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In: Banks
4 Mar 2010Here is Meristem Securities’ detailed analysis of the Nigerian banking sector. It provides a valuation, ratings, expected turnover, earnings performance, and outlook for each of the banks.
Meristem - 2010 Banking Report (45)The Central Bank of Nigeria released new guidelines for the tenures of bank CEOs. Here are the new guidelines:
1. Chief Executive Officers, CEO of banks shall serve a maximum tenure of ten years.
2. All CEOs who would have served for ten years by July 31, 2010 shall cease to function in that capacity and shall hand over to their successors.
3. Where a bank is a product of merger, acquisition, take-over or any other form of combination, the ten–year period shall include the pre and post combination service years of a CEO provided that the bank in which he previously served as CEO was part of the new bank that emerged after the combination.
4. Any person who has served as CEO for the maximum tenure in a bank shall not qualify for appointment in his former bank or subsidiaries in any capacity until after a period of three years after the expiration of his tenure as CEO.
5. The Governor/Deputy Governors of the CBN and the Managing Director/CEO and Executive Directors of the Nigeria Deposit Insurance Corporation, NDIC shall not be eligible for appointment in any capacity in banks until after the expiration of five years from the date of their exit from the CBN or NDIC as the case may be.
6. The Departmental Directors of the CBN and the NDIC shall not be eligible for appointment in any capacity in banks and their subsidiaries under the supervision of the CBN and NDIC until after the expiration of three years from the date of their exit from the CBN or NDIC as the case may be.
7. Henceforth, all banks shall reflect the provisions of these guidelines in the terms of engagement of their CEOs.
You can download the CBN release <a href=”http://www.cenbank.org/Out/2010/publications/pressRelease/GOV/Tenure_Guideline19012010.pdf”>here</a>.
In: Banks| News| company results
17 Dec 2009Here is Bank PHB’s statement on the recently announced N387 billion loss for the 3rd quarter:
In: Banks| company results
16 Dec 2009Here is Vetiva Securities’ analysis of the Q3 results for FCMB. The main issues are shrinking balance sheet and increased provision for loan losses which arent good.
<blockquote>In valuing FCMB, we utilized an Excess Returns Model; assuming a Cost of Equity of 17.00% and Terminal Growth Rate of 4%. A Sensitivity Analysis varying he Discount Factor and Growth Rate scenarios gave a Fair Value range of N7.89 – N8.84.
Checking our valuation with an Adjusted Gordon Growth Model, we derive a valuation for FCMB at 1.26x December 2009F book, with a Fair Value range of N9.32 – N11.63. An average of these valuation methodologies gives a Fair Value range of N8.60 – N10.24. It is our expectation that the stock would trade within this range under normal arket conditions; hence, our “Overweight” rating at current market price of N7.50.</blockquote>
In: Banks| company results
16 Dec 2009Meristem Securities has prepared a detailed breakdown on the bank statements of results detailing their losses. It is stunning Intercontinental – N328billion, Oceanic Bank – N286billion, Union Bank – N222billion, First Inland – N94.7billion, Spring Bank – N16billion, and Bank PHB – N387billion.
In: Banks
16 Dec 2009Here is the copy of the memo Oceanic Bank boss, John Eboh sent to the company’s shareholders explaining the stunning N286billion loss:
In: Banks
13 Nov 2009Cordros Capital has prepared a summary of the profit and loss information for the Nigerian banks. And it is not pretty. All but one (Guaranty Trust Bank) announced steep drops in profit. Guaranty Trust Bank’s profit increased 2.5%.
Profits decreased by as much as 200% for some of these banks. Examples include Access Bank, Ecobank and FCMB.
Check the document below:
Profit And Loss Summary For Banks (170)In: Banks| companyanalysis
12 Nov 2009Here are the analysis of Afrinvest of GTB, Unilever, First Bank, and Zenith Bank:
<strong>Guaranty Trust Bank</strong>, which highlights the company’s performance for Q3 ’09 and our outlook for FY ‘09.
