Source: Naira Metrics
Nigerian Exchange Group Plc realized N6.959 billion from transaction fees and treasury investment income in the 2023 financial year ended 31 December 2023.
This was contained in the group’s 2023 annual financial report seen by Nairametrics.
The amount represents a 34.19% growth over N5.187 billion reported in 2022 by the group and also cumulatively accounts for 83.85% of the total revenue of N8.299 billion.
Key revenue drivers
Further checks show that the key driver of the group’s revenue in the 2023 financial year emanated from the transaction fees, accounting for N4.818 billion as against N3.157 reported in 2022 representing a growth of 52.6%. The segment contributed to 58% of the total revenue of N8.299 billion.
Also, treasury investment income includes income from Bonds, Treasury bills, and fixed deposits followed by N2.141 billion an increase of 5.47% compared to the N2.030 billion generated the previous year, 2022. The income from the investment also contributed 25.79% of the total revenue achieved by the group.
Transaction fees or charges represent a basic cost of investing and they are typically charged anytime your bid or offer goes through. All charges are a percentage of the purchase or sales consideration.
Treasury investment income includes income from bonds, treasury bills, and fixed deposits with banks.
The decision of the Central Bank of Nigeria (CBN) to increase the interest rate by 24.75%, is expected that the NGX and other investment institutions will continue to reap more income from treasury investment.
The CBN’s Monetary Policy Committee (MPC) increased the benchmark interest rate by 200 basis points from 22.75% to 24.75%.
This was disclosed by the Governor of the CBN who doubles as the Chairman of the MPC at the end of the 294th MPC meeting held in Abuja.
Furthermore, the `apex bank retained the Cash Reserve Ratio (CRR) at 45%- unchanged from its last meeting but increased the CRR of merchant banks from 10% to 14% while retaining the liquidity ratio at 30%
The present Monetary Policy Rate (MPR) of 24.75% is unusually high, reflecting the bank’s strong commitment to tackling inflation and exchange rate fluctuations.
While this 200-basis points hike is steep, it still doesn’t surpass the substantial 400 basis points rise implemented by the bank in February.
According to investment experts, when the interest rate is low, speculators tend to move their funds from money market instruments to the stock market for higher yield, just as they move from stocks to other asset classes, especially money market instruments when the interest rate is high.
Key financial highlight
NGX Group Plc’s full-year 2023 financial result showed a profit after tax of N5.250 billion amidst economic headwinds.
- The disclosure was made in the group’s financial report, which was officially released to the Nigerian Exchange Limited and made available to the investing public through Nairametrics.
- The group’s profit after tax experienced a substantial surge, marking an impressive 788% increase from N591.509 million recorded in the previous year of 2022.
- Additionally, NGX reported a pre-tax profit of N5.271 billion, indicating a remarkable 636% rise
- The group’s total income rose to N11.803 billion, representing a 57.39% increase from the N7.499 billion posted in FY 2022.
THE AUTHOR: Chris Ugwu, Chris is a Senior Financial Analyst at Nairametrics Advocates Limited with over a decade stint in active journalism and public relations practice.
