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Here are the Insurance Stocks you need to look out for capital appreciation

Get great advice and stock recommendations when you subscribe to Nairametrics Stock Select Newsletter.

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These stocks have gained over 25% since we recommended them less than 6 months ago

Last week, the Nigerian stock exchange All Share Index closed with a positive gain of 15.55% year to date and is on track to close on a positive note this year.

In the past week, investors traded in a turnover of 2.067 billion shares worth N22.636 billion in 27,187 deals compared to a total of 1.909 billion shares valued at N23.610 billion in 23,578 deals in the previous week.  With the rising volumes and market index, it is a clear indication that we are in a bullish run.

The top gainers this week were Coronation Insurance +10%, Regency Assurance +9.09%, Consolidated Hallmark Insurance +8.82%, and none of these stocks are in our portfolio.

The stock we recommended in October; CAP Plc is already up 24%, but still a long way off our exit return of 51.4%. We also recommended some stocks like Africa Prudential, GTB Lafarge, MTNN, Nestle, Stanbic IBTC, United Capital, Vitafoam, and Zenith bank, which were able to hit and cross the target exit price by a significant margin.

However, let’s take a deep dive into some of the insurance stocks in our portfolio.

Mansard Insurance

Mansard insurance is an insurance stock in our portfolio that posted a year to date earnings per share of 50.7 kobo, up from 18.37 kobo in the same period last year, with a share price down by 9% year on year. The good is that net insurance premium was up 14% during the quarter. The company posted an underwriting profit of N2.4billion in the quarter, up by 30% from the same period last year. The bad is that Mansard Insurance did not record any significant gain in income from investment, which is a source for concern and also operating expenses rose slightly during the quarter topping N2.2 billion. The 4th quarter often records the highest operating expenses for Mansard, and suspect it could grow as high as N3 billion.

AIICO Insurance

It released its third quarter result showing earnings per share of 45 kobo compared to 65 kobo in the same period last year. The share price was, however, up by 7% last week, and down 12.4% since we recommended it in our portfolio. The good is that its net premium income was up 24% for the quarter year on year to 12.9 billion, while operating income fell by a whopping 65% to N870 million during the quarter. On the other end, the company posted a mega underwriting loss of N11.5 billion, as it paid more claims than premium received in the quarter. With earnings per share down so far this year, it is unlikely that the company will recover enough in the 4th quarter to avoid year on year earnings drop. Their current share price of 99kobo is still relatively cheap and undervalued in my opinion.

Finally, next week, we will continue with this review and focus on the rest of the stock in our portfolio with a special focus on telcos and industrials.

To get more in-depth analysis and review of companies in the capital market and in our portfolio, subscribe to our stock select newsletter here, as we discuss the Telecommunication and Manufacturing Industry.


Disclaimer

There is a wealth of information that should help decide whether you should buy a stock or not, and how long you can hold on to it. Our recommendation is based on the information we currently have and is wholly the opinion of Ugodre Obi-Chukwu. 

Nairametrics does not own some of the stocks recommended and may not purchase them despite including them in our Stock Select Portfolio. Ugodre does not also own all the stocks he recommends. 

This newsletter is an investment guide and as such, you should conduct extra analysis before deciding whether to buy, sell, or hold a stock. The decision to buy, sell or hold a stock is solely yours.

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Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

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UBA poised to change the face of E-Banking with new mobile app

UBA mobile banking app is designed to give its customers increased control and accessibility to carry out transactions with ease.

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Pan African financial institution, United Bank for Africa (UBA), Plc is set to change the face of digital banking services with its new mobile banking app aimed at delivering first-rate services to customers.

The new UBA mobile banking app, has been armed with benefits and features designed to give its customers increased control and accessibility to carry out transactions with ease.

UBA’s Group Head, Digital Banking, Kayode Ishola, who spoke about the new banking app to members of the press during an international virtual media parley on Monday, explained that apart from being able to decide where they want their cards to operate and block, view, or request new cards straight from the app to suit their specific needs, the app has been tailor-made to give customers what they want, how and in the way they want it.

