donne4real | November 18, 2008
Here are the reports analyses from FSDH and Meristem for the recently released results of Benue Cement Company, Total, Sovereign Insurance, and UACN.
FSDH - Company Analysis - Benue Cement - Nov 2008 (37)
FSDH - Company Analysis - Total - Nov 2008 (31)
Meristem - Company Analysis - Sovereign Insurance - Nov 2008 (31)
Meristem - Company Analysis - UACN - Nov 2008 (19)
donne4real | October 28, 2008
Here are the reports by ZSL and FSDH on Nigeria Bottling Company’s recent quarterly results:
ZSL - Company Spotlight - NBC - Oct 2008 (29)
FSDH - Company Spotlight - NBC - Oct 2008 (20)
donne4real | October 10, 2008
You can read here Zenith Securities’ take on First Bank and GT Bank:
ZSL - Spotlight on GTBank (Oct ‘08) (47)
ZSL - Spotlight on First Bank (Oct ‘08) (30)
Tags: Banks, companyreport
donne4real | September 25, 2008
I apologize for the late post. But here are the stock market reports for the week ended Friday September 19th 2008.
Also find below Zenith’s Analysis of Access Bank.
Express Discount - Weekly Report - Sept 19 ‘08 (36)
Forte - Weekly Report - Sept 19 ‘08 (33)
FSDH - Weekly Report - Sept 19 ‘08 (28)
Lead Capital - Weekly Report - Sept 19 ‘08 (19)
Zenith - Company Analysis - Access Bank (37)
donne4real | June 27, 2008
Meristem Securities prepared a research report on the middle-tiered banks in Nigeria. Click here to read.
Here is the summary/my take-away from the report:
- AfriBank and IBTC have the highest proportion of non-performing loans (17.6% and 14%) repectively as against the perr average of 8.9%.
- Skye Bank and FCMB have the best performing loan rates of 96.8% and 94.7% as against the average of 91.1%.
- Short term loans make up over 85% of the banks’ loan portfolio.
- Deposit structure of these banks is 50% current account, 7% savings, 42% time and call deposits and the remaining other account variants.
- These banks have a sound liquidity position.
- Combined assets of these banks increased from N363bn in 2004 to N2,607bn in 2007.
Their rankings:
1. Skye Bank
2. Diamond Bank
3. EcoBank
4. Access Bank
5. Bank PHB
6. FCMB
7. Fidelity Bank
8. Stanbic IBTC
9. Afribank
Opportunities- Nigeria still has a low bank penetration rate.
donne4real | June 2, 2008
I came across this article in the Guardian UK newspapers today. I must admit that I am impressed by the fact that foreign investment analysts are taking note of the success of these banks. Instead of the usual bad news, at least there are some good things here. They note the risks associated with the stellar performance of these banks. It is a good read. But analysts are humans and it is very difficult to divorce sentiment from facts at times.
Here are some highlights:
Stellar Nigerian banking growth brings high risks
Nigerian banks’ ability to manage risk may lag their explosive growth, souring investors’ buy-in on the back of record oil prices, an expanding middle class and corporate lending appetite, analysts say. Nigerian banks were among the strongest performing stocks in the world last year, even as a global credit crisis took its toll elsewhere, attracting interest from private equity and hedge fund investors from Europe, Asia and the United States.
The economy in the world’s eighth biggest oil producer is growing at its fastest rate for decades, global oil prices look set to continue to rally and Nigeria’s government has committed to reforms which will see a growing role for the private sector.
All of this in a country of up to 140 million people, just 15 million of whom are thought to hold bank accounts, meaning huge potential growth in retail banking. "In the last six months the growth in earnings momentum at the banks has just been stratospheric," said Fola Fagbule, a Nigerian research analyst with stockbroker Afrinvest. "We are seeing significant growth in loan books … The average bank I look at has doubled its loan book from the last time it reported an audited account," he told Reuters.
But there are fears that they may be growing too fast.
