Tier 2 Banks - Playing a catch-up game
- Which club will get to top 4? It’s an interesting tale in the EPL as three rivals, Chelsea, Liverpool, and Arsenal continue to struggle for a place in the top four. While Chelsea started the season weak, it seems to have stepped up its pace and has pulled away from its rivals after beating Manchester United at Stamford Bridge. The question now arises, will the rivals catch up with Chelsea or will Chelsea sustain its form?
- A tale in the Tier 2 space. Across our Tier 2 coverage banks, the valuations of three comparable banks are showing an interesting pattern just like the EPL. Fidelity Bank Plc (Fidelity) has pulled away from its peers – FCMB and Diamond Bank (Diamond), returning 90.48% YTD relative to 0.91% and 30.68% for FCMB and Diamond respectively. Fidelity currently trades at a price-to-book value (P/B) of 0.3x compared to 0.1x for its peers, commanding a premium relative to peers which has widened to 92% from 14.3% in FY 16. Price movement in recent trading appears like FCMB and Diamond are currently playing catch-up and in this note we look to determine if this premium will widen or shrink in the short term.
- See attached for full report
|
|
Diamond |
FCMB |
Fidelity |
|
Current Price (N) |
1.16 |
1.13 |
1.60 |
|
FVE (N) |
1.22 |
1.34 |
1.88 |
|
Current P/B |
0.11 |
0.12 |
0.23 |
|
Forward P/B |
0.13 |
0.13 |
0.28 |
|
BVPS |
10.18 |
9.11 |
6.93 |
|
EPS 17E (N) |
0.41 |
0.55 |
0.60 |
|
DPS 17E (N) |
- |
0.11 |
0.21 |
|
Dividend Yield |
- |
11.5% |
13.1% |
|
Potential Upside/Downside |
5.00% |
18.0% |
18.0% |
|
Ratings |
Neutral |
Neutral |
Neutral |
|
|
Diamond |
FCMB |
Fidelity |
|
CASA |
81.0% |
68.9% |
73.5% |
|
Loan Book (N’bn) |
976 |
649 |
756 |
|
NIM |
6.5% |
6.7% |
7.1% |
|
NPL |
9.5% |
4.7% |
5.9% |
|
Coverage Ratio (excl. reg reserve) |
78.3% |
111.2% |
97.3% |
|
CAR |
15.8% |
17.3% |
17.3% |
ARM Securities Limited is a full-service brokerage house that offers best-in-class brokerage services to local as well as foreign private and institutional investors. Formerly known as Hamilton Hammer, the Company commenced operation in 1994 and was acquired by ARM Investment Managers in 2008--an acquisition which has successfully re-positioned the company as a recognized brokerage firm in Nigeria. The Company is a dealing member of the Nigerian Stock Exchange (NSE) and is regulated by Securities and Exchange Commission (SEC). ARM Securities research team provides insightful commentaries on the Nigerian economy and its equity and debt markets using an approach which incorporates a thorough understanding of the fundamentals of the industries and companies under coverage. The research therefore adopts an integrated methodology of top-down analysis and bottom-up stock selection, which focuses on publicly quoted companies on the Nigerian Stock Exchange that are judged to offer the highest potential for earnings growth. In addition, its analysts provide periodic commentaries on a range of topical global and local issues which provide investing clients with a holistic view of the opportunities and risks in today’s financial market landscape.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.