As at the close of trading in November 2021, the overall
market capitalisation of 14 listed banks on the NGX was at N3.53trillion as
against N3.6trillion it opened for trading this year.
Consequently, the NGX banking index between January and
November 2021 also dropped by 0.6 per cent to close at 390.78 basis points from
393.02 basis points when the stock market opened for trading.
The decline in the banking index is contrary to the domestic
market benchmark this year, with the NGX All-Share Index in the 11 months under
review appreciated by 7.4 per cent to 43,248.05 basis points from 40,270.72
basis points the stock market opened in 2021 for trading.
A capital market analyst, Mr. Rotimi Fakayejo noted that
banking sectors on NGX witnessed mixed sentiment trading as investors’ trade in
stocks with improved corporate earnings, dividend pay-out and expectation of
impressive yield.
He noted that the macro economy challenges coupled foreign
exchange bottleneck and double-digit inflation have also compounded investors’
dumping banking stocks for money market instruments, fundamentals oil/gas and
telecommunication companies on the NGX.
The interbank market of foreign exchange market of the
Central Bank of Nigeria (CBN) in 11 months depreciated by 8.3 per cent to close
November at N41166 (central price) against the dollar from N380 against the
dollar it opened in 2021.
Meanwhile, out of the 14 listed banks’ stocks on the NGX,
seven recorded decline in stock prices in 11 months under review as investors’
trade the banking stocks with caution.
Analysis of trading numbers revealed that FCMB Group leads
the banking sector in most impressive appreciation in 11 months, gaining 1092
per cent or N56.24 billion in market capitalisation when it opened at N0.26 per
share to N3.10 per share, followed by FBN Holdings and ETI that gained 67 per
cent and 39.2per cent respectively.
FBN Holdings and ETI gained N172.3billion and N43billion in
market capitalisation in the 11 months under review.
The stock of FBN Holdings Plc has witnessed a steady
increase to N11.95 from N7.15 the market opened for trading, following the
announcement that Femi Otedola had acquired 5.07 per cent stake in the company.
As a result of signing a long-term credit agreement with the
European Investment Bank (EIB), ETI that has not paid out dividends for many
years, closed November 2021 at N8.35 from N6.00 it opened for trading.
Access bank’s market value added N37.3 billion; Fidelity
Bank, N289.7million; Jaiz Bank Plc, N345.4million; Wema Bank Plc, N3.86billion
The likes of Guaranty Trust Holdings Company Plc (GTCO),
Zenith Bank Plc, United Bank for Africa Plc, Stanbic IBTC Holdings Plc,
Sterling Bank Plc, Union Bank Nigeria Plc, among others have depreciated in
market value in 11 months under review.
The stock price of GTCO and Stanbic IBTC Holdings
depreciated by 7.75 per cent and 6.05 per cent to close November 2021 at N24.60
and N44.05 respectively in 11 months.
As gathered, GTCO market value dropped by N228.09billion;
Zenith Bank, N26.6billion; UBA, N20billion; Union Bank of Nigeria,
N23.3billion; Sterling Bank Plc, N16.12billion Stanbic IBTC Holdings,
N78.4billion, and Unity Bank Plc, N1.4billion
THISDAY can report that despite a pessimistic start to the
year, the Insurance index performance has gained N1.75trillion in 11 months,
influenced by sector’s recapitalization by regulating body and impressive
corporate earnings by the likes of Consolidated Hallmark Insurance, AXA Mansard
Insurance Plc, LASACO Assurance Plc, among others.
On a flip side, the NGX Insurance Index has depreciated by
0.99 per cent to close at 187.62 basis points as at November 2021 from 189.50
basis points it opened this year.
A total of eight insurance stocks traded flat at N0.20,
while nine appreciated in prices. In addition, AIICO Insurance Plc, Cornerstone
Insurance Plc, Linkage Assurance Plc, Mutual Benefits Assurance Plc, and Sunu
Assurances Nigeria Plc depreciated in stock prices in the 11 months under
review.
Further findings by THISDAY revealed that Consolidated Hallmark
Insurance, Custodian Investment Plc, Lasaco Assurance Linkage, Assurance Plc,
Prestige Assurance Plc, and AXA Mansard Plc are the only six companies that
declared 2020 dividend to shareholders.
By market capitalisation, AXA Mansard Insurance added N917.14billion,
while Coronation Insurance gained N599.79billion in 11 months. The likes of
LASACO Assurance also appreciated by N361billion by market capitalisation as
Regency Assurance Plc gained N545.63billion in the months under review.
In December 2020, the House of Representatives asked the
National Insurance Commission (NAICOM) to suspend the December 31, 2020
deadline, while two legal actions in Abuja and Lagos, instituted against the
regulator, were still pending in courts.
This, coupled with the court actions, led the commission to
suspend the first phase of the recapitalisation, leaving the second phase
scheduled to end by September 2021.
However, some insurance companies had declared on their own
that they met the requirements before the first phase of the recapitalisation
was suspended. While the second phase was still pending, some companies had
also assured their shareholders of meeting the regulatory requirements.
Analysts have expressed that the decline in financial
institutions stocks is a wakeup call for retail investors to take position,
stressing that the price tends to appreciate since the capital market is
long-term investment.
They noted that NAICOM suspension of the recapitalisation
exercise played a critical role on listed insurance companies stocks on NGX,
stressing that retail investors were taking position when NAICOM announced its
policy on recapitalisation.
Commenting on insurance companies’ performance in 11 months,
the Head, Retail Investment, Chapel Hill Denham, Mr. Ayodeji Ebo attributed
mixed performances in the sector to inactivity amid the suspension of the
recapitalisation exercise.
According to him: “The recapitalisation was supposed to
increase insurance companies to take over bigger transactions but with the
suspension, most of them are still dealing with traditional insurance products.
Investors expectation is blink within that sector.”
On his part, the Chief Operating Officer, InvestData
Consulting Limited, Ambrose Omorodion said the sector has not performed badly
amid decline in 11 months of 2021, stressing that the low priced insurance
stocks has created room for retail investors to take position.
“Most retailers are taking profit in the financial
institution stocks as some of their prices are low. Retail investors are moving
from those companies that are not paying dividends to dividend paying stocks as
most of them are not attractive.
“Market in 2021 has witnessed mixed performances and
investors are taking profit to reposition their portfolios against next year.
Institutional investors do not trade in insurance stocks due to low prices. The
recapitalisation has also boosted some of these companies this year and we
might likely see a merger once the suspension is lifted.
“However, the potential in the sector has not been tapped as
key drivers have not performed to attract more inflows into the sector. The
decline in financial institutions’ stocks is all about how the market operates
and it does not call for panic trading, ”he said.
Analyst at PAC Holdings, Mr. Wole Adeyeye said: “Investors
dumped some insurance stocks that may not meet the new capital requirement,
despite the suspension of the planned recapitalisation of the sector by NAICOM.
Also, most investors dropped insurance stocks, between January and September,
due to late filing of quarterly financial statements and poor earnings of some
insurance companies.”
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