A wave of consolidation has seen the number of banks in Africa’s most populous nation slashed from 89 to 24 in the past few years, leaving the survivors competing fiercely for millions of consumer clients as well as for large corporate customers."We are concerned that banks may be tempted to expand into retail banking before they are able to adequately manage the risks," JP Morgan analyst Andrew Cuffe said in a report this month, initiating coverage of the Nigerian sector.MANAGING THE RISK
Most banks have been scaling up, tapping international and local markets to raise more than $10 billion in capital last year alone, enabling them to increase their capacity to lend. Eight banks, including Zenith Bank and Oceanic Bank, have posted 9-month or quarterly earnings increases of more than 100 percent since the start of the year. "We’re beginning to see banks put a lot of their capital at more risk. They have no problem expanding their loan books, the challenge is maintaining the quality," Fagbule said.Afrinvest estimates that 80 percent of Nigeria’s wealth is in the hands of just 20 percent of the population, meaning a potential market of up to 28 million banking clients. But while many of them may be potential depositors, not all will be rich enough to make them profitable to lend to.
The lack of a national identity system or a fully functioning credit bureau in Nigeria, as well as the banks’ limited experience with consumer finance products such as mortgages, all means extra risk."Following extremely strong rates of growth in advances, and with pressure on banks to deploy capital raised over the past year, we believe the risk of a sharp increase in non-performing loans has increased," JP Morgan’s Cuffe said. Even compared to other parts of West Africa, Nigeria feels woefully underbanked. Cash machines are a recent arrival and charges for simple transactions so high that many Nigerians prefer to stash wads of cash under their beds. While some banks are doubling their consumer loan books every quarter, analysts say they are riding with a strong tailwind in Nigeria, a country flush with record oil revenues and expecting economic growth of at least 7 percent this year.
ROLLERCOASTER RIDE
With Nigeria determined to turn itself into one of the world’s leading economies by 2020, involving huge infrastructure projects partly financed by the private sector, analysts agree that the banking industry remains a compelling story.Russian brokerage Renaissance Capital launched two new financial stock indexes this month to capture growing interest in the sector, while JP Morgan Asset Management identified Nigeria as a leading frontier market for part of its new Africa equity fund, which it hopes could reach $250 million.
But there is less consensus on whether now is the time to buy Nigerian banks after a sharp share price rally last year.Fears that the banks’ meteoric rise could turn into a bubble have also been heightened by reports that some are engaged in high-risk margin lending, loaning money to other institutions or individuals for stock market trading.Some analysts, such as JP Morgan’s Cuffe, argue their shares have run well ahead of fundamentals and do not take into account the operational and macro-economic risks to the businesses.
Any external shock, such as a drop in world oil prices or serious political instability, could leave them vulnerable. "We believe the sector is expensive on both an absolute basis and relative to emerging market peers … Given a price correction, we would look to enter," Cuffe said.
Others, such as Afrinvest’s Fagbule, point out that last year’s stock market exuberance has waned and that banks are becoming more profitable than ever as they increase lending to the country’s top companies and their employees. "For any bank in Nigeria now that has a handle on risk management, they are going to do phenomenally well," he said. "… As long as those loans don’t go bad."
Tags: Banks, companyreport
Here is some information on the top banks in Nigeria as prepared by Reuters:
ACCESS BANK
One of Nigeria’s fasting growing banks, with more than 80 branches around the country. Began operations in 1989. Announced in May it had bought stakes in Banque Privee du Congo, Rwanda’s Bancor Bank and Omnifinance Bank of Ivory Coast.
Posted profit after tax of 8,994 million naira for the nine months to end-December, 2007, up 177 percent on previous year.
AFRIBANK
Commercial and retail bank with more than 250 branches. Began operations in 1960 and was once one of top ten in Nigeria by assets. It is seen as a potential takeover target.
Posted profit after tax of 7,511 million naira for the nine months to Dec. 31, 2007, up 207 percent on previous year.
DIAMOND BANK
Focused on commercial banking since starting operations in 1991, it is seeking to expand its retail business from a current 132 branches in effort to improve margins.
Posted profit after tax of 9,573 million naira for the nine months to Jan. 31, 2008, up 107 percent on previous year.
