Economy
Analyst Advises Investors to Pay Attention to Tier-2 Banking Stocks
By Dipo Olowookere
A capital market analyst has advised investors to pay attention to tier-2 banking stocks on the Nigerian Exchange (NGX) Limited not because they are cheaper but because they could spring up surprises this year.
Speaking on Monday on one of Channels Television programmes, Business Morning, which was monitored by Business Post, Mr Joshua Odebisi, the SSA Banks Research Analyst at Vetiva Capital Management Limited, said the financial institutions in this category have the potential to give more value to shareholders.
In the Nigerian banking industry, the likes of Fidelity Bank, FCMB, Wema Bank, Sterling Bank, Union Bank, Stanbic IBTC Bank, and Ecobank Nigeria are in the mid-level category.
At the stock market, the shares of the aforementioned lenders are not bellwethers like the tier-1 banks such as Zenith Bank, Access Holdings GTCO, UBA, and FBN Holdings (First Bank), all collectively known as ZAGUF.
During his interview on the platform today, Mr Odebisi pointed out that mid-level lenders have shown the desire to expand their operations and cement their stronghold of the retail market segment of the banking industry.
“I advise investors to look closely at tier-2 banking stocks, especially FCMB, Fidelity Bank and even Wema Bank.
“They have shown the desire to take charge of the retail segment, but their dividend at the end of the first quarter of this year will give more direction to investors on what to do,” he stated.
When asked if it is not too late for investors to take a position in the space, he responded, “What I would say is that it’s not too late simply due to the fact that the banks are still expected to continue growing their profits.
“So, as long as that is the case, the outlook for them is positive. I will tell you that the 113 per cent rally we have seen so far from Fidelity Bank is not the ceiling because that stock still has a long way to go, especially if management comes out with a strong dividend announcement by the end of Q1. Then, we would probably see further rallies to a much higher valuation.
“I still expect that to be the case for other tier-2 banks just because the higher their dividend announcement, the more interest investors will show in those stocks. So, there is definitely still a lot of headroom.”
Business Post reports that Fidelity Bank equities have risen by over 100 per cent in one year and nearly 180 per cent in three years. It has grown by 11 per cent in one week, over 25 per cent in one month and almost 38 per cent this year. As of press time, the stock was down by 1.50 per cent to N5.91.
As for FCMB, it has gained 1.02 per cent today to N4.95, 18 per cent in one week, 32 per cent in one month, 44 per cent in three months, 39 per cent this year, 63 per cent in one year, and 151 per cent in three years.
By Modupe Gbadeyanka
The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.
In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.
A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.
To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”
“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.
It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”
“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.
“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.
“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.
“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.
By Adedapo Adesanya
Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.
The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.
Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.
Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.
Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.
The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.
By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.
In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.
By Dipo Olowookere
It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.
The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.
Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.
Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.
At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.
This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.
VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.
In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.
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