Anticipation of 2012 Results Jolts Bank Stocks

31 Mar 2013

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Union Bank Plc, Mr. Emeka Emuwa

Festus Akanbi and Catherine Affadi
As members of the investing public brace up for the release of the 2012 financial reports of quoted banks, investigations have shown a modest improvement in the values of bank stocks, prompting market watchers to predict a robust earnings for bank shareholders in 2013.
According to a random survey of share performance carried out last week, virtually all the quoted banks recorded various degrees of improvement in share values within a spate of one year.

For instance, banks like Diamond Bank Plc, Sterling Bank Plc, UBA Plc and Wema Bank Plc recorded increases in their share values put at 63.83percent, 63.64 percent, 69.12 percent and 69.54 percent respectively between March 28, 2012 and last week. This is because Diamond Bank which sold for N2.55 in 2012 now goes for N7.05 per share. Sterling Bank, UBA and Wema had their share prices moving from N1, N2.49 and 53kobo in 2012 to N2.75, N8.06 and N1.74 per unit of share respectively.

The likes of Fidelity Bank Plc, GTBank Plc, Zenith Bank Plc, Unity Bank Plc and Skye Bank recorded a difference of 54.28 percent, 45.91 percent, 37.58 percent and Skye Bank Plc 33.65 percent respectively. This is because their share prices moved from N1.39, N14.15, N13.29, 50K and N4.18 to a new threshold of N3.04, N26.16, N21.29, 79k and N6.30 respectively.

Other banks with improved share performance include Union Bank Plc, Access Bank Plc, Ecobank Transnational Plc and First City Monument Bank Plc. Union Bank which was sold for N7.05 in March last year  has grown in value, hitting N10.02 kobo last week. Banks like Access, ETI, and FCMB which were priced at N7.10, N10.90 and N4.45 moved to a new threshold of N10.20, N14.05, and N4.69 per unit of shares respectively.

The survey showed that the greater percentage of the share appreciation was recorded in the first quarter of the year in what market analysts attributed to the anticipation of positive results by the banks.

Giving an insight into what investors in banks stand to gain, Group Managing Director, Union Bank Plc, Mr. Emeka Emuwa said banks are putting in place a regime of best practice to improve their standing.

Speaking during a session with journalists last week, Emuwa said Union Bank, for instance has decided to undertake a holistic review of its operations in a way to enhance its financial performance with the attendance fallout in dividend payment.

Investment analysts at FSDH Securities recently said relatively low prices, good dividend outlook and emerging financing opportunities that may boost banks’ incomes stand banking stocks in good stead as toasts of investors this year.

In its Banking Industry Review and Outlook, FSDH Securities said the balance sheet position and operations of banks as well as their relative stock market valuations point to the attractiveness of banking stocks.

According to the report, the drivers of investment in banking stocks in early 2013 would include good dividend payment expected from the 2012 business year and attractive valuation of banking stocks as banks are still trading at low multiples.

Banks have common financial year, ending December 31. Early audited report and accounts for the year ended December 31, 2012 are expected in early next month. Quoted companies are expected to file in their audited reports not later than three months after their year-end, according to the best practice rules of the Nigerian Stock Exchange (NSE).

Analysts at FSDH said emerging financing opportunities in the economy, especially in power, transportation, agriculture, wholesale and retail trade, and oil and gas sectors, should drive banks’ earnings going forward.

“The economic reform in the country presents a huge opportunity for the banks operating in the country. The Central Bank of Nigeria and other regulators in the financial market have taken proactive steps to implement a number of policies to make banks focus on their core banking business, develop specialisation and safeguard the Nigerian banking system,” the report highlighted.

Tags: Business, Diamond Bank Plc, Featured, Nigeria, Sterling Bank Plc, UBA Plc, Wema Bank Plc

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