A group of analysts at Stanbic IBTC Stockbrokers said United Bank for Africa Plc (UBA) joined 12 others listed banks on the Nigerian Stock Exchange (NSE) as top performing stocks in 2017.
On a year-on-year (YoY) return, the pan-African financial institution gained 128.9 per cent or N5.80 to close 2017 at N10.3 from N4.50 per share. Leading the Banking Sector 2017 YoY return were Fidelity Bank, followed by Stanbic IBTC Holdings Plc, FBN Holdings and UBA, analysts at Stanbic IBTC Stockbrokers highlighted.
The gain in above financial institutions impacted positively on NSE Banking Index that closed 2017 at 73.32 per cent or 201.12 basis points to 475.44 basis points from 274.32 basis points the equities market opened for trading in 2017.
Stanbic IBTC Stockbrokers said, last year started with a lot of uncertainties as the backdrop from the crash in oil prices, economic recession, high inflation, relative dollar illiquidity etc impacted negatively on the Nigerian bourse.
A report by the stockbrokers states,“As such, the first three months of the year 2017 were basically non-existent as market activities were concerned. However, the introduction of the Investors & Exporters Foreign Exchange (I &E FX) window by the CBN on the 21st of April re-ignited market activities and the All Share Index (ASI) jumped from a -6.27per cent return in April to 42.30per cent YoY return.
“It suffices to say the Nigerian bourse turned out unexpectedly well in 2017,” they explained. Specifically on UBA, analysts said, investors in the pan-African bank’s euro Bond have seen significant returns on their investment. At the price of Eurobond closed to premium to pair at $102.7, translating into a notable gain for the bond holders.’’
They also expressed that strong gain in the equity and debt of the bank is an apparent evidence of the global investors’ confidence in the management and overall leadership of UBA.
“Moreso, it reflects the confidence that investors have in the prospect of the bank particularly its ability to deliver sustainable and superior returns to both equity and debt investors,” they explained.
Hitherto, UBA announced impressive performance in its unaudited third quarter financial results ended September 30, 2017, showing remarkable performance across key financial indicators. The group gross earnings grew by 26 per cent to N333.9 billion, as against N265.5 billion reported in September 2016.
The growth in gross earnings was driven by the strong performance of its recurring core revenue lines, thus reflecting the increasing success of the bank’s enhanced customer engagement. The group also delivered an impressive profit before tax (PBT) of N78.3 billion, marking a significant growth of 33.2per cent as against N58.8 billion recorded in the similar period of 2016.
Recently, the UBA won the NSE Pearl Awards for Banking Sector Category. The award is based on qualitative and quantitative metrics which include corporate governance, profitability, sustainability and financial reporting standard/transparency among other key metrics that were used in ranking on the NSE.
However, analysts at Stanbic IBTC Stockbrokers explained further that, “we believe FBN Holdings and ETI will be particular stocks to watch in 2018- largely because both banks have made efforts to clean out their books over the past year and we could begin to see relatively smoother earnings going forward in line with peers.
“While ETI might have “kitchen-sunk” the big chunk of the bad (legacy) loan books, FBNH’s clean-up process is more gradual and NPLs (although should trend downwards) might remain relatively high over the next 24 months. Both stocks relatively still have attractive price points currently in our view.”
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