Economy - Stockbrokers' indebtedness to commercial banks reduced significantly to N53.41 billion during the second quarter ended 30th September, 2012. This represents 47.55 percent reduction over N101.83 billion owed by stockbrokers in the same period of 2011.
Data obtained from the Securities and Exchange Commission showed that the figure was based on second quarter returns filed with the Commission by 228 broker/ dealers on their activities.
However, the broker/dealers' level of profitability was still in the negative, though it showed significant reduction of 66.90 percent when compared to the previous figure.
Specifically, the figure declined to N1.11bilion, as against N3.35 billion in 2011.
While stockbrokers' loans to capital market clients went down to N15.16 billion from N31.91 billion in 2011, investment in quoted securities declined to N65.60 billion from N214.86 billion. This represents 52.50 percent and 69.47 percent reduction respectively.
Similarly, the shareholders' fund during the period stood at N74.73 billion, 17.59 percent decrease compared to N90.68 billion recorded in equivalent period of 2011.
The SEC explained in an accompanying note that the reduction in level of indebtedness by stockbrokers indicated a considerable improvement in market's leverage and liquidity, saying that more improvement was expected if this trend could be maintained.
'Profitability though still in negative, had considerably reduced compared to the 2nd quarter 2011 result. This could be attributable with the reduced operational cost of debt servicing arising from the large off-set of bank loans. The reduction observed in the firms' credit exposure which showed an improvement in the risk management framework of the companies that is in line with the Commission's focus of the market,' the SEC said.
'The decline observed in the investment in quoted securities may not be unconnected with portfolio re-distribution by firms to take advantage of the high yield in fixed income and money market (treasury bills).
'Shareholders funds: the funds declined by 17.59 percent compared to the 2nd quarter 2011 result. This was as a result of the persistent negative profitability trend over time (which would impact on the companies' Reserves),' it added.
The report further stated that returns filed by the various registrars showed consistent increase on the level of unclaimed dividend, with 2009 serving as the year of significant increase by 48.56 percent of amount outstanding as unclaimed dividend, recorded as N41.3 billion, an increase by N13.5 billion from 2008.
According to the report, the commission received returns on unclaimed dividend totaling N17.41 billion as at September 30th, 2012 with Access Bank Plc topping the list of with outstanding unclaimed dividend of N3.46 billion.
First Bank of Nigeria Plc followed with outstanding unclaimed dividend of N3.18 billion, while UACN, Nestle Nigeria Plc and Fidelity Bank closed the list of top five companies with highest unclaimed dividend with N1.97 billion, N1.37 billion and N1.23 billion in that order.
By Nkiruka Nnorom
Vanguard/04/03/2013