Governance, liquidity, regulation prompt companies’ exit from Nigerian Exchange

No fewer than 20 companies hitherto listed on the Nigerian Exchange Limited (NGX) have chosen to opt-out of the stock market.

Companies voluntarily or involuntarily choose to change their public status –that is delisting from an Exchange. So, why would firms want to give up the status of being a public company? Among other factors, percentage of firms choose to voluntarily delist when the benefits of being a public company no longer exist or are overshadowed by the cost of being public.

The big names that willingly (voluntarily) opted out of the Nigerian Exchange and the year they exited are: United Nigeria Textile (2011), Seven-Up Bottling Company (March 2018), Poly Products (July 2005), Paints and Coatings Manufacturers Nigeria (August 2018), Nigerian Textile Mills (2008), and Nigerian Bottling Company (2011).

Voluntary delisting is when a company willingly decides to remove its shares from the stock exchange and pays shareholders to return the shares held by them and removes the entire lot from the exchange.

Over 118 companies have delisted from the Nigerian Exchange till date, the reasons given include: regulatory delisting (NAICOM, NGX, others), mergers and acquisition, voluntary delisting, nationalised banks, and licence withdrawal.

Involuntary delisting is when a company does not meet listing requirements, the listing exchange issues a warning of noncompliance. If non-compliance continues, the exchange delists the company’s stock.

The Nigeria Bottling Company’s decision to leave the Nigerian Exchange after 38 years on the mainboard had raised questions regarding the attraction it held for quoted companies. Shareholders had given up their right to continue to drink from today’s Coca Cola dividends on the floor of the Exchange to Greek-based Coke bottler Coca-Cola Hellenic (CCH) in a deal then worth N21 billion ($136m).

Seven-Up Bottling Company (7-Up) delisted after it received a takeover bid from its majority shareholder, Affelka, aimed at restructuring the soft drinks bottler. Seven-Up Bottling Company last traded on the Nigerian Exchange Limited at N101.97 per share, valuing the company at N65.32 billion ($214m).

The exit of Seven-Up Bottling Company reduced the entire market by N65.32 billion. 7-Up’s minority shareholders had backed a $70 million buyout bid by then majority investor, Affelka, the investment firm of the Lebanese El-Khalil family.

Companies go public in search for liquidity in their shares. Companies can raise a lot of funds by going public. They can use the money for a variety of things – expand operations, introduce new products, invest in Research & Development, pay off their debt.

There are also other non-material benefits for going public. The firms brand equities are enhanced. People trust them more – since the nitty-gritties of their businesses are no more in the dark.

Going public also enhances the credibility of the companies– they can easily convince banks and other lenders to provide loans on better terms (private companies tend to pay a higher rate of interest because of lack of credibility).

Other companies that willingly opted out of the Nigerian Exchange and the years they left are: Newrest ASL Nigeria (May 2019), Nampak (2011), IHS Nigeria (May 2015), Impresit Bakolori (2002), Incar (2010), and First Aluminium Nigeria (July 2019).

No doubt, when companies have multiple shareholders, it takes longer to make major strategic decisions. What could have been over within a few hours of a meeting might take days with the board and shareholders’ approval.

Most time, the companies’ long-term goals might not always align with the shareholders’ immediate-term goals – for example, dividends. Most companies see it that the money they pay as dividends could otherwise be used to invest in future growth prospects – which will be possible if they are private – because then there is no pressure to pay out dividends to shareholders.

Others companies that opted for voluntary delisting are: 11 plc (May (2021), Continental Reinsurance (January 2020), Dangote Flour Mills plc (November 2019), and Great Nigeria Insurance (January 2019).

After 43 years, 11 plc, formerly Mobil Oil Nigeria plc, delisted its shares from the Nigerian Exchange. The entire share capital of 11 plc was delisted from The Daily Official List of the Nigerian Exchange Limited (the Exchange) on Friday, May 7, 2021.

Though the delisting of the entire issued share capital of 11 plc followed its shareholders’ approval to delist from the Exchange, it is worthy to note that as at the close of trading on May 7, 2021 (11 plc’s last day on the NGX) its market capitalisation stood at N82.22 billion.

It is pertinent to state that the delisting of the 360.59 million units of shares of 11 plc led to the negative closure and drop recorded in market capitalisation on that last trading day of the week.

The Nigerian Exchange delisted Dangote Flour Mills from its daily official list following acquisition by Olam International Limited, which had bought all outstanding and issued shares in Dangote Flour Mills for N120 billion.

Also, Enpee delisted from the Nigerian Exchange in 2008; CFAO Nigeria (2007), Avon Crown Caps and Containers (September 2017), and A.G. Leventis (Nigeria).

The Nigerian Exchange had announced the delisting of A.G Leventis Nigeria from its daily official list, saying that the company had voluntarily applied for a delisting, which it approved on December 31, 2019. The entire issued share capital of A.G. Leventis was on Tuesday, January 7, 2020, delisted from the daily official list of the Exchange.

Before delisting, A.G. Leventis had said its core shareholders ― Boval S.A, Leventis Holding S.A, and Leventis Overseas Limited ― had planned to acquire the shares held by other shareholders.

Boval S.A, which acted on behalf of the other core shareholders, had approached its board of directors with an intention to acquire the shares held by other shareholders at an offer price of 53 kobo per share and subsequently delisted the company from the NGX.

The pressure and cost of dealing with regulatory authorities could also be among the reasons. Depending on the size of the company, listed firms pay an annual listing fee to the stock exchange on which they trade. Also, public companies pay for the periodic reports they filed or even failed to file with the regulatory authorities (for example, the quarterly results report, and the annual report).

12 Nigerian start-ups emerge among 2021 Africa’s Business Heroes

The Africa’s Business Heroes flagship philanthropic programme for the Jack Ma Foundation in Africa, has announced the top 50 finalists for the 2021 ABH prize competition and twelve Nigerians entrepreneurs made the list

The 12 Nigerian entrepreneurs include; Adebowale Odulana, founder of Doctoora E-Health Limited; Ebinabo Ofrey, founder of GeroCare Solutions Limited; Oghenetega Lortim, founder of Gricd; Abiodun Adereni of HelpMum; Leslie Emenalo of Kobopay; and Yetunde Oyalowo of Market Doctors- Social Enterprise.

Others are Chidi Nwaogu of Publiseer; Ikenna Nzewi of Releaf Marketplace Nigeria Limited; Olagoke Balogun of So Fresh Neighbourhood Market Limited; Godwin Benson of Tuteria; Ige Atiba of Laughkord Consult and Resources Limited and Olorunishola Aje of Ideas in Fusion Limited.

The top 50 finalists were chosen from over 12,000 entries, and selected by a prestigious pool of 233 judges.

