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Wema Bank leads as top performing banking stocks in Q1 2024

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Wema Bank concludes 1st tranche of capital raise programme

Wema Bank leads as top performing banking stocks in Q1 2024

Wema Bank emerged as the top profitable companies in Nigeria in 2023, largely propelled by a substantial increase in foreign exchange gains during that period.

This robust growth trajectory was also mirrored in their market performance. In 2023, the total market capitalization experienced significant ascent, soaring by about 109% from N3.34 trillion in 2022 to N6.98 trillion in 2023.

This upward trajectory continued into Q1 2024, with market capitalization further climbing to N8.052 trillion, reflecting a 15.37% growth in Q1 alone.

Despite this positive momentum, the NGX Banking Index recorded a growth of 19.17%, which, while significant, trailed the broader market’s performance reflected in the NGX All-Share Index (NGXASI) growth of 39.84%.

This suggests that while investors may have shown confidence in banking stocks, other sectors or stocks within the market as well contributed to the market’s overall growth.

Consequently, Nairametrics has been monitoring the performance of some of the top-performing banking stocks on the NGX this year. Wema Bank, FBNH, GTCO, Unity Bank and Sterling Bank emerged as the five top performers.

Recommended reading: Wema Bank reports 193% PBT growth, proposes N0.50 dividend

Sterling Bank +25.87% YtD
Sterling HoldCo, saw a 25.87% share price appreciation, closing Q1 at N5.40 and market capitalization of N155.468 billion, ranking the bank the fifth-best performing bank among the banking stocks.

Furthermore, the share price performance was outstanding in 2023, achieving a robust gain of 206%, ranking it the second-best performer.

The Group’s strong financial performance in 2023 likely had a considerable impact on its share price performance.

Based on its unaudited interim results, the Group disclosed a net income of N21.52 billion, reflecting an impressive YoY growth of 11.50%.

Looking ahead, the Group anticipates further growth, aiming to achieve a net income of N10 billion in Q2 2024. This projection represents about 47% of the net income generated in 2023.

Investors may interpret this forecast as a sign of management’s confidence in the company’s ability to sustain its growth trajectory, which could positively impact the share price.

 

Also, its low price-to-sales ratio of 0.63x, which suggests undervaluation may lead to positive impacts on the share price, including potential for appreciation, attracting value investors, market correction, and increased investor interest.

 

Unity Bank +27.78% YtD
UNITYBNK emerged as the third-best performing stock among NGX banking stocks in 2023, posting a significant YtD gain of 194.55%.

In Q1 2024, it continued its strong performance, achieving a gain of 27.78%, placing it fourth behind GTCO, FBNH, and Wema Bank.

The sustainability of this growth going forward would depend on various factors including the company’s financial health, market conditions, regulatory environment, and management’s strategies.

According to the bank’s 9-month 2023 results, it appears to be facing challenges as it reported a substantial loss after tax of N49.277 billion, indicating a significant 2,461% year-on-year decline.

Looking ahead, the bank’s earnings forecast indicates an anticipated reduction in its losses for both Q1 and Q2 of 2024. The bank projects losses of N8.49 billion for Q1 and N21.58 billion for Q2.

The anticipated effect of these results and forecasts on the bank’s share price in the future may predominantly be negative.

However, the projected decrease in losses could provide a ray of hope for investors. Since the end of Q1, the stock has recorded a modest gain of 1.49%, bringing the YtD gain to 29.63%.

GTCO +29.63% YtD
Closing Q1 2024 with a share price of N52.50 and a market capitalization of N1.545 trillion, Guaranty Trust Holdings recorded a Q1 2024 gain of 29.63%.

This gain accounts for about 39% of the total share price gain in 2023, ranking the bank third-best performer in Q1.

The share price rally of GTCO could be attributed to the strong financial performance of the group. In the first nine months of 2023, GTCO reported a net income of N367.417 billion, indicating an impressive YoY growth of 182% compared to the same period in 2022.

Analysts are anticipating earnings per share to reach N14.39 for the 2023 fiscal year. If this projection is met, it has the potential to influence investor sentiment positively and consequently contribute to a rise in the share price.

FBNH +50.96% YtD
FBN Holdings secured the second-best performing NGX banking stock in Q1 2024. Its share price surged by 50.96%, which is about 44% of its overall gain for the full year 2023.

