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Billionaire investor Femi Otedola has got the midas touch, as everything he touches turns to gold. It is a rare attribute in the investment world.
Since the propitious billionaire Femi Otedola bought over 5 percent stake in FBN Holdings Plc or FBNH to become a majority shareholder in October, 2021, there has been an improvement in asset quality, internal capital generation, profitability, and earnings.
Some analysts refer to Otedola as a feared corporate raider who buys a significant stake in a struggling company, and turns it into a cash cow that delivers returns to shareholders.
FBNH return on average equity (ROAE) increased to 20.10 percent as at March 2023 from 14.50 percent in December 2022 and 18.40 percent as at December 2021.
The lender is able to earn more profit on the loan it gives as net interest margin moved to 6.40 percent in March 2023 from 5.80 percent in December 2022 and 4.50 percent in 2021.
High net interest margin helps a bank to have a higher level of cushion on a loan. If the economic cycle decreases and insolvency increases in the future, higher net interest helps banks absorb a higher degree of shocks.
There has been an improvement in asset quality that validates risk asset management and efficient portfolio selection.
Non-Performing Loans (NPLs) ratio, improved to 4.0 percent in March 2023 from 4.30 percent in December 2022 and 6.30 percent in 2021.
Analysts have wagered on FBNH stock as they say it stands to book revaluation gains on the back of the recent currency devaluation.
The lender alongside Guaranty Trust Holdings (GTCO), Zenith Bank, United Bank for Africa (UBA) and Access Bank have impressive earnings per share (EPS) expansion potential for investors, according to a recent report by Chapel Hill Denham Limited.
“However, FBNH could emerge as the clear outperformer in the tier-1 space,” said analysts at Chapel Hill Denham.
The lenders’ shares traded at N7.51 percent on September 28 before Femi Otedola bought a majority stake, and it gained 122 percent to close at N16.68 as of June 23, 2023 as at 12:30 pm in Lagos on Friday.