Sixteen countries are represented in the top 50, 10percent of which are francophone and women are well-represented, making up 38percent of the list.

Stock market gains N94bn as investors buy Oando, Ardova, others

Nigeria’s equities market opened a new trading week in green with record gain of about N94billion as investors continued their bargain hunting in value stocks as half-year (H1) earning season gains traction.

“Last week, the market saw increased buy-side activity and overall improvement in activity level which was driven largely by the expectation of better-than-expected second quarter (Q2) earnings as seen in some of the early releases.

“We expect to see similar trading pattern going into the new week, even as we highlight the possibility of profit taking on some counters that have seen gains in recent sessions later in the week”, said Vetiva research analysts in their July 26 note.

The stock market has rallied by 2.49percent in this month of July.

Investors showed further interest in stocks of Oando Plc, making it to rally most on the Nigerian Exchange Limited (NGX). Oando Plc stock price moved up most, from N3.97 to N4.36, up by 39kobo or 9.82percent, followed by FTN Cocoa Plc which increased from 41kobo to 45kobo, up by 4kobo or 9.76percent.

Also, Ardova Plc made the top advancers league after its share price increased from N15.90 to N17.45, up by N1.55 or 9.75percent, followed by BOC Gas which rallied from N7.70 to N8.45, up by 75kobo or 9.74percent, and Livestock Feeds Plc which rose by 19kobo or 9.64, from N1.97 to N2.16.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation which opened this week’s trading at 38,667.9 points and N20.146trillion respectively increased by 0.47percent or N94billion to 38,849.08 points and N20.240trillion.

Banking stocks led the activity chart on the Bourse as Fidelity Bank, Access Bank, UBA, GTCo and Wema Bank were most traded on Monday July 26. In 4,676 deals, equity investors exchanged 246,556,190 units valued at N2.242billion. The stock market’s negative return year-to-date (ytd) decreased to -3.53percent.

Stakeholders Call for Improved Capital Mobilization in Private Markets in Nigeria

A growing number of financial sector stakeholders are calling for an improvement of the flows of private capital into Nigeria. Coronation Merchant Bank as part of its advocacy supporting  Nigeria’s quest to become a leading destination for private capital investments, hosted its “Coronation Conversations” which centred on the theme “Capital Mobilization through the Private Markets”.

In his opening remarks the Managing Director/CEO of Coronation Merchant Bank, Mr. Banjo Adegbohungbe, described the forum as an opportunity to facilitate productive engagements with stakeholders in the financial market. He said the theme of the event provided an opportunity,  to explore the potentials in the Nigerian capital market.

According to Adegbohungbe private markets are witnessing very credible and sustainable levels of financing, in areas like technology and renewable energy, thereby providing hope that a well-positioned emerging economy such as Nigeria could draw on this large pool of international investible funds.

Delivering the keynote address, the Chief Executive Officer of FMDQ Group, Mr. Bola Onadele Koko who was represented by Mr. Yemi Oshinubi, the MD of FMDQ Private Markets said the private markets have always existed in Nigeria, but FMDQ felt it was important to that the market be designed to provide a durable structure for its domestic growth.

Oshinubi noted that the global private market size was currently $7.35trn, with private equity leading in terms of the assets under management (AUM) of $4.35trn, followed by real estate $1.09trn, infrastructure and natural resources $0.88trn and private credit $0.88trn.

Speaking further he said the long-term growth in private markets has been quite substantial, stating that in 2020 about 11,000 firms participated in the global private market.

Private market expert said that since inception in 2020, the FMDQ Private Markets has seen transactions worth over N250bn. He projected that the infrastructure segment would be the biggest market growth driver in the future.

FMDQ’s Private Markets boss added that The primary goal for establishing FMDQ Private Markets limited, was to democratize capital markets by promoting the inclusion of private companies and unleashing the largely untapped pool of private investible funds in Nigeria”.

The FMDQ Official highlighted the following as the value proposition of the Private Markets limited to include;

• Transparency and Information symmetry
• Enhanced distribution channel
• Issuer viability
• Opportunity to stay private longer
• Access to larger investor base
• Light touch regulations and less burdensome documentation requirements
• Valuation, trade and transfers

In terms of categorization, he said the Private Markets has structured the layers of cradleboard, growth board and main board for small and mid-size companies with potentials for growth.

 The event featured a panel session with Chinwe Egwim, Chief Economist, Coronation Merchant Bank,  Magnus Nnoka, Chief Risk Officer, Coronation Merchant Bank,  Suru Daniels, Head Investment Banking, Coronation Merchant Bank and Wole Famurewa who served as moderator.

Court Restrains FG from Accessing N200bn Unclaimed Dividends

A Federal High Court sitting in Abeokuta has granted an interim order restraining the federal government from taking over the unclaimed dividends of shareholders in the capital market estimated to be over N200 billion. The order followed a suit instituted by shareholders under the aegis of Palm Wealth Shareholders Association (PWSA).

The Finance Act 2020 signed into law last February by President Muhammadu Buhari provides that any unclaimed dividends of a public limited liability company quoted on the Nigerian Exchange Limited (NGX) and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank, which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account, shall be transferred immediately to Unclaimed Funds Trust Fund.

Bullish Turn Persists, as Average Yield Dips 2bps WoW

In the Nigerian Treasury Bills (“NT-Bills”) secondary market last week, average yield marginally dipped 2bps W-o-W to close at 6.80% from 6.82%  the previous week, sustaining the bullish run. Demand on mid-and long-dated maturities fueled the performance as average yields contracted 1bp and 7bps W-o-W respectively.

A total of N216.19bn worth of maturing NT-Bills be rolled over by the Apex Bank in a Primary Market Auction (“PMA”) this Wednesday.

Please see our expectations below:

Auction Date	28-July-21	28-July-21	28-July-21
Allotment Date	29-July-21	29-July-21	29-July-21
Tenor	(91-Day)	(182-Day)	(364-Day)
Value on Offer (N)	7,193,228.0	47,476,888.0	161,522,566.0
Previous Stop Rates (%):	2.50	3.50	8.67
Expected Stop Rate Range (%):	1.80 – 2.20	2.90 – 3.50	8.00 – 8.50

We expect improved activity levels in the NT-Bills secondary market this week, given the buoyed liquidity levels from maturing instruments (NT-Bills: N216.19bn, OMO bills: N16.84bn). Thus, we advise investors to continue to position in relatively attractive bills across the curve while looking out for possible corporate offerings.

