In the 2023 financial year ending December 31, 2023, the Nigerian Exchange Group Plc realized N6.959 billion from transaction fees and treasury investment income. This amount marks a 34.19% growth compared to N5.187 billion reported in 2022 and contributes to 83.85% of the total revenue of N8.299 billion.
Key Revenue Drivers:
The primary driver of the group’s revenue in 2023 was transaction fees, accounting for N4.818 billion, a growth of 52.6% compared to N3.157 billion in 2022. This segment contributed 58% to the total revenue.
Treasury investment income, including income from bonds, treasury bills, and fixed deposits, amounted to N2.141 billion, a 5.47% increase from N2.030 billion in 2022. This income contributed 25.79% of the group’s total revenue.
Transaction fees represent a basic cost of investing, typically charged whenever a bid or offer goes through. At the same time, treasury investment income encompasses earnings from bonds, treasury bills, and fixed deposits with banks.
The Central Bank of Nigeria’s (CBN) decision to increase the interest rate by 200 basis points to 24.75% is expected to benefit NGX and other investment institutions, leading to increased income from treasury investments.
The CBN’s Monetary Policy Committee (MPC) announced the interest rate hike at the end of the 294th MPC meeting in Abuja. Additionally, the CBN retained the Cash Reserve Ratio (CRR) at 45% but increased the CRR of merchant banks from 10% to 14%, while maintaining the liquidity ratio at 30%.
The present Monetary Policy Rate (MPR) of 24.75% reflects the bank’s commitment to tackling inflation and exchange rate fluctuations. Although the 200-basis-point hike is steep, it does not surpass the substantial 400 basis-point rise implemented by the bank in February.
According to investment experts, when the interest rate is low, speculators tend to move funds from money market instruments to the stock market for higher yield. Conversely, when the interest rate is high, they shift from stocks to other asset classes, particularly money market instruments.
Key Financial Highlights:
Despite economic headwinds, NGX Group Plc reported a profit after tax of N5.250 billion in full-year 2023. This marks a significant 788% increase from N591.509 million recorded in 2022.
Furthermore, NGX reported a pre-tax profit of N5.271 billion, representing a remarkable 636% rise.
The group’s total income rose to N11.803 billion, indicating a 57.39% increase from the N7.499 billion posted in FY 2022.
