Nigeria | NGX

GTCO's FY 2021 AUDITED numbers showed an 11.3% y/y decline in Interest Income to N266.9bn, mainly on the back of a decline in yields on fixed income instruments. This came in 3.0% below our estimate of N275.2bn. Q/q, however, Interest Income grew marginally, up 4.2% in Q4 compared to Q3. Net Loans and Advances to Customers grew moderately, up 8.4% in December 2021, compared with December 2020. On the other hand, Interest Expense declined 1.7% y/y to N46. 3bn (4% above our estimate) but increased 8.7% in Q4 compared with Q3. We had modelled a gradual increase in cost of funds through the year and forecast funding cost of 1.8% for FY 2022 from 0.67% in June 2021. Customer Deposits grew strongly in Q4, bringing total deposit growth up 14.3% y/y compared with 6.7% in September 2020. Overall, Net Interest Income was down 13.0% y/y but was up 3.2% in Q4 compared to Q3.

UBA's FY 2021 AUDITED numbers showed a moderate 10.8% y/y growth in Interest Income to N474.3bn (Net loans to customers grew 4.9% y/y). Interest Expense, on the other hand, was down 6.4% y/y but was up 8.1% q/q. The q/q growth reflects the gradual increase in funding costs through 2021. Overall, cost of funds was down to 2.2% in FY 2021 compared with 2.9% in 2020. Customer Deposits were up 12.2% y/y. Net Interest Income was up 22.1% y/y to N316.1bn in December 2021 from N259.5bn in December 2020, broadly in line with our estimates.

Following months of tension, Russian President Vladimir Putin ordered what he termed a "special military operation" against Ukraine on Thursday, 24 February 2022. A full-scale invasion followed, and Ukrainian President Volodymyr Zelenskyy has vowed that his country would defend itself. Based on media reports, Russia now has at least 50% of its estimated 150,000-strong invasion forces in Ukraine. If the war gets prolonged, how does Nigeria stand to gain or lose? Brent oil price passed US$100/bbl. for the first time since 2014 following the announcement of the invasion. From the prospect of continued increase in oil prices to increase in prices of major commodities like wheat and to the movement of funds from equities and fixed income market into the commodities market, Nigeria, an import-dependent country, stands to see significant effects from a prolongation of the crisis. In this report, we postulate our views.

In its recently released audited results, Nestle Nigeria Plc grew topline by 22.6% y/y to N351.8bn in FY 2021 from N287.1bn in FY 2020. In Q4 alone, growth in Revenue was relatively flattish, up marginally by 0.1% q/q to N90.2bn. The food sub-segment, which contributed 59.2% of the total Revenue, recorded double-digit growth in the period, up 21.3% to N208.3bn in FY 2021. Similarly, the beverages sub-segment which accounted for 40.8% of Revenue grew 24.4% y/y to N143.5bn. Export sales increased, up 19.9% to N5.3bn in 2021 from N4.4bn in 2020.

In its recently released audited FY 2021 results, Lafarge reported a 27.1% y/y increase in Revenue to N293.1bn from N230.6bn in FY 2020. On a q/q basis, Revenue was down marginally by 0.4% to N73.9bn in Q4 2021 from N74.2bn in Q3 2021. The broad-based growth in Cement Sales (up 26.1% y/y to N285.1bn), sale of Aggregates & Concrete (up 77.7% y/y to N7.6bn) and Others (up 231.1% y/y to N0.3bn) drove the improved topline performance in FY 2021. While no information has been provided on the Revenue breakdown, we believe, just as in the previous quarters of the year, that both growth in price and volume supported the Revenue growth, with the former being stronger than the latter. The persistent inflationary pressures presented opportunity for the company to implement higher prices as of 9M 2021 to neutralize the cost impact.

Based on its recently released FY 2021 results, Dangote Cement sustained the upbeat it started the year with, recording a solid 33.8% y/y growth in Revenue to N1.38tn in FY 2021 from N1.03bn in FY 2020. The actual full-year Revenue is slightly ahead of our 2021 estimates by 3.7%. In Q4 2021, performance was moderately better compared to Q3 2021 as Revenue was up by 9.0% q/q to N361.5bn. In line with our prognosis, Q4 revenue was the highest in the year as the quarter is historically proven to be the best quarter for the cement players. One, the early dry season in Q4 is best suited for construction and housing developments in Nigeria. Moreso, the euphoria towards completing many residential homes before the yuletide season amidst the newly launched 3MT Okpella plant to capture growing cement demand must have also aided growth. Specifically, Revenue from the Nigerian operations increased by 38.7% y/y to N993.4bn in FY 2021 on the back of higher realized prices (+18.1% y/y) and strong volume growth (+16.8% y/y). Similarly, for the Pan African region, Revenue increased by 24.7% y/y to N397.3bn in FY 2021 owing to better price per tonne (+14.6% y/y) and volume growth (+8.8% y/y).