First Bank, First City Monument Bank (FCMB), Stanbic IBTC Holdings, have the most Sell ratings at 36 percent, 29 percent, and 22 percent respectively, according to research house Renaissance Capital.
A sell stock recommendation from investment analysts means these lenders will significantly underperform the market or their peers.
It must be noted that Nigerian Banks operate in a difficult regulatory and macroeconomic environment, as they treaded on rocky terrain in 2021 suffering deteriorating net interest margins and return on equity (ROE).
Stanbic IBTC holdings, First Bank, and FCMB have the highest Cash Reserve Ratio to deposit at 52 percent, 43 percent, and 37 percent, which is why their interest income is low.
Also, Stanbic IBTC Holdings has the highest CRR plus CBN special bills (%total asset) at 37 percent.
It is important to note that Stanbic IBTC felt the pang of a harsh regulatory environment than peer rivals. It saw a full-year net income dip by 31.20 percent to N56.84 billion as at December 2021. ROE fell to 15.08 percent in December 2021 from 24.44 percent the previous year.
Analysts say the stringent regulations combined with the capital controls that have stoked capital flights is increasingly enhancing foreign investors’ appetite for Bank stocks.
For the first time in 2022, the Central Bank of Nigeria (CBN) has wielded the big stick and debited Zenith Bank Plc, Providus Bank, First City Monument Bank (FCMB) Limited and 11 other banks N356.1billion for failing to meet its 27.5 per cent Cash Reserve Requirement (CRR) obligation.