Nigeria’s Tier One banks, otherwise termed FUGAZ experienced significant losses in the first half of the year (January to June 2022).
According to findings from Nairametrics research, FBN Holdings, UBA, GTCO, Access, and Zenith Bank all of which make up FUGAZ ended the first half of the year lower than they started.
The Nigerian Exchange All Share Index fell to losses in June for the fourth consecutive year as fear of inflation swung investors to sell. Profit-taking may have also been a major consideration with the stock market still posting over 20% gains YTD, making it one of the best performing in the world.
Despite the still positive return for the broader index, FUGAZ stocks lost considerably through a combination of profit-taking, sell-downs, and sell-ons.
FBNH – One of Nigeria’s oldest banks has been one of the best performings in the last year and has lost much of its momentum this year. The stock closed a turbulent June 3% below how it started and is just up 2% year to date.
- During the month, the majority owner of the bank, Femi Otedola, sold down about 2% of the bank’s shares pulling the share price down to just over N8 per share.
- However, it has since recovered back to above N11 per share.
- FBNH had impressive 2022 first-quarter results and indications suggest it will sustain the same momentum when it publishes its half-year in the next few weeks.
- Its PE ratio is just above 2x.
UBA – Nigeria’s leading global bank has struggled to maintain a share price similar to its pairs as it continues to trade at the lowest price compared to other FUGAZ members.
- The stock fell 4% in June and has lost 7% year to date mostly due to profit-taking and sell-on by investors looking to cycle out of stocks.
- UBA price to earnings ratio averages 2.1x based on its trailing twelve months basis, making it one of the cheapest banking stocks out there.
- We do not see any reasons why UBA should be priced this low except that it continues to struggle to attract investor interest.
GT CO – is going through one of the most turbulent years since the bank was listed on the exchange. The bank lost its status as the most valuable bank on the exchange to Zenith Bank and is yet to recover.
- Things got worse this in June after the bank lost 9% of its value, the worst of the FUGAZ.
- On a year-to-date basis, GTCO remains the worst-performing after falling 21% since the start of the year.
- Despite the losses, the stock trades at a price-to-earnings ratio of 3.38x, making it one of the most expensive tier 1 banking stocks.
Access Holding – is known for its brazen acquisitions within and outside Nigeria. Whilst this has made it the number one bank in Africa, it has weighed down on its market value.
- Access Bank has had some wins this year, but things went sideways in June after losing 8% of its market value.
- Year to date the stock is flat at 1% offering its investors zero return in 2022.
- Access Bank also suffers from low valuation multiples with a price-to-earnings ratio of just above 2x.
- One of the major reasons for its low valuation is its dividend yield. Access Bank pays out some of the least dividend yields out there.
Zenith Bank – remains the most valuable bank in Nigeria despite also losing grounds in June to sell-on and profit-taking.
- The bank closed the month 7% lower than it started and now trades at N21.7 closer to its year low.
- Zenith Bank is a highly liquid stock and as such, investors typically cycle in and out when depending on their portfolio stratification.
- The bank is trading at a price-to-earnings ratio of 2.23x, fairly cheap by our estimates.
FBN Holding is the best-performing FUGAZ stock this year so far.
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