Its market capitalization soared to N1.276 trillion, positioning it as the third company in terms of market capitalization, and following Zenith Bank and GTCO, as stocks worth over one trillion Naira.

The robust market performance in Q1 could be attributed to the group’s impressive financial results in 2023. The net income grew by 127% YoY, reaching N309.888 billion, while earnings per share surged to N8.56 from N3.75 in 2022.

Furthermore, with the anticipation of earnings per share reaching N5.95 in 2024 and considering its trading liquidity, it is expected to have a notable impact on the share price.

FBNH currently ranks as the 6th most traded stock over the past three months, with a total volume of 1.77 billion shares traded and an average monthly volume of 20.974 million.

However, investors should exercise caution due to FBNH’s recent poor performance, witnessing a decline of 14% in value after Q1.

Wema Bank+51.79% YtD
Wema Bank outshone its peers on the NGX in Q1 2024, with a 51.79% share price appreciation, closing the quarter at N8.50 with a market cap of N109.294 billion.

This impressive performance could be attributed to Wema Bank’s robust performance for the 2023 fiscal year.

The audited financial statements for 2023 reveal a profit after tax of N35.989 billion, representing an impressive YoY growth of 217%.

However, considering the new CBN capital base requirement, Wema Bank faces a significant challenge in meeting the new mandated capital base of N200 billion.

Presently, its share capital and share premium account combine to N15.127 billion, highlighting the substantial gap that needs to be bridged to comply with the new regulations.

The stock probably, in reaction to the news has declined by 3.5% taking the YtD gain down to 46.43%.

Recommended reading: Wema Bank reports 104.7% profit growth in 2023

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Fidelity Bank started recapitalisation before CBN made it compulsory –Amuchie

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Fidelity Bank started recapitalisation before CBN made it compulsory –Amuchie

Fidelity Bank started recapitalisation before CBN made it compulsory –Amuchie

Recently, the Central Bank of Nigeria (CBN) raised the capital base of commercial banks and set the tone for recapitalisation. But one bank that was already working on recapitalisation prior to that is Fidelity Bank Plc.

Revealing this in an interview, Fidelity Bank’s Executive Director, Chief Operations and Information Officer, Mr. Stanley Amuchie, said the bank had in August last year got its shareholders’ nod to recapitalise, only for the CBN to unveil the programme in March 2024.

He said Fidelity Bank was ahead of its competitors in knowing the right thing to do at every point in time.

He spoke on this and other things.

With CBN recapitalisation programme, which affects all banks, where you are on this?

The Central Bank of Nigeria, on March 28, 2024, announced recapitalisation for the banking industry. If you look at Fidelity Bank, we got the approval of our shareholders on August 11, 2023. That shows that, as a bank, we understand our business as well as the environment. We have done what we call Capital Needs Assessment. Based on that, therefore, we went out to seek approval of our shareholders to raise capital. And what we are trying to do is to issue 10 billion units of shares in public offering at N9.75k per share; and 3.2 billion units of shares by way of right issue to existing shareholders at N9.25k per share. That process has been in play. The signing ceremony is a step towards opening to the market. And that was why, a few days ago, on June 5, we had the signing ceremony. Of course, the processes involves getting all the parties together.

Who are these parties?

The parties will be the people at the issuing houses, the receiving banks, the reporting accountants and then the stockbrokers. Those are the people that will make up the parties to the offer. We have gone through the processes of getting all the people together, as well as prepared documents for the Securities and Exchange Commission (SEC) for approval. We have also secured approval of the Nigeria Stock Exchange Commission (NSEC) and that of the Nigeria Exchange Limited (NGX) and then held the signing ceremony. The next step is to secure the final approval of SEC to open the offer to the market. And we hope to open the offer on June 20 this year. It will be open for 28 working days. What it means is that, we will close on July 29, 2024.

It looks like you want to go into the market before others and ensure you get your shares before the competition gets stiff…

Like I said, we started this process earlier, because ours is based on strategy. This is because we are looking at our current business. We believe we had enough capital to do our business but we are looking at growth, which is why we are projecting growth. We believe that, if you want to grow, you must have what it takes. I want to liken capital to what oxygen is to human beings. If you don’t have enough oxygen, you will suffocate. Therefore, we looked at the growth process and what we needed to do, hence we started ours quite early. We didn’t wait. Remember, we were not reacting to CBN’s pronouncement. We have been very proactive about our capital base. That is what we are doing.

