Nigerian banks recorded 76 percent growth in investment securities in H1 2023 as dollar assets were revalued upward on the back of naira devaluation.
Twelve banks listed on the Nigerian Exchange Group recorded investment securities worth N25.56 trillion in H1 2023, an increase from N14.51 trillion recorded in the same period of 2022.
“Banks investment securities increased as a result of revaluation gain. A bank asset valued in dollars will be revalued upward as a result of naira devaluation,” Tesleemah Lateef, banking analyst at Cordros Securities Limited said.
She said investment securities are in foreign currencies such as Eurobonds and the revaluation gain means the earnings of the assets will increase which is positive for the banks.
Kayode Eseyin, analyst, investment research and strategy at CardinalStone Securities said banks’ investment securities increased due to the dollar assets in their books.
“Several of these banks have dollar assets than dollar liabilities which they had to revalue using the new exchange rates,” Eseyin said.
He said the revaluation of the banks’ assets is good for them in terms of earnings on dollar debt as dollar interest income from this would likely be translated at a higher naira rate.
However, Eseyin stated that it could be very bad if banks have to impair some of these loans due to a potential decrease in creditworthiness.
Based on year-on-year growth, United Bank for Africa topped the chart with 250.8 percent growth in investment securities, Eco Bank (86.2%), Guaranty Trust Holding Company (76.9%), Sterling Holdings(65.2%) and Access Holdings (64.5%).
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Wema Bank, FBN Holdings, Zenith Bank, and First City Monument Bank recorded 41.8 percent, 36.6 percent, 36.5 percent, and 31.6 percent respectively. However, Unity Bank recorded a 6.6 percent decline while Stanbic IBTC Holdings 27.1 percent decline in investment securities.
Investment securities are a category of tradable financial assets such as equities or fixed-income instruments which are purchased with the intention of holding them for investment. As opposed to investment securities, in general, securities are purchased by a broker-dealer or other intermediary for quick resale.
Bank analysis
United Bank For Africa(UBA)
United Bank for Africa recorded the highest growth in investment securities compared to its peers, the bank recorded 250.8 percent growth during the first half of 2023.
The bank’s investment securities in its assets are worth N6.21 trillion in H1 2023 from N1.77 trillion in the similar period of 2022.
United Bank for Africa reported a foreign exchange gain of N418.28 billion in H1 2023 from N9.15 billion in the same period of 2022.
UBA’s share outstanding stood at 34.2 billion while the share price amounted to N18.8 with a traded volume of 56.3 million on Friday.
Eco Bank
Eco Bank ranked in second place with 87.2 percent growth in investment securities during the first half of 2023.
The bank’s financial instrument amounted to N5.13 trillion in H1 2023 from N2.74 trillion in the same period of 2022.
Eco Bank recorded a foreign exchange loss of N156.28 billion in H1 2023 from a loss of N35.56 billion in the similar period of 2022.
The bank’s share outstanding stood at 18.35 billion while the share price amounted to N15.15 with a traded volume of 53,372 on Friday.
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Guaranty Trust Holding Company(GTCO)
Guaranty Trust Holding Company ranked third with 76.9 percent growth in investment securities for the first half of 2023.
The holding company’s investment securities increased to N1.84 trillion in H1 2023 from N1.04 trillion in the similar period of 2022.
GTCO’s foreign exchange gain rose to N357.47 billion in H1 2023 from N1.87 billion in the same period of 2022.
Guaranty Trust Holding Company’s share outstanding stood at 29.43 billion while the share price amounted to N35.7 with traded volume of 11.82 million on Friday.
Sterling Holdings
Sterling Holdings ranked fourth with 65.2 percent growth in investment securities during the first half of 2023.
The holding company’s investment securities grew to N456.24 billion in H1 2023 from N276.26 billion in the same period of 2022.
Sterling Holdings recorded a foreign exchange loss of N3.63 billion in H1 2023 from a foreign exchange gain of N804 million in the same period of 2022.
The holding company’s share outstanding stood at 28.79 billion while the share price amounted to N3.48 with traded volume of 3.47 million on Friday.