Please see the indicative secondary market NT-Bills rates below:

Maturity	Tenor (Days)	Rate (%) p.a.	Yield (%) p.a.
28-Oct-21	94	3.55	3.58
25-Nov-21	122	4.35	4.41
10-Feb-22	199	5.10	5.25
31-Mar-22	248	5.60	5.82
28-Apr-22	276	5.94	6.22
26-May-22	304	6.76	7.16
09-Jun-22	318	7.16	7.64

Rates are valid till 01:45 pm today (26-Jul-21)

*Please note that the minimum subscription for NT-Bills is N100,000.00

 
FGN Bonds Update: Sustained Bullish Performance as Average Yield Sheds 7bps WoW to 12.09%

 
The FGN bond secondary market furthered its bullish trend last week, as investor demand ramped up towards the end of the week, given the elevated yield levels at the start of the week as unmet bids filtered in from the PMA that held on Monday. As a result, average yield across all maturities declined 7bps W-o-W to settle at 12.09% (from 12.16% the previous week) with the most buying interests recorded on the 22-Jan-26 (-17bps W-o-W) and 18-Jul-34 (-39bps W-o-W) maturities.

At the PMA, the Debt Management Office (“DMO”) offer of N150.0bn was met with a strong overall subscription of 2.1x. Interestingly, the DMO under-allotted the 2028s, but slightly over-allotted the 2036s and 2050s. Also, the highest subscription at the auction was the 2050s which had â‚¦156.26bn subscription. The stop yields for the 2028s and 2036s were at current market offers, while the stop yield for the 2050s was moderately lower than present market offers.

Please see a detailed summary of the FGN bond PMA below:

	13.98% FGN FEB 2028 (Re-opening)	12.40% FGN MAR 2036 (Re-opening)	12.98% FGN MAR 2050 (Re-opening)
Term-To-Maturity	6 Years, 7 Months	14 Years, 8 Months	28 Years, 8 Months
Amount on Offer (₦)	50,000,000,000.00	50,000,000,000.00	50,000,000,000.00
Total Subscription (₦)	56,409,800,000.00	73,441,901,000.00	156,256,401,000.00
Amount Allotted: (₦)	31,713,300,000.00	51,156,600,000.00	55,201,400,000.00
All Bids Awarded At (Yield)	12.3500	13.1500	13.2500
Bid-to-Cover Ratio	1.78	1.44	2.83
Amount Bid to Offered Ratio	1.13x	1.47x	3.13x
Stop Yield	12.35%	13.15%	13.25%
Previous Auction Stop Yield	–	–	13.70%

Please see indicative secondary market bonds rates below:

Bond	Tenor (Years)	Yield (%)	Coupon (%)	Implied Price (N)
Apr-23	2	10.30	12.75	103.80
Mar-24	3	11.10	14.20	106.88
Mar-25	4	11.50	13.53	105.88
Jan-26	5	11.60	12.50	103.08
Mar-27	6	11.80	16.29	118.07
Feb-28	7	11.85	13.98	109.52
Jul-34	13	12.25	12.15	99.35
Mar-36	15	12.50	12.40	99.30
Apr-37	16	12.45	16.25	125.89
Apr-49	28	12.50	14.80	117.71

Rates are valid till 01:45 pm today (26-Jul-21) 
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00

Given the upcoming MPC meeting slated for the first two trading sessions of the week and the moderated yields in the FGN bonds secondary market, we expect some cautious trading from investors this week. However, we do not rule out the possibility of bargain hunting along the curve as outstanding funds from local investors filter into the secondary market. We therefore advise investors to take advantage of maturities with improved yields, particularly at the short end of the curve.

Ecobank Transnational Incorporated Reports N62.5bn PAT in Q2 2021 Results,(Share Price:N5.10k)

Ecobank Transnational Incorporated released its Q2 2021 Unaudited results for the period ended June 30th, 2021.

 Key Highlights

• Gross Earnings grew by 13% to N443bn from N392bn in the previous quarter.

• Profit before tax grew by 33% to N85bn.

• Profit after tax grew by 29% to N62.5bn.

• Net Assets declined by -1% from N812bn to N803bn.

• Share Price Currently Stands at N5:10k

Ecobank Group Reports Profit before tax of $210 million for the half-year, up 23%, on Revenue of $825 million. ROTE of 16.1% and TBVPS of 5.22 US cents, up 9%.

Ade Ayeyemi, Ecobank Group CEO, said: “We saw continued and sustained resilience in our performance, which is indicative of the success of our ‘execution momentum’ drive. As a result, we generated a return on tangible equity of 16.1% versus 15.2% a year ago and increased diluted EPS and tangible book value per share by 19% and 6%, respectively. In addition, profit before tax increased 23% to $210 million.”

“Group revenues rose 7% to $825 million, despite the challenging operating environment with the third wave of coronavirus infections threatening economic recovery. Our diversified pan-African business model continued to rise to the challenge. Revenues grew 13% and 6% in our Commercial and Consumer businesses, while our focus on growing the trade business led to increased trade assets. The slowly increasing business and spend activity drove a 20% rise in our Payments business’s revenue to $90 million. Deposits growth was strong, with total deposits now over $19 billion, an increase of $1.0 billion in the second quarter and $2.4 billion in a year, driven by our omnichannel strategy. Though loan growth remained flat, we are focused on providing support to MSMEs for growth,” Ayeyemi added.

“I am proud of the team’s hard work in driving efficiency, which continues to reflect in our cost-to-income ratio of 58.7% ahead of guidance and progressing well toward our medium-term goal of approximately 55%. In addition, credit quality continued to be exceptionally strong. As a result, our NPL ratio of 7.4% is a substantial improvement from the prior year’s 9.8%, as we also build reserves to insulate the balance sheet with an NPL coverage ratio of 86.7% and pushing towards our near-term target of 90%,” Ayeyemi continued.

“We successfully raised $350 million Tier 2 Sustainability Notes in June, the first-ever by a financial institution in sub-Saharan Africa and first to have a Basel III-compliant 10-year non-call 5 structure outside South Africa in 144A/RegS format. The Bond was 3.6 times oversubscribed, demonstrating strong confidence in the Ecobank Group and our commitment to the sustainability of our communities and their social needs. I am deeply grateful to all stakeholders and must thank our clients for continuing to put their trust in Ecobank for their diverse banking needs.” Ayeyemi concluded.