Ir seems there are some jitters, maybe not so much, but when the news about the revocation of Heritage Bank’s license came out, banking stocks dropped, people were asking questions, and now you are going to the market. How do you convince the people that Fidelity Bank is safe?

Let me say this again. Fidelity Bank Plc is very safe. This is a bank that has shown capacity and growth over the years. For instance, in the last five years, if you look at the stock, which is what we are talking about, you will appreciate the value our bank has created between May 2019 and May 2024. The value or the share price of Fidelity has grown by 507 percent or at N1.68k as at 31st of May, 2019, to N10.20k as at 31st of May, 2024. That is 507 per cent growth. What this means is that we have grown at an average of over 100 percent for every year.

 

You hit a new record high, over one hundred and four thousand, for the all-share index?

Yes. For all that has happened, you will see that our bank grew more than two times the all-share index. Even if you talk about the banking index, which is what tracks the value of shares of the banking industry, our bank did four times.

What are the chances of mergers, or are you looking at acquiring some banks?

Everything is on the table. For now, what we are trying to do is to get additional capital at the level where we are today. And by the time we get that, we will be in a very good position to look at what is ahead of us.

What of acquiring banks that need help, which will also increase your branches and assets?

Those are very possible. Like I said, everything is on the table for us. Our plan is to put ourselves in that position where you can think clearly and then be able to take any decision. And if we need to acquire, there has to be value. We will look at those who bring that synergy we will need. That is what we are looking at. But aside from that, we are well positioned. For the offer that is about to open, we are already getting feelers that people are seeing the investments in Fidelity and what it has done over the years. That is why they are very eager to be part of what is happening in Fidelity.

What is the major drive for capital that you are looking to get from the market?

When you are in business, at every point in your business, you need to sit back and look at where you are going to. We have seen a lot of growth in Fidelity in the last three to five years, in almost all the indices. If you look at indices like gross earnings, we’ve seen growth from N206 billion in 2020 to N556 billion in 2023 on gross earnings. That is a cumulative average growth rate of about 39 per cent. Similarly, our Profit Before Tax (PBT) grew from N28 billion to N124 billion by the end of 2023. That is a cumulative growth rate of 64 per cent. Moreso, savings accounts and deposits have also grown, significantly.

So, almost all the performance Indices have been on trajectory of growth. Therefore, you appreciate the kind of businesses you are seeing on the horizon at this moment. In this regard, what we have done, essentially, is to look at the Capital Needs Assessment, because we are getting more businesses, which is why we need to increase our capital, to be able to take on more businesses so that we do not get businesses we cannot handle. And like I said, capital in business is like what oxygen is to human beings.

Small business owners do say that commercial banks are not their friend at all. Do you think this new capital will get to small businesses?

Fidelity Bank has always been known for supporting small and medium enterprises (SMEs). Our bank has won several awards for SMEs support and there are probably only a few banks, if any, that have supported SMEs the way Fidelity has done. Our bank is more like an SMEs’ bank. We’ve grown new champions in the market and that is what we are known for. I can assure you that we will continue to do that, even better in the years ahead.

Recently, the Independent Project Monitoring Company recognised Fidelity Bank. What is the bank doing diffetently in Environmental, Social and Governance to warrant such recognition?

We are doing a lot. Today, we are one of the banks in Nigeria that have taken ESG to a greater level. We are doing a lot on the environment, staff (socials), and corporate governance. Therefore, if you talk about governance board, of course, ours is recognized as one of the strongest boards in the banking industry in Nigeria. We have people from different facets of the economy: oil and gas, investment banking and others. It goes to show that the quality of the board and its discussions are very strong. Then talk about the environment; we are doing paperless office, green financing and all. These are the things they have seen and that is why they recognised us.

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Guaranty Trust HoldCo Proposes N500bn Share Offering

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Guaranty Trust HoldCo Proposes N500bn Share Offering

Guaranty Trust HoldCo Proposes N500bn Share Offering

Guaranty Trust Holding Company (GTCO) Plc, said it has filed a preliminary ‘red herring’ prospectus with the Securities and Exchange Commission (SEC) to raise N500 billion.

The Company in a notice said the number of ordinary shares to be offered and the price range for the proposed offering have not yet been determined.
The notice said “this is issued in reliance on Rule 283 of the Rules & Regulations of SEC, Nigeria. The notice read in part, this does not constitute an offer to sell or the solicitation of an offer to buy any securities.

