Despite Improved Earnings, Tier-1 Banks’ Market Valuation Down N315.9bn

Kayode Tokede

Despite releasing impressive corporate earnings on the Nigerian Exchange Limited (NGX), the market valuation of Tier-1 banks dropped by N315.9billion in 11 months of 2022, according to THISDAY investigation. 

Stock market investors in the period placed N2.413 trillion on Nigeria’s Tier-1 capital banks ahead of 2022 full year earnings season, accounting for about 9.3per cent of the entire stock market capitalisation that closed November at N25.959 trillion.

The market valuation of Access Holdings Plc, Zenith Bank Plc, United Bank for Africa (UBA), Guaranty Trust Holding Company Plc (GTCO), Ecobank Transnational Incorporated (ETI), and FBN Holdings opened 2022 at N2.73 trillion and dropped to N2.413trillion as of November 30, 2022.

A breakdown shows that GTCO between January and November 2022 has suffered the highest drop in market value followed by Zenith Bank.

With about N6.00 per share drop in stock price to N20.00 as of November 30, 2022 from N26.00 it opened for trading, the market valuation of GTCO has depreciated by N176.6billion.

For Zenith Bank Plc’s market value dropped by N102.04billion as its stock price opened for trading this year at N25.15 per share to close November 30, 2022 at N21.90 per share.

Both leading banks had reported N304.7 billion profit after tax in nine months ended September 2022, representing an increase of 5.06 per cent from N289.99 billion reported in nine months of 2021.

Zenith Bank and GTCO had declared interim dividend to shareholders in audited half year result and accounts.

Access Holdings saw its market value drop by N28.44billion when its stock price depreciated by N0.8 per share, while UBA witnessed N27.36billion decline in market value.

The stock price of UBA was down by N0.8 to N7.25 as of November 30, 2022 from N8.05 per share it opened for trading this year.

In addition, ETI’s market value was down by N25.7billion as FBN Holdings recorded N7.18billion decline in market value when it price closed at N11.2 per share from N11.4 per share it opened for trading in 2022. 

Capital market analysts attributed the decline to uncertainty surrounding the local economy in 2022 as foreign investors continued to exit the stock market.

They also blamed the decline on a hike in Monetary Policy Rate (MPR) to 16.5 per cent, which forced investors to fixed-income market instruments.

Zenith Bank is currently the most valuable among Nigeria’s top lenders, followed by GTCO– an agile financial service provider that was dislodged by share price appreciation in Zenith bank in 2022.

Investors value Zenith Bank at N687.58billion on about 31.4 billion outstanding shares at a unit price of N21.9 as of November 30.

To the market, investors GTCO worth N588.62 billion as of November 30 on 29.431 billion shares outstanding price at N20 at the close of the market on November 30.

GTCO was the Tier-1 bank leader, and the stock had moved near the N1 trillion mark before price action onslaught by its main rival –Zenith bank.

FBN Holding commanded N402.03 billion market valuation as of November 30, 2022.

The oldest among Tier-1 category lenders has 35.895 billion outstanding shares price at N11.20 as of November 30, 2022.