Bank stocks gain N439bn in October



Investors in banks quoted on the main board of the nation’s stock market reported a cumulative gain of about N439 billion during the month of October, 2020.
This is despite the #ENDSARS protests that crippled the nation’s economy as investors expect fair earnings results from lenders.
Checks by New Telegraph revealed that the stocks recorded a gain of N439 billion or 20 per cent to close at N2.633 trillion in market capitalisation on the last trading day of October 30 as against the opening figure of N2.194 trillion at the beginning of trading on October 2.
Market watchers believe the investors are taking positions on banks stocks following expectations of fair third quarter results.
According to reports, market experts are optimistic that the banking segment of the Nigerian stock market would always give their shareholders reasons to smile, especially if the Central Bank of Nigeria (CBN) addresses an important issue, which is apex bank’s policy for non-performing loans.
Mohamed Abu Basha, Head of Macro Economy, EFG Hermes, explained that the banking segment would yield more returns to the shareholders if CBN introduces more lenient policies to the banking sector.


Basha said: “Banks stock are hot stocks always, assuming the CBN’s policy for NPL recognition and subsequent provisions remains lenient.
“In such a scenario, we think banks could continue to report relatively robust profitability (compared to the other listed segments) and dividends, which would provide a cushion for investors against forex risks and a domestic low-yield environment.”
Over the years, investors have enough faith in the earnings of top NSE-listed banks to buy them when economic recovery and rising future earnings are in prospect, and to sell them when prospects worsen.
Guy Czartoryski, Head of Research, Coronation Asset Management, also explained that buying those stocks with strong RoEs when  their valuations are depressed is still a reasonable, and potentially money-making tactic.
The Chief Executive Officer (CEO) of Sterling Bank Plc, Mr. Abubakar Suleiman, while commenting on the bank’s half year financial performance had said: “Our impressive half-year performance in the face of the COVID-19 crisis and the ensuing economic disruption belies the rough seas ahead. In the second quarter of the reporting period, we focused on empowering our stakeholders to respond to the unprecedented disruption occasioned by prolonged restriction to movement while supporting them to adapt to new ways of banking.


“Our commitment to digitisation was validated as we continued to serve existing and new customers through our mobile and digital platforms. We also responded to the uncertainty by doubling down on cost optimisation while leveraging our existing remote work policy to keep our workforce productive without risking COVID-19 infection. Notwithstanding rising inflation, we were able to moderate operating expenses during H1 2020 to deliver a net profit comparable to the first half of 2019.
“In the second half of the year, our focus remains the same; retooling our employees to function optimally while observing social distancing, enhancing our execution capacity and enabling our customers to thrive in the middle of a pandemic.
“We will continue to focus on the sectors that are critical to the well-being of the economy, or as we call it, the HEART sectors namely: Health, Education, Agriculture, Renewable Energy and Transportation.”






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