Ahead of next week when shareholders of Access Bank plc will vote on the proposed N68 billion rights issue, the bank yesterday beat other companies to emerge the ‘earliest bird’ in the reign of third-quarter earnings season at the Nigerian Stock Exchange (NSE).
The bank released its nine-month financials to local and international investors at the Nigerian bourse which shows 17.3 percent growth in gross earnings to N181.798 billion against N155.026 billion in the corresponding period in 2013. Also, its total assets grew to N2.074 trillion, from N1.835 trillion in the corresponding period of 2013, indicating an increase of 13 percent.
The bank’s nine-month results berthed at the NSE at a time investors are repositioning to take advantage of firms with positive earnings at the market.
“We expect price appreciation in some stocks on the back of recent positive news and position taking for Q3 numbers,” said market analysts at UBA Capital.
In the nine-month period to September 30, 2014, Access Bank reported Profit Before Tax (PBT) increase of 20 percent to N42.156 billion, from N35.087 billion. The tier-one bank’s profit for the period rose by 28 percent to N35.346 billion, from N27.597 billion, while its Basic Earnings per Share (kobo) rose by 28 percent to 154, from 121.
The bank also reported Net Interest Income (NII) growth of 27 percent to N75.945 billion, from N59.628 billion in the corresponding period of 2013.
BusinessDay check shows that investors are looking to pick value stocks in the depressed market which yesterday had Year-to-Date (YtD) return standing at -1.83 percent.
Analysts are optimistic that the release of impressive Q3 results would change the current negative route in the stock market.
“The market will depend on positive earnings releases, while local investors look for bargains on cheaper prices and cheaply priced stocks,” said CBO Capital Partners analysts.
They, however, expect another period of lacklustre performance in the market marked by fear driving a bearish sentiment and volatility.
Recent report by the Financial Derivatives Company (FDC) says the stock market is expected to stay in correction territory (approximately 40,000) with increased volatility where stocks gain for a few days and give back their gains. The market is currently at 41,122.78.
In the last quarter, the 9.65 percent gain witnessed by the stock market was pared by the bears in Q3. The negative performance of the stock market has been largely driven by “upcoming elections creating a wait-and-see sentiment”, according CBO Capital Partners.
Additionally, the sustained misalignment of fiscal and monetary policy has added to the poor stock market performance.
The downturn in the stock market has not been a completely isolated case for Nigeria. Further expected reduction of Quantitative Easing (QE) by the US Federal Reserve increased volatility in emerging market stocks. Investors adjusted their portfolios in preparation for an increase in interest rates, leading to a decline in the MSCI Emerging Markets Index by 7.5 percent, says the FDC report.
Despite the poor performance, the equity market still provides access to competitive returns. Specifically, in the current market where prices are low, opportunities can be found in banking, cement and consumer stocks, according to the FDC report.
Iheanyi Nwachukwu & Yinka Abraham
