Equity Market Review & Outlook
+ The Nigerian equity market closed the week in bearish territory, despite a marginal rally on the last trading day. Consequently, the benchmark Index shed 176bps, while the average value of transactions for the week rose by 45.2%, relative to the previous week.
+ We expect equity market activities to remain flat this week as attractive rates in money and fixed income markets will lure investors from this market, despite anticipation that the release of results this week will boost the level of activities.

Money Market Review & Outlook
+ A hike in the MPR last week led to corresponding hikes in money market rates across board. A dearth of liquidity within the system saw rates skyrocket during the week, with slight moderation on Friday as proceeds from AMCON bond sales to the tune of N450.0bn were credited into the system.
+ We expect a decline in system liquidity this week on the back of an upcoming bond auction. Interbank rates should adjust upward by the end of the week, as liquidity within the system eases out.

Foreign Exchange Market Review & Outlook
+ Demand for the Dollar at the official market stood at US$1.3bn, 93.8% higher than the US$685.4m on demand at the single auction in the previous week. The CBN’s offer of US$400.0m at Monday’s auction was 45.7% short of the US$736.9m on demand, depreciating the Naira by 151k to close at N156.91/US$1.00.
+ We expect to see a slight depreciation in the Naira this week at the official market, with an appreciation at the interbank segment. We also expect the CBN to help ease supply gaps for the Greenback at the interbank, in a bid to limit the growing premium between markets.

Bond Market Review & Outlook
+ The 275bps hike in the MPR to 12.0% last week saw yields in the bond market adjust upwards by at least 300bps apiece on all securities at the end of the week. Although inflation for September came in at 10.3%, 100bps above the 9.3% reported for August 2011, these instruments will continue to generate real returns for investors based on current yields.
+ Despite an inflow of N450.0bn from the sale of AMCON bonds by certain banks late last week, liquidity is expected to tighten slightly this week on account of T-bills and bond auctions. This may lead to a further increase in yields, albeit marginally.

Afrinvest Weekly Update - 14th October 2011 (128).
NSE Weekly Report - FSDH - October 14th 2011 (120).
NSE Weekly Report - IBTC - October 14th 2011 (117).

Week Ended October 7th:
Afrinvest Weekly Update 7th October 2011 (87).
NSE Weekly Report - FSDH - October 7th 2011 (83)

Week Ended September 30th:
NSE Weekly Report - Access Bank - Sept 30th 2011 (98).
NSE Weekly Report - FSDH - Sept 30th (91).
NSE Weekly Report - Lead Capital - Sept 30th (100).
NSE Weekly Report - Lead Capital - Sept 30th 2011 (74)

Week Ended September 23rd:
Afrinvest Weekly Update 23rd September 2011 (73).
NSE Weekly Report - Access Bank - Sept 23rd 2011 (69).
NSE Weekly Report - FSDH - Sept 23rd 2011 (73).
NSE Weekly Report - Lead Capital - Sept 23rd 2011 (69)

1. To tighten monetary policy by a majority decision of 10 to 2.
2. To raise the MPR by 75 basis points from 8.0 per cent to 8.75 per cent by a majority vote of 8 members in its favour, 1 member favoured 50 basispoint increase while 3 members voted for holding the MPR at 8.0 per cent.
3. To maintain the corridor at +/- 200 basis points around the MPR.

Below is the summary from the communique of the meeting:

The Monetary Policy Committee (MPC) met on 25th and 26th July, 2011 to review domestic economic conditions during the first half of 2011 and the challenges facing the Nigerian economy against the backdrop of developments in the international economic and financial environment in order to chart the course of monetary policy in the second half of the year.

On the global scene, the Committee noted with concern the enormity of the challenges being faced by the US and euro zone countries as well as the major emerging market economies such as the fiscal position of Brazil, possible real estate bubbles in China and seemingly intractable inflation in  India, which may impact the Nigerian economy adversely through several channels. The economic slowdown and the commodity price inflation in the international economy as well as the rapid increase in prices of some asset classes in some emerging market economies remain serious threats to the global economic recovery. There are continuing widespread threats of inflationary pressures fuelled by the sustained high energy, commodity and food prices in the global economy. Headline inflation in many of the major emerging market economies is now exceeding 6 per cent and is running close to or above central banks’ targets in a number of other larger economies.

The performance of the global financial markets was mixed. Many national currencies in Africa depreciated against the US dollar while in many emerging markets, currencies appreciated vis-à-vis the US dollar during the first half of 2011. Furthermore, most stock markets around the world showed weak recovery during the period due to high inflation, weakening consumer confidence and government finances, particularly in the US and eurozone. The unfolding debt crises in the European periphery could damage confidence and output in the near-term while the US debt and unemployment situation pose grave danger to the international economy given the reserve currency role of the US dollar and the size of the US economy. It is not unlikely that the US will lose its AAA rating and actual default is possible unless a deal can be worked out between the White house and the Congress.

On the domestic scene, the Committee noted that inflationary pressures which were traceable to the high expenditure levels associated with the April 2011 general elections as well as the effects of rising international energy, commodity and food prices had moderated by June 2011. This development was due in part to the tight monetary policy stance of the Bank since September of 2010. However, the Committee observed that the inflation outlook appears uncertain owing to the expected implementation of the new national minimum wage policy and the imminent deregulation of petroleum prices.

Significant injection of liquidity from FAAC in the third quarter coupled with the impact of AMCON recapitalizing intervened banks to the tune of N1.6 trillion will both add to inflationary pressures. The Committee welcomed the favorable growth projections but cautioned that the current security challenges, infrastructural bottlenecks and the uncertainty in the international economy as well as fiscal developments could undermine investors’ confidence and output growth in the near term.

The Committee expressed serious concerns about the continued sluggish growth of credit to the private sector during the first half of the year which is attributed, among other factors, to the heightened credit risk in the real economy as a result of the persisting structural problems occasioned by the inadequate power supply and critical infrastructure deficit. It also observed that the lending rates of deposit money banks (DMBs) remained relatively high.

You can download the full communique below:

And here is the communique from the June meeting:

Before the July 25th and 26th meeting, Afrinvest, Access Bank, and Vetiva had released preview documents of the Central Bank’s decision, you can read them below:

Monetary Policy Committe Decision Preview - Access Bank - July 25th 2011 (152).

Monetary Policy Committee Communique - Afrinvest - July 26th 2011 (145).

