The Central Securities Clearing System plc, the capital market’s central securities depository, recorded a surge in post-tax profits of 334 percent, to N4.6 billion in FY 2014 from N1.07 billion in 2010. Revenue almost doubled, rising by 92 percent during the period.
This was made known at the depository’s first ever investor presentation since it became a public company in 2012, where it presented its five-year financial performance review to its shareholders.
According to a presentation of results by Vincent Ukoh, the firm’s chief financial officer, expenses declined by 7 percent during the review period, and in the process, helped to achieve an expense-to-income ratio of 29.5 percent in 2014, from a high 61.2 percent in 2010.
“If expenses remained flat, it would have been an achievement, but our expenses actually went down by 7 percent,” said Kyari Bukar, managing director/CEO of CSCS, at the presentation. “This means that process improvement and technology deployment actually yielded fruit,”he said.
CSCS said its income was driven by a 358 percent growth in investment income over the five-year period, a 54 percent growth in transaction/depository fees, and a 53.4 percent growth in other income.
In its bid to diversify its income heads away from transaction/depositary fees, which are prone to market-related volatility, the share of transaction/depository fees declined to 64 percent of total income, from an 80 percent contribution in 2010. Investment income’s share of total income consequently rose to 30 percent in 2014, from 12 percent in 2010.
Its more recent Q1 results showed that PAT grew by 34 percent Y-o-Y to N1.17 billion, from N882 million in the corresponding quarter of the previous year. Total expenses declined by 0.04 percent during the period.
According to CSCS, transaction volume rose from 89.2 billion units of exchanged shares in 2011, to over 108 billion units in 2014. Consequently, its transaction value from equities rose from N635 billion in 2011 to N1.3 trillion as of 2014 year end.
The depository already offers collateral management (pledging of securities as collateral in lending transactions).
It also offers Legal Entity Identifiers (LEI), a 20-digit, alpha-numeric code, which is a global reference data system that uniquely identifies every legal entity or structure, in any jurisdiction, that is party to a financial transaction. Currently, only Nigeria and South Africa offer LEI within Africa.
“All securities in Nigeria are transparently seen all over the world,” Bukar said.
To further boost growth, the CSCS is eyeing offering Depository, Clearing and Settlement infrastructure to sectors like the pension industry, land registry, medical, and academic records, and in the future, establishing a central counter party for products like derivatives and futures, and providing a platform for market makers to access securities lending agents.
“What we want to do is what CSCS has done in the capital market,” said Bukar, saying “we want to see if there are opportunities of such dematerialised or clearing of data in the insurance, pension and land registry space.”
CSCS shares, which closed at N5.30 as of the time of writing, trades on the NASD platform.
Earnings per share grew by 268 percent, from 25 kobo in 2010 to 92 kobo in 2014, while dividend per share grew by 80 percent, from 15 kobo in 2010 to 27 kobo in 2014.
Edozie Ifebi
