Investors in the eight of the 14 listed banks would be thinking of reviewing their investment as the banks have underperformed the Nigerian Stock Exchange (NSE) benchmark All-share Index (ASI) as at last Monday. Only five of the banks outperformed the index.
Although the NSE Banking Index, which measures the aggregate performance of the banking sub-sector, has recorded year-to-date (YTD) growth of over 32 per cent and the ASI 13.3 per cent as last Monday, the eight banks recorded appreciation of between 2.2 per cent and 50.6 per cent.
THISDAY's analysis of the individual performance of the stocks, showed that Union Bank of Nigeria Plc led the pack with the highest capital loss of 50.6 per cent as at last Monday. Skye Bank Plc followed with a decline of 29.6 per cent while First City Monument Bank Plc posted a decline of 27.5 per cent.
Stanbic IBTC Bank Plc, Wema Bank Plc and Fidelity Bank Plc, Unity Bank Plc and Ecobank Bank Transnational Incorporated shed 21.5 per cent; 12.3 per cent; 10.3 per cent; and 2.2 per cent respectively.
However, five of the banks have so far put smiles on the faces of their investors. United Bank for Africa Plc has recorded the highest capital gain, having appreciated by 67 per cent. Access Bank Plc followed with 60 per cent. First Bank of Nigeria Plc recorded a growth of 47.3 per cent while Diamond Bank Plc grew by 40.6 per cent. Zenith Bank Plc posted a capital gain of 27.3 per cent, while Sterling Bank Plc remained static.
Market operators said the performance of the banking sub-sector reflected more of demand and supply forces. According to them, given the financials results of the banks for the half year ended June 30, none of the banks should underperform the ASI.
"But as you may know, the banking subsector witnesses a lot of volatility due to the high volume of shares and the holding structure, which is spread among many domestic investors. That is why you can see huge volume of bank shares always in supply in the market every day and this affect the price movement of each security," a broker said.
External Reserves Rises to $38bn on Oil Price Rally
Nigeria's foreign reserves, which have been upbeat since the beginning of this month, due to increase in crude oil prices at the international market appreciated by a total of $1.43 billion to close at $38.005 billion on Monday.
Data obtained from the Central Bank of Nigeria's (CBN's) website showed that the amount represented an improvement by four per cent this month, compared with the $36.547 billion stood on August 1.
Brent Crude price stood at $112 per barrel on Monday, amidst concerns that a tropical storm will shut United States' refineries and as western governments mulled the release of strategic reserves to calm oil prices. Oil prices have risen by nearly 30 per cent since June with international sanctions hitting Iranian exports and maintenance affecting North Sea oil flows.
According to analysts, the moderate demand for the United States dollar observed at the CBN's regulated Wholesale Dutch Auction System (WDAS) also influenced the gradual build-up of the reserves, which is mainly from proceeds of crude oil sales.
Financial Derivatives Company Limited (FDC) said that the build-up in the foreign reserves would continue. The firm predicted that the reserves would "close the year at an average of $40 billion. Oil market volatility will play a significant role in reserves accretion."
CBN Governor, Mallam Sanusi Lamido Sanusi, last week attributed the development to gradual recovery of global economy.
He had added: "The international environment has not been one of high inflation so the challenges are those of commodity prices as a result of the European crisis and the US. We have focused on building our reserves."
Sanusi also explained that there had been very sluggish growth in "M2 and monetary tightening has been very effective and keeping the exchange rate fairly within the band that we expected of N157 to N158, which reduces imported inflation."
He maintained that if the accretion in the reserves was maintained, and a fairly exchange rate was maintained, inflation would fall.
The Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, had disclosed that the federal government had set a target of $50 billion foreign reserves by the end of the year.
Speaking recently in Lagos, she had also said the federal government was building economic buffers as the economy was vulnerable to the current developments in the global economy.
Okonjo-Iweala had also said government had also put in place, measures to ensure that the Excess Crude Account (ECA) balances rises to about $10 billion.