• Return on assets (ROA) of 1.2% and return on tangible equity (ROTE) of 16.1% reflects continued success of our ‘momentum execution’ strategy.
• Revenues of $825m, up $54m, or 7%, benefiting from growth across all business lines especially in Commercial (up $23m) and Consumer (up $11m).
• Payments revenue up 20% to $90m, representing 11% of Group revenues.
• Profit before tax of $210m, up 23%, on higher NIMs, positive operating leverage and efficiency gains, partially offset by higher impairment charges and a net monetary hyperinflationary loss. • Profit available to ETI shareholders increased 19% to $106m. • Record cost-to-income ratio (CIR) of 58.7%, reflecting sustained progress at cost discipline and achieving mid-50s CIR in the medium-term.
• Cost-of-risk improved to 180 basis points. Includes macro-overlay of $15m, as a proactive buffer against the uncertain economic outlook
• We continued to generate record deposit growth. Year-on-year (YoY) customer deposits increased $2.4bn to $19.1bn, driven by a strong omnichannel strategy across digital and physical channels. Deposits grew by $1.0bn in the three months ended 30 June (2Q21)
• Customer loans of $8.6bn increased 3% and were ahead of guidance.
• The NPL ratio reduced further to 7.4% from 7.6% in 4Q20 and 9.8% in 2Q20
• NPL coverage ratio of 86.7% improved from 74.5% in 4Q20 and 65.3% in 2Q20 demonstrating efforts to build reserves of NPLs to near 100% in the near term.
• Book value per share of 5.76 cents, down 4% YoY; tangible book value per share (TBVPS) up 9% to 5.22 cents
• Total regulatory capital estimated at $2.22bn; Total capital adequacy ratio (CAR) of 14.7%.
• Successfully raised $350m 10NC5 Tier 2 Sustainability Bond in June 2021
• Transaction values on digital channels grew by 57% YoY to $27bn and accounted for 35% of total transaction count. Transaction values in branches were up 11% to $42bn and accounted for 6% of total transaction count, following the easing of pandemic-related lockdowns.
• All our geographical regions recorded significant increases in both digital and in-branch transactions.
• Our digital platforms and our capabilities to switch payments across 33 African countries is driving symbiotic partnerships with Fintechs, Telcos, and International Money Transfer Organisations.

First six months of 2021 vs. First six months of 2020

Profit before tax was $210 million, increasing by $40 million, or 23%, or in constant currency, by 28%, driven by positive operating leverage, efficiency gains, and improving credit quality, partially offset by higher net monetary losses in the current period.

Net revenue (operating income) was $825 million, increasing by $54 million, or 7%, or in constant currency by 9%. Revenue benefited from increases in both net interest income, up 6%, and non-interest revenue, up 8%, driven by multiple factors including moderate economic growth across our markets, an uptick in customer and business activity, and the net impact of lower rates on funding cost. Also, all our business lines grew revenues, especially strong within Commercial and Consumer, where revenue growth was up 13% and 6%, respectively.

Net interest income was $455 million, an increase of $26 million, or 6%, driven predominantly by a 6% decrease in interest expense, and supported by a 2% growth in interest income. Interest income, additionally, benefited from higher investment securities balances. Increasing the generation of low-cost deposits benefited interest expense and helped reduce the cost of funds to 2.2% from 2.6%. However, the net interest margin (NIM) compressed marginally to 5.0% versus 5.1% in the first half of 2020.

Non-interest revenue was $370 million, an increase of $27 million, or 8%. Fees and commission income, net of expenses, increased $16 million, or 9%, to $205 million, driven primarily by substantial gains in funds transfer fees, fees generated on digital transactions including mobile money payments, and current account servicing fees-all of these supported by an uptick in consumer and business activity following the easing of coronavirus restrictions. However, net trading income fell $3 million, or 3%, to $133 million as client-related foreign-currency sales were lower than the prior year, given that continued supply-chain bottlenecks hindered international trade. At the same time, consumer and business overseas travel remained low.

Expenses were $484 million, decreasing by $10 million, or 2%, or 3%, in constant currency. Staff-related expenditures fell by $17 million, or 7%, partially offset by a $6 million, or 3%, increase in other operating expenses. Total expenses continue to decline because of stringent costs management across all our business lines. As a result, the cost-to-income ratio (efficiency ratio) improved by 840 basis points to 58.7% from 64.1% in the prior year. Likewise, the cost-to-assets ratio, which measures costs in relation to average assets, fell and was 3.7% in the first half of 2021 compared with 4.1% in the prior-year period.

Impairment charges on loans (net) were $87 million compared with $83 million in the prior year. The higher impairments in the current period reflected an increase in gross impairment charges of 12%, driven by UEMOA and CESA. However, loan recovery efforts continued to be effective, with recoveries increasing by 12% from the prior-year period and helping to offset, partially, the higher gross impairment charges. Also, included in the period’s impairment charges is a macro-overlay of approximately $15 million as a buffer against what is still a fragile economic recovery amid increasing coronavirus infections in recent months. The cost of risk was 1.80% compared to 1.75% in the prior year’s period and 1.85% at yearend 2020.

Taxation – Income taxes were $58 million in the first half of 2021 compared with $43 million in the prior-year period. The effective income tax rate (ETR) was 27.4% versus 25.1% in the prior year

Gross loans and advances to customers were $9,454 million, down $344 million, or 4%, year-to-date (YTD), but increased $242 million, or 3%, YoY. Net loans were $8,850 million, down $390 million, or 4% YTD, but up $229 million, or 3%, from the prior year. The YTD decrease in loans reflected tepid loan demand in what still is a fragile economic recovery. Also, the decrease reflected our more cautious credit underwriting approach. As a result, net loans in Corporate decreased by $383 million or 6% to $6,403 million, and in Commercial loans fell $34 million or 2% to $1,331 million, YTD.

Deposits from customers were $19,143 million, up $2,436 million, or 15%, from the prior year. On a YTD basis, deposits increased $846 million, or 5%. All our business lines contributed to driving the increase in YoY growth in deposits. Corporate deposits grew $992 million, or 14%, to $8,171 million, Consumer Bank deposits increased $612 million, or 11% to $6,352 million, and deposits at Commercial increased by $843 million, or 23%, to $4,585 million, on a YoY basis. On a YTD basis, Corporate and Commercial Bank deposits grew 8% and 7%, respectively, while deposits decreased by 2% in Consumer. The YTD growth in deposits outpaces that of the prior-year period, reflecting stickiness in digital adoption trends among customers and the pandemic’s continued impact.

The Group estimates Tier 1 CAR and Total CAR at 9.8% and 14.7%, as of 30 June 2021, compared with 9.4 per cent and 12.3 per cent as of 31 December 2020. The increase in CAR is primarily due to internal profit generation and ETI’s June 2021 issuance of a $350 million 10-year Subordinated (Tier 2 capital) Sustainability Eurobond. On a fully loaded IFRS 9 Day One basis, the Group estimates Tier 1 CAR at 9.1% and Total CAR at 13.9% as of 30 June 2021.

Equity available (attributable) to ETI shareholders was $1,424 million as of 30 June 2021, compared with $1,503 million and $1,481 million as of 31 December 2020 and 30 June 2020, respectively. The YTD decline in shareholders’ equity was driven by unrealised mark-to-market losses of $89 million on debt securities and foreign currency translation reserves losses of $93 million. These losses were partially offset by higher profit available to ETI shareholders of $106 million.

