FSDH Merchant Bank predicts robust profits for Nigerian companies

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Companies will make higher profit and consumers will earn more money in 2018, leading investment banker-FSDH Merchant Bank Limited, has said.

In its latest preview and research report, FSDH Merchant Bank stated that business profit and consumer income will grow higher in 2018 than in the last three years.

The wholesale banker stated that its analysis of the recent data from the Central Bank of Nigeria (CBN) on the business and consumer expectations confirms the position on higher corporate profit and consumer income.

The surveys that the CBN conducted in December 2017 had shown that the expectations of firms and consumers about the next 12 months improved from previous months.

According to FSDH, the improvement in the business expectations should drive business expansion and increase the employment of labour. This, in turn, will increase the consumers’ purchasing power. On the other hand, the increase in consumer expectations will increase spending which will have positive impact on businesses.

FSDH noted that the interrelationship between the two economic agents-business and consumer, will drive business profit and consumer income

The latest Purchasing Managers’ Index (PMI) report published for the month of December 2017 by the CBN had shown improved business activities in both the manufacturing and non-manufacturing sectors. At 59.3 and 62.1 points, the Composite Manufacturing PMI and Composite Non-Manufacturing PMI respectively attained the highest levels since January 2015.

“The impact of the expected growth in the business profit and consumer income is positive to the financial market. We expect it to drive equity market investments and position corporates to access long-term capital needed for expansion. Banks should also be more favourable to extend credit to both businesses and individuals, leading to a growth in the National Disposable Income,” FSDH stated.

The investment banker added that the recent drop in the yields on the Nigerian Treasury Bills (NTBs) should also lower the borrowing cost for the business sector, which should also boost production activities and increase profits.

FSDH also expected improved debt issues by companies as they respond positively to decline in cost of borrowing.

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