Nigerian Banks with Healthy Fundamentals Get Buy Ratings
Some Nigerian deposit money banks are probably overpriced currently in the stock market, and analysts have guided that investors should either hold or sell them.
Ranging from hold, buy and sell ratings, analysts at Meristem Securities estimate showed that these banking names have healthy fundamentals.
The lowest with net interest margin below 18% have at least 12% return on equity and strong upside potential upside.
Meristem Securities said in its stock recommendation report that some of these lenders, despite their relatively healthy fundamentals, have performed negatively in the stock market in 2024.
Access Holdings Plc has about 18% year-to-day loss, followed by FBN Holdings, which has recently become target for profit-taking. Meristem Securities estimates reviewed by MarketForces Africa showed that FBN Holdings has negative year to date return of 10.19%.
Stanbic IBTC remains worst investment for shareholders, with 25.34% negative year to date return along with negative return from UBA, and Zenith at 14.23% and 7.12% respectively.
Equity analysts only advised sell rating on Wema Bank due to negative upside potential despite healthy fundamentals – 17% net interest margin and 25% return on equity.
Due to negative upside potential, FBN Holdings and GTCO shares are rated hold at market price of N21.90 and N45 respectively, on the Nigerian bourse.
Pan African lender, Ecobank Transnational Incorporation (ETI) is also rated hold due to weak upside potential estimated at 9%, according to stock recommendation list.
Despite negative year to date return, Fidelity Bank Plc is rated buy on expectation of more than 10% upside potential.
The investment firm estimates showed that Zenith Bank achieved highest earnings per share, followed by Ecobank and Access Holdings. Islamic lender, Jaiz Bank Plc has highest return on equity due to profit sharing business model, resulting in significant profit from contract financing activities. Bonds Yield Steadies after DMO Auction Underperforms