Monthly Economic Note - Vetiva Research - February 2011 (300).

Monthly NSE Report - Proshare - February 2011 (330).

Afrinvest 2010 Pharmaceutical & Healthcare Sector Update (459).

Vetiva Research - Cement Sector Study (2589).

An excerpt of their outlook for the different sectors of the economy is below:

Sector Outlook

Banking Sector: Risk gives way, eyes on fundamentals
We are overtly upbeat on 2011 earnings, as the key drags on growth fizzle out. Aside our modest outlook on loan growth which is expected to enliven interest income as well as fee and commission books, the steady uptick in the overall yield environment will provide support for appreciable growth in FY’11 earnings over 2010 levels. Our top calls in the sector are ZENITHBANK, ACCESS and FIRSTBANK. These three banks have an expected return of 27%, 25% and 17% respectively.

Consumer Sector: Tough year ahead…efficiency, requisite
The global factor of rising commodity prices, and constrained domestic credit growth will combine to pose challenges for companies within the consumer sector in 2011. It is worthy to note that these stress points would play differently for the sub-sectors within the Consumer industry. Importantly, the ability of consumer companies to improve and sustain production efficiencies would gird against some of these pressures. In the consumer space, we are bullish on Dangote Flour and Flour Mills on the basis of our expected return of 29% and 11% respectively.

Energy Sector: Elections to slow reforms
With far reaching reforms in the pipeline in of the oil, gas and power segments of the Energy industry, electioneering for the April polls seems to be shifting the focus of the legislators, and also the ability of the executive arm of government to focus on implementation. We note that for most segments, less activity on the reforms would be felt pre-election, whilst the Government is likely to put more focus on the pressing issues in the Energy Industry, post-elections. Our top shot in the sector remains Oando, based on our estimated return of 32%.

Infrastructure Sector: Set for mixed realities
Our focus on the building materials sub sector is on the cement producers, as they dominate the infrastructure sector. The outlook for the cement producers follows from our overall expectations of slow infrastructure development. In line with the additional capacities expected to come on stream this year, the sub sector is set to witness a major boost in cement supply. On consumption, we expect some improvement in Q1’11 given the onset of the dry season. The construction sub sector will still be dependent on government capital expenditure. We expect a reduced level of government contract awards and mobilization as focus on elections stalls decision making in government quarters. Notwithstanding the strong fundamentals of the sector, most of the stocks are stretched at current prices. However, we remain bullish on Lafarge WAPCO and Julius Berger based on our estimated potential return of 18% and 14%.

Insurance Sector: Searching for value
With the Nigerian economy forecast to grow at 7.0% in 2011, and given rising income levels and higher risk awareness among the populace, we are cautiously optimistic about the demand for insurance products. However, intense competition with rate undercutting, moderate returns from investments, and adjustments to the new regulatory guidelines is likely to continue to taper short-term profitability. Our favorite in the Insurance space remains Custodian and Allied Insurance based on our estimated return of 32.1%

Capital Markets: High Expectations Amid Uncertainty
Our expectation is that the equity market will close 2011 18% up, with the benchmark index ending the year at 29,246.49. In our view, this base case scenario would be driven by a 30% return by banks, while Petroleum Marketing and our new Infrastructure (includes building materials and construction companies) sectors are forecast to return 18% and 9% respectively. We expect our new Consumer group to return 15%, however, sub sector forecast puts Food & Beverages at 21%, the Brewers at 12%, while the Conglomerates will throw in a 6% return. As in 2010, we believe the Insurance sector would once again lag the broader market with 2011 return forecast at 5%.

Our Bull case estimate for the equity market performance rises 606 bps above our base case scenario to 24%. Again the banks will lead with a 40% return, Petroleum Marketing and Consumer sectors will follow with 25% and 19% respectively. The Infrastructure sector will post 18% return, while Insurance counters will return 10%.

Our Bear case estimate sees equities returning 10% for the year. This scenario forecasts banks adding 25%, the Petroleum Marketing and Consumer sectors posting gains of 10% and 6% respectively, while the Infrastructure and Insurance sectors will shed 4% and 5% respectively.

Given the expected hyperactivity in local Bond issuances by AMCON and the federal government early in the year, we expect the bond market to continue to attract capital flows as bond yields would trend higher in 2011, hence shaving off, only slightly though, some of the potential investments in equities. Stronger still, the uncertainty in the Nigerian Political environment might delay significant investments in the capital markets further into the year as investors exhibit caution over the outcome of the elections.

And here is their outlook:
Vetiva Research Feburary 2011 Monthly Economic Note (228)

Outlook

Inflation
We  expect inflation to trend higher in the short-term thereby piling pressure on the need to  continue raising interest rates. We emphasize “short-term”,  as the drivers of inflation are clearer and more persuasive over this time frame. Fiscal spend in the run up to the April elections, expectations on the back of the  recently approved  N18,000 minimum wage,  high oil prices owing to rising  tensions in the MENA region and,  spiking food prices on the back of adverse weather conditions are a few of the risks somewhat certain to linger up till H1’11. Our  view is that these risks are short-lived,  and we expect  inflation will finish the year in the 10%-11% range.

Interest rates
The lack of clarity on the fiscal direction of the government and the anticipation of higher  oil revenues have pushed  ahead market expectations  of the likely timing and pace of monetary policy tightening. On this assumption, we expect interest rates to edge higher gradually in reaction to the tightening measures. In addition, we anticipate there will be a more dramatic reaction as soon as the  CBN’s  guarantee on interbank market transactions is removed as expected in H1’11.

Exchange rates
Without discounting the possibility of short-lived volatilities, we remain positive on the stability of the  naira on the back of  a steady accretion of reserves and well managed demand  base. We are cautiously optimistic that the withdrawals from the Excess Crude Account (ECA) as seen in 2010 will not recur.

From all indications, oil prices are not a major risk  to  reserve accumulation in 2011  as prices are forecast to remain significantly above the budget benchmark. The major risk we see is the health of oil production volumes, which will depend on the outcome of the April elections.  Another slightly worrying consideration is the devaluation of the US  dollar  which is the world’s reserve currency. The Bloomberg Dollar Index has lost 4.8% and 1.1% in the last three  months,  and one month respectively. There is no gainsaying that the greenback will devalue further in  2011,  as the government is committed to closing its huge deficit gap. It may make sense for the CBN to actively pursue diversification of Nigeria’s reserve currency exposure.

