Dialectic Africa Analyst

Dear Africa Interested Individuals:                                                          Brazil and Nigeria: similar experiences and different macroeconomic approaches                                                           Brazil is the largest economy and oil exporter in South America.  Brazil is also the most populous nation in South America.  Nigeria wears the same three crowns for the continent of Africa.  Both countries held presidential elections five months apart: Brazil in October 2014 and Nigeria in March 2015.  Both cou...

Dear Africa Interested Individuals:                                                         Let us take a look at how the largest bank (Ecobank) and the oldest bank in Ghana (SCB) are doing as at June 30th, 2015 in a concise fashion.   Ecobank Ghana is going all out to increase its earnings and make a profit.  The bank has pitched its tent with lending given the high lending rate environment in Ghana and reduced its exposure to non-lending business areas.  Interest income weighting relative to gross earnings is at 71% which is interestingly enough, less than that of SCB Ghana at 78%.  SCB increased its exposure to investment securities to offset its high NPL ratio negative impact on the i...

Dear Africa Interested Individuals:                                                         Let us talk about GT Bank's H1 2015 performance concisely.   GT Bank is still committed (by its actions) to relying on lending to drive its earnings unlike its peers.  74% of its gross earnings emanated from interest income and 26% from non-interest income.  Other income is only 49% of net interest income pre-impairment.  Despite the difficult lending environment, the bank is still reliant and succeeding in generating interest income while still being cautious and understanding of the difficult operating environment.   Net loans to customers rose by less than 2% over the first six ...

Dear Africa Interested Individuals:                                                         Access Bank Group has just released its half-year 2015 cumulative result.  Find below my major observations and summarized conclusion.   I commend Access Bank for the detail provided in how the bank runs its business.   As I have mentioned in the past banks are free to determine which loans in their portfolio are deemed to have been impaired.  The policy of Access Bank ( in my opinion) makes it harder for loans to be classified as impaired even after the borrower has defaulted on payments.  Non-performing loans ratio came in at 2% and non-performing loans are just 1.1% of total ass...

Dear Africa Interested Individuals:                                                          In the current world market of low commodity prices and strong dollar which negatively impacts the natural resource rich continent of Africa, diversification of business interests may just be the best route to survival.  Is it or is it not?   I selected a diversified industrial company in the major economy of Southern, East and West Africa (South Africa, Kenya and Nigeria) and Mauritius for having the best bank performance weighting relative to size of the economy in my recent article.  The companies reviewed are: 1. Gamma Civic for Mauritius 2. Beige Holdings for South Africa 3. C...

Dear Africa Interested Individuals:                                                         This is a concise look at Nigeria's largest bank by deposits (First Bank) and largest bank by assets (Zenith Bank ) as at June 30th, 2015 .  This article will focus on insightful commentary and not a display of the numbers crunched etc.   Zenith Bank is a more profitable bank than First Bank.  First Bank's twelve-month outlook is brighter than that of Zenith Bank.  This simply means that First Bank has more of an upside than Zenith Bank from where both banks are presently perched from a portfolio investment and net income growth perspective.   Both banks achieved negative loan val...

Dear Africa Interested Individuals:                                                           I just looked at the 2014 GDP of the major economies of Africa (excluding Algeria) and other select economies and the financial performance of the largest banks by assets in these countries for fiscal year 2014.  I selected sixteen (16) African countries and their respective largest banks.  I intend to compare the percentage weighting of each country's GDP against other selected African economies against the percentage weighting of 2014 net income (in dollars) of the largest bank in each country.  Which banks' financial performance percentage weighting among the largest bank in the sixteen countri...

Dear Africa interested individuals:                                                                  We have heard the rampant advice that African oil exporting countries should devalue their currency whenever oil dips significantly and remains there for a prolonged period of time. Proponents say it generates more income for the countries in question to use internally and reduce the impact of the lower revenue on government spending.  I agree that more revenue will come into the country in local terms (assuming constant demand.)  Continual devaluation of African currencies portends serious danger for African economies. I will highlight just three in this article in a concise form. 1. Devaluation leads to a currency being dumped by even those who do not need dollars. Why?  No one wants to hold a currency ...

Dear Africa Interested Individuals:                                                         We take a look at the latest earnings from the largest bank in Africa's largest economy.  The same bank where the Central Bank Governor of Nigeria was sourced from and the Governor of Akwa Ibom State was Zenith Bank's former CFO.  Let us get to it, starting with key observations.   Zenith Bank did not experience a lull in activity that characterized some other banks as at H1 2015.  Non-interest income grew by $79.1m relative to net interest income (post-impairment) that grew by $48.9m year-on-year. Non-interest income growth is 62% higher than post-impairment net income growth.  Customers are tr...

Dear Africa Interested Individuals:                                                         About eight years ago, equity public offers was the popular way to raise capital when needed.  Some companies even came to the market twice within a fifteen-month frame.  No company thought of raising debt; stock prices were at all-time highs which made it easier for companies to raise desired sums without piling up on shares outstanding.  Besides, who wants to raise capital that has to be fully repaid with interest and the company has to try to generate income from utilization of debt in excess of interest due plus principal repayment?   When companies raise equity, shareholders recourse is to ...

Dear Africa Interested Individuals:                                                         SAB Miller is the second largest brewer in the world and has major Africa brewing operations in Nigeria, Tanzania, Zambia, Mozambique, Botswana, South Africa and Uganda.  We take a look at the performance of the brewer in three African countries all based in different regions: East, Southern and West Africa.   Tanzania Breweries Limited (TBL) TBL is the best performing of the three SAB Miller breweries selected.  It has the most demand for its products.  The combined relative demand for the other two breweries is still less than that of TBL over a two-year average period.  TBL is also the m...

Dear Africa Interested Individuals:                                                         The three above mentioned African countries are going through tough economic times though, to varying degrees.  It is at times like this that I get to know resilient banks.  The banks that make hay when the sun shines and dig a nice hole to hibernate during the winter which keeps them warm in a cold environment.  "The strength of a warrior can only be determined during battle."  I selected the largest bank in Malawi, Ghana and Nigeria plus two others.  Let us kick off with Malawi. Malawi   The monetary policy rate (MPR) of Malawi is currently 25% .  Malawi's latest inflation rate i...