Earnings season: Banks warming up to release Q1 scorecards

Amid rising cases of COVID-19 pandemic, Banks are now gearing up to release their first quarter (Q1) 2020 earnings results.

Many of the operators have submitted notice of closed period to the Nigerian Stock Exchange, stating intention to consider Q1 accounts.

The Banks that have notified the Exchange include GTBank, FBN, Access Bank, Fidelity and FCMB among others.

Analysts’ expectations

Due to incidence of coronavirus pandemic and slowdown in global prices of oil, equity analysts have started adjusting the sector’s earnings expectations.

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Analysts expect significant cut in earnings in Q1 as Banks give moratorium to clients. Many accounts are expected not to perform due to lockdown.

To reflect the situation, some banks have also adjusted their earnings estimates in that line, cutting their year target to slice.

At earnings call with analysts, Nnamdi Okonkwo, Fidelity Bank Managing Director said the bank had cut earnings outlook for the year.

“We expect that many Banks debtors would hide behind COVID-19 for failure to make repayment, and this is genuine reason in all sense.

“However, Banks are under moral/economic obligations to treat cases on merit.

“Moratorium is key to allow debtors reposition their businesses”, says, LSintelligence Research.

Average industry review

Analysts’ consensus estimates for the year have been revised down between the range of 10% to 30%, available reports from equity analysts show.

Explaining changes in fundamentals, equity analysts expect banks to take sizeable haircuts in earnings performance in the year.

Generally, investment bankers see banking industry’s performance going south due to impact of coronavirus, sliding prices of oil.

Credits concentration 

After oil price resurgence, Banks had returned to extend some high ticket credit facilities to oil and gas clients.

A reverse in this direction started when the Central Bank of Nigeria initiate new loans as proportion of deposits target in the second half of 2019.

“Sizeable amounts of loans to Oil and Gas would default”, some analysts notes revealed.

Analysts expressed that earnings estimates miss would feature more this year corporate results.

With oil trading low, many oil and gas customers may not be in strong financial position to service their debt accounts.

Meanwhile, MarketForces Africa gathered that banks would have to deal with multiple issues in 2020.

Earnings season: Banks warming up to release Q1 scorecards

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