Here is an excerpt from the report on their outlook for 2011:

Outlook for 2011
Global Economy
The highlights of the consensus from the IMF, World Bank  and OPEC on the outlook of the world economy for 2011 are:
+ Looking at the world economic growth rate in 2011, IMF projects 4.5%, OPEC projects 3.9% while World Bank projects 3.3%. The  IMF’s projection is slightly lower than the estimated growth rate of 5% in 2010, but represents an upward revision from 4.25% released in the WEO, October 2010. IMF added that signs are increasing that private consumption  – which fell sharply during the crisis – is starting to gain in major advanced economies.
+  IMF however notes that downside risks to the recovery remain elevated. According to the Fund, the most urgent requirements  for robust recovery are comprehensive and rapid actions to overcome sovereign and financial troubles in the euro area and policies to redress fiscal imbalances and to repair and reform financial systems in advanced economies more generally. These need to be complemented with policies that keep overheating pressures in check and facilitate external rebalancing in key emerging economies.
+ IMF projects oil price around US$90/b in 2011.

The Nigerian Economy
The general elections into various political offices in Nigeria will commence with the National Assembly Elections on April 02, 2011. This will be followed by Presidential Elections on April 09, 2011 and lastly Government/State Assembly Elections on April 16, 2011. Although there are some securities issues around the country which the government has vowed to deal decisively with, we are of the opinion that with the success of the just concluded party primaries across the nation, the election will be void of crisis that can adversely affect the smooth running of the economy and the financial market.
+ There are renewed commitments from the Federal Government to privatize the Power Holding Company of Nigeria (PHCN) by June 2011. This is in line with FSDH Research recommendation. When actualized,  it is capable of thrusting the economy on a growth path never witnessed before.
+ We expect the FGN to adopt more Public Private Partnership (PPP) in its bid to improve the state of infrastructural facilities in the country.
+ We expect the current Sovereign Debt Note  (SDN) where the FGN guarantees the payment of the subsidy to oil importers to end toward  mid-year. This will also be in preparation for the deregulation of the sector.
+ The current high yields on government securities may serve as disincentive for the banks to lend to the real sector of the economy thus further crowding-out the private sector and driving up lending rates.
+ We expect the Bill establishing the Sovereign Wealth Fund (SWF) to be passed and signed into law. If this is established, we expect it to provide additional cushion for the economy and instill more discipline in political office holders in handling public finances. If the average oil price in 2011 stands at US$88/b,  we estimate a total of about US$13.75bn to be saved in the SWF given the production of 2.3m/b and a budget oil price of US$65/b in 2011.
+ Our forecast inflation rate range for 2011 is 12.50% -13.00%.
+ We expect that the FGN, after the general election will have the political will to implement the much desired full deregulation of the downstream sector of the oil and gas industry in Nigeria.
+ Forecast exchange rate for 2011 is the region of  N150.50/US$1-N152.50/US$1. The CBN has also approved forward trading on foreign exchange.
+ With the cleanup of the microfinance subsector of the financial industry, the sector is now well positioned to promote credit creation among the active poor, promoting synergy and mainstreaming of the informal sector in the national financial system and contributing to rural transformation.
+ Our forecast GDP Growth range for Nigeria in 2011 is  7%-8%.  We however believe that Nigeria has the capacity to achieve double digit GDP growth rate if the country has stable power supply, relevant transportation network and  with the proposed deregulation of the downstream sector of oil and gas.
+ External reserve: Our forecast figure to end 2011 is US$35.58bn.
+ Estimating the public debt position of the FGN both from the domestic and external markets from available data and forecast, we expect the domestic debt to increase to N5.11trn, while the external debt should increase to US$5.21bn.

Fixed Income Securities
Considering the interactions of several factors, the following factors may dominate activities in the money market in the next six months:
+ Liquidity tightness
+ Inter-bank rates to maintain upward trends in response to the tightness in the market.
+ We expect further drop in the prices of FGN Bonds in response to rising interest rates, yields and increase in the domestic borrowing of the Federal Government.
+ Treasury Bills may command higher discount rate.
+ Deposit rate may also inch up to attract deposits.
+ Increased activities in the state government bond market after April election, particularly for states where the incumbent governors win the April election. We expect a gradual slow down in the activities in the state government bonds and corporate bonds issuances to close the year.
+ Any new corporate bond will command high coupon rate given the current high yields on FGN Bonds in the market.

Equities Market
FSDH Research believes that the current improved regulatory oversight on the equities market will boost investors’ confidence both locally and internationally. In our view, the following factors will sustain the growth of the market in 2011.
+ Improvement in earnings of quoted companies;
+ Success of the general elections and smooth transition of power;
+ Stability in foreign  exchange rate and other macroeconomic factors;
+ Taking over of non-performing assets of banks by AMCON;
+ Sustained global economic recovery which  will keep oil price around current level  of US$90/b;
+ Signing into law the Petroleum industry Bills;
+ Deregulation of Downstream sector of oil and gas;
+ Adoption of PPP in improving the state of infrastructure in the country;
+ The resolution of the leadership crisis at the NSE;
+ Privatization of PHCN;
+ Commitment on the part of the Federal government to improve power generation and relevant transportation (road and rail).

However the downside risks to the growth of the NSE in 2011 are as follows:
+ Election crisis;
+ The wave of insecurity in the some parts of the country  which may scare foreign investors;
+ Rising yields and rates on fixed income securities;
+ Tightening policy thrust of the MPC;
+ Rising prices of  food and other intermediate raw material in the international market which may reduce the margins of  the companies that rely on them;
+ Delay in AMCON taking over the non-performing assets of banks which may make investors lose confidence in the whole process;
+ Possibility of bubble capital from the  Foreign Portfolio Investment(FPI);
+ The possible adverse impact of the  euro area crisis on the domestic financial market.

We are of the opinion that these factors are to a large extent subdued and the factors in favour of the economy and the financial market outweigh these risks. We are therefore inclined to release a forecast growth rate of 17.42% for the NSE ASI in 2011. Given this growth rate, we expect the NSE ASI to close the year in the region of 29,085.96 points.

