FBNH Slumps Amidst Oba Otudeko’s Acquisition Brouhaha
FBN Holdings slumped on Tuesday as its shareholders offloaded some shares following Oba Otudeko’s significant shares acquisition that triggered widespread negative reactions among stakeholders.
Otudeko was sacked by the regulator two years ago over an unholy boardroom coup to oust First Bank of Nigeria’s chief executive Dr, Sola Adeduntan.
Like falling angels, the apex bank dissolve the board and sustained the appointment of FBN CEO who had announced untimely resignation under the leadership of Otudeko, Ibukun Awosika, others
Data from the local bourse showed that the financial services group backtracked from making a further uptrend after its market valuation crossed N800 billion early in the week. FBNH share lost 3.59% to close at N21.3 per share versus CardinalStone Securities Limited’s target price of N21.93 per share.
FBNH’s market value then decline to N771.74 billion after Ecobank urged the Holdco to reject Honeywell Group Chairman’s Otudeko share acquisition. The Pan African lender is claiming N13.5 billion judgment debt obtained against Otudeko, the amount its legal representative said excludes accruing interest.
Ahead of the second quarter earnings release, CardinalStone Securities Limited has placed FBNH in its buy bucket as equities analysts at the firm estimated the ticker has a 15% upside potential, according to a market update.
In its investment proposition, CardinalStone said in the last 2 years, FBNH’s management has taken drastic steps to position the bank on a path to profitability through a more intricate risk management framework.
The bank has improved asset quality and pre-provision operating profit through this strategy, with non-performing loans moderating to 4.7% from 8.4% in 2022, analysts said in the update. It was noted that FBNH’s pre-provisioning operating profit rose by 68.7% over the same period.
With the weighty impact of legacy non-performing loans effectively behind it, FBNH looks well positioned to grow profitability aided by the normalisation of loan loss provisioning to pre-2015 levels, CardinalStone said.
“More so, akin to the bank’s large retail market share and agency banking networks, it is on track to benefit from its growing asset size and the elevated interest rate regime”.
Equity analysts said the holds the largest net long dollar position across CardinalStone Securities Limited’s coverage, leaving legroom for substantial foreign exchange gains on the impact of the naira devaluation.
The capitalization of these gains could effectively ease lingering capital adequacy ratio (CAR) concerns, by boosting capital buffers despite the expansion in risk-weighted assets, analysts stated.
In the update, CardinalStone Securities estimated a 12-month target price of N21.93 for FBNH. Equities research analysts said they expect the bank to post an average return on equity of 19.9% over the next five years. In the same period, analysts estimated a 1.5% return on assets for FBNH. #FBNH Slumps Amidst Oba Otudeko’s Acquisition Brouhaha
