Banking Industry Report (BIR) of leading market analyst group, FSDH Research has shown that out of the 13 banks reviewed based on their audited 2015 results, 10 have upside potential for equity investors.
Details show that most of the banks are trading significantly below their opening prices. Apart from Access Bank Plc, GTBank Plc, Zenith Bank Plc, United Bank for Africa Plc, Stanbic IBTC Bank, the rest banks are trading below their opening prices.
Diamond Bank is 44 per cent lower that its opening price, ETI (33 per cent); Fidelity Bank (37 per cent); Sterling Bank (42 per cent); Union Bank (23 per cent); Unity Bank (33 per cent); Wema Bank (37 per cent); FCMB (31 per cent); FBN Holding (39 per cent).
The report said “Our analysis of the Nigerian banks listed on the floors of the NSE shows that they are trading at huge discount relative to their emerging market counterparts. We analysed 13 banks based on their latest audited financial results as at December 2015 and adjusted for half year, 2016. Our valuation results show that 10 banks have upside potential for equity investors. We placed a hold rating on one bank and sell ratings on two banks.”
“Nigerian banks need to develop more constructive strategies to increase their share of the non-oil sector in their loan portfolios. We recognise that the current foreign exchange shortage in the country is a major problem facing the manufacturing and trading, sectors. However, lending to sectors that have local and export contents may be viable alternatives,” they said.
Further presentations of the report indicate that as at December 2015, the total assets of the banking industry in Nigeria stood at N27.04 trillion, a decrease of 1.77 per cent from N27.53 trillion as at December 2014.
“The bank with the largest assets remains FBN Holdings with total assets of N4.17 trillion accounting for 15.41 per cent of the industry total assets. This was followed by Zenith Bank with total assets of N4.01 trillion and accounted for about 14.82 per cent of the industry size,” FSDH the group also noted that five largest banks by assets size, FBN Holdings, Zenith Bank, UBA, Access Bank and GT Bank accounted for 59.33 per cent of the industry total assets size. The largest contributor to the industry total assets was loan and advances which stood at N12.56 trillion and accounted for 46.45 per cent of the total assets.