SKYE BANK…LOW OUTSTANDING SHARES YET LOW EARNINGS PER SHARE.

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 7^th 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