Following the continued decline in share prices at the Nigerian Stock Market, which has brought several growth stocks around the 100 kobo mark, investors appeared to be showing preference for low-priced equities, otherwise known as penny stocks.
Trading reports by the Nigerian Stock Exchange, NSE, showed that low-priced stocks have dominated activities charts in recent period, in what market analysts regarded as a shift of emphasis from liquidity to potential for higher dividend yield and capital appreciation, The Nation reports.
In the immediate past week, three stocks, which trade around N1 were the most active. The trio of Sterling Bank PLC, FCMB Group PLC and Transnational Corporation of Nigeria accounted for 250.205 million shares worth N237.138 million in 3,654 deals, representing 28.6 per cent of the total equity turnover volume. Total turnover at the NSE last week stood at 873.838 million shares worth N8.024 billion in 15,944 deals.
In the previous week, the trio of FBN Holdings Plc, Access Bank PLC and FCMB Group PLC also accounted for 226.665 million shares worth N757.967 million in 1,879 deals, representing 33.4 per cent of the total equity turnover volume for the week.
Head, Financial Advisory Group, GTI Capital Limited, Mr Hassan Kehinde, said the trend showed that investors were taking earnings and dividend yields as major consideration in their portfolio allocation.
According to him, with the low share prices of several stocks, there is potential for good dividend yields by the end of this year notwithstanding the depressed bottom-line due to the tough operating environment.
FBN Holdings Plc, the holding company for First Bank of Nigeria and its previous subsidiaries, had grown its total balance sheet to N5.1 trillion by the third quarter of this year as the financial conglomerate pooled gross earnings of N417.3 billion within nine months.
Key extracts of the nine-month report showed that FBN Holdings retained its leading position as the largest bank in Nigeria, in terms of balance sheet position.
Total assets rose to N5.1 trillion by September 2016, representing 21.6 per cent growth on N4.2 billion recorded at the beginning of this year. Customer deposits rose by 10.9 per cent to N3.3 trillion as against N2.97 trillion recorded by the year ended December 31, last year. Net customer loans and advances closed September 2016 at N2.2 trillion, an increase of 22.2 per cent on N1.8 trillion recorded at the beginning of the year.
The report indicated that gross earnings rose by 7.0 per cent to N417.3 billion in third quarter of the year as against N390 billion recorded in comparable period of 2015. Net-interest income had risen by 5.2 per cent to N202.9 billion in 2016 as against N192.9 billion in 2015.
Also, Sterling Bank Plc rode on the back of increasingly better operating and credit management efficiency to build up the quality and profitability of its core banking business in the third quarter.
Key extracts of the interim report and accounts of Sterling Bank for the nine-month period ended September 30, this year showed considerable improvements in key underlying fundamentals of the bank as it continues to grow its main focus of retail banking.
The report showed that net interest margin, which measures the profitability of the core lending business, improved to 8.5 per cent in third quarter of the year as against 7.9 per cent in comparable period last year. The proportion of non-performing loans (NPL) to gross loans and advances, which indicates assets quality and the efficiency of the credit risk management, also improved significantly from 4.8 per cent December 2015 to 2.5 per cent in third quarter 2016. This brings Sterling Bank well ahead of the 5.0 per cent industry thresholds for NPL set by the Central Bank of Nigeria (CBN). The bank’s cost of funds also improved to 5.3 per cent in third quarter 2016 compared with 6.2 per cent in corresponding period of 2015.
