The Nigeria Sovereign Investment Authority (NSIA), recorded a sizable jump in pre-tax profits to N792.9 billion ($996m) in the first half (H1) of 2023, from a N3 billion loss in the corresponding period in H1 2022 according to unaudited management accounts, seen by MoneyCentral.
The gains in the H1, 2023 results of the NSIA which manages Nigeria’s Sovereign Wealth Fund (SWF) were largely driven by foreign exchange and revaluation gains.
NSIA moderates FX risks by maintaining a significant 93.8% of its financial assets as US$ investments as at 31 December 2022. As at the same date, a sensitivity analysis conducted reveals a potential gain of ₦132.7 billion (13.2% of shareholders’ funds) should the naira depreciate by 15% against the US$ and vice-versa.
Thus the NSIA benefited from its long net foreign currency asset position with the recent harmonisation of exchange rates in Nigeria and the attendant 42% depreciation of the naira at the official market.
Thus, annualised return on assets (ROA) and return on equity (ROE) surged to 106.1% and 113.2% respectively, in naira terms.
In USD terms and discounting FX volatility impact, profitability also surged to $595.1 million from a $12.2 million loss position in the corresponding period in H1 2022.
This translated to an annualised ROA and ROE of 48.1% and 51.7% respectively.
The NSIA’s future generations fund (FGF) which warehouses hedge fund, private equity PE and long-only equity investment was up by 7.4% in H1 2023, relative to the 3.9% dip in FY 2022, as many indexes across the globe have improved their performance in H1 2023. The stabilisation fund (SF) and Nigeria infrastructure fund (NIF) also returned 4.7% and 2% respectively in the six months ended 30 June 2023.
In H1 2023, the Authority’s interest income rose 47.4% year-on-year to N37.3 billion.
Meanwhile, the NSIA received a capital injection of $45 million in the first six months (H1) of 2023, from price-based royalties from oil companies.
The Petroleum Industry Act (PIA) signed in August 2021 introduced a price-based royalty of up to 10% on crude oil sales that would be credited to NSIA as equity.
Analysts expect more capital will flow to the NSIA as more crude oil contracts are migrated to the PIA regime, and more oil exporting companies fully adopt the PIA.