By Ayobami Adedinni
Jaiz bank Plc which was listed on NSE early 2017 emerged the worst performing banking share, followed by Wema bank Plc.
Skye Bank Plc remained flat at N0.50 per share for the second consecutive year, over non-disclosure of its 2016 accounts.
The bank has serially failed to submit its Q2 result of 2016; Q3 result of 2016; the full 2016 report; Q1 result of 2017, and the first –half year results of 2017.
However, a Tier- II lender, Fidelity Bank Plc has emerged best performing bank stock in 2017 on The Nigerian Stock Exchange (NSE) as it has rallied by 193 per cent in 52- week trading.
Highest gainer by percentage, Fidelity Bank, followed by Stanbic IBTC Holdings Plc, FBN Holdings Plc and United Bank For Africa Plc share prices surge to join seven others as the largest market capitalization on the NSE Bank Index in 2017.
Other top gainers by percentage include Access Bank Plc, Zenith Bank Plc and Guaranty Trust Bank Plc (GTBank).
Notably, Zenith Bank, GTBank and Stanbic IBTC are three staandout names in Nigeria’s banking sector as investors push up their valuations compared to peers in 2017.
The gain in the above financial institutions impacted positively on NSE Banking Index that closed 2017 at 73.32 per cent or 201.12 basis points to 475.44 basis points from 274.32 basis points the equities market opened for trading in 2017.
As at the close of trading on Friday (December 29), Fidelity Bank share price added N1.62 to close 2017 at N2.46 from N0.84 it opened for trading this year.
The lender’s Earning Per Share (EPS) closed 2017 at 0.53x, far above other Tier-II banks listed on The Exchange.
The share price of Stanbic IBTC added 177 per cent or N26.50 to close 2017 at N41.5 from N15.00 it opened for trading while FBN Holdings Plc share price also appreciated by 163 per cent or N5.45 from N3.35 it opened for trading to close at N8.80 on last day of trading.
United Bank For Africa Plc (UBA) share price also increased by 129 per cent or N5.80 to close 2017 at N10.3 from N4.50 per share.
Joining in the top five banks by percentage is Access Bank while Zenith Bank and GTBank came sixth and seventh respectively.
The share price of Access Bank rose by 78 per cent or N4.58 to close 2017 at N10.45 from N5.87; Zenith Bank share price gained 74 per cent or N10.89 to close 2017 at N25.64 while GTBank’s share price increased by 65 per cent or N16.05 from N24.70 it opened for trading to close at N40.75.
Another major gainer in banking share is Diamond Bank Plc. The bank’s share price gained 70per cent or N0.62per cent to N0.88 from N0.62 it closed for trading in 2016.
Other gainers are Ecobank Transnational Incorporated with gain of 65 per cent or N6.72 to close at N17; Sterling Bank Plc share price added 42 per cent or N0.32 to close at N1.08; Union Bank Of Nigeria Plc rose by 42 per cent or N2.30 to N7.80 and FCMB Group Plc rose by 35 per cent or N0.38 to close 52-week trading at N1.48.
Analysts attributed the performance to stability in foreign exchange, reiterating that quarter-on-quarter corporate earnings also impacted on these banks’ shares in 2017.
A stockbroker at Foresight Securities & Investment Limited, Mr. Fakrogha Charles, attributed the growth to corporate governance and increased participation from foreign investors.
He said, “Take a look at Fidelity Bank. The bank in 2017 was involved in a lot of Small and Medium-sized Enterprises (SMEs) empowerment and investors were taking note. The bank also announced an impressive result in nine months ended September 30, 2017. All these impacted on the bank’s results.
“Banks growth in share prices is a combination of so many factors but most importantly, the managements have shown some seriousness in taking those banks to the next level and that is expected to bring confidence.”
He maintained that Nigerian economy growth in Gross Domestic Product (GDP) also play a critical role in banks shares in 2017, stressing that by 2018, further stability will further aid growth in banking sector shares.
“Once a bank is effectively managed, foreign investors will patronize their shares. Once economic policies are stable, banks are expected to perform very well and not only banks but other companies.
The Managing Director,, Enterprise Stockbrokers Plc, Rotimi Fakayejo, said most banks have gained above 100 per cent due to impressive earnings in second quarter and third quarter of 2017.
He said, “coming back of foreign portfolio investors also play a critical role in banks shares in 2017. We have seen stability of the Naira bring back foreign investors. The game changer is stability in the foreign exchange and also the workable foreign exchange policies of the CBN.”
However, for 2017 banking shares, Zenith Bank, GTBank and Stanbic IBTC were trading above their tangible book value, a measure of what the companies would theoretically be worth if liquidated, with Zenith Bank at 5.21x; GTBank at 4.90 x and Stanbic at 4.60x.
The three banks are the largest by market capitalisation in Nigeria (excluding ETI with primary listing in Lome Togo).
The price to tangible book value ratio is closely watched by bank investors and analysts.
GTBank has generally traded between 1.2x and 1.8x book value in the past four years while Stanbic’s valuation has soared with the lifting of regulatory overhang on the share following the resolution of the financial reporting council (FRC) saga.
Zenith Bank saw profit before tax rise to N152.6 billion, while GTBank and Stanbic profit before hit N150.03billion and N45.65 billion in nine months ended September 30, 2017 respectively.