Reeling off some of the features and benefits of the app, he said a lot of investment in cutting edge technology and attention to details was put into the new UBA mobile app.

Ishola said, “The new UBA Mobile App is your personal finance manager built with a distinctive user interface that will change the face of banking. With this app, we are reimagining banking as our engagement has moved from being channel-based to being platform-based. The speed of the platform has been made to match the speed of light as we have cut down significantly on the number of processes expected to carry out your transactions.

“Interestingly, we have worked towards creating behavioural insight for our customers and working around this to address the real needs of our customers using the Omni channel platform and running on our open digital platform, which is very interactive and armed with lifestyle services. It is sleek and trendy with seamless user interface” Ishola stated.

UBA’s Head, SME Banking, Sampson Aneke, said that apart from the fact that the app has been created with journey that has a high-level of intelligence – as it can work based on frequent transactions, it can also speak to the specific country where it is being used as the new mobile app runs concurrently in the 20 countries of UBA’s operation interacting in the different languages and cultures in line with the specific needs and regulation of the country in focus.

“This all-encompassing platform which boasts of a new user interface because of its sleek, modern nature of delivering seamless experience across several devices; can be used as a budgeting tool, loan application and also allows customers view their expenses according to their various categories such as the amount spent on data within a particular period;” Aneke added.

On the security features of the app, UBA’s Group Chief Information Officer, Onyebuchi Akosa, said that security of the app are best in class adding that the new platform, which will revolutionise the way banking services are offered, promises to deliver increased personalized banking via a watertight and highly-effective security system.

“The new app has also been built with the best-in-purchase security features and has been modelled appropriately to ensure that all the features are working properly to secure transactions maximally. It is also important to mention that the bank took into consideration the virtually impaired, and thus has used voice recognition as a channel for transaction which suits both convenience and the visually impaired customers,” he said.

United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than twenty million customers, across 1,000 business offices and customer touch points, in 20 African countries. With presence in New York, London and Paris, UBA is connecting people and businesses across Africa through retail, commercial and corporate banking, innovative cross-border payments and remittances, trade finance and ancillary banking services.

United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than twenty-one million customers, across over 1,000 business offices and customer touch points, in 20 African countries. With presence in the United States of America, the United Kingdom and France, UBA is connecting people and businesses across Africa through retail; commercial and corporate banking; innovative cross-border payments and remittances; trade finance and ancillary banking services.

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UBA delivers double-digit growth in gross earnings, as profit hits N132bn

The Bank’s total assets also grew by 37.0 percent to N7.7 trillion for the year under review.

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Rave reviews trail UBA’s innovative mobile banking app 
  • Gross Earnings Crosses the N600bn Mark
  • Proposes Final Dividend of N0.35k

Pan-African financial institution, United Bank for Africa Plc (UBA) has announced its audited results for the full-year ended December 31, 2020, recording impressive growth across its top and bottom lines.

The 2020 audited financials filed at the Nigerian Stock Exchange (NSE) on Monday, showed that bank’s gross earnings grew by 10.8 percent to N620.4 billion, compared to N559.8 billion recorded in the corresponding period of 2019. The Bank’s total assets also grew by 37.0 percent to N7.7 trillion for the year under review.

Despite the challenging business environment during the Covid-19 pandemic and the resultant effect on economies globally, the Bank’s Profit Before Tax was impressive at N131.9 billion, compared to N111.3 billion at the end of the 2019 financial year. In the same vein, the Profit After Tax rose remarkably by 27.7 percent to N113.8 billion compared to N89.1 billion recorded at the end of the 2019 financial year.

On the cost side, Operating Expenses grew by 10.1 percent to N249.8 billion, as against N217.2 billion in 2019, well below average inflation rate of 13.2 per cent for the year, thus reflecting the bank’s cost-effectiveness.

