…As banking index records YTD growth of 43.97%
By OLUSHOLA BELLO, Lagos
Investors’ net worth in banking stocks on the Nigerian Stock Exchange (NSE) rose by N1.34 trillion as a result of expectation of economic recovery and improvement of macroeconomic fundamentals. The banking stocks total capitalisation rose by N1.34 trillion to N3.695 trillion on June 12, 2017 from N1.335 trillion at which it opened trading for the year.
Banking stocks are clearly leading on the Nigerian bourse as indicated by the Nigerian Stock Exchange (NSE) Banking Index, which measures the aggregate performance of the banking sub-sector has recorded year-to-date growth of 43.97 per cent as at June 9, 2017, outperforming the NSE benchmark index that has so far gained 23.82 per cent.
Findings by LEADERSHIP showed that banking stocks are becoming investors toast on hopes that the economy is recovering from recession and the development would impact positively on the performance of the banks at the end of the current financial year.
Analysis of the individual performance of the stocks showed that FBN Holdings led the pack with the highest year-to-date capital gain of 101.5 per cent as at June 12, 2017. UBA followed with a YTD gain of 98.4 per cent while Stanbic IBTC posted a gain of 96.6 per cent.
Access Bank recorded 83.3 per cent YTD growth, Diamond Bank up by 63.62 per cent, Fidelity Bank appreciated by 60.7 per cent and Sterling Bank gained 52.6 per cent. Unity Bank, Zenith Bank, Guaranty Trust Bank, FCMB Groups, and ETI posted a year-to-date gain of 40 per cent, 39.9 per cent, 36.4 per cent, 28.2 per cent and 23.1 per cent respectively.
Also, Union Bank recorded capital gain of 10.2 per cent, Skye Bank appreciated by eight per cent and Wema Bank grew marginally by 1.9 per cent.
Reacting to stock market and the banking sector performance under the period, capital market stakeholders said the continuous rally seen in the market is on the back of the recent development in the forex market, particularly the introduction of the Investors’ and Exporters’ Window (I&E window) and improvement in forex interventions by the Central Bank of Nigeria (CBN), which has buoyed liquidity and narrowed the parallel market premium.
They said the Banking sector has benefitted the most from the bullish run, with the NSE Banking index YTD return at 43.97 per cent outperforming the NSE benchmark.
The managing director of Highcap Securities Limited, Mr. David Adnori said that the market in recent time has been driven by handful of positive economic data, better than expected first quarter corporate earnings and CBN forex restructuring on foreign investors.
He noted that the banking stocks have historically been the most liquid stocks in the market. Asides the liquidity, their strong earnings profile and rich dividend payout make them the investors’ toast.
The chief operating officer of Cowry “he Investors would want to invest where they will get higher return and less risk, so from the look of things they felt banks will declare higher returns.