Despite sell pressure witnessed on the shares of some quoted companies listed on the floor of the Nigerian Exchange in the month of August, three top Nigerian Banks, Zenith Bank Plc, Ecobank and FBNH Plc gained about N68.627 billion in market capitalisation.
Checks by Nairametrics showed that Ecobank Plc grew by 11% to N11.00 per share from N9.90 which was the opening share price on 1st August, while Zenith Bank Plc increased by 5.79% to N21.90 per share from share price of N20.70 at the commencement of the current year trading in August. FBNH Plc trailed with a growth of 2.76 % to N11.15 per share from N11.00 per share during the period under review.
The positive sentiment is following the improved performance witnessed in the banking sector’s half year 2022 on various parameters like credit growth, asset quality, and profitability.
Performance of the banks’ share prices
- Ecobank closed its last trading day of the month at N11.00 per share and N201.845 billion in market capitalisation on the Nigerian Stock Exchange (NGX) as against N9.90 per share and N181.660.56 billion in market capitalisation at the beginning of trading on August 1, hence has earned a month to date gain of N20.184.5 billion or 11.11%.
- Zenith Bank Plc also closed its last trading day at N21.90 per share and N687.583.21 billion in market capitalisation on the Nigerian Stock Exchange (NGX) in contrast to opening figure of N20.70 per share and N649.907.42 billion in market capitalisation at the beginning of trading on 1st August. The bank has since gained 5.79% and N37.675.79 billion in market capitalisation.
- FBNH Plc also closed the last trading day at N11.15 per share and N400.232.51 billion in market capitalisation compared to opening figure of N11.00 per share and N389.463.93 billion in market capitalisation, hence has earned a gain of N10.768.58 billion 0r 2.76% month to date.
Analysts’ projections
Analysts at CardinalStone Research have said that the prospects of higher yields may spur interest in banking names towards year end.
- ‘’Based on our expectation for an uptrend in fixed income yields in the second half of 2022, we envisage a significant pick up in banks’ net interest income. Our positive earnings expectation is premised on CBN’s switch to relatively hawkish stance, already demonstrated by the 150 bps increase in benchmark rate to 13.0%.
- Overall, we assess that the relative underperformance of banking names in H1’22 could present attractive entry opportunities for investors over the next one year
- We favour stocks with sound fundamentals (i.e BUY recommendation within our rating system), proven track record of resilience in pre-election years, positive exposure to interest rates (for banks), low leverage (for non-banks), positive exposure to commodities, and decent dividend yield (i.e above 1-year T-bill rate)”.
