News
Just in: FBNH, UBA, GTCO, Access Bank, drop out of trillion market cap club
By Kayode Sanni-Arewa
Nigerian banks experienced a challenging April, as all major banking stocks posted losses month-to-date.
This downturn coincided with the first month-to-date decline in the NGX All Share Index of the year, which lost 6% in April this year.
The most impacted were the FUGAZ banks—First Bank, UBA, GTCO, Access Bank, and Zenith—although Zenith was the only one to maintain its position in the SWOOT (Stocks Worth Over One Trillion Naira) index.
As of December 2023, Nigeria’s largest banks had a total net asset value of N9.7 trillion but only a combined market capitalization of N4.2 trillion ($ billion), translating to a price-to-book ratio of 0.43, or 43%.
This indicates that investors significantly undervalue banks compared to their book values.
Amid this, challenger banks like Opay and Kuda Bank are valued above $1 billion, despite their smaller operational scales.
According to the Nairametrics SWOOT Index, as of April, FBN Holdings, UBA, GTCO, and Access Bank each fell below the trillion naira market cap, a level they last exceeded in January when they briefly hit this milestone.
Access Bank: Since January, these banks have seen substantial declines in market capitalization.
For instance, Access Bank, Nigeria’s largest bank by assets, last reached the N1 trillion mark in late January.
By the end of April, its market cap had fallen to about N598.9 billion, despite having over N32 trillion in total assets and N2.5 trillion in net assets.
Similarly, UBA, with total assets and net assets of N20.6 trillion and N2 trillion respectively, saw its market cap drop from over N1 trillion in January to N817.3 billion at April’s end.
FBN Holdings, Nigeria’s oldest bank, saw its market cap peak just above N1 trillion in early April but fell to N857.8 billion by April 30th, 2024.
GTCO also experienced a dip; valued above N1 trillion as recently as April 26th, it ended the month with a market capitalization of N962.3 billion.
Zenith Bank, however, remained in the SWOOT, though it risks dropping below if the sell-offs continue into May 2024. It has total and net assets of N20.3 trillion and N2.3 trillion, respectively
Why Nigerian banks are undervalued
Several factors contribute to these low valuations relative to net assets, despite consistent dividend payouts.
Some analysts attribute it to the high liquidity of bank stocks, while others point to a general disinterest in the Nigerian stock market, suggesting that intrinsic stock values are seldom reached.
A more recent factor is the banking recapitalization announcement by the apex bank, which requires banks to raise over N4 trillion in new capital.
This has likely prompted a sell-off, as lower share prices benefit bank shareholders when the capital increase is through a rights issue.
News
Shettima becomes 1st VP to lead Nigeria’s delegation to UN Assembly in 25 yrs
President Bola Ahmed Tinubu has decided not to attend the 79th United Nations General Assembly (UNGA) session in New York this year.
The president has thus directed Vice President Kashim Shettima to lead Nigeria’s delegation.
President Tinubu, who returned to the country last Sunday after his trip to China and the United Kingdom, according to a statement yesterday by his spokesman, Bayo Onanuga, wants to focus on domestic issues and address some of the country’s challenges, especially after the recent devastating flooding.
“At UNGA 79, Vice President Shettima will deliver Nigeria’s national statement to the General Assembly, attend important sideline events, and hold bilateral meetings.”
“The high-level General Debate, with the theme ‘Leaving no one behind: Acting together for the advancement of peace, sustainable development and human dignity for present and future generations,’ will run from Tuesday, September 24, through Saturday, September 28, 2024,” the statement added.
Since return to democratic governance in 199, Shettima will be the first Vice President to Nigeria’s delegation to UNGA.
Only Goodluck Jonathan represented Nigeria as Acting president in September 2010 at the 65th UNGA, while late President Umaru Musa Yar’adua was away in Saudi Arabia due to his ill health.
News
Plateau Assembly approves N5.8bn for LG election
The Plateau State House of Assembly, on Thursday, approved N5.8bn for the conduct of the local government election in the state slated for October 9, 2024.
The approval by the House followed a communication from Governor Caleb Mutfwang, which was read at plenary by the Assembly Speaker, Gabriel Dewan.
The Speaker stated that the request was necessary as there was no budgetary allocation for the LG elections in the 2024 budget.
A member of the State Assembly, who declined to be named because he was not authorised to speak for the Assembly, confirmed the development to The PUNCH in Jos on Thursday.
The lawmaker said, “Governor Mutfwang, at Tuesday’s plenary, sought the House’s approval for N5.7bn as the 2024 supplementary, which was increased after upward review by the legislators.”
He continued, “The House leader, Joseph Bukar, presented the bill during our plenary. While soliciting the support of members for speedy passage, he said PLASIEC was running out of time in preparation for the election.”
“In their individual contributions, Hon. Kalamu Dal suggested a downward review of the budget size, while Hon. Daniel Nanbol urged for a critical review and deliberations. Afterwards, members approved a revised sum of N5.8bn, as opposed to the N5.7bn requested.”
The increase, as explained by Bukar, was due to an increase in security allocation for the election, from N2.7m to N4.2m. “So, that is what happened, and that is where we are at the moment regarding the forthcoming LG election,” the lawmaker concluded.
News
Enugu, Kwara tighten security ahead of LG polls
Security measures have been intensified in Enugu and Kwara states ahead of their Local Government elections scheduled for Saturday, September 21, 2024.
In Enugu State, the Police Command has pledged to ensure the safety of lives and properties during the elections.
However, the peace accord signing for the elections was marred by the absence of major parties like the Peoples Democratic Party, All Progressives Congress, and Labour Party.
Only representatives from the All Progressives Grand Alliance and Accord attended but chose not to sign the accord, citing the lack of participation from the leading parties.
Enugu State Commissioner of Police, Kanayo Uzuegbu, said all wards and flashpoints had been identified, and security personnel would be on high alert to prevent any disruptions.
The Chairman of the Enugu State Independent Electoral Commission, Prof. Chris Ngwu, said the commission was fully prepared for the elections with the support of the state government in procuring necessary materials.
In Kwara State, security agencies have been actively coordinating to ensure a smooth electoral process.
Over 3,000 personnel from the Nigeria Security and Civil Defence Corps have been deployed across the state.
The Kwara State Independent Electoral Commission has completed arrangements for a trouble-free election.
Kwara State Police Public Relations Officer, Toun Ejire-Adeyemi, reported that a strategic meeting with heads of various security agencies, including the Nigerian Army, Navy, Air Force, and others, had been held to ensure coordinated efforts for maintaining law and order.
The Commissioner of Police, Victor Olaiya, guaranteed maximum security for the election period.
The NSCDC Commandant, Dr. Umar Mohammed, announced the deployment of 3,000 personnel to various polling units and emphasised their role in preventing violence, ballot snatching, and other disruptions.
Meanwhile, the Chairman of the Benue State Independent Electoral Commission, Telumun Tombowua, announced on Thursday that eight political parties will participate in the upcoming LG elections in the state, scheduled for October 5, 2024.
Addressing journalists in Makurdi, Tombowua said the election would be conducted fairly and transparently.
He emphasised that the law establishing the BSIEC does not permit the use of Bimodal Voter Accreditation Machines for this election.
Regarding the APC, Tombowua confirmed that the National Working Committee of the party had requested the commission to work with the seven-man caretaker committee appointed to oversee party affairs in the state.
He noted that while 14 parties had initially shown interest, only eight completed the necessary processes and submitted their candidates.
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