The Nation Newspaper Investors target banks’ shares on earnings, recapitalisation’s push
There are indications that investors are taking up positions in banking stocks ahead of the full rollout of the recapitalisation plans of banks.
After a streak of losses, Nigerian equities closed weekend average gain of 1.46 per cent, pushing the year-to-date return to 33.18 per cent. Banking stocks were largely responsible for the recovery. The benchmark index for the Nigerian equities market, the All Share Index – a common, value-based index that tracks all share prices at the NGX, closed weekend at 99,587.25 points as against its week’s opening index of 98,152.91 points.
In the ongoing recapitalisation, CBN uses a distinctive definition of the new minimum capital base for each category of banks as the addition of share capital and share premium, as against the previous use of shareholders’ funds. While several banks have shareholders’ funds in excess of the new minimum capital base, their share premium and share capital significantly fall short of the new minimum definition.
According to him, the recent depreciation in share prices and the quantum leap showed by the first quarter results have created substantial value in banking stocks. FBN Holdings led the gainers with a gain of 32.68 per cent to close at N27. Sterling Financial Holdings Company followed with a gain of 27.75 per cent to close at N4.88 per share. Jaiz Bank rose by 16.34 per cent to close at N2.35 while United Bank for Africa rallied 12.17 per cent to close at N25.80 per share.
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