INDUSTRY WATCH- THE BANKS

INDUSTRY WATCH- BANKING SECTOR

The banking sector of the Nigerian stock exchanged is adjudged to be the most active sector in the entire capital market, this write up takes a look at all the banks quoted on the Nigerian Stock Exchange with comparisons based on their quarter three figures and ratios.

 

 

PM-Profit Margin    OS-Outstanding Shares   RVS-Revenue per Share     GE-Gross Earnings           

 

Comparison based on each bank Gross Earnings and Profit After Tax.

 

 

Graph showing the Profit Margin of each Bank

 

                                                                               

                                             Revenue each bank makes for every unit of shares.

 

 

 

                                                                                            

                                                                Return on Equity for each Bank.

                                                                                

                                              Graph Comparing the Current Price and Book Value

                                                                                    

                                                        Price to Book Value for each bank.

 

INFERENCES-

ACCESS BANK – The price of Access bank is properly valued for it numbers and I do not expect much upsurge in the share price in the short term.

DIAMOND BANK- The current price of Diamond bank though close to it 52 weeks high still indicate a bargain, with its quarter 3 EPS higher than that of Access and UBA and PE far below the industrial average. My only fear for the stock lies with what the management decision is going to be in terms of dividend payment for 2013.

ETI-This bank is with huge potential but the bank needs to put many things in order, the bank has the highest Gross earnings in the entire industry and it is also ranked as the second in terms of turnover in the entire market. This makes one to expect a better Profit after tax but the PAT is like an half of GTB and Zenith bank PAT. The bank also seems to be battling with so many internal squabbles though its share price has been able to shield itself from the effect of such squabble. The fact however remains that the bank need to work on its Expenses, cost of operation, provision and all that is zapping it high gross earning. If the bank can do all the aforementioned and also gear effort towards ending it internal wrangling’s it should be a consideration for the medium and long term

FBNH-FBNH seems to be lagging behind among its first tier peers, from it lateness in releasing it quarter result to the result not meeting up with expectations. I however strongly feel FBNH remain a candidate of above N15.6 in the short and long term.

FCMB- FCMB tends to look a little attractive, with a low PE, trading at a huge discount of it Book Value. The bank gave out bonus for 2012 year end without a dividend so the prospect of a dividend for 2013 year end is positive. Probably in the short but certainly in the long the stock should be able to attain if not go beyond its 52wks high of N5.20.

FIDELITY- With a 52wk price of N3.47, a current price of N2.54, possible forward EPS of 0.51k, a forward PE of 4.65, a Book Value of N5.60 and a possible above 0.10k dividend. Fidelity deserves a consideration

GTBANK- GTBank is one bank that has created a niche for itself in the industry, it appears over-valued from it numbers but here is a stock investors tends to look more from the quality of the company and the effectiveness of its management rather than the quantity of the share price. If a Nigerian BANK can have a PAT margin of 38% then that speaks volume.

SIBTC- This bank has paid interim dividend of 0.70k for 2013, the effect which has manifested in the share price by moving from N12 to its current price of N22, there is however a possibility of a low dividend for its year end which might not project the share price further than it current price.

SKYE- Skye bank currently has the lowest PE in the industry, also looking at it from a technical angle makes it attractive.

STERLING-Sterling Bank looks moderately attractive.

UBA-The price of UBA is moderate with its current numbers.

UBN- The management of this bank is proving their tenacity in returning Union bank to its big, strong and reliable status, the share price appears over-priced though with the current numbers.

UNITY BANK- This bank really needs a way out as the management seems not to be getting things right at all, from having the penultimate Gross earning and Profit after tax. The bank also seems to be making a meager 0.01k for every unit of share per quarter, with a forward EPS of 0.04k I don’t see the share price moving based on fundamentals. However considering technicals Unity Bank will be a toast as its current 0.50k is 132% lagging behind it 52wks high of N1.16 . The management is planning a reconstruction of shares and recapitalization I however don’t see that projecting the price in the short term as the simultaneous intention seems like a flip flop where ordinary shareholders will be the end losers

WEMA – Based on PE, Wema bank is the most expensive bank in the industry, it is also the bank with the lowest Gross earning, lowest PAT, lowest EPS and highest PE. The bank does not have any fundamentals neither to support its current price nor to project it forward.

ZENITH- This is another bank that seems to take after GTB

The above inferences are my own personal feelings and should not be used to make any investing decision, I also currently have Diamond Bank, ETI and FCMB in my portfolio so any biased feelings from me toward them in my inferences should be jettisoned.

All Comment, questions and advice will be highly welcome.

owolabiafeez@hotmail.com

Twitter - @1himself

                                         

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