Nigeria’s Tier-1 Banks Market Valuation Crosses N4trn
Ahead of the second quarter of the financial year 2023 earnings release, Nigeria’s top five banks have seen their combined market valuation increase above N4.05 trillion. Stock market analysts said the sharp increase was aided by improved market sentiment triggered by sounds of economic reforms under the new government led by President Bola Tinubu.
There is an expectation of better financial sector regulation following the suspension of Godwin Emefiele as the Central Bank of Nigeria (CBN) governor. Tinubu’s Keynesian economic stance signals nudged market sentiment upward, and equities investors have started the position on an expectation of healthy economic performance driven by the private sector.
FBNH saw more than 19% gain in a week drove the banking index higher, supported by about 16% weekly gain recorded by UBA, and about 13% while Zenith bank popularity among alpha seekers declined with 1.6% price appreciation versus about 5% for GTCO.
Equities analysts told MarketForces Africa that over the years, Nigerian banks have been underpriced below emerging markets peers, though market critics are of the view that the Nigerian Exchange failed to reward performance.
In the first quarter earnings season, the big 5 local lenders reported spikes in top line amidst headwinds, their separate audited reports showed despite the naira crisis and election holidays.
Trading data show that the year-to-date performance of Tier-1 banks (FBNH, UBA, GTCO, ACCESS, and Zenith –FUGAZ) pushed the banking index upward as the Nigerian Bourse All-share index hits an 18-year high on Friday.
Market data shows that the big banks year to date return also raced ahead of other key indices.
In the just concluded week, Zenith Bank’s popularity slowed down among value hunters, recording less than 2% over the last five trading sessions on the local bourse.
The bank of the year, according to the Banker, saw its market valuation surge to N1.093 trillion, maintaining its leading brand identity in the banking sector. Its share price settled at N34.80 following healthy earnings growth in the first quarter of 2023.
There is so much to like about the Ajose Adeogun-based financial services behemoth. This includes sustained year-on-year growth in profitability. It continues to rank higher in Tier-1 capital.
Equities analysts said strong earnings performance over the year has helped the bank deliver its dividend policy. Zenith Bank remains most valuable in the local bourse with a strong buying rating.
Traded at N36.70 per share, GTCO Plc valuation comes close after falling from the top, now ranked second most valuable in the banking sector category. As of Friday, the Orange brand financial services holding company was priced at N1.08 trillion on 29.43 billion outstanding shares in the market.
Following a fast and furious bargain hunting, FBNH worth about N729 billion, sold at N20.30 per share in the Nigerian bourse. The financial services stock gained weight due to a 14% share acquisition by its erstwhile board chairman, Oba Otudeko.
Access Holdings, the largest financial services by total asset has also seen its market valuation increase amidst stock market rallies.
However, Access Plc is lower at N666.5 billion as of Friday’s close than peers’ valuation. UBA’s valuation was the lowest in the category at about N486 billion. The bank share was priced at N14.20 on Friday. >FBNH Rises to N682bn on ‘Special Stock Bet’
Weekly stock market performance
Zenith Bank gained 1.6% in the just concluded week, while GTCO shares closed with 4.86% share price appreciation in the last seven days of trading sessions. FBHN’s share also jumped 19.06% amidst underwhelming earnings performance in 2022. Meanwhile, Access Holdings’ share price gathered momentum with a 12.73% weekly gain. Trailing Access share uptick, UBA pushed higher with a 15.91% increase in its market valuation.
Month-to-date returns
Zenith Bank recorded about a 21% gain month to date, tracking behind GTCO’s 24.62% share appreciation in the same period. In the month, FBNH’s share price has advanced more than 30%.
Access Holdings jumped by 12.95% with support from last week’s rally pushing prices upward. UBA share price increased by 18.35% over a month, providing investment returns covering inflation rate exposures.
Year-to-Date Returns
Zenith Bank has boosted its market valuation with a 48.09% valuation jump. The returns track along with the inflation rate movement amidst an improved estimate for 2023.
UBA gained 71.08% in the same period while FBNH Plc has seen 89.72% year-to-date gain. Access Holdings top the performers list with more than 113% year-to-date return, GTCO also delivered an impressive return, recording 64.57% year-to-date return. #Nigeria’s Tier-1 Banks Market Valuation Crosses N4trn
