Nairametrics| This February alone about 162 million units of Zenith Bank has crossed hands. The share price has failed to cross the N16 resistance level but instead has breached the support price of  N15. A further sell off and it’s back to the N14 territory. 

Access Bank on the other hand has seen about 73 million units sold with the share price still struggling to cross the resistance price of N7. It closed at N6. 6 on Wednesday. 

But this to some people is good news. Reports suggest South African firm, Allan Gray Ltd, the largest manager of non-government investment funds in Africa, has increased its stake in Zenith and Access banks.

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The Cape Town based investor is said to be betting on Nigeria’s banking industry despite capital controls imposed by the central bank and challenges of Nigeria’s crumbling economy. 

Allan Gray Chief Investment Officer Andrew Lapping, offered an explanation in a Feb. 10 interview in Cape Town.

“We see a lot of value in Nigerian banks,” Lapping said. “Most people think they’re all going to zero because of the bad debts. We think they will survive” because high interest rates make the banks profitable and they have less debt to equity compared with European lenders, he said.
Allan Gray apparently  isn’t the only investor that’s interested in local lenders.

According to Bloomberg , Laurie Dippenaar, chairman of Johannesburg-based FirstRand Ltd, Africa’s largest bank by market value, said last month that it’s looking to buy a mid-sized bank.

Diamond Bank Plc, Sterling Bank Plc and Wema Bank Plc were among mid-sized Nigerian lenders that have lost over 40% of their values .  

Mr Dippenaar isn’t actually deterred as he has put his money where his mouth it. 

“Everyone thinks the naira is going to weaken, but I’m not so sure,” Lapping said. “The bad-debt problem can cure itself over time.”

“Maybe we’ve dug ourselves into a hole” by investing in Nigerian banks, Lapping said. “Even if it’s 50-50, going bust or going up, the upside is so much that it’s worth the risk.”


Ugo Obi-chukwu "Ugodre" is a chartered accountant with over 16 years experience in financial management, corporate finance and financial analysis. He is also a retail investor and a personal finance advocate with over a decade experience investing in the Nigerian stock market. Ugo is the founder/Publisher of Nairametrics and blogs regularly on the website.

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