 

Governance, liquidity, regulation prompt companies’ exit from Nigerian Exchange

No fewer than 20 companies hitherto listed on the Nigerian Exchange Limited (NGX) have chosen to opt-out of the stock market.

Companies voluntarily or involuntarily choose to change their public status –that is delisting from an Exchange. So, why would firms want to give up the status of being a public company? Among other factors, percentage of firms choose to voluntarily delist when the benefits of being a public company no longer exist or are overshadowed by the cost of being public.

The big names that willingly (voluntarily) opted out of the Nigerian Exchange and the year they exited are: United Nigeria Textile (2011), Seven-Up Bottling Company (March 2018), Poly Products (July 2005), Paints and Coatings Manufacturers Nigeria (August 2018), Nigerian Textile Mills (2008), and Nigerian Bottling Company (2011).

Voluntary delisting is when a company willingly decides to remove its shares from the stock exchange and pays shareholders to return the shares held by them and removes the entire lot from the exchange.

Over 118 companies have delisted from the Nigerian Exchange till date, the reasons given include: regulatory delisting (NAICOM, NGX, others), mergers and acquisition, voluntary delisting, nationalised banks, and licence withdrawal.

Involuntary delisting is when a company does not meet listing requirements, the listing exchange issues a warning of noncompliance. If non-compliance continues, the exchange delists the company’s stock.

The Nigeria Bottling Company’s decision to leave the Nigerian Exchange after 38 years on the mainboard had raised questions regarding the attraction it held for quoted companies. Shareholders had given up their right to continue to drink from today’s Coca Cola dividends on the floor of the Exchange to Greek-based Coke bottler Coca-Cola Hellenic (CCH) in a deal then worth N21 billion ($136m).

Seven-Up Bottling Company (7-Up) delisted after it received a takeover bid from its majority shareholder, Affelka, aimed at restructuring the soft drinks bottler. Seven-Up Bottling Company last traded on the Nigerian Exchange Limited at N101.97 per share, valuing the company at N65.32 billion ($214m).

The exit of Seven-Up Bottling Company reduced the entire market by N65.32 billion. 7-Up’s minority shareholders had backed a $70 million buyout bid by then majority investor, Affelka, the investment firm of the Lebanese El-Khalil family.

Companies go public in search for liquidity in their shares. Companies can raise a lot of funds by going public. They can use the money for a variety of things – expand operations, introduce new products, invest in Research & Development, pay off their debt.

There are also other non-material benefits for going public. The firms brand equities are enhanced. People trust them more – since the nitty-gritties of their businesses are no more in the dark.

Going public also enhances the credibility of the companies– they can easily convince banks and other lenders to provide loans on better terms (private companies tend to pay a higher rate of interest because of lack of credibility).

Other companies that willingly opted out of the Nigerian Exchange and the years they left are: Newrest ASL Nigeria (May 2019), Nampak (2011), IHS Nigeria (May 2015), Impresit Bakolori (2002), Incar (2010), and First Aluminium Nigeria (July 2019).

No doubt, when companies have multiple shareholders, it takes longer to make major strategic decisions. What could have been over within a few hours of a meeting might take days with the board and shareholders’ approval.

Most time, the companies’ long-term goals might not always align with the shareholders’ immediate-term goals – for example, dividends. Most companies see it that the money they pay as dividends could otherwise be used to invest in future growth prospects – which will be possible if they are private – because then there is no pressure to pay out dividends to shareholders.

Others companies that opted for voluntary delisting are: 11 plc (May (2021), Continental Reinsurance (January 2020), Dangote Flour Mills plc (November 2019), and Great Nigeria Insurance (January 2019).

After 43 years, 11 plc, formerly Mobil Oil Nigeria plc, delisted its shares from the Nigerian Exchange. The entire share capital of 11 plc was delisted from The Daily Official List of the Nigerian Exchange Limited (the Exchange) on Friday, May 7, 2021.

Though the delisting of the entire issued share capital of 11 plc followed its shareholders’ approval to delist from the Exchange, it is worthy to note that as at the close of trading on May 7, 2021 (11 plc’s last day on the NGX) its market capitalisation stood at N82.22 billion.

It is pertinent to state that the delisting of the 360.59 million units of shares of 11 plc led to the negative closure and drop recorded in market capitalisation on that last trading day of the week.

The Nigerian Exchange delisted Dangote Flour Mills from its daily official list following acquisition by Olam International Limited, which had bought all outstanding and issued shares in Dangote Flour Mills for N120 billion.

Also, Enpee delisted from the Nigerian Exchange in 2008; CFAO Nigeria (2007), Avon Crown Caps and Containers (September 2017), and A.G. Leventis (Nigeria).

The Nigerian Exchange had announced the delisting of A.G Leventis Nigeria from its daily official list, saying that the company had voluntarily applied for a delisting, which it approved on December 31, 2019. The entire issued share capital of A.G. Leventis was on Tuesday, January 7, 2020, delisted from the daily official list of the Exchange.

Before delisting, A.G. Leventis had said its core shareholders ― Boval S.A, Leventis Holding S.A, and Leventis Overseas Limited ― had planned to acquire the shares held by other shareholders.

Boval S.A, which acted on behalf of the other core shareholders, had approached its board of directors with an intention to acquire the shares held by other shareholders at an offer price of 53 kobo per share and subsequently delisted the company from the NGX.

The pressure and cost of dealing with regulatory authorities could also be among the reasons. Depending on the size of the company, listed firms pay an annual listing fee to the stock exchange on which they trade. Also, public companies pay for the periodic reports they filed or even failed to file with the regulatory authorities (for example, the quarterly results report, and the annual report).

12 Nigerian start-ups emerge among 2021 Africa’s Business Heroes

The Africa’s Business Heroes flagship philanthropic programme for the Jack Ma Foundation in Africa, has announced the top 50 finalists for the 2021 ABH prize competition and twelve Nigerians entrepreneurs made the list

The 12 Nigerian entrepreneurs include; Adebowale Odulana, founder of Doctoora E-Health Limited; Ebinabo Ofrey, founder of GeroCare Solutions Limited; Oghenetega Lortim, founder of Gricd; Abiodun Adereni of HelpMum; Leslie Emenalo of Kobopay; and Yetunde Oyalowo of Market Doctors- Social Enterprise.

Others are Chidi Nwaogu of Publiseer; Ikenna Nzewi of Releaf Marketplace Nigeria Limited; Olagoke Balogun of So Fresh Neighbourhood Market Limited; Godwin Benson of Tuteria; Ige Atiba of Laughkord Consult and Resources Limited and Olorunishola Aje of Ideas in Fusion Limited.

The top 50 finalists were chosen from over 12,000 entries, and selected by a prestigious pool of 233 judges.

Sixteen countries are represented in the top 50, 10percent of which are francophone and women are well-represented, making up 38percent of the list.

