• Thursday, March 28, 2024
businessday logo

BusinessDay

Wema Bank sustains heavy trade volume amid market’s bearish sentiment

Wema Bank

Tier-two lender, Wema Bank plc, recorded a heavy volume of trade for the second trading session this week on the Nigerian Stock Exchange (NSE), making it to lead the pack of most active stocks for the two days in a market which has shed over 5 percent of its value since the start of the year.

More 2.3 million units of the bank’s shares valued at N1.48 billion were traded at the local bourse on Tuesday, this represents a shortfall from a turnover of over 2.69 million units of Wema Bank’s shares worth N1.71 billion which exchanged investors’ hands in the previous session.

“It is not a regular market trade,” said Paul Uzum, a stockbroker who trades at the Lagos bourse, told BusinessDay in a telephone interview. “The person selling should be a big shareholder of the company.”

Checks by BusinessDay show the stock has not recorded such a significant volume of trade in the last three years. In spite of this, the share price, which gained 3.23 percent to 62 kobo on Monday, lost 4.69 percent to close at 61 kobo on Tuesday to join 20 other equities which recorded declines in share value. This worsened its year-to-date loss to 3.17 percent.

The muted investor sentiment towards stocks listed on the NSE, which continued on Tuesday, is a reflection of the absence of a market catalyst to shore up their falling share prices which are already trading at their multi-year lows, even as President Muhammadu Buhari is yet to nominate members of cabinet for his second term in office.

“We expect investors to cautiously take positions in fundamentally sound stocks trading at attractive prices and offering high dividend yield as we approach H1:2019 earnings seasons,” analysts at Afrinvest Securities Limited said in a note to clients.

Wema Bank’s volume of trade on Monday accounted for 94 percent of a total of 2.86 billion shares transacted on the NSE, the proportion fell to 82 percent on Tuesday as the market recorded 2.91 billion turnover valued at N11.23 billion.

The mid-tier lender grew its profit-after-tax by 50 percent to N1.14 billion in the first three months of 2019 on the back of higher interest income as against N764 million achieved in the corresponding period of 2018.

In 2018 financial year, it posted a N3.32 billion profit, this represents a 47.6 percent surge from N2.25 billion garnered as net income in the previous year. Out of this amount, the bank recently paid a final dividend of 3 kobo per ordinary share for its shareholders, translating to a total sum of N1.16 billion.

An analysis of the bank’s balance sheet shows that retained earnings of the firm improved by 13 percent to N6.77 billion up from N5.99 billion recorded a year earlier, bringing its shareholders’ funds to N52 billion at end-March 2019 from N50 billion accrued to its owners in the same period last year.

Wema Bank Plc provides commercial banking services. It offers retail and corporate banking services, trade finance, treasury as well as foreign exchange operations. The bank was incorporated on May 2, 1945, and listed on the Nigerian Stock Exchange on February 13, 1991

 

OLUWASEGUN OLAKOYENIKAN