Bullish FBN stock animates market: gains 106% in six months

FELIX OLOYEDE

Share price of First Bank of Nigeria Holdings (FBNH) plc has breezed past all forecasts as the Holdco’s stock price zipped past a 100 per cent growth in barely six months. If investors had spent N100,000 buying the stock on January 3, 2017, they would currently be N105,882.35 richer on June 6, 2017 with a total stock value of 205,882.35 or which is equivalent to a month-on-month return of 16 per cent.

The Holdco’s share price was N3.40 at the end of the first trading day of the year and closed at N7.02 on Friday, June 9, 2017. It even got to N7.07 on June 5 before the week’s close.

FBNH’s stock has been one of the most persistently underweight stocks listed on the stock exchange (NSE) in the last one year and investors who had heeded the analysis of Business Hallmark would have made a small fortune. The Holdco still possess the largest asset base of all first-tier financial institutions in the country as it quickly cleans up its high loan impairment charges that seem to have been responsible for the poor investor perception the institution has faced in the last two years.

Mr Robert Omotunde, analyst with Afrinvest West Africa Limited said the introduction of the Investors’ and Exporters’ forex window has renewed confidence in the Nigerian Stock Exchange, which has rubbed off positively on most stocks on the exchange.

The Exchange has enjoyed a bullish run since May and reached a thirty month high on Friday as the All Share Index (ASI) climbed to 32,195.13, its highest value since December 2014 when it was 32,316.31.

A thumping 71,994,799 of FBN Holdings stock exchanged hands on Friday as analysts went long and advised investors to buy, suggesting that it would continue to appreciate in the foreseeable future.

The group’s Gross earnings was up 31.2 percent year-on-year to N141.0 billion in the first of 2017 billion from N107.5 billion in the corresponding period in , up 31.2% year-on-year (y-o-y), but Profit after tax was down 22.1 percent y-o-y to N16.1 billion, compared to N20.7 billion in Q1 2016.

FBN Holdco’s total stood at N4.98 trillion at the end of march 2017 up 5.2 percent year-to-date (Dec 2016: N4.7 trillion), while its customer deposits of N3.1trillion was flat at -0.3% y-t-d (Dec 2016: N3.1 trillion) and customer loans and advances declined 1 percent y-t-d  to N2.1 trillion instead of N2.1 trillion at the end of 2016.

Its Non-Performing Loan (NPL) ratio was 26 percent during the period compared to 21.5 percent in the same period in 2016.

Meanwhile, Dr Adesola Adeduntan, Managing Director of First Bank of Nigeria during the Holdco’s 2016 annual general meeting assured shareholders that the board and management of the company was working relentlessly to reduce its loan impairments.

And Mr U.K. Eke, Group, Managing Director, FBN Holdings assured shareholders that the group had put in place structures that would ensure they got better returns from their investments in 2017.

He stated that the company used the recessionary period in the country to clean up its books so that when the economy recovers it would be able to better dividends to its shareholders.

Going into the third quarter of the year investors are anxious to see how well than banks has done by half year to bolster their confidence. With recent earnings per share of 40 kobo and a price earnings ratio of 17.35 the stock is beginning to look a bit pricey and a correction could loom in the near horizon unless Q2 figures indicate a marked growth in forward earnings. In the mean time investors are holding onto their smiles.

                                        Source: FBNH audited annual accounts, 2017f represents Business Hallmark forecast