Stock market gains N94bn as investors buy Oando, Ardova, others

Nigeria’s equities market opened a new trading week in green with record gain of about N94billion as investors continued their bargain hunting in value stocks as half-year (H1) earning season gains traction.

“Last week, the market saw increased buy-side activity and overall improvement in activity level which was driven largely by the expectation of better-than-expected second quarter (Q2) earnings as seen in some of the early releases.

“We expect to see similar trading pattern going into the new week, even as we highlight the possibility of profit taking on some counters that have seen gains in recent sessions later in the week”, said Vetiva research analysts in their July 26 note.

The stock market has rallied by 2.49percent in this month of July.

Investors showed further interest in stocks of Oando Plc, making it to rally most on the Nigerian Exchange Limited (NGX). Oando Plc stock price moved up most, from N3.97 to N4.36, up by 39kobo or 9.82percent, followed by FTN Cocoa Plc which increased from 41kobo to 45kobo, up by 4kobo or 9.76percent.

Also, Ardova Plc made the top advancers league after its share price increased from N15.90 to N17.45, up by N1.55 or 9.75percent, followed by BOC Gas which rallied from N7.70 to N8.45, up by 75kobo or 9.74percent, and Livestock Feeds Plc which rose by 19kobo or 9.64, from N1.97 to N2.16.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalisation which opened this week’s trading at 38,667.9 points and N20.146trillion respectively increased by 0.47percent or N94billion to 38,849.08 points and N20.240trillion.

Banking stocks led the activity chart on the Bourse as Fidelity Bank, Access Bank, UBA, GTCo and Wema Bank were most traded on Monday July 26. In 4,676 deals, equity investors exchanged 246,556,190 units valued at N2.242billion. The stock market’s negative return year-to-date (ytd) decreased to -3.53percent.

Stakeholders Call for Improved Capital Mobilization in Private Markets in Nigeria

A growing number of financial sector stakeholders are calling for an improvement of the flows of private capital into Nigeria. Coronation Merchant Bank as part of its advocacy supporting  Nigeria’s quest to become a leading destination for private capital investments, hosted its “Coronation Conversations” which centred on the theme “Capital Mobilization through the Private Markets”.

In his opening remarks the Managing Director/CEO of Coronation Merchant Bank, Mr. Banjo Adegbohungbe, described the forum as an opportunity to facilitate productive engagements with stakeholders in the financial market. He said the theme of the event provided an opportunity,  to explore the potentials in the Nigerian capital market.

According to Adegbohungbe private markets are witnessing very credible and sustainable levels of financing, in areas like technology and renewable energy, thereby providing hope that a well-positioned emerging economy such as Nigeria could draw on this large pool of international investible funds.

Delivering the keynote address, the Chief Executive Officer of FMDQ Group, Mr. Bola Onadele Koko who was represented by Mr. Yemi Oshinubi, the MD of FMDQ Private Markets said the private markets have always existed in Nigeria, but FMDQ felt it was important to that the market be designed to provide a durable structure for its domestic growth.

Oshinubi noted that the global private market size was currently $7.35trn, with private equity leading in terms of the assets under management (AUM) of $4.35trn, followed by real estate $1.09trn, infrastructure and natural resources $0.88trn and private credit $0.88trn.

Speaking further he said the long-term growth in private markets has been quite substantial, stating that in 2020 about 11,000 firms participated in the global private market.

Private market expert said that since inception in 2020, the FMDQ Private Markets has seen transactions worth over N250bn. He projected that the infrastructure segment would be the biggest market growth driver in the future.

FMDQ’s Private Markets boss added that The primary goal for establishing FMDQ Private Markets limited, was to democratize capital markets by promoting the inclusion of private companies and unleashing the largely untapped pool of private investible funds in Nigeria”.

The FMDQ Official highlighted the following as the value proposition of the Private Markets limited to include;

• Transparency and Information symmetry
• Enhanced distribution channel
• Issuer viability
• Opportunity to stay private longer
• Access to larger investor base
• Light touch regulations and less burdensome documentation requirements
• Valuation, trade and transfers

In terms of categorization, he said the Private Markets has structured the layers of cradleboard, growth board and main board for small and mid-size companies with potentials for growth.

 The event featured a panel session with Chinwe Egwim, Chief Economist, Coronation Merchant Bank,  Magnus Nnoka, Chief Risk Officer, Coronation Merchant Bank,  Suru Daniels, Head Investment Banking, Coronation Merchant Bank and Wole Famurewa who served as moderator.

Court Restrains FG from Accessing N200bn Unclaimed Dividends

A Federal High Court sitting in Abeokuta has granted an interim order restraining the federal government from taking over the unclaimed dividends of shareholders in the capital market estimated to be over N200 billion. The order followed a suit instituted by shareholders under the aegis of Palm Wealth Shareholders Association (PWSA).

The Finance Act 2020 signed into law last February by President Muhammadu Buhari provides that any unclaimed dividends of a public limited liability company quoted on the Nigerian Exchange Limited (NGX) and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank, which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account, shall be transferred immediately to Unclaimed Funds Trust Fund.

Bullish Turn Persists, as Average Yield Dips 2bps WoW

In the Nigerian Treasury Bills (“NT-Bills”) secondary market last week, average yield marginally dipped 2bps W-o-W to close at 6.80% from 6.82%  the previous week, sustaining the bullish run. Demand on mid-and long-dated maturities fueled the performance as average yields contracted 1bp and 7bps W-o-W respectively.

A total of N216.19bn worth of maturing NT-Bills be rolled over by the Apex Bank in a Primary Market Auction (“PMA”) this Wednesday.

Please see our expectations below:

Auction Date	28-July-21	28-July-21	28-July-21
Allotment Date	29-July-21	29-July-21	29-July-21
Tenor	(91-Day)	(182-Day)	(364-Day)
Value on Offer (N)	7,193,228.0	47,476,888.0	161,522,566.0
Previous Stop Rates (%):	2.50	3.50	8.67
Expected Stop Rate Range (%):	1.80 – 2.20	2.90 – 3.50	8.00 – 8.50

We expect improved activity levels in the NT-Bills secondary market this week, given the buoyed liquidity levels from maturing instruments (NT-Bills: N216.19bn, OMO bills: N16.84bn). Thus, we advise investors to continue to position in relatively attractive bills across the curve while looking out for possible corporate offerings.