In its usual tradition of rewarding shareholders, the Bank proposed a final dividend of N0.35 kobo for every ordinary share of 50 kobo. The final dividend, which is subject to the affirmation of the shareholders at its Annual General Meeting, will bring the total dividend for the year to N0.52kobo as the bank had paid an interim dividend of N0.17 kobo earlier in the year.

UBA recorded a remarkable 24 percent growth (to N2.6 trillion) in loans to customers, whilst customer deposits increased by 48.1 percent to N5.7 trillion, compared to N3.8 trillion recorded in the corresponding period of 2019, reflecting increased customer confidence, enhanced customer experience, successes from the ongoing business transformation programme and the further deepening of its retail banking franchise.

Commenting on the result, the Group Managing Director/CEO, Kennedy Uzoka noted that the year 2020 was important for UBA Group, as it gained further market share in most of its countries of operation.

He said, “We ended a very challenging year on a reassuring note. The Bank recorded double-digit growth in both our top and bottom lines, as gross earnings and after-tax profit grew by 10.8% and 27.7% to N620.4billion and N113.8 billon respectively. Return on equity was 17.2%, even as our cost-to-income ratio moderated to 61.3%. Our earnings per share of N3.20 is a 26.8% growth from the preceding year, as we continue to ensure maximum value creation for our highly esteemed shareholders.

Continuing, Uzoka said, “Despite the tumultuous impact of Covid-19 pandemic globally and across our 23 countries of operation, we created N519.0 billion additional loans as we continued to support our customers and their businesses. Customer deposits grew 48.1% to N5.7 trillion, driven primarily by additional N1.8 trillion in retail deposits. As a global bank, we remain well capitalized and determined to successfully drive financial inclusion on the continent through our innovative products and vast network. Our capital adequacy and liquidity ratios came in at 22.4% and 44.3%, well above the respective regulatory minimum of 15.0% and 30.0%.

Speaking on the bank’s strategy, he said, “Our primary strategy will continue to focus on providing excellent services from our customers’ standpoint, putting the customer first always. Looking ahead, I am inspired by the achievements we have made since the launch of our transformation programme. We have expanded market share considerably across the geographies where we operate and are consolidating our digital banking leadership in Africa. We will continue to leverage our diversified business model and dedicated workforce to further strengthen our position as ‘Africa’s Global Bank’.”

Speaking on the performance, the Group Chief Financial Official, Ugo Nwaghodoh said, “The persistent low interest rate environment in 2020 exerted significant downward pressure on margins. Notwithstanding, our interest income for the year grew by 5.7% (to N427.9 billion), driven by 8.2% and 7.5% year-on-year growth on interest income on loans and investment securities respectively. Our interest expense declined by 8% (to N168.4billion) driven largely by a 34.2% decline in interest expense on customer deposits in our Nigerian operations, bringing down the Group’s cost of funds to 2.9%, from 4% in 2019.

Nwaghodoh said, “We have prudently stepped-up our reserves for loan impairments, hence the 37.4% YoY growth to N22.4billion, implying a 0.9% cost of risk. These reserves provide adequate cover for impairments and should help minimise the need for further reserves in the current year, in view of the improving global operating environment. Our NPL ratio has declined to 4.7% (from 5.3% in 2019), driven by growth in the loan book, robust credit risk monitoring architecture, and payment of Past Due Obligations (PDOs).

The CFO added that as Nigeria continues to see signs of recovery from the Covid-19 pandemic led by resumption of economic activities across the globe, increase in consumer spending, and continued progress on vaccine deployment, UBA is well-positioned for greater synergy across the Group. “We remain committed to our prudent risk management practices, and optimistic of best value for our stakeholders in the days ahead,” he added.

United Bank for Africa Plc is a leading Pan-African financial institution, offering banking services to more than twenty-one million customers, across over 1,000 business offices and customer touchpoints, in 20 African countries. With presence in the United States of America, the United Kingdom and France, UBA is connecting people and businesses across Africa through retail; commercial and corporate banking; innovative cross-border payments and remittances; trade finance and ancillary banking services.

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