Investors bet on Zenith, Stanbic, Diamond Banks as share prices soar 27% in one week

IMPRESSIVE NINE MONTHS results released for the third quarter of 2018 for Zenith and Stanbic Bank have increased demands for their stocks, thereby resulting in a price appreciation of 5 percent and 2.2 percent respectively.

Zenith bank having being able to muster a 12 percent year-on-year post tax profit growth amounting to N144.2 billion, as against N129.2 billion made in September 2017, Friday earned a buy rating from analysts at Cordros capital.

The analysts see a positive outlook for the banking firm’s 2018 full year earnings on the backdrop of lower cost of funds by the bank as well as lower impairment charges. They, however, foresee a damper on FY earnings along declines in major revenue line (Gross earnings drop of 15%) of the firm which was recorded in the first half of 2018.

Stanbic IBTC Bank also recorded significant improvements across its top and bottom lines in its interim statements for the nine months period ended 30th September 2018.

Stanbic grew profit after tax by 58.6 percent to N59.8 billion from N37.7 billion in September 2017 on the backdrop of a 24 percent increase in non-interest income of N80 billion and a 10 percent increase in gross earnings which rose to N168.8 billion from N154.2 billion in the corresponding period of 2017. Its shares thus rose by N1 or 2.2 percent to close the week at N46 per share.

But Diamond Bank’s shares recorded the highest growth of 20 percent last week following news of recapitalization of the bank following the resignation of its chairman and three other non-executive directors. This brings the cumulative one week share price growth of the three banking firms to 27 percent.

The bank had in a notice to investors said it recognizes the need to shore up its capital adequacy ratio (CAR) adding that it will go through the process by an internal capital management programme.

On this backdrop, Diamond Bank also released its nine month results ended 30th September 2018 to the market late Friday declaring a 57.6 percent decline in profit after tax of N1.7 billion from N3.9 billion made during the same period of 2017.

Uzoma Dozie the bank’s managing director/CEO however assured investors of a return to strong profitability on the backdrop of certain activities the bank is embarking on in the final quarter of the year.

“As we move into the final quarter of the year, we expect headwinds to continue driven by emerging situations in developed economies as well as our domestic political realities. Despite this, our investors can expect a further decline in Non-Performing Loans (NPLs), a further increase in our digital footprint and completion of the sale of the UK subsidiary. Through these actions we remain optimistic about the medium to long term outlook of Diamond Bank and its return to strong profitability,’ Dozie said in a statement made available to business a.m Friday.

Other highlights of the results showed the bank’s contribution of non-interest income to profit increased by 10.81 percent from N24.66 billion (Q3 2017) to N27.32 billion (Q3 2018) while impairment charges was down 24.21 percent from N33.21 billion (Q3 2017) to N25.17 billion (Q3 2018).

Customer deposit dropped by 8.0 percent yearon year to N1.107 trillion due to re-pricing and non-rollover of high priced maturing deposits, and migration to government securities while Liquidity position remained strong as current and savings account balances increased from 77.4 percent (FY2017) to 78.08 percent of total deposits in September 2018.

As we move into the final quarter of the year, we expect headwinds to continue, driven by emerging situations in developed economies as well as our domestic political realities