FSDH - Economic And Financial Outlook For 2011 (644)

MPC Decisions
In the light of the above considerations, the Committee is committed to maintaining price stability by pursuing the current policy thrust of monetary tightening in view of the perceived inflation risks in the near term. The Committee took the decision to further tighten monetary policy. This was a decision taken by a majority of 11:1. The following measures were approved:
1. Raise the MPR by 25 basis points from 6.25 per cent to 6.50 per cent with immediate effect (a majority vote of 11:1);
2. Maintain the symmetric corridor of +/- 200 basis points by 7-5; 4 members voted for asymmetric corridor by 50 basis points increase in Standing Deposit Facility rate;
3. Raise the Cash Reserve Requirement (CRR) Ratio by 100 basis points from 1.00 per cent to 2.00 per cent with effect from February 1, 2011 with a majority vote of 11:1; and
4. With effect from March 1, 2011, raise the Liquidity Ratio (LR) by 500 basis points from 25.00 per cent to 30.00 per cent with a majority vote of 11:1.

And you can download the full minutes below.
Communique for MPC Meeting of January 24th-25th 2011 (124)

ECONOMIC REVIEW

The economy continued to record impressive output growth in Q4 2010. Provisional data from the National Bureau of Statistic  (NBS) indicates a real Gross Domestic Product (GDP) growth of 8.29% compared to 7.86% in Q3 2010.  The overall GDP growth for 2010 is estimated at 7.85% compared to 6.96% recorded in 2009.  This also compares favourably with the average growth rate in Africa of 4.5%.  The growth was driven by the Agricultural and Crude Oil sectors, which makes up approximately 42.32% and 19.70% of GDP respectively.  The CBN’s Monetary Policy Committee (MPC) shifted its policy stance from accommodative to monetary tightening.  The benchmark interest remained unchanged at 6.25% but the standing deposit facility rate rose to 4.25% from 3.25%. Consequently, headline inflation fell to its lowest level since the CPI basket was rebased, from 13.40% inOctober to 12.80% in November. We expect the CBN to maintain the current policy in 2011. Similarly, the CBN maintained its stable exchange ratepolicy throughout the year despite the slight pressure witnessed on the demand side in the second half of the year.  As such, the CBN exchangerate (offer) which opened the year at N147.60/$ reached a high of N149.55/ $ and closed the year at N149.17/$.

MARKET REVIEW
The All Share Index (“ASI”) opened the quarter at 23,050.59 closed at 24,770.52 representing an appreciation of 7.46%. For the year in review, the ASI rose by 18.93% as against -33.78% returned in 2009. Similarly, all sectors of the Exchange closed on a positive note with the banking sector recording the highest appreciation (21.93%) for the quarter, while the building material sector recorded the highest appreciation (44.98%) for the year.

Our analysis attributes this change in market trend to the increase in confidence in the market as a result of the announcements from the Asset Management Corporation of Nigeria (“AMCON”), the sanitization of the Nigerian Stock Exchange and strong Q3 performance by majority of the banks. During the quarter, AMCON announced the purchase of all non-performing loans in excess of the 5%. These loans were paid for with 3 year Zero coupon bonds guaranteed by the Federal Government of Nigeria.  Our analysis suggests that this will increase the liquidity of banks and theirability to create risky assets, thereby boosting their profitability further.  In addition, we expect this to significantly reduce the sellingpressure experienced in the equities market due to the overhang of margin loans.   The selection of Mr Oscar Onyeama as the new Director General of the Nigerian Stock Exchange was also announced on the last day of the quarter.

In the fixed income market, the Debt Management Office (“DMO”) raised a total of N282.17 billion via bond issuance which was lower than the N351.46 billion raised in Q3. The DMO reduced the total debt raised in Q4 due to increased crowding out of private sector borrowing by the federal government.  The 3, 5, and 20 years FGN Treasury Bonds opened the quarter at yields of 8.43%, 9.90% and 12.53% respectively and closed higher at yields of 10.82%, 11.42% and 14.24% respectively. In addition, Edo State, Ebonyi State and Flourmills of Nigeria issued 7 year, 5 year and 5 year bonds in N30 billion, N16.5 billion and N35 billion tranches at yields of 14%, 13.50% and 12% respectively. Also the Federation Account Allocation Committee (“FAAC”) disbursed a total of N880 billion during the quarter.

Quarterly Economic Review - Q4 2010 And 2011 Outlook - Stanbic IBTC (152)

• Mixed performance by listed companies
• Declining income and savings
• Absence of margin facilities
• Reduction of bank exposure to margin loans
• Continued banking reforms
• AMCON commenced operations
• GDP growth averaged 7.6% with oil contributing 84% of GDP
• Government revenue was N5,297.18 billion which was 11% below budget requirement
• Inflation was at 12.8% as of Nov 2010
• 93.3billion shares with a value of N797.55billion traded
• Average of 377million shares worth N3.2billion traded daily
• Zenith Bank, First Bank, GTBank, UBA and Access Banks were the most traded
• 2011 growth projected to be 7 – 7.4%
• Big risk of inflation

A.G. Leventis Nigeria PLC 2009 Annual Report (188).

Abbey Building Society Annual Report (249).

Access Bank PLC 2009 Annual Report (225).

Ecobank Transnational Incorporated Annual Report 2009 (905).

Flour Mills of Nigeria PLC 2009 Annual Report (921).

FTN Cocoa Processors 2009 Annual Report (320).

Guaranty Trust Assurance Plc Annual Report 2009 (379).

Honeywell Flour Mills PLC : Annual Report for 2010 (204).

Nigerian Enamelware Plc Annual Report 2009 (417).

Red Star Express PLC 2010 Annual Report (177).

Seven Up Bottling Company Q2 Annual Report (581).

Vitafoam Nigeria PLC 2009 Annual Report (723).

1. To Retain the Monetary policy Rate (MPR) at 6.25 per cent.
2. To adjust the corridor to +/- 200 basis points, implying Standing Lending Facility (SLF) rate of 8.25 per cent, and Standing Deposit Facility (SDF) rate of 4.25 per cent.
3. Maintain the policy stance of a stable exchange rate.
4. Continue to monitor inflationary trends with a view to taking appropriate steps as and when necessary.
5. On the stance of monetary policy in the year ahead, the Committee reaffirmed that monetary policy would seek to exert pressure on aggregate demand, thereby helping to lower inflation expectations.

The report is below:

Central Bank of Nigeria Communiqué No. 73 of the Monetary Policy Committee Meeting,Nov. 22-23, 2010

The Monetary Policy Committee (MPC) met on 22nd and 23rd November, 2010 to review domestic and international economic and financial conditions in order to reassess the options for monetary policy for the rest of the year and beyond. On the global scene, the Committee noted with concern the continued slowdown in global economic recovery, especially in the US against the backdrop of the huge US trade deficit, requiring both domestic and external rebalancing of demand.