Please see the indicative secondary market NT-Bills rates below:

Maturity	Tenor (Days)	Rate (%) p.a.	Yield (%) p.a.
28-Oct-21	94	3.55	3.58
25-Nov-21	122	4.35	4.41
10-Feb-22	199	5.10	5.25
31-Mar-22	248	5.60	5.82
28-Apr-22	276	5.94	6.22
26-May-22	304	6.76	7.16
09-Jun-22	318	7.16	7.64

Rates are valid till 01:45 pm today (26-Jul-21)

*Please note that the minimum subscription for NT-Bills is N100,000.00

 
FGN Bonds Update: Sustained Bullish Performance as Average Yield Sheds 7bps WoW to 12.09%

 
The FGN bond secondary market furthered its bullish trend last week, as investor demand ramped up towards the end of the week, given the elevated yield levels at the start of the week as unmet bids filtered in from the PMA that held on Monday. As a result, average yield across all maturities declined 7bps W-o-W to settle at 12.09% (from 12.16% the previous week) with the most buying interests recorded on the 22-Jan-26 (-17bps W-o-W) and 18-Jul-34 (-39bps W-o-W) maturities.

At the PMA, the Debt Management Office (“DMO”) offer of N150.0bn was met with a strong overall subscription of 2.1x. Interestingly, the DMO under-allotted the 2028s, but slightly over-allotted the 2036s and 2050s. Also, the highest subscription at the auction was the 2050s which had â‚¦156.26bn subscription. The stop yields for the 2028s and 2036s were at current market offers, while the stop yield for the 2050s was moderately lower than present market offers.

Please see a detailed summary of the FGN bond PMA below:

	13.98% FGN FEB 2028 (Re-opening)	12.40% FGN MAR 2036 (Re-opening)	12.98% FGN MAR 2050 (Re-opening)
Term-To-Maturity	6 Years, 7 Months	14 Years, 8 Months	28 Years, 8 Months
Amount on Offer (₦)	50,000,000,000.00	50,000,000,000.00	50,000,000,000.00
Total Subscription (₦)	56,409,800,000.00	73,441,901,000.00	156,256,401,000.00
Amount Allotted: (₦)	31,713,300,000.00	51,156,600,000.00	55,201,400,000.00
All Bids Awarded At (Yield)	12.3500	13.1500	13.2500
Bid-to-Cover Ratio	1.78	1.44	2.83
Amount Bid to Offered Ratio	1.13x	1.47x	3.13x
Stop Yield	12.35%	13.15%	13.25%
Previous Auction Stop Yield	–	–	13.70%

Please see indicative secondary market bonds rates below:

Bond	Tenor (Years)	Yield (%)	Coupon (%)	Implied Price (N)
Apr-23	2	10.30	12.75	103.80
Mar-24	3	11.10	14.20	106.88
Mar-25	4	11.50	13.53	105.88
Jan-26	5	11.60	12.50	103.08
Mar-27	6	11.80	16.29	118.07
Feb-28	7	11.85	13.98	109.52
Jul-34	13	12.25	12.15	99.35
Mar-36	15	12.50	12.40	99.30
Apr-37	16	12.45	16.25	125.89
Apr-49	28	12.50	14.80	117.71

Rates are valid till 01:45 pm today (26-Jul-21) 
*Please note that the minimum subscription for FGN Bonds is N20,000,000.00

Given the upcoming MPC meeting slated for the first two trading sessions of the week and the moderated yields in the FGN bonds secondary market, we expect some cautious trading from investors this week. However, we do not rule out the possibility of bargain hunting along the curve as outstanding funds from local investors filter into the secondary market. We therefore advise investors to take advantage of maturities with improved yields, particularly at the short end of the curve.

Ecobank Transnational Incorporated Reports N62.5bn PAT in Q2 2021 Results,(Share Price:N5.10k)

Ecobank Transnational Incorporated released its Q2 2021 Unaudited results for the period ended June 30th, 2021.

 Key Highlights

• Gross Earnings grew by 13% to N443bn from N392bn in the previous quarter.

• Profit before tax grew by 33% to N85bn.

• Profit after tax grew by 29% to N62.5bn.

• Net Assets declined by -1% from N812bn to N803bn.

• Share Price Currently Stands at N5:10k

Ecobank Group Reports Profit before tax of $210 million for the half-year, up 23%, on Revenue of $825 million. ROTE of 16.1% and TBVPS of 5.22 US cents, up 9%.

Ade Ayeyemi, Ecobank Group CEO, said: “We saw continued and sustained resilience in our performance, which is indicative of the success of our ‘execution momentum’ drive. As a result, we generated a return on tangible equity of 16.1% versus 15.2% a year ago and increased diluted EPS and tangible book value per share by 19% and 6%, respectively. In addition, profit before tax increased 23% to $210 million.”

“Group revenues rose 7% to $825 million, despite the challenging operating environment with the third wave of coronavirus infections threatening economic recovery. Our diversified pan-African business model continued to rise to the challenge. Revenues grew 13% and 6% in our Commercial and Consumer businesses, while our focus on growing the trade business led to increased trade assets. The slowly increasing business and spend activity drove a 20% rise in our Payments business’s revenue to $90 million. Deposits growth was strong, with total deposits now over $19 billion, an increase of $1.0 billion in the second quarter and $2.4 billion in a year, driven by our omnichannel strategy. Though loan growth remained flat, we are focused on providing support to MSMEs for growth,” Ayeyemi added.

“I am proud of the team’s hard work in driving efficiency, which continues to reflect in our cost-to-income ratio of 58.7% ahead of guidance and progressing well toward our medium-term goal of approximately 55%. In addition, credit quality continued to be exceptionally strong. As a result, our NPL ratio of 7.4% is a substantial improvement from the prior year’s 9.8%, as we also build reserves to insulate the balance sheet with an NPL coverage ratio of 86.7% and pushing towards our near-term target of 90%,” Ayeyemi continued.

“We successfully raised $350 million Tier 2 Sustainability Notes in June, the first-ever by a financial institution in sub-Saharan Africa and first to have a Basel III-compliant 10-year non-call 5 structure outside South Africa in 144A/RegS format. The Bond was 3.6 times oversubscribed, demonstrating strong confidence in the Ecobank Group and our commitment to the sustainability of our communities and their social needs. I am deeply grateful to all stakeholders and must thank our clients for continuing to put their trust in Ecobank for their diverse banking needs.” Ayeyemi concluded.

