Recession cuts NASD earnings by 654% to N322m

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Slow economic activity and weak investor appetite, have slashed NASD OTC Market trading commission by 654 per cent, from N32.2 million earned in 2016 to N242.8 million achieved in the preceding year, New Telegraph has learnt.

According to a report obtained by this newspaper, the volume and value of shares traded also declined by 58 per cent and 91 per cent respectively over the same periods.

As at 31 December, 2016 the cumulative value of transactions was about N5 billion, a 91 per cent decline from the preceding year

From membership fees, the company earned N34 million and N42.2 million from interest on bank placements, representing 111 per cent increase and 20 per cent decrease respectively over the previous year’s revenue of N16.1 million and N52.4 million. The increase in membership fees for 2015 was largely due to registration of new participating institutions and listing of new companies, while the fall in interest income was due to decrease in cash holdings available for investment and substantial decrease in interest rates in significant periods of the year.

Chairman, Board of Directors NASD Plc, Olutola Mobolurin said: “Our direct trading expenses in the year under review was N82.7 million compared to N85 million in the preceding year, indicating a slight decrease of 3 per cent. This is as a result of renegotiation of the lease payment to Nigerian Stock Exchange for the use of its trading platform, which however, could not be concluded until the 4th quarter of the year.

“We expect to see a significant decrease in this expenditure in 2017 if there is no major devaluation of CBN Naira/US$ official rate, which is the referenced rate for the expenditure. I would like to mention that this is the highest singular expenditure item for the company. The Board has decided to re-open the evaluation of the trading platform and to consider alternative options to align the cost with current slow pace of the development of the market.

Other costs during the review period (marketing, payroll and general administration costs) stood at N135.2 million as against N151.6 million in the preceding year, depicting a decrease of 11 per cent. This reduction is a conscious effort to reduce operational costs in the face of dwindling revenue and this initiative will continue through the year 2017.

MD/CEO, NASD Plc, Mr. Bola Ajomale, said market capitalisation of admitted securities on NASD OTC Market at the end of the year 2016 stood at N423.89 billion (up 18 per cent from N359.76 billion in previous year).
He noted that in spite of the low trading activity, eight equities listed below were admitted to the NASD OTC Market during the year, bringing the total number of shares on the market to 32.

He said: “In our efforts to dematerialise holdings in the OTC market, we were able to achieve a 17 per cent increase in dematerialised shares from the previous year and by the end of 2016, 19.02 billion shares had been dematerialised into the Central Securities Clearing System Plc. (CSCS). This still only represents 16 per cent of the total market, so our efforts to increase the level of dematerialisation shall continue in 2017.

“2016 witnessed a significant drop in activity in comparison to the previous year. 799.04 million shares worth N4.68 billion were traded in 4,857 deals in 2016, compared to 1.89 billion shares worth N50.92 billion traded in 2,151 deals in 2015. The market was also less liquid in 2016 in comparison to 2015. Eighteen out of 32 securities were actively traded during the year, in 2015, 19 out of 24 securities actively traded.

“We believe the drop in activity was mainly as a result of the uncertain investment climate that pervaded Nigeria. We however, expect that a stabilisation of exchange rates and our continued efforts to develop the market will enhance trading activity on the NASD OTC market.”

Source: New Telegraph

 

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