…UBA biggest gainer since June 2023
Since June 1, 2023 the country’s largest banks have added N3.95 trillion to shareholders’ wealth, thanks to President Bola Tinubu’s policies that have triggered a monster rally.
The combined market value of 12 listed lenders (ZENITH, GTCO, ACCESS, UBA, FBNH, ETI, FCMB, STERLING, WEMA, FIDELITY, STANBIC and UNITY BANK) have jumped by 93 percent to N8.18 trillion as at January 19, 2024, compared with June 1, 2023’s market capitalisation of N4.22 trillion, according to MoneyCentral calculations.
The equity market started to rally immediately after president Bola Ahmed Tinubu announced some market-friendly reforms during his inauguration such as the removal of subsidy on Premium Motor Spirit (PMS) and the unification of the exchange rate to spur foreign direct investment.
Analysts say the fundamental reasons behind unbridled bank stocks rally is simply because of the devaluation of the currency and expectations of higher dividend, combined with Central Bank of Nigeria (CBN) governor Olayemisi Cardoso’s speech calling specifically for recapitalisation of the banking sector.
Other reasons behind the stellar performance are persistently high yield environment which gave rise to even stronger financial performance and the suspension of Godwin Emefiele as the Governor of the CBN who was later removed.
The CBN last week offered short-term 365-day paper in auctions of its so-called OMOs — which refers to open market operations— which it issues to banks and offshore investors, at 17.5%.
Among all lenders, United Bank for Africa led the gains in market capitalization with an increase of N725 billion in the past 7 and a half months.
Access Bank Holding Plc has gained N632 billion in market capitalisation since June 1st of 2023, and FBNH Plc magnified shareholder’s earnings by N452 billion in the same period.
Guaranty Trust Holding Company Plc saw its market cap increase by N444 billion since June 2023 till date, while Zenith Bank has added N486.6 billion.
A lack of transformation policy by the government of ex-president Muhammed Buhari had stoked a protracted investor apathy towards the equity market.