• Return on assets (ROA) of 1.2% and return on tangible equity (ROTE) of 16.1% reflects continued success of our ‘momentum execution’ strategy.
• Revenues of $825m, up $54m, or 7%, benefiting from growth across all business lines especially in Commercial (up $23m) and Consumer (up $11m).
• Payments revenue up 20% to $90m, representing 11% of Group revenues.
• Profit before tax of $210m, up 23%, on higher NIMs, positive operating leverage and efficiency gains, partially offset by higher impairment charges and a net monetary hyperinflationary loss. • Profit available to ETI shareholders increased 19% to $106m. • Record cost-to-income ratio (CIR) of 58.7%, reflecting sustained progress at cost discipline and achieving mid-50s CIR in the medium-term.
• Cost-of-risk improved to 180 basis points. Includes macro-overlay of $15m, as a proactive buffer against the uncertain economic outlook
• We continued to generate record deposit growth. Year-on-year (YoY) customer deposits increased $2.4bn to $19.1bn, driven by a strong omnichannel strategy across digital and physical channels. Deposits grew by $1.0bn in the three months ended 30 June (2Q21)
• Customer loans of $8.6bn increased 3% and were ahead of guidance.
• The NPL ratio reduced further to 7.4% from 7.6% in 4Q20 and 9.8% in 2Q20
• NPL coverage ratio of 86.7% improved from 74.5% in 4Q20 and 65.3% in 2Q20 demonstrating efforts to build reserves of NPLs to near 100% in the near term.
• Book value per share of 5.76 cents, down 4% YoY; tangible book value per share (TBVPS) up 9% to 5.22 cents
• Total regulatory capital estimated at $2.22bn; Total capital adequacy ratio (CAR) of 14.7%.
• Successfully raised $350m 10NC5 Tier 2 Sustainability Bond in June 2021
• Transaction values on digital channels grew by 57% YoY to $27bn and accounted for 35% of total transaction count. Transaction values in branches were up 11% to $42bn and accounted for 6% of total transaction count, following the easing of pandemic-related lockdowns.
• All our geographical regions recorded significant increases in both digital and in-branch transactions.
• Our digital platforms and our capabilities to switch payments across 33 African countries is driving symbiotic partnerships with Fintechs, Telcos, and International Money Transfer Organisations.

First six months of 2021 vs. First six months of 2020

Profit before tax was $210 million, increasing by $40 million, or 23%, or in constant currency, by 28%, driven by positive operating leverage, efficiency gains, and improving credit quality, partially offset by higher net monetary losses in the current period.

Net revenue (operating income) was $825 million, increasing by $54 million, or 7%, or in constant currency by 9%. Revenue benefited from increases in both net interest income, up 6%, and non-interest revenue, up 8%, driven by multiple factors including moderate economic growth across our markets, an uptick in customer and business activity, and the net impact of lower rates on funding cost. Also, all our business lines grew revenues, especially strong within Commercial and Consumer, where revenue growth was up 13% and 6%, respectively.

Net interest income was $455 million, an increase of $26 million, or 6%, driven predominantly by a 6% decrease in interest expense, and supported by a 2% growth in interest income. Interest income, additionally, benefited from higher investment securities balances. Increasing the generation of low-cost deposits benefited interest expense and helped reduce the cost of funds to 2.2% from 2.6%. However, the net interest margin (NIM) compressed marginally to 5.0% versus 5.1% in the first half of 2020.

Non-interest revenue was $370 million, an increase of $27 million, or 8%. Fees and commission income, net of expenses, increased $16 million, or 9%, to $205 million, driven primarily by substantial gains in funds transfer fees, fees generated on digital transactions including mobile money payments, and current account servicing fees-all of these supported by an uptick in consumer and business activity following the easing of coronavirus restrictions. However, net trading income fell $3 million, or 3%, to $133 million as client-related foreign-currency sales were lower than the prior year, given that continued supply-chain bottlenecks hindered international trade. At the same time, consumer and business overseas travel remained low.

Expenses were $484 million, decreasing by $10 million, or 2%, or 3%, in constant currency. Staff-related expenditures fell by $17 million, or 7%, partially offset by a $6 million, or 3%, increase in other operating expenses. Total expenses continue to decline because of stringent costs management across all our business lines. As a result, the cost-to-income ratio (efficiency ratio) improved by 840 basis points to 58.7% from 64.1% in the prior year. Likewise, the cost-to-assets ratio, which measures costs in relation to average assets, fell and was 3.7% in the first half of 2021 compared with 4.1% in the prior-year period.

Impairment charges on loans (net) were $87 million compared with $83 million in the prior year. The higher impairments in the current period reflected an increase in gross impairment charges of 12%, driven by UEMOA and CESA. However, loan recovery efforts continued to be effective, with recoveries increasing by 12% from the prior-year period and helping to offset, partially, the higher gross impairment charges. Also, included in the period’s impairment charges is a macro-overlay of approximately $15 million as a buffer against what is still a fragile economic recovery amid increasing coronavirus infections in recent months. The cost of risk was 1.80% compared to 1.75% in the prior year’s period and 1.85% at yearend 2020.

Taxation – Income taxes were $58 million in the first half of 2021 compared with $43 million in the prior-year period. The effective income tax rate (ETR) was 27.4% versus 25.1% in the prior year

Gross loans and advances to customers were $9,454 million, down $344 million, or 4%, year-to-date (YTD), but increased $242 million, or 3%, YoY. Net loans were $8,850 million, down $390 million, or 4% YTD, but up $229 million, or 3%, from the prior year. The YTD decrease in loans reflected tepid loan demand in what still is a fragile economic recovery. Also, the decrease reflected our more cautious credit underwriting approach. As a result, net loans in Corporate decreased by $383 million or 6% to $6,403 million, and in Commercial loans fell $34 million or 2% to $1,331 million, YTD.

Deposits from customers were $19,143 million, up $2,436 million, or 15%, from the prior year. On a YTD basis, deposits increased $846 million, or 5%. All our business lines contributed to driving the increase in YoY growth in deposits. Corporate deposits grew $992 million, or 14%, to $8,171 million, Consumer Bank deposits increased $612 million, or 11% to $6,352 million, and deposits at Commercial increased by $843 million, or 23%, to $4,585 million, on a YoY basis. On a YTD basis, Corporate and Commercial Bank deposits grew 8% and 7%, respectively, while deposits decreased by 2% in Consumer. The YTD growth in deposits outpaces that of the prior-year period, reflecting stickiness in digital adoption trends among customers and the pandemic’s continued impact.

The Group estimates Tier 1 CAR and Total CAR at 9.8% and 14.7%, as of 30 June 2021, compared with 9.4 per cent and 12.3 per cent as of 31 December 2020. The increase in CAR is primarily due to internal profit generation and ETI’s June 2021 issuance of a $350 million 10-year Subordinated (Tier 2 capital) Sustainability Eurobond. On a fully loaded IFRS 9 Day One basis, the Group estimates Tier 1 CAR at 9.1% and Total CAR at 13.9% as of 30 June 2021.

Equity available (attributable) to ETI shareholders was $1,424 million as of 30 June 2021, compared with $1,503 million and $1,481 million as of 31 December 2020 and 30 June 2020, respectively. The YTD decline in shareholders’ equity was driven by unrealised mark-to-market losses of $89 million on debt securities and foreign currency translation reserves losses of $93 million. These losses were partially offset by higher profit available to ETI shareholders of $106 million.