Investors lose N247.62 billion in two top Nigerian banks year-to-date as sell pressure intensifies

Sell pressure witnessed on shares of the top two Nigerian banks in market capitalisation Zenith Bank Plc and GTCO Plc since the beginning of the year has resulted in investors of both banks losing about N247.623 billion at the close of trading on 22nd June.

Checks by Nairametrics showed that GTCO Plc dropped by 19.23% to N21.00 per share N26.00 which was the opening share price in January, while Zenith Bank Plc shed 12.72% to N21.95 per share from share price of N25.15 at the commencement of the current year trading in January.

This is despite the fact that the banking sector witnessed an improved performance in Q1’2022 on various parameters like credit growth, asset quality, and profitability.

The relentless sale pressure by Foreign Portfolio Investors (FPIs) is on the back of high commodity inflation that happened due to the Russian-Ukraine War, which led to a spike in interest rates and, in turn, led to a jump in bond yields in the US and other developed markets.

Foreign institutional investors invest in Nigeria stocks or other emerging markets when they have excess liquidity (low borrowing costs). However, if bond yields rise in the US, money will move away from emerging markets.

Following low sentiment from FPIs analysis from the NGX has shown that foreign transactions stood at N201.29 billion, accounting for about 13.37 per cent of the total transactions carried out from January to May, while domestic transactions constituted N1.304 trillion, representing 86.63 per cent of the total transaction, outperforming the foreign investment during the same period.

Performance of the banks’ share prices

• GTCO closed its last trading day (Wednesday, June 22, 2022) at N21.00 per share and N689.153 billion in market capitalisation on the Nigerian Stock Exchange (NGX) as against N26 per share and N765.210 billion in market capitalisation at the beginning of trading in January 2022, hence has earned a loss of N147.155 billion or 19.23% year to date.
• Zenith Bank Plc also closed its last trading day (Wednesday, June 22, 2022) at N21.95 per share and N689.153 billion in market capitalisation on the Nigerian Stock Exchange (NGX) in contrast to opening figure of N25.15 per share and N789.621 billion in market capitalisation at the beginning of the year on January. The bank has since lost 12.72% and N100.467 billion in market capitalisation.

Key results highlights

• Guaranty Trust Holding Co’s Q1 2022 financial result showed a profit of N43.21 billion during the period. This reflects a 5.13% decline year on year.
• The bank also reported earnings per share of N1.51, a 5.63% drop from the N1.60 reported a year earlier in 2021.
• The statement revealed that in Q1 2022, Net interest income grew by 9.09% from N52.43 billion to N57.20 billion in the current period. Guaranty Trust’s profit performance is on the back of margin growth as income from interest and fees and commission income appreciated year on year. However, net trading income declined y-o-y by 5.03%, subduing bottom-line profit, as well as other expenses.
• Also, Zenith Bank Plc’s Q1 2022 financial result revealed a profit of N58.20 billion in Q1 2022. This reflects a 9.68% increase year on year.
• The bank also reported earnings per share of N1.85, a 9.47% growth from the N1.69 reported a year earlier in Q1 2021.
• The statement revealed that in Q1 2022, net interest income grew by 20.89% from N83.17 billion to N100.54 billion in the current period. Zenith Bank’s profit performance is on the back of margin all growth as income from interest, trading income and fees and commission income all appreciated year on year.