The Central Securities Clearing System (CSCS), the Clearing and Settlement House of the Nigerian Capital Market and the Nigerian Stock Exchange (NSE), has unveiled strategic steps to serve as a springboard in consolidating on its record of value delivery and in its journey towards becoming a globally recognised central securities depository in Africa.
Haruna Jalo-Waziri, The Managing Director and Chief Executive Officer of CSCS, at the 2019 Stakeholders’ Evening in Lagos on Tuesday highlighted strategy to drive the company’s next phase of growth as he briefed stakeholders and media on CSCS 2018 performance, ahead of its Annual General Meeting to hold Tuesday, April, 30.
According to Waziri, “ Process optimisation, customer satisfaction, partnership through strategic alliance across business and stakeholders, improvement of technology in delivering corporate goal and revenue growth” remain crucial to the CSCS agenda for growth in 2019.
The helmsman of the Financial Market Infrastructure (FMI) quipped that the pillars would provide the platform for CSCS success story in 2018 to be surpassed.
Already putting the framework in place, the CEO explained that there is on-going talent repositioning at CSCS to identify the best talent that would deliver the most value to stakeholders. And that CSCS has launched a customer centre and a resolution channel to improve overall customer experience.
In addition, CSCS has received a green light from international regulators to take the notch higher as earlier in April it received a central securities depository (CSD) rating upgrade to A+ from Thomas Murray, the leading provider of global capital market infrastructure data, post-trade risk assessments and analytics to banks, funds and capital markets.
The re certification under ISO/IEC 27001:2013 following a recent audit of CSCS compliance with information security risks controls by the British Standards Institution (BSI), UK, and also Legal Entity Identifier (LEI) accreditation, was noted by the CEO.
Presenting the company’s financials for 2018, Waziri said that as activities declined in the capital market, CSCS strategically refocused on traditional CSD business lines to enhance earnings quality and growth sustainability into the future.
Gross earnings grew 4 percent year on year to N9.08 billion despite income from depository fees and commissions on trade dipping in the period on the heels of a decline in market capitalisation below 2017 levels. CSCS generates income in part from charges and fees on market valuation and commissions on trades.
While core income grew 4 percent year on year to N8.82 billion, non-core income surged 21 percent to N260 million in 2018.
Profit before tax(PBT) grew 7 percent to N6.09 billion as PBT margin improved to 67 percent in 2018 from 65 percent in 2017.
“ We were able to grow our PBT by deliberately keeping cost down, bearing in mind the scarcity of revenue and the sluggish pace of the market,” Waziri commented. Personal expense fell 15 percent year on year and total operating expenses declined by 1.3 percent also.
However, excess dividend tax of N595.7mn in the period drove the company’s effective tax rate to 21 percent and total tax expense ballooned by 85 percent to N1.27 billion.
The excessive dividend tax was due to initial tax exempt on CSCS investment in fixed income and government treasuries which became taxable when the board decided to pay a dividend of 70 kobo in 2018.
The increase in tax adversely impacted bottom-line and PAT margin fell to 53 percent in 2018 from 58 percent in 2017.
Waziri reiterated that the company’s performance has been strong and would remain so going forward.
“We are passionate about creating value for all our stakeholders. Over the period from 31 Dec 2015 till date, capital appreciation to shareholders has been c.19.3% on a CAGR basis.”
