Nigeria: All-Share Index Falls Further As Market Extends Bearish Trend

18 October 2019

The Nigerian equities market declined further following losses by banking stocks. The Nigerian Stock Exchange (NSE) All-Share Index fell by 0.06 per cent to close at 26,456.29, while market capitalisation shed N7.7 billion to close at N12.9 trillion.

However, activity level was mixed as volume traded rose 4.1 per cent to 144.1 million shares while value traded declined 19.6 per cent to N2.9 billion.

In all, eight stocks declined led by Cornerstone Insurance Plc with 8.1 per cent, trailed by United Bank for Africa Plc with 2.5 per cent. Wema Bank Plc shed 1.6 per cent and Guaranty Trust Bank Plc lost 1.3 per cent.

The depreciation in the price of GTBank Plc came a day after the bank released its financial results for the nine months ended September 30, 2019.

GTBank announced a decline of 3.0 per cent in gross earnings to N324.262 billion, from N334.711 billion in 2018.

Net interest income rose to N172.937 billion from N170.641 billion in 2018, while net fee and commission income rose to N46.497 billion, compared with N37.84 billion in 2018. Loans impairment charges increased from N1.736 billion to N2.761 billion. Profit before tax (PBT) stood at N170.651 billion, up 3.9 per cent from N164.245 billion, while profit after tax (PAT) grew by 3.4 per cent to N146.989 billion as against N142.224 billion in 2018.

According to analysts at Cordros Capital, the GTBank's result was in line with expectations as gross earnings declined while profitability expanded moderately. The performance was underpinned by non-funded income growth, as interest income growth continues to lag the prior year.

"Interest expense also declined by 23.4 per cent to N32.63 billion, as the bank shed high cost deposits during the year, interest on deposits from customers declined by 20.4 per cent, to N42.90 billion, while zero cost on debt securities relative to the prior year (N4.34 billion) also contributed. Consequent on the higher pace of decline in expense relative to income, the bank's net interest income settled higher by 1.3 per cent. Similar to many banks, the GTBank's non-interest income growth has outpaced interest income growth, as non-funded income grew by 3.0 per cent at N100.07 billion. This was supported by fees and commissions income which grew by 22.9 per cent to N46.50 billion. Notably transaction volumes have continued to grow, supporting E-business income (+63.1 per cent to N11.04 billion), while credit related business charges (+37.1 per cent to N9.08 billion) have also boosted the bank," they added.

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