31 Jan

South Africa Boutique Investor Joins Viceroy in Questioning Capitec

Benguela Global Fund Managers (Pty) Ltd. wrote to Capitec Bank Holdings Ltd. earlier this month questioning its loan practices, even before a short seller alleged the South African lender was concealing write-offs.

Benguela, which manages 3.6 billion rand ($301 million), raised concerns about Capitec’s “aggressive practice of rescheduling arrear loans and advances,” according to a letter dated Jan. 19.

In a separate letter to its investors, Benguela said it had “serious reservations” about Viceroy Research’s approach and its assertion that Capitec should be put under administration was “shocking and irresponsible,” after the short seller released a report about the allegations.

Capitec, which makes unsecured loans mainly to low- and middle-income households, posted its biggest-ever intraday share drop on Tuesday after Viceroy alleged it was hiding write-offs by refinancing defaulted loans with new debt.

It then recovered most of those losses after South Africa’s central bank said it has no evidence to suggest the lender’s stability is in question.

“Benguela totally condemns the Viceroy approach to raising governance issues and it appears to be motivated by pure greed than actual interest in the company,” Chief Investment Officer Zwelakhe Mnguni said in his letter on Tuesday.

Full Disclosure

Speaking at a press conference in Cape Town late Tuesday, Capitec Chief Executive Officer Gerrie Fourie declined to answer questions about whether it had received a letter from Benguela and said he would respond next month. Fourie also denied the allegations made by Viceroy and said the report was full of inaccuracies.

A spokesman for Capitec said on Wednesday that the lender is busy with its response to Benguela. Viceroy didn’t immediately respond to an emailed request for comment.

Capitec discloses “all our figures of rescheduling in a transparent way,” Chief Financial Officer Andre du Plessis said in an email on Tuesday. The company has “absolutely” no plans to take any additional writedowns because it already does a detailed analysis of its book at a weekly credit committee, he said.

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23 Jan

African Development Bank to Add $2 Billion to Nigeria Loans

The African Development Bank plans to increase its loans to Nigeria by more than $2 billion next year with investments in energy, infrastructure and agriculture, its President Akinwumi Adesina said.

“The total portfolio we have in Nigeria is $6 billion,” Adesina said in a Jan. 18 interview in Abuja, the capital. “We expect that by the year 2019, we will grow that into a little bit over $8 billion.”

The Abidjan, Ivory Coast-based lender will pump more than $800 million into Nigeria this year, most of which will fund investments in power. Among them is a $250 million support to revamp power-transmission lines and electricity sub-stations as well as fund a $200 million solar power project in Jigawa state in the north, Adesina said.

The $400 million balance from a $1 billion loan for budget support will be disbursed directly to industries identified by the government after projects have been vetted by the bank, he said.

Africa’s most populous country, with more than 180 million people, is recovering from its worst economic slump in 25 years. It will also receive budget support and public financial management assistance from the lender, he said.

Agribusiness Clusters

The AfDB forecast Nigeria’s economy will grow 2.1 percent this year as the output of and the price of oil, its main export, recovers. The country depends on crude exports for two-thirds of government revenue and most of its foreign income.

Brent crude, which compares with Nigeria’s export grades, has gained 26 percent in the past year, helping the recovery. It traded at $69.40 a barrel as of 7:18 a.m. in London.

As Nigeria seeks to reduce its dependence on oil by boosting agricultural production, the AfDB plans to help set up “staple crop processing zones” and create agribusiness clusters across the country to curb harvest losses of as much as 70 percent for some crops, Adesina said.

“These zones will change our rural economy,” he said. “You will be able to create markets for farmers and reduce massive post-harvest losses. You will change the structure of agriculture itself because people will see it as a business as opposed to a subsistence activity.”

Source: https://www.bloomberg.com/news/articles/2018-01-22/african-development-bank-to-increase-nigeria-loans-by-2-billion

29 Aug

StanChart sets aside Sh10bn for unsecured loans


Standard Chartered Bank Kenya #ticker:SCBK has allocated Sh10 billion to be issued as unsecured personal loans by mid-October, signalling a renewed risk appetite by the lender.

The lender’s plan runs against increased conservatism in the banking industry whose aggregate lending to the private sector slowed down to 2.4 per cent in the 12 months to April.

Lenders have blamed the credit squeeze to the inability to price risk in the wake of interest rate controls, with implementation of greater prudential accounting standards from next year further deterring risk taking.

StanChart says it has done its homework in terms of risk appraisal, giving it the confidence to issue up to Sh7 million to each borrower in the 45-day period running up to October 11.

“In the past one year there was a remarkable slowdown in lending to the retail segment as we adjusted to the rate-cap regime,” StanChart’s CEO Lamin Manjang said in a statement.

“During the period we have put in a lot of work in segmenting our customers and identifying their credit needs.”

Borrowers will enjoy a one-month repayment holiday before the bank effects loan deductions. The offer is available to salaried individuals and can be repaid over a period of up to six years.

A customer borrowing the maximum Sh7 million over the six-year period will incur a total cost of credit of Sh3.57 million according to www.cost-of-credit.com, a website created by the Kenya Bankers Association (KBA) to improve transparency in the lending market.

The cost includes monthly repayments of Sh144,240 and one-off charges amounting to Sh192,500. StanChart says it expects most of the loans will fund purchases of real estate and cars.

StanChart expanded its loan book at a relatively slower pace of 6.4 per cent to Sh116.8 billion in the first quarter ended March when it ramped up its purchase of government debt by 40.1 per cent to Sh96.2 billion.