Access Holdings
Access Holdings ranked fifth with 64.5 percent growth in investment securities during the first half of 2023.
The holding company’s investment securities rose to N4.54 trillion in H1 2023 from N2.76 trillion in the same period of 2022.
Access Holdings recorded a foreign exchange gain of N244.34 billion in H1 2023 from N52.84 billion in the same period of 2022.
The holding company’s share outstanding stood at 35.55 billion while the share price amounted to N16.35 with traded volume of 22.17 million on Friday.
Wema Bank
Wema Bank ranked sixth with 41.8 percent growth in investment securities during the first half of 2023.
The bank’s investment securities amounted to N423.77 billion in H1 2023 from N298.6 billion in the same period of 2022.
Wema Bank’s foreign exchange gain stood at N28.7 million in H1 2023 from N108.97 million in the comparable period of 2022.
Wema Bank’s share outstanding stood at 12.86 billion. Share price amounted to N4.73 with traded volume of 1.31 million on Friday.
FBN Holdings
FBN Holdings ranked seventh place with 36.6 percent growth in investment securities during the first half of 2023.
The holding company’s investment securities rose to N2.95 trillion in H1 2023 from N2.16 trillion in the similar period of 2022.
FBN Holdings recorded a foreign exchange loss of N98.42 billion in H1 2023 from a foreign exchange gain of N16.51 billion in the same period of 2022.
The holding company’s share outstanding stood at 35.9 billion. Share price amounted to N16 with a traded volume of 9.41 million on Friday.
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Zenith Bank
Zenith Bank ranked in eighth place with 36.5 percent growth in investment securities for the first half of 2023.
The bank’s investment securities increased to N2.02 trillion in H1 2023 from N1.48 trillion in the same period of 2022.
Zenith Bank recorded a foreign exchange loss of N212.33 billion in H1 2023 from a foreign exchange gain of N3.35 billion in the same period of 2022.
The bank’s share outstanding stood at 31.4 billion. Share price amounted to N33.15 with a traded volume of 4.34 million on Friday.
First City Monument Bank(FCMB)
First City Monument Bank ranked in ninth place with 31.6 percent growth in investment securities for the first half of 2023.
FCMB’s investment securities amounted to N633.32 billion in H1 2023 from N480.5 billion in the same period of 2022.
The bank recorded a foreign exchange loss of N50.99 billion in H1 2023 from a foreign exchange gain of N1.34 billion in the same period of 2022.
FCMB’s market capitalisation share outstanding stood at 19.8 billion. The share price amounted to N6 with a traded volume of 8.32 million on Friday.
Fidelity Bank
Fidelity Bank ranked in tenth place with 9.3 percent growth in investment securities for the first half of 2023.
The bank’s investment securities rose to N718.32 billion in H1 2023 from N657.3 billion in the same period of 2022.
Fidelity Bank’s foreign exchange gain stood at N32.16 billion in H1 2023 from a foreign exchange loss of N1.51 billion in the same period of 2022.
The bank’s share outstanding stood at 19.8 billion. The share price amounted to N6 with a traded volume of 8.32 million on Friday.
Unity Bank
Unity Bank recorded a 6.6 percent decline in investment securities during the first half of 2023.
The bank’s financial investment dipped to N112.84 billion in H1 2023 from N121.19 billion in the similar period of 2022.
Unity Bank recorded a foreign exchange revaluation loss of N35.42 billion in H1 2023 from N16.23 million loss in the same period of 2022.
The bank’s share outstanding stood at 11.69 billion. Share price amounted to N0.95 with traded volume of 1.98 million on Friday.
Stanbic IBTC Holdings
Stanbic IBTC Holdings’ investment securities dropped 27.1 percent during the first half of 2023.
The holding company’s financial investments declined to N528.98 billion in H1 2023 from N726.1 billion in the same period of 2022.
Stanbic IBTC Holdings’ trading revenue increased to N44.72 billion in H1 2023 from N16.32 billion in the same period of 2022.
The holding company’s share outstanding stood at 12.96 billion. Share price amounted to N69.55 with a traded volume of 591,328 on Friday.
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