and analysts. Ten out of 19 respondents expect the naira to be weakened in 2021, while five predict a mark-down as early as the second half of this year. The remainder believes the central bank will keep…

LUSAKA (Capital Markets in Africa) – Zambia’s government debt is yielding as much as 33% thanks to a widening budget deficit, and there’s one clear winner: local banks, which are reaping record profits. Standard Bank Group Ltd.’s Zambian unit earned more in the country in 2019 than any lender ever has, according to a statement by the company, Stanbic Bank Zambia Ltd. That’s partially due to rising interest income from holdings of government securities, and in a…

LONDON (Capital Markets in Africa) – Investec is increasing its focus on environmental, social and governance issues to bolster its profit and address concerns raised by investors over climate change. The South African and U.K. lender — which offers wealth management as well as private, corporate and investment banking — is getting ready to list a renewable-energy fund later this year. This month, Investec launched a structured product that for the first time gives South Africans…

NEW YORK (Capital Markets in Africa) – Federal Reserve Chairman Jerome Powell came close to acknowledging that the central bank may not have the firepower to fight the next recession and called on Congress to get ready to help. The current low level of interest rates “means that it would be important for fiscal policy to support the economy if it weakens,” he told the House Financial Services Committee on Tuesday. The remark, which came in opening testimony that…