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The United Bank for Africa recently released its earnings report for the nine-month ended September 30, 2019, closing the period with an impressive after-tax profit of N81.63bn, a growth of 32% over that of 2018, a momentum the bank may likely sustain into the full-year, pointing to the possibility of even higher profit. The bank ended the quarter with stronger earnings that grew sharply, resulting in its fastest profit growth in three years, with higher profitability and investment ratios driven by electronic and improved retail banking. Further growth is likely for UBA Plc, based on the growth momentum at the end of its third-quarter trading, driven by three major developments. The first is the accelerated revenue growth, led by interest and non-interest income; as well as the declining provisioning for the bad loans; and improved cost management as shown in the group interest expenses. The recent directive by the Central Bank of Nigeria (CBN) that banks should raise their Loa...

Market Update for October 29 The high volatility on the Nigerian Stock Exchange persisted Tuesday as the bear-run resurfaced strongly even as the earnings reporting season entered its last few hours. The market remained mixed, despite the fact that many companies rushed to meet the 30-day stipulated period for the release of their quarterly financial reports. The benchmark NSE All-Share index reversed, wiping out previous day’s gains and gliding to new 52-week lows amid continued selloffs in high cap stocks, despite the NSE’s recent price methodology that has made the market dull and seemingly artificial. We, however, note that the rule has prevented a continuation of the free fall in the composite index. Despite the impressive Q3 numbers from Nestle and Seplat Petroleum Development Company, whose directors offered N25 and N18 per share interim dividends respectively, their prices remained unchanged, due to 100,000 units rule. Hopes are high that the Central Bank of Nigeria (CB...

The board of Dangote Cement Plc, on Wednesday, said it is considering and seeking detailed advice on a share buyback and reverse share split, as well as regulatory approvals A statement by Edward Imoedemhe, deputy company secretary, on behalf of the board warned shareholders. to exercise caution while dealing with the shares of Dangote Cement. A share buyback occurs when a company re-acquires its own shares as a more flexible way of returning money to shareholders by paying them the market value per share and re-absorbing those portions of its own that were previously held among the public and private investors. According to Investopedia, “in recent decades, share buybacks have overtaken dividends as a preferred way to return cash to shareholders.” Why Buyback? corporatefinanceinstitute.com answers this question, a company could repurchase its “shares to send a market signal that its stock price is likely to increase, to inflate financial metrics denominated by the number of...

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The board of Zenith Bank Plc, recently published its unaudited financials for the nine-month ended September 30, 2019, in line with its post-listing requirements of the Nigerian Stock Exchange (NSE). The numbers, which came slightly later, when compared to the released date of the 2018 nine-month scorecard, showed that the bank’s management kept fate with its track record of growing it's earnings on a quarterly and yearly basis over the last two decades. The bank also continues its culture of effective and strategic risk management which has kept its Non-Performing Loan ratio within the regulatory threshold of 5.0%, with its 2019Q3 at 4.95%, lower than the full-year 2018 position of 4.98%. This reflects the bank’s high asset quality that supports its outstanding numbers that point to a higher dividend payout at the end of the current financial year. The management’s commitment to creating value for stakeholders at all levels is evident in its operations that conti...

Market Update for The Week ended October 25 and Outlook for 28-Nov 1 The nation’s equity market continued its decline over the past week, seemingly unimpressed by the influx of mixed corporate earnings during the period, even as the new pricing methodology introduced October 11 by the Nigerian Stock Exchange (NSE) slowed down the losing momentum. It is therefore arguable whether the intention of the new pricing methodology (ensuring relative stability by reducing price fluctuation of highly capitalized stocks with much influence on the benchmark index) has been a success. The mixed and mild reaction to these quarterly scorecards by market players and even companies that posted surprising numbers show the low confidence and liquidity prevailing in the market and economy. Investors may also have started considering the implications of the Central Bank of Nigeria (CBN) directive minimum Loan-Deposit Ratio, as well as the restriction of individuals and corporate bodies from i...

Market Update for October 23 Midweek’s trading activities on the Nigerian Stock Exchange (NSE) remained volatile, while halting six consecutive sessions of decline on a seemingly improved buying interest in the midst of earnings influx, as more companies made available their 9-month scorecards to the investing public. These companies include: Zenith Bank, Total Nigeria, Learn Africa, Africa Prudential, Cadbury Nigeria, BOC Gas, VeritasKapital Assurance, Aluminum Extrusion, and Multiverse. In summary, the results were a mixed performance for banking stocks and its index, despite the relatively impressive numbers, considering their current market value which makes stocks in the sector attractively, especially for dividend investors looking at the high yield, ahead of full-year financials. Since Guaranty Trust Bank made available its Q3 numbers on October 16, others like UBA Plc, FBN Holdings, and Zenith Bank followed, the sector’s index has lost 2.93%, as earnings reports...

Market Update for October 22 The free fall of equity prices persisted on the Nigerian Stock Exchange (NSE), despite the new price methodology introduced by the bourse, amidst low liquidity, which propelled the All-Share index to decline on Tuesday. This situation could have been worse, if not for the fact that prices of highly capitalized stocks remained unchanged to a level of giving any kind of support to the index. Money flow index for the day read 4.04, indicating that funds left the market as some fund managers continue to sell down, irrespective of the ongoing earnings season. The day’s decline means that the NSE’s Index has remained bearish over the last 15 trading sessions of the month and eight trading days after the introduction of the 100,000 units as volume needed to change price across all classes of equities listed on the exchange, except for one day- October 14, when the market closed green. The indexes showed a pattern of price action that seemingly indicates...

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Market Update for The Week ended October 18 and Outlook for 20-25 Again, the bears extended their stranglehold on the Nigerian Stock Exchange (NSE) to its fifth consecutive weeks of decline, with the All Share Index recording daily losses throughout the trading period. This is not unexpected, given the rising risks arising from a seeming mismatch of monetary and fiscal policies that mainly heightened the September inflation rate to 11.24%, from the 11.02% recorded in August. The continued decline of the NSE’s benchmark index was despite the recent artificial market created in the form of the new pricing methodology which moderated its movement with the prices of many highly-priced stocks becoming inactive state due to low liquidity. News of a stress -test which revealed that seven banks of the nation’s 24 banks are not adequately funded as revealed by the 2018 Financial Stability Report (FSR) of the Central Bank of Nigeria (CBN) and reported by different newspapers. Thi...

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Market Update for The Week ended October 18 and Outlook for 20-25 Again, the bears extended their stranglehold on the Nigerian Stock Exchange (NSE) to its fifth consecutive weeks of decline, with the All Share Index recording daily losses throughout the trading period. This is not unexpected, given the rising risks arising from a seeming mismatch of monetary and fiscal policies that mainly heightened the September inflation rate to 11.24%, from the 11.02% recorded in August. The continued decline of the NSE’s benchmark index was despite the recent artificial market created in the form of the new pricing methodology which moderated its movement with the prices of many highly-priced stocks becoming inactive state due to low liquidity. News of a stress -test which revealed that seven banks of the nation’s 24 banks are not adequately funded as revealed by the 2018 Financial Stability Report (FSR) of the Central Bank of Nigeria (CBN) and reported by different newspapers. This has ...