FCMB
Pioneer investment bank which started operations in 1983 serving corporate clients, it opened its doors to retail customers in 2001. Continues to generate fees as advisor on capital raisings but seeking to expand in retail sector.
Posted profit after tax of 8,995 million naira for the nine months to Jan. 31, 2008, up 153 percent on previous year.
FIDELITY BANK
Started as a merchant bank in 1988, converting to commercial banking just over a decade later and becoming a universal bank in 2001. Plans to expand in oil and gas financing and push ahead with significant retail branch expansion.
Posted profit after tax of 9,344 million naira for the nine months to March 31, 2008, more than triple the previous year.
FIRST BANK
Nigeria’s oldest bank, incorporated in 1894 with a head office in the United Kingdom, it remains the country’s most profitable with more than 400 branches and ATMs. Seen as potential market leader in retail lending.
Posted profit after tax of 25,922 million naira for the nine months to Dec. 31, 2007, up 75 percent on previous year.
GUARANTY TRUST BANK
Focused on retail and corporate banking, it began operations in 1991. Quick to introduce mobile, telephone and internet banking in 2002 it has been aggressively rolling out new branches. Has subsidiaries in Gambia, Sierra Leone and Ghana.
Posted profit after tax of 11,808 million naira for the nine months to Nov. 30, 2007, up 57 percent on previous year.
IBTC CHARTERED BANK
IBTC began operations in investment banking and asset management in 1989 before merging in 2005 with Chartered Bank and Regent Bank, bringing retail and commercial capabilities.
South Africa’s Standard Bank bought control of IBTC last August. The bank has handled some of Nigeria’s largest equity capital raisings. Posted profit after tax of 4,509 million naira for its half-year to Sept. 30, 2007, up 38 percent on previous year.
INTERCONTINENTAL BANK
A pure merchant bank when it began operations in 1989, it has become a major commercial player in the oil and gas, and telecoms sectors. It is also expanding its retail business, aiming for close to 300 branches.
Ranked among the 1,000 largest banks in the world, it is in technical partnership with France’s BNP Paribas in the management of Nigeria’s foreign reserves. Posted profit after tax of 11,317 million naira for its half-year to Aug. 31, 2007, up 73 percent on previous year.
OCEANIC BANK
Focused on retail banking, it began business in 1990 and has expanded rapidly with a broad range of consumer products. Commercial lending primarily to real economy, manufacturing and mining firms, as well as to federal and state governments.
Posted profit after tax of 8,847 million naira for the three months to Dec. 31, 2007, up 153 percent on previous year.
BANK PHB
Formed out of a merger in 2005 between Platinum Bank and Habib Nigeria Bank, it is a commercial bank heavily involved in public sector finance and has been aggressively growing its retail client base.
Posted profit after tax of 14,846 million naira for the nine months to March 31, 2008, up 229 percent on previous year.
SKYE BANK
Created by the merger of five banks in 2006, it is full service bank offering real estate development finance, public sector banking and has been developing corporate banking in the oil and gas, and telecoms sectors.
Posted profit after tax of 7,663 million naira for second quarter to March 31, 2008, more than four times previous year.
UBA
Originally founded in 1961, United Bank for Africa merged with Standard Trust Bank in 2005 and aims to lead growth in consumer finance, develop private/public sector financing and expand across Africa.
Posted profit after tax of 18,420 million naira for its half year to March 31, 2008, up 71 percent on previous year.
UNION BANK
Established in 1917, previously owned by Barclays, it has a broad, loyal customer base but is seen as slow to respond to market changes. Global banks have expressed interest in taking a strategic stake.
Posted profit after tax of 13,500 million naira for its half year to Sept. 30, 2007, up 60 percent on previous year.
ZENITH BANK
Focused on low-cost commercial, public sector and retail deposits and lending to low-risk large corporates, it has built a reputation for high asset quality and is pushing ahead with a rapid roll-out of new branches across the country.
Posted profit after tax of 33,323 million naira for its 9 months to March 31, 2008, up 137 percent on previous year.
Tags: Banks, companyreport
