Stanbic IBTC, UBA Lead as Banking Stocks Investors Count Gains

By Goddy Egene

The shares of Stanbic IBTC Holdings Plc and United Bank for Africa Plc (UBA) have delivered the best  returns to investors in terms of capital gain year-to-date (YTD) at the stock market, THISDAY checks have revealed.

Investors buy stocks mostly to get returns in form dividends, bonus issues and capital appreciation.  While the banking sector of the Nigerian Stock Exchange (NSE) outperformed others, including the benchmark, NSE All-Share Index, rising by 64.4 per cent, an analysis of the individual stock, showed that Stanbic and UBA are clear leaders.

Stanbic IBTC has recorded a YTD appreciation of 173 per cent, followed by UBA with a gain of 120 per cent. FBN Holdings Plc recorded 82 per cent, while Access Bank Plc went up by 78 per cent. Ecobank Transnational Incorporated Plc rose by 71 per cent, just as Zenith Bank Plc added 61 per cent. Guaranty Trust Bank Plc went up by 60.3 per cent, while Fidelity Bank Plc and Diamond Bank Plc appreciated by 59 per cent and 45.4 per cent respectively.

Others are: Sterling Bank Plc(36.8 per cent);FCMB Group Plc (10 per cent);  Unity Bank Plc (5.4 per cent) and Union Bank of Nigeria Plc (4.9 per cent).

However, Jaiz Bank and Wema Bank recorded depreciation of 33 per cent and 1.8 per cent respectively.

Market analysts have attributed the growth in banking stocks to positive reactions to the impressive performance recorded by the banks in their financial results.

 At the beginning of the year, market operators said while the economy faced serious headwinds that pushed it into recession in 2016, some banks still posted impressive results and declared significant dividends.

“It is therefore instructive for discerning investor to take position in the banking sector now that there  are strong indications that the economy would recover. When this happens, it means better performance for banks and higher returns to shareholders at the end of the year,” a stockbroker had said.

Analysts at Meristem Securities Limited, were bullish in their outlook for the banking sector , saying  that  while the issues which have plagued the sector in recent times are still prevalent to certain extents, the levels of income generation witnessed during the year, even in the face of significant credit loss charges, signal that the sector is driving towards another strong performance in 2017.

They said: “Also, we expect more risk asset creation from the sector in 2017, when compared with the previous year when the growth in the nominal value of assets was due to the depreciation of the currency.  While the issues plaguing the banking sector are still prevalent and significant, the resilience of the sector, in general, is not in doubt, in our opinion. We expect that with a re-surgence in the economy and improvement of macroeconomic fundamentals, non-performing loan issues should dissipate and respite from this perspective should result in measured, appreciable risk asset creation, which should, in turn, drive growth further.”

The analysts added that given the state of the economy, which has seen the Monetary Policy Committee deploy policy tools to support the currency and manage price levels, interest rate environment has supported top and bottom-line growths for the majority of banks with liquidity to deploy.