Sectoral Analysis

The banking sector recorded YTD of -7.26 percent with prices of stocks in that space sliding. Price depreciation was largely driven by generally poor earning announcement and low dividend. The drag in earnings was the result of low interest income.

ZENITH BANK

Zenith Bank lost 13.22 percent in price between January and April 2021 fuelled by markdown for 2020 full year dividend payment in March 2021. However, the stock gained 4.28 percent between April 21 and May 11.

For the 2021 Q1, Zenith Bank’s interest income dipped 11.5 percent to N107.8 billion with loans and advances to consumers declining 4.3 percent to N64.67 billion. Income from securities investment fell by 12.6 percent to N33.13 billion due to low yield on fixed income and the bank’s reluctance to create risk assets. Interest expense however declined 45.1 percent to N18.01 billion with net interest income rising to N103.5 billion or 2.0 percent . Non-interest income rose 9.8 percent to N51.20 billion due to rise in fees and commission, leaving profit before tax up 3.8 percent to N61.02 billion and profit after tax up 5 percent to N53.06 billion. Zenith Bank is among the high dividend paying companies with N3.15 per share paid to shareholders in the 2020 financial year. Share price of Zenith Bank is expected to close

GT BANK

Like Zenith Bank, Gtbank’s shares traded at a loss, depreciating 6.7 percent between January and April 2021, driven by decline in interest income and weak sentiment in the overall market.

For the 2021 first quarter, Gtbank reported 16 percent decline in gross profit to N106 billion as a result of 22 percent drop in income to N60 billion. The fall in interest income followed the N13 billion decrease in interest on treasuring bills and the 48 percent fall in securities investment. The bank however grew non-interest income by 28 percent to N6 billion with non-performing loan ratio down from 6.4 percent to 6.1 percent.

STANBIC IBTC BANK

Stanbic IBTC Bank is one of the stocks that defied the general bear market to record appreciation in price. Between January and April 2021, it gained 4.42 percent, helped by its brand name, investors’ expectation of improved performance in Q2 results. For the 2021 Q1, Stanbic IBTC Bank toed the line of other banks that recorded decline in earning. The bank reported 26 percent fall in gross earning to N46 billion following the decline in yields on assets. Interest income fell 23 percent to berth at N21 billion. The decline in interest income is on the back of lower income from investment securities. Non-interest income declined 27 percent due to 78 percent decrease in trading revenue. Operating expenses rose 10 percent to N29 billion. The good news however is that interest expenses fell 42 percent to N5 billion as a result of decline in interbank placement charges and generally low interest rate.

In spite of the unimpressive delivery, the market expect Stanbic IBTC Bank to grow earning in Q2 due to expectation of increase in fixed income space. Vetiva Capital Research projects growth in gross earnings from N230 billion to N245 billion and profit after tax of N68 billion from N89 billion. The company also forecast EPS of N7.82 per share.

ACCESS BANK

Access Bank lost 14.70 prrcent between January and April 2021, a development fuelled by generally weak overall market sentiment. However, it recovered with 12 percent capital gain between April 21 and May 11.

In the 2020 financial year, Access Bank reported gross earning of N764.4 billion, up from N666.75 billion in 2019. Profit after tax rose to N106.01 billion, compared with N94.05 billion. Earnings per share grew from 279 kobo to 301 kobo per share.

For the 2021 Q1, the bank announced increase in interest income at N125.96 billion from N113.75 billion in 2019 Q1. Interest expense fell from N59.65 billion to N49.83 billion. The reduction in interest expense and other cost components resulted in growth in profit after tax from N49.93 billion in 2020 Q1 to N52.55 billion. Growth in earning helped expansion of earning per share from 129 kobo to 149 kobo. Vetiva Research forecasts price target price of N12.97.per share for Access Bank.

UBA

Investors reacted negatively to UBA’S disappointing full year N0.35 dividend compared with 2019 cash payment of N0.80, leading to 18.07 percent price depreciation between January and April 2021. Between April 21 and May 11, however, it gained 0.68 percent.

In the 2021 Q1, profit before tax rose 24 percent following 14 percent year on year increase in revenue and 23 percent decline in credit loss impairment. Profit after tax rose 27 percent to N38.2 billion.

FBN HOLDINGS

FBN Holdings joined others in the financial sector to shed weight. It lost 7:00 percent between January and April 2021 due to the general weak market sentiment in the 2020 financial year, and the board crisis before the cbn intervention. FBN Holding’s gross earning declined 19 percent to N579.4 billon from N590.4 billion in 2,019. It recorded 0.9 percent fall in interest income to N384.8 billion from N431.9 billion the previous year. Profit before tax rose 12 percent to N83.7 billion while profit after tax rose 21.81 percent to N89.7 billion compared with N 173.7 billion in 2019.