Here is JP Morgan’s Analysis of Nigerian Banks. I will add some comments and notes later.

Update:
Here are my comments and summary of the article:

1. Believes that stocks in the banking sector are expensive on both an absolute basis and relative to emerging market peers. The believe that they are overvaluated up to about 56%.
2. Recommended an Overweight (BUY) position in GTB, Neutral (HOLD) on Zenith, Union Bank, and Oceanic, and Underweight (SELL) on Intercontinental, UBA, and First Bank.
3. Expect a return in the range of 27% for GTB to negative 40% for First Bank.
4. Believe that the banks are sufficiently capitalised to support strong EPS growth.
5. The continued vulnerability of smaller banks may pose systemic risks to the Nigerian banking system.

Are negative on the Nigerian banks for the following reasons:

1. Valuations appeared stretched.
2. Capital raising has been used to fund growth while internal growth capability is low.
3. Continued intensification of competition.
4. The risk of sharp increase in non-performing loans has increased as private sector credit increased 98% in 2007.
5. Earnings growth visiblity is low.
6. Growth has moved ahead of the risk capabilities of both the banks and regulator.
7. Growth opportunity in the retail market may take longer to realise than the market is presently expecting.
8. The stock market has been driven by a hot-house effect, movinig ahead of fundamentals.
9. Bank prices do not sufficiently reflect the difficulties imposed by a lack of infrastructure, high levels of systemic risk as well as general economic and political risk.