We’ve said it several times on this blog, Nigerian banks are cheap despite tough regulatory environments squeezing out their profits. This is perhaps one of the best times to purchase Nigerian banking stocks in my opinion.
It’s no wonder Punch Newspaper reports the famous Chairman of Templeton Emerging Markets Group, Mark Mobius, is picking Nigerian bank stocks ahead of South African peers as Johannesburg-based lenders battle rising bad-debt charges while trading at higher valuations.
“The banks up north are cheaper,” Mobius said in an interview in Johannesburg on Thursday, referring to Lagos-based lenders.
“The big challenge with banks” in South Africa was a surge in loans not backed by assets, which caused risks in the industry to increase, he said.
Guaranty Trust Bank Plc, Nigeria’s largest lender by market value, is trading at 8.5 times historical earnings, compared with Johannesburg-based Standard Bank Group Limited, Africa’s biggest, which trades at a price-to-earnings ratio of 11.6, according to data compiled by Bloomberg.
Banks in Nigeria, Africa’s most populous nation, are benefiting from financing oil, gas and power projects in the continent’s second-largest economy, while bad debts fall.
South African lenders are struggling with stagnant mortgage growth and rising non-performing loans as the continent’s largest economy buckles under an almost 25 per cent unemployment rate and the slowest expansion since the 2009 recession.
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