Investors scramble for big banks in N23.55b equities deals

Investors increased their stakes on Nigerian equities by 74.45 per cent with nearly one-thirds of the transactions on three of Nigeria’s largest banks.

Investors staked N23.55 billion on quoted equities at the Nigerian Stock Exchange (NSE) last week, 74.45 per cent above N13.50 billion recorded in the previous week. A total of N6.94 billion, representing about 29.5 per cent of the total turnover value was staked on the trio of Guaranty Trust Bank (GTBank), FBN Holdings and Zenith Bank Plc.

GTB is Nigeria’s most capitalised bank. Zenith Bank is the second most capitalised bank while FBN Holdings is the holding company for Nigeria’s oldest bank, First Bank of Nigeria (FBN) Limited.

Market pundits attributed the large-volume transactions on the three first tier banks to investors seeking safe haven from industry and macroeconomic headwinds noting that the three banks are widely regarded as safest havens in the industry.

Nigeria’s largest financial institution, GTBank, posted pre-tax profit of N58.2 billion within the first three months of this year. Key extracts of the unaudited three-month report for the quarter ended March 31, 2020 showed that GTBank’s profit before tax rose from N56.98 billion in first quarter 2019 to N58.20 billion in first quarter 2020.

After taxes, net profit also improved from N49.30 billion in first quarter 2019 to N50.07 billion in first quarter 2020. Earnings per shares increased from N1.74 in first quarter 2019 to N1.77 in first quarter 2020.

Net interest income had risen from N58.22 billion to N64.28 billion, counterbalancing the decline in net fee and commission incomes, which dropped from N18.01 billion to N13.55 billion. GTB paid N82.4 billion to shareholders as cash dividends for the 2019 business year, representing a dividend per share of N2.80.

Zenith Bank recorded profit before tax of N58.8 billion in first quarter 2020 as against N57.3 billion recorded in comparable period of first quarter 2019. Gross earnings rose to N166.8 billion in first quarter 2020 against N158.1 billion recorded in first quarter 2019.

FBN Holdings grew its top-line by 14.5 per cent to N159.7 billion in first quarter 2020 as against N139.4 billion posted in first quarter 2019. Profit before tax leapt by 61.5 per cent to N28.7 billion in first quarter 2020 compared with N17.8 billion in first quarter 2019 while profit after tax also rose by 62.7 per cent from N15.8 billion to N25.7 billion.

While most analysts believed that the impact of the COVID-19 pandemic might moderate the performance of banks and other companies in the second quarter, they agreed that the leading banks are better positioned to wade through the crisis.

Total turnover at the NSE last week stood at 1.47 billion shares worth N23.55 billion in 22,911 deals compared with a total of 1.26 billion shares valued at N13.50 billion traded in 20,554 deals in the previous week.

The bank-dominated financial services sector, the traditional most active sector, remained the most active with a turnover of 861.78 million shares valued at N8.55 billion in 11,647 deals; representing 58.66 per cent and 36.28 per cent of the total equity turnover volume and value respectively. The consumer goods sector followed with 184.64 million shares worth N5.88 billion in 3,953 deals while the services sector placed third with a turnover of 119.24 million shares worth N270.08 million in 1,043 deals.

The three most active stocks-FBN Holdings, GTB and Zenith Bank accounted for 456.58 million shares worth N6.94 billion in 5,921 deals, representing 31.08 per cent and 29.47 per cent of the total equity turnover volume and value respectively.

Also traded were a total of 288,112 units of Exchange Traded Products (ETPs) valued at N3.99 million in  nine deals compared with a total of 150,008 valued at N359.831 million traded in 14 deals in the previous week.

In the debt market, a total of 2,785 units valued at N3.116 million were traded last week in six deals compared with a total of 5,225 valued at N5.875 million traded in three deals in the previous week.

Meanwhile, profit-taking transactions weighed on the overall market position as investors sought to monetise long-running capital by the weekend. Benchmark index for the Nigerian stock market indicated average decline of 1.0 per cent, equivalent to net capital depreciation of about N131.2 billion.

The All Share Index (ASI)- the value-based common index that tracks share prices at the NSE, closed weekend at 25,016.30 points as against its opening index of 25,267.82 points for the week. Aggregate market value of all quoted equities also dropped from the week’s opening value of N13.168 billion to close at N13.050 billion. Nigerian equities have so far in the second quarter recorded average return of 17.44 per cent, but considerable decline in the first quarter has retained negative average year-to-date return of -6.80 per cent.

Banking stocks have seen the second biggest rally this quarter with average return of 26.61 per cent, trailing consumer goods stocks, which lead with average return of 30.90 per cent.

There were 26 gainers to 39 losers last week compared with 34 gainers and 21 losers recorded in the previous week. Neimeth Nigeria led the advancers with a gain of 56.6 per cent to close weekend at N1.77. Sky Aviation Handling Company followed with a gain of 50.8 per cent to close at N2.73 while Japaul Oil and Maritime Services appreciated by 50 per cent to close at 30 kobo per share.

On the negative side, Afromedia led with a drop of 23.1 per cent to close at 20 kobo. Julius Berger Nigeria followed with a loss of 22.7 per cent to close at N21.25 per share while UAC of Nigeria declined by 13.9 per cent to close at N7.75 per share.

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