Access Bank shares hit N7 on September 12 for the first time since May but it took it another 6 weeks to get past N8. It has, however, taken just 5 days to get past N9 sending it tops as the highest gaining bank for the week.
The Nigerian Stock Market closed the week 0.08% up, marking a temporary end to weeks of losses. The stock market All Share Index is currently -0.16% month to date and down 16.28% year to date. From all indications, the stock market is still hemorrhaging losses but maybe perhaps there is a silver lining.
Among the ten top gainers for the week were four of the FUGAZ banks. Access Bank, UBA, GT Bank, and FBNH all gained big during the week. Apart from FBNH, the other two gained double digits to close the week on a bullish note.
Access Bank: Nigeria’s largest bank by balance sheet size (N6.6 trillion) gained 17.9% during the week, one of its biggest single week gains in weeks. Year to date Access Bank is up a whopping 35% on the back of some decent results since the merger with Diamond Bank Plc. The stock closed the week at N9.2 crossing N9 for the first time in over a year.
What is driving this? We believe the key driver here is its latest 9 months results which it released last week. The bank declared pre-tax profits of N103 billion about 47% higher when compared to the year before.
Its profit was also N103 billion in the whole of 2018 suggesting that investors may be on track for another year of record profits. Access Bank is also fairly valued at about 2.3X earnings per share. Return on average equity is 16.4%
Apart from Access Bank, 4 other banks rallied big during the week as investors sent a strong signal that the bulls may be sensing a strong end to the year.
FCMB: The bank gained 16.25% to close at N1.8. YTD is still down 1.59% and has a year high of N2.41 suggesting there is still significant upside for a sustained rally. The company is yet to release its 9months result explaining that it was still being audited. Is the rally in anticipation of a good result? Results will be announced on or before November 29th, 2019.
UBA: The bank also reported impressive gains during the week helping investors to a 13.79% gain. Year to date UBA is down 14.3% and still a long way from its year high of about N8.20. UBA also reported a pre-tax profit of N98 billion 24% higher than the same period in 2018. Its current return on average equity of 15% is also strong, suggesting there might be considerable upside for a rally.
GT Bank: Nigeria’s largest bank by market capitalization gained 13.49% during the week closing at N28.60. It is still 17% off its year high of N38.95, however, this is the best price in about a month. GTB’s 2019 9 Months results were also impressive so we expect investors to recognize this as the year draws to a close. Its most recent price-earnings ratio is about 4.3X, one of the highest in the banking sector. We won’t bet against the stock trading at 6X earnings by early January.
FBNH: The oldest of the FUGAZ Bank also gained 9.4% to close at N5.8 per share. FBNH is still down 27% year to date. The bank’s 9-month profit of N60 billion is up 17% from a year earlier though the return on average equity is 9%. We also see a rally here though it might not be as bullish as the banks listed above.