On the domestic front, the MPC noted the high economic growth rate and the progress made towards restoring stability in the banking sector. It, however, observed with concern the continued high inflation rate and reiterated the urgent need for fiscal consolidation and the continuation of comprehensive economic and structural reforms to remove supply-side bottlenecks.

Key Domestic Macroeconomic and Financial Developments
Output and Prices:
The Committee observed the sustained impressive output growth recorded thus far in 2010. Provisional data from the National Bureau of Statistics (NBS) indicates that real Gross Domestic Product (GDP) is estimated to grow by 8.29 per cent in the fourth quarter of 2010, up from 7.86 per cent recorded in the third quarter. Overall GDP growth for 2010 is projected at 7.85 per cent compared with 6.96 per cent recorded in 2009. The non-oil sector remained the main driver of overall growth.

The Committee, however, cautioned that the recent slowdown in economic activity in some major advanced economies could have adverse effects on commodity-producing economies like Nigeria, notwithstanding the expected high crude oil prices in the international markets. While urging greater efforts at diversifying the economy, the Committee stressed the need for policy reforms to address the binding growth constraints on the domestic economy, especially, infrastructural inadequacy. The Committee noted with satisfaction the progress made thus far on the power sector front, but stressed the need for renewed focus on the petroleum and agricultural policy sectors. The continued dependence of the country on imported food and energy, which is totally avoidable, is one of the main sources of erosion of our foreign reserves.

The year-on-year headline inflation (rebased) stood at 13.4 per cent in October 2010 relative to 13.6 per cent in September 2010. Food inflation was 14.1 percent in October, down from 14.6 per cent in September. However, core inflation rose to 13.2 per cent in October from 12.8 per cent in September. The persistence of high inflation remains a major challenge, when viewed against the relatively good harvests, improved supply of petroleum products and weak expansion of credit to the private sector. This reality further underscored the need for addressing supply-side constraints in the medium to long term, and the urgent need to restrain debt-financed government spending in the short term.

The MPC reiterated its earlier position on the threat of inflationary pressure arising from high inflation expectations, calling for stronger fiscal prudence to support the monetary policy stance. This is particularly critical for improving the dynamics of policy coordination. Nevertheless, the Committee would continue to monitor price developments with a view to taking appropriate policy measures to stem any inflation threat and ensure that the upside risk to growth is minimized.

Monetary, Credit and Financial Market Developments:
Provisional data showed that relative to end-December 2009, broad money (M2) grew by 4.25 per cent in October 2010, which, when annualized represented a growth of 5.10 per cent. Reserve money (RM), which stood at N1,653.86 billion at end-December 2009, fluctuated downward and by November 15, 2010, stood at N1,4449.95 billion.

Available data showed that in October 2010, aggregate domestic credit (net) grew by 19.69 per cent over the December 2009 level, and by 23.63 per cent when annualized. Credit to government (net), which grew substantially by 53.35 per cent over end-December 2009 (or 64.02 per cent on annualized basis), was the major source of expansion in aggregate credit. Credit to the private sector, grew marginally by 3.22 per cent (or 3.86 per cent on an annualized basis). In general, the growth in monetary and credit aggregates remained below the long term trends.

The interest rates at the interbank segment of the money market responded to the increase in the Monetary Policy Rate (MPR) effected at the last meeting of the MPC in September in line with policy expectation. Consequently, in October 2010, the average inter-bank call and open-buy-back (OBB) rates rose significantly to 8.45 and 7.53 per cent, respectively, representing increases of 526 and 461 basis points from the 3.19 and 2.92 per cent recorded in the preceding month.

Developments in market interest rates indicated that the retail lending rates were still relatively high. The average maximum lending rate moderated slightly to 21.85 per cent in October from 22.20 per cent in September while the average prime lending rate stabilized at 16.66 per cent.

The weighted average savings deposit rate remained relatively stable while the consolidated deposit rates increased to 2.31 per cent in October from 2.07 percent in September. Thus, the spread between the maximum lending rate and the consolidated deposit rate narrowed marginally to 19.54 per cent in October from 20.14 per cent in September.

The domestic capital market continued to show some signs of recovery. The All-Share Index (ASI) increased from 23,050.59 at end-September to 25,301.34 as at 15th November, 2010, or by 9.8 per cent. Market capitalization (MC) – equities only, increased by 43.1 per cent from N5.65 trillion to N8.08 trillion over the same period. The number of deals increased by 21.6 per cent, while the volume and value of shares traded decreased by 38.5 and 62.7 per cent, respectively. The increase in ASI and MC was principally due to the share price increases in the Banking, Food & Beverage, insurance and Oil/Gas sectors, and new and supplementary listings of shares on the exchange. The Committee believes that the effective take-off of the Asset Management Corporation (AMCON) and progress made on resolution of the banking system crisis have been major contributions to this improvement in sentiment.

External Sector Developments:
The foreign exchange market remained relatively stable. The total foreign exchange inflow in October was US$2.38 billion, representing a decrease of US$0.32 billion or 11.85 per cent below the US$2.70 billion recorded in the preceding month. Total outflows or payments in October amounted to US$3.46 billion, a decrease of US$1.62 billion or 31.89 per cent compared with US$5.08 billion recorded in the preceding month. Consequently, the net outflow during this period was US$1.09 billion.

Inflows from autonomous sources in October were US$10.43 billion compared with US$7.55 billion in September. Cumulatively from January-October 2010, total foreign exchange inflows to the market amounted to US$ 88.32 billion comprising funds from the CBN (US$21.15 billion) and from autonomous sources such as oil companies, international institutions and home remittances (US$67.17 billion). The Committee noted with satisfaction the complementary role of autonomous inflows in moderating demand pressure in the foreign exchange market.

In October, the WDAS average closing rate was N151.25/US$ compared with N151.07/US$ recorded in September, representing a depreciation of 18 Kobo (0.12 per cent). On November 15, 2010, the WDAS exchange rate was N150.29/US$ compared with N151.25/US$ for October, representing an appreciation of 96 kobo (0.64 per cent) At the interbank segment, the average buying and selling rates for October, were N151.68/US$ and N151.78/US$, compared with N152.51/US$ andN152.61/US$ respectively recorded in September, representing an appreciation of 83kobo (or 0.54 percent). On November 15, 2010 the corresponding rates were N150.65/US$ and N150.75/US$ as against N151.68/US$ and N151.78/US$, in October, registering an appreciation of 103 kobo (or 0.68 per cent) .

