How banks closure of 234 branches, 649 ATMs down Nigeria’s FAS to 4.44%

*As experts predict volatile trading for Nigeria’s equities market

As Nigeria banks closed a total of 234 branches and a whopping 649 Automated Teller Machines (ATMs) in 2020, the International Monetary Fund (IMF) has said the nation’s Financial Access Score (FAS) has declined to 4.44 in 2020, as against 4.78 recorded in 2019.

This is even as industry experts have predicted a volatile Nigerian stock market this week, due to investors continued portfolio rebalancing and repositioning for year-end seasonality and dividend expectations.

However, the global financial institution who disclosed the decline in Nigeria’s FAS, as contained in its recent Financial Access Survey (FAS) 2021 Trends and Developments, stated that the number of commercial bank branches per 100,000 adults and the number of ATMs per 100,000 adults is the two commonly used FAS indicators.

IMF is known to utilise two FAS indicators to monitor an item of the 2030 Sustainable Development Goals (SDGs), which aims to increase domestic financial services financial institutions’ capacity to promote access to banking.

An Economist & Consultant, Marcel Okeke, in a writeup on the IMF latest FAS, noted that the details from the IMF report showed that Nigeria experienced reductions in the two FAS indicators, among others.

According to him, for sure, the pursuit of ‘financial inclusion’ or “access to banking and financial services” is a germane global policy; but the IMF indicators are rather archaic and otiose. In a world of fast-paced digitization of financial services, further fast-tracked by the Covid-19 pandemic, applying a number of (physical) bank branches as an indicator of progress (or otherwise) is purely anachronistic.

“IMF says Nigeria experienced reductions in these two crucial FAS indicators, and so went further to highlight and ‘justify’ how the country has not fared well on a particular SDG target.

“But, in point of fact, Nigerian banks made quantum leaps in such performance indices as a number of bank customers, volume and value of transactions in the past couple of years covered by the IMF survey. Like in many climes, one of the crucial ‘gains’ from the Covid-19 outbreak was the massive embrace of e-Payment platforms and digital transformation in Nigeria. Data from the National Bureau of Statistics (NBS) and the Nigeria Interbank Settlement System (NIBBS) Plc amply portray this trend”, he stated.

Meanwhile, analysts at Afrinvest Limited stated that “This week, we expect the equities market to trade sideways due to the absence of positive triggers.”

Cordros Securities Limited said that “In the week ahead, we expect investors to trade cautiously whilst taking positions in stocks with attractive dividend yields ahead of 2021 full year dividend declarations.

“In addition, we believe the outcome of the bond auction scheduled to hold during the week will also shape market sentiments. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.”

In the new week, analysts at Cowry Assets Management Limited expected the local bourse index to close northwards as investors take advantage of some fundamentally sound stocks which have shed value.

“Also, we feel investors will continue to position in those companies that have printed higher profitability and are likely to pay good dividends in full-year, 2021,” they said.

The chief operating officer of InvestData Consulting Limited, Ambrose Omordion said “We expect the mixed trend on profit-taking and momentum investing as pullback create an opportunity for players to jump into positions on the strength of third quarter (Q3) numbers, just as candlestick formation and volume traded at the end of day trading revealed sellers in control as the index slide down marginally.

“Also, we note that institutional players are not selling but positioning in blue-chip companies, as the pullback was on a light volume. It is equally noteworthy that this pullback at this level is for the accumulation of more positions ahead of year-end seasonality. Also, many stocks are trading within their buy ranges, a situation expected to attract more funds into the equity space, given the dividend yield capable of serving as a hedge against inflation.”

Last week, despite recording losses on three of the five trading sessions, gains in telco heavyweights ensured the market closed in the green territory. Specifically, analysts observed strong buying interest in Airtel Africa and MTN Nigeria Communications (MTNN) due to the euphoria that greeted the announcement of Payment Service Bank (PSB) licence approval by the CBN.

Consequently, the All-Share index closed the week higher by a 2.95 per cent gain to close at 43,253.01 points. Similarly, the market capitalisation rose N646. Billion week-on-week (W-o-W) to close at N22.572 trillion.

However, the sub-sector gauges did not mirror the benchmark index as most of the indices closed in red territory.

The NGX Banking, NGX Insurance, NGX Oil & Gas and the NGX Industrial indices decreased by 1.32 per cent, 2.25 per cent, 0.69 per cent and 0.01 per cent to close at 397.96 points, 177.62 points, 381.89 points and 2,196.50 points respectively. However, the NSE Consumer Goods index rose by 0.63 per cent to close at 568.87 points.

The market breadth for the week was negative as 27 equities appreciated at price, 36 equities depreciated in price, while 93 equities remained unchanged. Neimeth International Pharmaceuticals led the gainers’ table by 12.50 per cent to close at N1.98, per share. Red Star Express followed with a gain of 12.18 per cent to close at N3.50, while Airtel Africa went up by 11.76 per cent to close to N871.70, per share.

On the other side, Conoil led the decliners table by 14.90 per cent to close at N21.70, per share. Pharma-Deko followed with a loss of 9.83 per cent to close at N2.11, while CWG Plc declined by 9.73 per cent to close at N1.02, per share.

Overall, a total turnover of 1.471 billion shares worth N20.941 billion in 20,410 deals was traded last week by investors on the floor of the Exchange, in contrast to a total of 1.428 billion shares valued at N12.373 billion that exchanged hands the previous week in 23,987 deals.