“Any offer, solicitation or offer to buy, or any sale of securities will be made only by a prospectus duly registered by the Securities and Exchange Commission, Nigeria (SEC) in accordance with the provisions of the Investments and Securities Act, No. 29, 2007 (the Act) and the rules and regulations of the SEC made pursuant to the Act (the SEC Rules).”

Stating the purpose of the proposed offering, the notice further said that, “the net proceeds of the proposed offering will be used for the growth and expansion of the GTCO Group’s businesses. Such planned growth and expansion will be effected through investments in technology infrastructure to fortify existing operations, the establishment of new subsidiaries and selective acquisitions of non-banking businesses; and the recapitalisation of Guaranty Trust Bank Limited.”

It added that “the proposed offering is structured as an institutional offering targeted at eligible investors and a retail offering within Nigeria and a private placing to persons reasonably believed to be qualified institutional buyers outside Nigeria (the international tranche).”

It noted that the proposed offering is anticipated to open by July, 2024, adding that the filing of the red herring prospectus was undertaken with a concurrent filing of a preliminary universal shelf registration statement.

“The universal shelf registration will permit GTCO to establish a multi-currency securities issuance programme (the Programme) to issue various types of securities, or any combination of such securities, in one or more offerings, from time to time, to raise proceeds in an aggregate amount of up to $750 million or equivalent amount in Nigerian naira) in the Nigerian/international capital markets during the validity period of the Programme.”

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Wema Bank concludes 1st tranche of capital raise programme

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Wema Bank concludes 1st tranche of capital raise programme

Wema Bank concludes 1st tranche of capital raise programme

 

Wema Bank, Nigeria’s foremost innovative bank and pioneer of Africa’s first fully digital bank, ALAT, has successfully concluded the first tranche of its recapitalisation exercise having secured all relevant regulatory approvals for the allotment of its N40bn Rights Issue which was initiated in December 2023.

In view of macroeconomic conditions, the Central Bank of Nigeria (CBN) in March 2024, launched a recapitalisation programme requiring commercial banks to raise fresh capital in alignment with the minimum requirement for their respective banking licenses, within a 24-month timeline spanning April 1, 2024, to March 31, 2026.

The goal of this recapitalisation programme is to simultaneously boost the Nigerian economy and strengthen the Nigerian financial services industry.

As a forward-thinking and pioneering bank, Wema Bank in December 2023 launched a N40bn Rights issue which has now been approved by the Central Bank of Nigeria and the Securities and Exchange Commission (SEC). With this remarkable development, Wema Bank has now successfully raised N40bn of the N200bn minimum requirement laid down by the CBN.

In a statement made to the public by the Bank, Moruf Oseni, Wema Bank’s Managing Director and CEO, iterated the Bank’s resolve in retaining its Commercial Banking license with National Authorisation, adding that the N40bn Rights Issue is a step in that direction.

“We are delighted to announce the conclusion of the 1st tranche of our Capital Raise Programme, after obtaining the relevant approvals of all regulatory authorities. Our move to commence our Capital Raise Programme very early demonstrates our push for excellence and with a strong emphasis on our digital play, we are set to amass more successes in the coming months.”

“We were impressed by the vote of confidence given by our shareholders during the 1st Rights Issue exercise as our shares were fully subscribed. In addition, we obtained the approval of shareholders at our 2023 Annual General Meeting (AGM) to raise an additional N150billion to meet the capitalisation threshold set by the CBN. The process is expected to be completed within 12-18 months. We are committed to providing optimum returns for every stakeholder and the successful conclusion of this N40bn Rights Issue is a bold step in the right direction.”

In addition to the upward trend in the Bank’s financial performance and the success recorded so far in its recapitalisation exercise, Wema Bank’s corporate rating was recently upgraded to BBB+ by Pan African credit rating agency, Agusto and Co, and retained at BBB by international rating agency, Fitch.

Over the medium to long term, Wema Bank is positioned to dominate not only the digital Banking space but also the Nigerian financial services industry at large as it translates its industry leadership to significant market share.

Wema Bank is a leading financial services entity with banking operations across Nigeria, its leadership position in the digital banking space speaks to its aspirations to liberate Nigerian businesses and entrepreneurs by making digital platforms widely available.

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