Highlights:
Q3’09 Results:
· GTBank recorded a strong growth of 43.5% in gross earnings during the period under review
· Impressive YOY growth of 50.0%in its interest and discount income (which constitutes 70% of its gross earnings) while cost grew by 33%
· Balance sheet crossed the N1.0tn (US$7.1bn) landmark
Key Strategic Drivers for the performance
· Sound Risk Management Framework coupled with prudent and conservative business model seems paying off in the current economic terrain
· Customers’ loyalty contributed to impressive growth in Deposits
· Low Non-performing loan ration at 3.07% when compared to industry average of 5.3%
FY 09 Outlook:
· We have a positive out look of the company based on the past performance, YTD gain stands at 49%
· On the basis of these, our recommendation is to ACCUMULATE with a 12 month price target estimate of N18.48 indicating 16.2% upside potential.
<strong>First Bank</strong>, which highlights the company’s performance for 6M ’09 and our outlook for FY ’09 (9 Months to December 31, 2009).
Highlights:
6 Month ’09 Results:
· First Bank recorded a modest growth of 32.2% in gross earnings during the period under review
· N29.5bn Provision for risk assets greatly impaired profits
Key Strategic Drivers for the performance
· Efficiency ratio impaired across board while cost to income ratio also increased
· High Non-performing loan ratio at 8.2% when compared to industry average of 5.3% and previous year’s 1.8%
FY 09 Outlook:
· The bank has embarked on aggressive cost containment strategy across board
· The bank hopes to capture more market share on the heel of its proposed acquisition/merger deal which has reached advanced stage
· We don’t expect the above strategies to significantly impact its bottom line over the next 12 months
· As a result of these, we recommend REDUCE for 6 month outlook and NEUTRAL for 12 month outlook
<strong>Unilever Nigeria PLC</strong>, which highlights the September 30th Q3 results and our FY’09 outlook for the company.
Highlights:
· Unilever generated impressive Q3’09 results with improved earnings
· Turnover (N32.6bn) went up 16.6% from Q3’08 levels, while PAT (N5.5bn) grew by 125.9% over same period.
· Improved operating efficiencies and focus on portfolio management
· Our recommendation is NEUTRAL, with a FY’09 price target estimate of N19.30
<strong>Zenith Bank Plc</strong>, which highlights the company’s performance for the un-audited 12 Months to September 30, 2009 and our outlook for FY’09 (15 Months to December 31, 2009)
Highlights:
12M’09 Results:
· Zenith Bank recorded growth of 19.4% in gross earnings during the period under review
· Impressive growth of its loan to deposit to ratio to 60.4% up from 38.1% in the corresponding period
· 8.1% drop in deposits to N1.1tn (US$7.2bn)
Key Strategic Drivers for the performance
· Strategic focus on aggressive cheap deposit generation, leveraging on its strong brand name
· Conservative lending policies and low-cost, technology driven operations
· Zenith’s loan portfolio of N658.1bn (US$4.3bn) is the second largest in the industry
FY 09 Outlook:
· Based on Zenith’s past performance, our outlook is positive as Zenith is one of only 2 banks that have a positive YTD return in 2009
· Our forecast for the bank’s full year pre-tax profit for year ending 31 December 2009 to be N29.7bn(US$196.0m)
· On the basis of these, our recommendation is to ACCUMULATE with a 12 month price target estimate of N16.57 indicating 15.4% upside potential.
From the CBN regarding Equitorial Trust Bank:
Following the Special Examination of all banks operating in the country, and the subsequent actions by the CBN, the shareholders of Equitorial Trust Bank Limited requested the permission of the Central Bank of Nigeria to be allowed to rectify lapses identified in the bank. In pursuance to that, the shareholders executed a Deed of Covenant, the specific terms and conditions of which included the following:
i. The willingness of the shareholders to recapitalize the bank by way of injection of additional capital latest by June 30, 2010;
ii. Restructuring, diversification and enlargement of the capital base of the bank either by way of a public offering of shares, securing a core investor or merger with a local bank within one (1) year period;
iii. Addressing the corporate governance issues in the bank which were mainly ascribed to the previous Executive Management team in the bank;
iv. Reconstitution of the Board of Directors of the bank through the retirement of two non-executive directors and the appointment of four new non-executive directors, including Dr. Mike Adenuga Jnr. (CON), an erstwhile member of the board, subject to the approval of the Central Bank of Nigeria; and
v. Convening a general meeting of the bank’s shareholders to ratify, through a resolution all the nominated appointments to the bank’s board.