At the BDC segment, the average buying and selling rates in October wereN151.98/US$ and N153.98/US$ respectively, compared with N152.30/US$ andN153.80/US$ in September. The buying rate represented an appreciation of 32kobo (0.21per cent) while selling rate represented a depreciation of 18 kobo (or0.12 percent). The buying and selling rates on November 15 were N151.50/ US $and N153.50/ US$ compared with N151.98/US$ and N153.98/US$ for October,represented an appreciation of 48 kobo (or 0.31 per cent). Thus, the stability of the naira exchange rate since the first half of 2009 continued into 2010. The MPC believes that the relative stability in the foreign exchange market is likely to be sustained in the near term. The Committee would continue to monitor developments in the market to ensure that measures are taken to eliminate speculative demand and exchange rate volatility.

The gross external reserves stood at US$34.27 billion on 15th November, 2010
compared with US$33.597 billion as at end-October and US$34.59 billion as at
end-September.

The committee noted the elevated demand for foreign exchange at the WDAS which led to an increase in reserve utilization to defend the currency. It also noted recent moderation of demand pressure following Central Bank’s interventions to curtail speculative demand. It, however, stressed that the solution to reserve accretion have to be in implementation of appropriate reforms to industrial and trade policy aimed at reducing import-dependence, and these are beyond the scope of monetary policy.

The Committee’s Considerations
The key concerns noted by the Committee were:

1. The elevated inflation levels;
2. Rising government expenditure and borrowings with the possible crowding out effects on the private sector; and
3. Demand pressure in the foreign exchange market, leading to reduction in external reserves.

The view of the Committee is that the solution requires both fiscal and monetary measures, and reiterated the need to eliminate unnecessary subsidies that add to government expenditure and debt. There is need also for continuing reforms in the economy particularly in the energy and agricultural sectors to curb high import bills through appropriate fiscal policies. The Committee remains conscious of its core mandate and reaffirms its commitment to price stability to engender sustainable economic growth.

The MPC remained committed to exchange rate stability in order to attract foreign direct investment and anchor expectations. The MPC emphasized greater communications with stakeholders to remove speculative demand in the foreign exchange market. It also held that, in view of the low price elasticity of demand for imported necessities, depreciation of the currency would not in itself address the structural problem of import-dependence. The Committee continued to urge greater fiscal responsibility and commitment to reforms that  will enhance the effectiveness of monetary policy.

Overall, members agreed that there is need for tightening, but the discussions centered on the form and the timing of the tightening. After due consideration of the pros and cons of various policy options, the Committee agreed on a majority decision of 6 to 4 members to retain the current policy rate, given the need to retain flexibility and allow the effect of the previous rate increase to work through the system, against the argument for immediate increase in view of the elevated inflation risk. Also, the Committee agreed by a majority of 9 to 1 members to narrow the corridor around the MPR by reintroducing the symmetry of +/- 200 basis points.

Decisions
The MPC’s decisions were therefore:

1. To Retain the Monetary policy Rate (MPR) at 6.25 per cent.
2. To adjust the corridor to +/- 200 basis points, implying Standing Lending Facility (SLF) rate of 8.25 per cent, and Standing Deposit Facility (SDF) rate of 4.25 per cent.
3. Maintain the policy stance of a stable exchange rate.
4. Continue to monitor inflationary trends with a view to taking appropriate steps as and when necessary.
5. On the stance of monetary policy in the year ahead, the Committee reaffirmed that monetary policy would seek to exert pressure on aggregate demand, thereby helping to lower inflation expectations.

In addition, monetary policy would stand ready to provide adequate and timely liquidity to support credit dynamics that would sustain fiscal mechanisms to bolster growth.

Sanusi Lamido Sanusi
Governor,
Central Bank of Nigeria
Abuja
November 23, 2010

You can download the report below:
Communique for MPC Meeting of Nov 22nd -23rd 2010 (70).
DLM Economic Update - MPC Maintains MPR at 6.25% (72)

+ The NSE All-Share Index gained 229 bps cumulatively this week.

+ Bullish activities were very prominent in most of the rescued banks’ stocks this week; this is due partly to the announcement in respect of AMCON modalities to be released in the coming week. As a result the likes of FinBank, Wema Bank, Oceanic Bank, Union Bank and Bank PHB all recorded gains between 14.5% & 21.0%. However, the top tier banks were not left out in the bullish activities, First Bank appreciated by 5.6%, Zenith Bank 9.0% and UBA 9.5%, while GTBank closed the week unchanged.

+ In the food and beverages sector, bearish sentiments dominated proceedings this week, this translated to losses of more than 2.0% for Cadbury, NBC and Flour Mills. On the flip side, Nascon, Dangote Sugar and Dangote Flour recorded gains of between 1.7% and 6.0%.

+ Activities in the insurance sub sector improved slightly this week and this led to price appreciation for some of the stocks in the sector; Niger Insurance gathered 22.8%, and this was followed by Law Union & Rock with a 7.4% gain, while Cornerstone inched up by 4.0%. On the other hand, Custodian & Allied, Prestige and NEM all shed above 4.0% each.

Here are the reports:
NSE Weekly Report - FSDH - Nov 12th 2010 (75).
NSE Weekly Report - Afrinvest - Nov 12th 2010 (65).
NSE Weekly Report - Lead Capital - Nov 12th 2010 (61).
NSE Weekly Report - IBTC - Nov 12th 2010 (69).
Afrinvest Forthnightly Nigeria Update - November 12 2010 (61)

And here are the stats:

Source: Stanbic IBTC

Here is an excerpt from the report:

Investment Summary
We update our view on Nigerian brewery sector with NEUTRAL ratings on the 2 biggest players – Nigerian Breweries Plc and Guinness Nigeria Plc with pooled market share of 80%.

- Volume drivers still at work. With a 15m hectolitres (mhl), (2009 est.) according it the second largest in SSA, the Nigerian brewery market, in our estimate, will grow to 23mhl by 2015 premised on the combined impact of beer per capita consumption (PCC) growth (13litres expected vs. 10litres currently), population build-up (2.8% p.a.) and nominal per capita income growth (8.3% p.a.). Consumption of brewed products is intrinsically linked to GDP growth which is rising across SSA economies, with Nigeria expected to deliver aboveaverage growth performance, based on IMF and World Bank forecasts.

