By OLUSHOLA BELLO, Lagos
Based on its positive performance for the first nine months of the year, the Banking stocks listed on the Nigerian Stock Exchange (NSE) has recorded a market capitalisation growth of N6.305 trillion.
From the data gotten from NSE, this shows a growth of 191.63 per cent from a market capitalisation of N2.162 trillion achieved in the beginning of the year 2017.
Also, the 15 listed Banking stocks contributed 51.61 per cent to the whole NSE market capitalization of N12.217 trillion recorded at the end of trading on September 29, 2017.
Under the period review, the banking sector of the NSE outperformed others, including the benchmark, NSE All-Share Index, rising by 60.46 per cent. An analysis of the individual stock showed that Stanbic and UBA are clear leaders, with 165.46 per cent and 123.60 per cent, respectively.
Access Bank recorded a nine-month gain of 79.81 per cent, Fidelity Bank appreciated by 79.52 per cent, while Zenith Bank up by 73.13 per cent.
Based on its positive performance for a period of the first nine months of the year, Guaranty Trust Bank emerged the most active and capitalised stock of the sector as it moved from N706.35 billion to N1.18 trillion.
Zenith Bank followed with a market capitalization of N731.54 billion, while Stanbic IBTC grew its capitalization to N400 billion.
Capital market analysts have attributed the growth in banking stocks to positive reactions to the impressive performance recorded by the banks in their financial results.
The chief operating officer of InvestData Limited, Mr. Ambrose Omordion, said the NSE is currently riding on its longest bullish run in over a decade.
“The All Share Index is already 36.38 per cent up this year and it appears there are still room for some upside. One sector that has garnered significant attention from the point of view of investors is the banking sector”, he added
He noted that the Banking Index as at September ending recorded a year-to-date growth of over 60 per cent with nearly all the gains coming this second quarter alone.
He added that Banking sectors typically attract the blessing of the bulls during bullish sentiments and the wrath of bears when investor sentiments are bearish.
“Their volume and visibility makes them an easy target. Going by the way the market is surging there is still quite some room for banking stocks, however, some are still trading at par or just above their book values”, he noted.
Omordion explained that “banks have been helped largely by forex gains without each the high non-performing loans they carry might have ravaged their earnings.”
Also, the managing director of Highcap Securities and Funds Limited, Mr. David Adonri said, “In the beginning of the year, the economy faced serious headwinds that pushed it into recession in 2016, some banks still posted impressive results and declared significant dividends.
“It is therefore instructive for discerning investor to take position in the banking sector now that there is an improvement in the economy and coming out of recession, there is possibility that the performance for banks at the current year end will be impressive with higher returns to shareholders”.
The CEO of APT Securities and Funds Limited, Mallam Kurifi Garuba, said that the Banking sector has benefited the most from the bullish run, noting that investors’ interest has largely been centred on Tier-1 lenders.
Garuba linked the performance to reduced apprehension in the macro-economic environment, impressive full year 2016 and first and second quarter, 2017 results as well as increased confidence and liquidity in the forex market.