SKYE BANK…LOW OUTSTANDING SHARES YET LOW EARNINGS PER SHARE.
No doubt about the Nigerian banks
been the movers and shakers of the entire Nigerian Stock Market, one can even
hasty generalized that the Nigerian Stock Market is all about the bank. There
is however one worrisome trend across the
sector and such lies in their EXCESSIVE or OVER-BLOATED OUTSTANDING SHARES this can be majorly attributed to their
almost year in year out bonus issues, though the banks are now gearing towards
matching both their top-line and bottom-line with the excessive shares except
for Unity bank which has seen earnings in terms of top and bottom line plummets
thereby making its EPS worthless as it recapitalized and added another excess
shares to the already existing excess shares.
Refraining from committing an all
for one fallacy, a bank stands out in terms of its low OUTSTANDING SHARES
unlike the others and such is the SKYE, Skye bank has the lowest outstanding
shares in the banking sector on the Nigerian Stock Exchange, this can be traced
to its non-issuance of bonus as I could not trace and recently or past declared
bonus from the company.
BANKS RANKING IN TERMS OF
OUTSTANDING SHARES
|
RANK
|
BANK
|
OUTSTANDING SHARES (bill)
|
|
1
|
UNITY
|
33.675
|
|
2
|
FBN
|
32.632
|
|
3
|
UBA
|
32.334
|
|
4
|
ZENITH
|
31.396
|
|
5
|
GTB
|
29.413
|
|
6
|
FIDELITY
|
28.974
|
|
7
|
ACCESS
|
22.888
|
|
8
|
IBTC
|
18.750
|
|
9
|
FCMB
|
18.711
|
|
10
|
UBN
|
16.935
|
|
11
|
STERLING
|
15.703
|
|
12
|
DIAMOND
|
14.475
|
|
13
|
SKYE
|
13.219
|
|
|
|
|
NB-ECOBANK is
not included as its position is not yet know due to it issuance of 3.125b to a new
investment consortium, WemaBank and UBN are also not included as it they both
do not have recent earning report to complete their juxtaposing.
From the tale above, it can be seen
that Skye Bank sits at the bottom in terms of outstanding shares. A feat which
should give it an edge in its EPS comparability with its peers, the table below
shows the ranking in terms of EPS.
RANKING IN TERMS OF EPS(EARNING PER
SHARE) base on QUATER1, 2012
|
RANK
|
BANK
|
EPS(K)
|
|
1
|
FBN
|
75
|
|
2
|
GTB
|
65
|
|
3
|
ZENITH
|
61
|
|
4
|
ACCESS
|
53
|
|
5
|
UBA
|
42
|
|
6
|
DIAMOND
|
35
|
|
7
|
SKYE
|
26
|
|
8
|
FCMB
|
22
|
|
9
|
IBTC
|
13
|
|
10
|
FIDELITY
|
11
|
|
11
|
STERLING
|
0.8
|
|
12
|
UNITY
|
0.6
|
From its position in terms of
outstanding share, Skye bank has no business been in the 7th
position in terms of EPS hierarchy, if FCMB has the same OS as Skye, it will
even precede Skye Bank in the table above!!! What could then be the reason for
Skye not to leverage out an high EPS value from its corresponding low OS? The
answer is not farfetched as it lies in its low TOPLINE and BOTTOMLINE, this
will therefore lead to a comparison between topline and bottom line of the
banks.
Q1,2012 Topline and Bottomline of
Nigerian Banks
|
|
FBN
|
ZEN
|
UBA
|
GTB
|
ACC
|
DIA
|
SKYE
|
FID
|
FCMB
|
STRL
|
IBTC
|
UNITY
|
|
TLINE(Bil)
|
92.286
|
72356
|
53.864
|
52.615
|
52.172
|
30.732
|
27.839
|
22.429
|
19.755
|
17.716
|
14.689
|
12.693
|
|
BLINE(Bil)
|
24.524
|
19.226
|
13.778
|
19.312
|
12.114
|
5.097
|
3.476
|
3.402
|
4.092
|
1.321
|
2.501
|
1.960
|
DEDUCTIONS
Pre-recent
M&A Access, Fcmb and Skye were classified as Tier2 banks but it now seems Access
is leaving that region to compete with the Tier1Banks,some analyst will even
adjudge it is already a Tier1 bank.
Agreed that Access recent acquisition must have aided such feat but I won’t
totally agree it form the entire basis for accomplishment as it was not the
only bank that took part in the M&A process. It thus implies the management
of ACCESS is assiduously putting strategy into place while that of SKYE may be
complacent!!!
Singling
out both FCMB and SKYE Bank shows an obvious contraction, SKYE topline is by
almost an average higher than FCMB topline yet the latter has an higher
bottomline than the former. This unconnected choppy could arise from excessive
Management and administrative expenses, high cost of finance, abundant loan
provision, surplus provision for depreciation and amortization, etc. Whichever
any of such incoherent arises from, it does not speak well about the
management.
Maybe I
will one day work in a bank so that I will understand core intricacies, because
I tend to be marveled and I ask, what is the likes of FBN,ZENITH,GTB,ACCESS
doing that others could not imitate to at least close-up, even by little, the
excess gap in their topline? One of Nigeria foremost Finance expert
“KNIGHTOFDELTA’’ who has already predicted an increased buoy in the topline and
bottomline of the Tier1 banks before they were released links such buoyancy to
their involvement of Treasury Bills, that I wish I can comprehend and i am
eager to, I will therefore be taking an unrushed look at the entire figures of
the Tier1 versus Tier2, comparing their T-bills status and gets to learn about T-bills at large as these should be among the tenets to watch out for when considering buying the banks.……………
To be continued
DISCLAIMER: This write up is neither to dress down Skyebank
nor incite the investing public against skyebank shares or the NSE at large, it
should be taken as lighter note from the writer, do also note that the writer,
1himself is a graduate of Physics major and does not have any formal Finance
knowledge.
A Critical review coupled with questions will also be welcomed.
1himself can be followed on Twitter @1himself