- Eyed by the bigwigs… Nigerian brewery sector is increasingly attracting the attention of global majors: SAB Miller, Carlsberg and Castel. These interests re-affirm the growth opportunities embedded in the sector and we expect it to generate a positive development for the sector in terms of volume growth and deeper market penetration.

- …in view of robust investment thesis. The investment case for the Nigerian brewery sector is uncomplicated: the sector is largely dominated by 2 global players, Heineken and Diageo, through their subsidiaries (Nigerian Breweries Plc and Guinness Nigeria Plc respectively); beer consumption is notably at low levels with PCC of 10litres, which is a 56% discount to comparative benchmarks and 40% discount to levels attained in the 1980s; medium to long-term economic outlook is healthy at 5%-plus real GDP growth expectation over the next decade; supportive demographics characterised by growing youthful population with avid thirst for fun and social culture that encourages festivities. These fundamentals form the basis of our conviction for a deserving long-term call on the sector.

- Credible route to economic growth potential… Nigerian brewers are moderately shielded against Nigerian macroeconomic risks as sales recover quite swiftly from unfavourable economic cycles, proven once again in the 2009/10 financial years. We believe the sector provides a solid route to accumulate direct exposure to Nigeria’s medium-term growth potential, and indeed SSA, as we think domestic beer consumption rate will increasingly set the Nigerian market apart on the heels of expanding economy. We will play this growth theme through NB and Guinness from a long-term perspective given their operational scale, market dominance and impressive CAPEX.

- …but we are NEUTRAL on full valuation, in the near-term. From a valuation standpoint, the shares of quoted brewers offer a long-term attractive proposition but, on a 12-month horizon we find the risk-reward profile limited, as the shares have performed strongly (41% in 12 months) and trade at forward P/E multiple of 17.1x and EV/2010e EBITDA of 9.8x. We are on the sidelines to make an inroad into the sector’s long-term growth prospect on better valuation attraction. At this point, we think direct acquisition and repositioning of fringe players is a potent source of alpha.

I must say, it is not comforting in any way. Here are some reasons for concern – Nigeria’s investment rating has been downgraded from Stable to Negative, there has a huge depletion of the foreign reserves, the government is still on a borrowing binge, and the Naira is reducing value. And dont forget the upcoming elections.

The report also contains brief analysis of their top 20 stocks on the NSE:
Access Bank
Berger Paints
Custodian and Allied Insurance
Dangote Cement
Dangote Flour Mills
Fidelity Bank
Fidson Healthcare
First Bank of Nigeria
Flour Mills of Nigeria
GlaxoSmithKline Consumer
Guaranty Trust Assurance
Guaranty Trust Bank
Guinness
Lafarge Cement WAPCO
Nigerian Breweries
Oando
PZ Cussons
Skye Bank
Sterling Bank
Zenith Bank

Some excerpts are below. But to get the full benefit, read the entire report.

On the macroeconomic front, an analysis of provisional data provided by the National Bureau of Statistic (NBS) indicates that real GDP grew by 7.7% in Q2 2010, up from the 7.4% recorded in Q1 2010. The CBN has revised the GDP estimates upwards, forecasting a 7.8% growth in GDP for 2010 (with growth estimates of 7.7% and 8.2% in Q3 and Q4 respectively). The upward review in GDP forecasts rides on the back of favourable rainfall (a critical input for agricultural produce), improved crude oil and natural gas production, and the relative stability in crude oil prices. The non-oil sector is expected to remain the key driver of overall growth. External reserves stood at $36.6bn as at mid September, compared to $37.2bn by the end of July 2010. This range is expected to hold, depending on the stability of oil prices and output.

Oil production has remained relatively stable around the 1.9–2.1mbpd range (year to date), following the return of stability to the Niger-Delta earlier in the year and the success of the on-going amnesty programme. Oil prices have however been volatile all through the year; it stood at $83.30 at the end of Q3 ’10, which is above the country’s benchmark oil price of $60.00. We re-iterate our belief that oil prices will hover between the $70.00 – $80.00 range in the near term as the global economy firms up. The Naira, which remained fairly stable in the first two quarters of the year, saw more volatility in the third quarter and closed the quarter in the CBN, inter-bank and parallel market windows at N149.85/US$1.00, N154.60/ US$1.00 and N156.00/US$1.00 respectively.

The devaluation is not unconnected with the huge surge in dollar demand, particularly at the tail-end of the third quarter. The CBN Governor, Sanusi Lamido Sanusi, explained that this was as a result of an increase in the volume of petroleum products as well as rice imports, following enhanced credits from the Federal Government’s Petroleum Stabilization Fund (“PSF”) and waivers granted to rice importers. By the end of October, the Naira had appreciated to N148.50/US$1.00, N150.85/US$1.00 and N154.00/ US$1.00 at the CBN, inter-bank and parallel market windows respectively. The CBN has promised to intervene and defend the naira where necessary while it continues to monitor developments in the market, taking measures to eliminate speculative demand and exchange rate volatility.

The NBS recently revised and rebased the Consumer Price Index (CPI) to a November 2009 base period, in a bid to reflect the current consumption structure. Subsequently, inflation rose by 70bps from July to August 2010, and dropped marginally by 10 bps in September, closing at 13.6%. Afrinvest Research is of the opinion that fiscal injections related to election expenses may spur an upward trend in inflation. We however observe that the CBN is actively combating inflation through tighter monetary policies, an example of which is the recent increase in MPR to 6.25% and Standing Deposit Rate (SDR) to 3.25%.

The stock market was up 20.2% by the end of October 2010, after varying degrees of oscillation in the course of the year. This is however an improvement from the 30.5% decline recorded in the corresponding 2009 period.

….

Stability in Oil Prices…
Crude oil prices remained stable during the quarter with a Q3 2010 average (Bonny light) of $77.84 per barrel, a slight drop from the $80.06 per barrel recorded in Q2 2010. This drop in price has been compensated for by an increase in daily production, from approximately 2.35 million barrels per day in Q2 2010 to about 2.41 million in Q3 2010. Consensus analysts’ forecasts indicate that the outlook on oil prices is stable both in the short and medium term. Investor expenditure on commodities picked up during Q3 2010 after very strong flows during the tail end of 2009. Recognizing this upward trend in oil prices, analysts have reviewed their forecasts up towards the $95.00 mark over the next 12 months. Afrinvest Research expects fundamentals and investor flows to drive oil prices, though the potential increase in production quota/output may lead to a supply glut and check an upward movement in price.

