• Thursday, March 28, 2024
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BusinessDay

GTB stocks still a good buy, analysts say

GTBANK

The bearish stock price movement of Nigeria’s most capitalised deposit money bank on the equity market amid a wave of market pessimism was relieved as investors compensated the bank for its performance in the first half of the year 2019.

GTB on Friday gained 0.97 percent in stock price, exiting a 1-year lowest price of N25.75 to settle at N26 at the end of trading, gaining N7.35 billion for its investors as at the end of trading.

Insight into the bank’s financials released on the Nigerian stock exchange (NSE) market in the early hours of Friday revealed a growth by 4 percent in GTB’s net income amid a marginal decline in bank’s net interest income for the period H1 2019.

During period under review, the bank recorded a net income of N99.13 billion against N95.58 billion in the corresponding period of 2018. This was driven by jump by 29 percent in fee and commission income, likewise 13 percent in bank’s other income.

This was also coupled with net impairment gains on other financial assets of N108.44 million in H1 2019.

This therefore resulted in a 6 percent growth in profit before tax of N115.78 billion against N109.63 billion in the first half of 2018.

In a bid to compensate shareholders, GTB announced an interim dividend in the sum of 30 kobo per ordinary share of 50 kobo, however subject to appropriate withholding tax deduction and approval.

The stock performance of GTB being one of the most capitalised firms has mirrored since inception of the year 2019, bearish trend of the Nigerian All Share Index (ASI) as negative market sentiment prevails.

Year to date analysis of the bank shows a negative return by 24.53 percent to investors grossly underperforming the ASI which is down 13.90 percent.

1 year return of the lender also reveals a negative return of 32.33, also under performing the ASI with a negative 1-year return of 21.82 percent.

However, BusinessDay analysis revealed there exist opportunity for growth investors in GTB as well as some deposit money banks.

“You never can tell how low some of these stocks can go but anyone buying a GTB or Zenith is getting a good bargain,” said Paul Uzum a broker on the floor of the Nigerian Stock Exchange (NSE) told BusinessDay.

Regulatory concerns, however, especially in the light of recent policies by the Central Bank of Nigeria in increasing credit flows, has resulted in surprising valuations of lenders.

GTB trades on 3.88x PE, 1.2458x PB while offering 10.62 percent dividend yield. Zenith Bank trades on 0.6768x price to book, and offers 17.07 percent dividend yield and UBA trades on 2.36x PE, 0.3639x PB and offers 15.18 percent dividend yield, data from Bloomberg show.

According to BusinessDay report, the policies of the apex bank governor have seen the country’s foreign exchange somewhat stabilize and the reverse situation can cover much of the outflow risks but the price is a restrictive monetary policy and juicy fixed income returns that limit demand for equity.

 

DAVID IBIDAPO