Download the full statement here.
In: Banks
2 Nov 2009As at the last count, at least 4 Nigerian banks are in the market to raise capital through bond issuance. These are Zenith, UBA, First Bank and Guarantee Trust banks. This report by <a href=”http://www.vetiva.com”>Vetiva</a> provides some details on what these banks are planning to do:
Vetiva - Highlights of Proposed Capital Raising By Banks (118)The <a href=”http://www.cenbank.org”>Central Bank of Nigeria</a> on Wednesday, released the list of debtors with non-performing loans to the banks that were recently taken over (Bank PHB, Equitorial Trust Bank, and Spring Bank). Here is an excerpt of <a href=”http://www.tribune.com.ng/15102009/news/news10.html”>Tribune Newspaper’s</a> report:
<blockquote>IN its ongoing sanitisation of the nation’s banking sector, the Central Bank of Nigeria (CBN), on Wednesday, released another list of individuals, corporate organisations, parastatal agencies and state governments owing five banks whose audit reports were released recently.
The total amount owed the five banks, according to the release, is N346,408,028,581.04, excluding the sum total of non performing loan of Wema Bank, which could not be ascertained at press time.
The non performing loans of the banks as at June 30, 2009 and October 5, 2009 respectively revealed Bank PHB topping the list with N170,073,403,358.39, followed by Spring Banks (N95,594,989,430.06), Equitorial Trust Bank’s (N46,154,945,774.44) and Unity Bank (N36,585,690,018.15).
As usual, names of politicians, businessmen and contractors topped the list. These include the former Managing Director of Wema Bank Plc, Mr. Adebisi Omoyeni whose Independent Securities Ltd owes N5 billion and Barrister Jimoh Ibrahim whose total loan is put at N5 billion also.
Others include Femi Otedola of Zenon Petroleum Gas Limited (N5,154,041,716.86), Peter Ololo of Petosan Oil & Gas Company Limited (N4,548,125,091.02), Chief Oyewole Fasawe (N7,874,801,592.84) and Kola Daisi of National Sports Lottery Ltd (N4,821,060,327.76).</blockquote>
You can download the report below.
CBN-Bank Debtors - Oct 14th 2009 (134)
In: Banks| CBN| Economy| special reports
17 Sep 2009Here is a document dump of different reports and news stories on the banking crisis and the actions taken by the CBN.
Vetiva provides some details on the CBN’s presentation/road-show in the UK in late August. The noted that:
- All write-downs are to be taken in the current quarter (i.e. quarterly results to be released for September ending will feature total provisions for non-performing exposures)
- Results not to feature high profitability margins
- GTBank and Diamond Bank have already accounted for losses as at second quarter of 2009 (i.e. Q2’09 ended June 30, and Q1’09 ended July 31 respectively), so their results in Q3 are expected to be much better than the average performance of most other Banks
- Fourth quarter (ending December) should be strong for Nigerian Banks in general because earnings will no longer be eroded by Non-Performing Loans
Vetiva - Sanusi's Meeting With CNBC Africa - Aug 28th 2009 (108)
One of the most explosive revelations of this entire exercise was the news report by Vanguard in March about the plans to “level” the ground in the banking sector to favour the Northerners and how 5 banks were going to be taken over.
Vanguard March 23, 2009 - The Plan to take over 5 banks (115)
Standard Chartered also prepared an analysis of the events. The pointed out that:
-CBN prints money to fund the initial cost of the bank bailout
-Given the current environment, and the contraction in broad monetary aggregates already underway, this is unlikely to be inflationary
-A diverse range of funding options are open to the authorities
-The hope is that the CBN’s capital injection will be recovered following future private-sector investment in Nigeria’s banking system
Standard Chartered - Nigeria – Paying for the bank bailout - Aug 25 '09 (151)
Proshare NG also provided some analysis:
CB - Dissecting the problems with Nigerian Banks (321)
Fronteria Post of 4 out of the CBN (87)
This blog is dedicated to informing users on the latest business and economic news news from the CBN and Nigerian Stock Exchange. Happy reading!