With the return of stability in the country’s leadership, President Jonathan has taken a number of steps, seemingly in the right direction, aimed at boosting economic performance in the third quarter. Top on the list is the unveiling of a very articulate strategy designed to put an end to Nigeria’s chronic power shortages through the privatization of the country’s inefficient power generation and distribution facilities. The recent sanitization of the Nigerian Stock Exchange (NSE) (which should help rebuild investor confidence) and the incorporation of the Asset ManagementCompany of Nigeria (AMCON), are further indications that the president seeks to create the desired enabling environment for economic growth and development.

The exchange rate assumption of N150.00/US$1.00 is proving difficult to sustain given the drastic reduction in the nation’s foreign reserves, the depletion of the windfall oil savings and the fact that inflation has climbed to a high of 13.6%, a sharp contrast to the 11.2% assumed for the budget. We believe that this will pose a threat to exchange rate stability with the exchange rate at N151.50/US$1.00 as at end of October 2010. Cost efficiency ratios are also a major concern, as the quality of government expenditure is suspect, while the level of budget performance remains poor.

….

Piling Debt Despite Increasing Revenues…
A Sovereign Wealth Fund (SWF) is a state-owned investment fund composed of financial assets, which include money, stocks, bonds, property and other financial instruments. In the Nigerian context, the SWF is expected to replace the current Excess Crude Account (ECA). The ECA was set up as a stabilization fund to bridge budget deficits and fund domestic infrastructure investments. It was however set-up as a political arrangement (and without legal backing) during the Olusegun Obasanjo administration. The bill for the National SWF was submitted to the National Assembly on the 13th of September, to ensure that it has a legal underpinning. About N153.0bn (US$1.0bn) has been set aside as seed capital for its take-off. The fund is to be used for three distinct purposes; savings for the future generation, an economic stabilization fund, and an infrastructure fund for co-investment with other investors.

The Debt Management Office (DMO) released figures in Q3 2010 showing an outstanding domestic debt of N4.2tn (US$28.2bn) from N3.8tn (US$25.3bn) in Q2 2010. FGN bonds accounted for 64.0% of the Q2 2010 domestic debt amount, while Non-treasury Bills (NTBs) and Treasury Bills accounted for 23.9% and 10.4% respectively. Development Stocks and Promissory Notes made up the balance of the debt figure with both responsible for just less than 2.0% of the domestic debt figure. The increase in domestic debt can mainly be attributed to the financing of Federal Government budget deficits and expenditure on capital projects. The DMO also released its issuance calendar for 2010 showing a quarterly increment FGN auctions from N300.0bn in Q2 2010 to N330.0bn in Q3 2010, with a scheduled issuance of N408.8bn in Q4 2010.

….

The Federal Government also plans to issue a N75.0bn (US$500.0m) Eurobond to fund outstanding infrastructural projects. This is expected to be a five year bond with a fixed coupon rate of 8.625% that will also help finance the budget deficit in the country. This means that the country’s domestic debt figure could climb to over N4.5tn (US$30.0bn) by Q4 2010. In a related development, the international rating agency, Fitch Ratings, downgraded Nigeria’s credit rating to a BB-, and from a stable to a negative outlook. This was based on certain factors, including the near total drawdown of the excess crude account and the continuous fall in foreign reserves.

A depleted excess crude account, amid oil revenues of N7.2tn (US$48.0bn) is a major cause for concern, while the quality of Government expenditure remains worrisome. Apart from the cost incurred from Nigeria’s bureaucratic structure, there is a risk that if a project funded through an FGN Bond is unsuccessfully completed either through mismanagement or poor execution by the contractor, the Federal Government would have to redeem its initial debt on the maturity and re-issue another debt instrument for the same project. This, coupled with the interest paid on any debt facility, means that a project could cost 2-3 times its original price. The Minister of Finance however noted that the steps needed to ensure that Nigeria’s outlook be upgraded to stable are already being implemented. Standard & Poor’s Rating Agency however affirmed Nigeria’s B+/B global scale rating and the NGA+/NGA-1 national scale rating. They also confirmed a stable outlook, reflecting expectations that the country will maintain her strong external and fiscal balance sheet, and improve in budgetary performance.

……

Our Overall Expectation: 2010
With election related activities on the rise, we fear that progress on the roadmap to reforms in the power sector may stall. The revival of the power sector is a key factor in the continuous growth of industries and businesses in particular and the economy in general. There is therefore an urgent need to follow through on these reforms. We expect that the relative peace in the Niger Delta, as well as stability in crude oil prices, will enhance the country’s foreign exchange revenues. The excess revenue, which will be saved in the SWF, is expected to be used to improve on infrastructure and close budget deficits where necessary.

The CBN stipulated a September 2010 deadline for AMCON to become fully operational. This has however not been the case. We however hope to see some clarity as to the direction of the banking sector when AMCON becomes fully operational. There has also been interest in certain banks by both local and foreign participants, suggesting that mergers and acquisitions are likely to occur. We also believe that the banks will resume lending, although at a gradual pace. Persuasive mechanisms by the CBN may also encourage this to happen as quickly as possible. The resilience of many listed companies in the face of harsh macroeconomic and business conditions has been shown by the relatively decent financial results released. We expect investors to continue to show interest in stocks with positive results and growth potential, as well as a high level of transparency and corporate governance.

The drive by the SEC to ensure transparency and corporate governance in the NSE is expected to boost investors’ confidence and renew interest in equities. The uncertainty around the outcome of the forensic audit on the NSE has somewhat dampened this. We therefore believe that the timely conclusion and release of the audit findings will help restore investor confidence and encourage positive sentiments towards the equities markets. Participants will however remain cautious and eager to lock in any significant short term gains. This suggests that there will be constant profit-taking activities in the market, signifying volatility in trading which may persist till the end of the year.

In our Q1 2010 Market Review, we re-iterated our expectations of significant volatility within the NSE ASI 20,000 to 28,000 points range. Afrinvest Research remains bullish on equities, although we are slightly cautious. We review our forecast to a bear case scenario of a 10.0% -15.0% downside and a bull case of a 5.0% – 10.0% upside from around the 25,000 mark. We also expect lending rates to slowly dip and savings rate to rise as the year comes to an end.