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The Market Today - 06 April 2018

CBN data shows improved credit outlook
The Central Bank of Nigeria’s (CBN) credit conditions survey for Q1’18 indicated that lenders increased credit to households and corporates alike, attributing the increase to improved risk appetite, hinging on a more favorable economic outlook. In addition, lenders reported a healthier outlook for loan performance in the coming quarters and stated their willingness to narrow the spread on rates (vs. the monetary policy rate) for household loans in the coming quarters. We highlight that whilst this data is mostly ordinal and does not reflect the size of credit growth, it however underscores the country’s brighter economic outlook. We expect the improved risk appetite for banks to support stronger economic growth.

DANGCEM propels ASI to first green close in Q2’18
Lifted by a sizeable uptick in market heavyweight, DANGCEM, and supported by modest green closes across most key sectors, the Nigerian equity market rose 31bps yesterday, abruptly halting a two-session run of losses. Despite the positive close, we note that trading sentiment remained mixed, albeit with some renewed interest on select large caps. We therefore anticipate another session of mixed trading today.

Stock Watch: Reflecting the lukewarm sentiment currently surrounding lower tier banking names, JAIZBANK has shed 32% over the last eleven sessions. Interestingly, the bank recently released FY’17 numbers with PAT coming in 73% higher y/y. The stock currently trades at a price of ₦0.68 and has returned 8% ytd.

Mixed trading session as CBN resumes OMO auctions
With ₦434 billion hitting the system via T-bill maturities, the CBN resumed Open Market Operations yesterday – after a lengthy pause – offering ₦700 billion and selling ₦749 billion across the 91DTM and 245DTM bills at slightly lower stop rates of 12.50% and 14.30% (effective yields: 12.90% and 15.82%) respectively. Pressured by the mop up, trading turned mixed across the T-bills market with yields trending in opposite directions, albeit advancing 3bps on average. The bond market was similarly mixed, with demand remaining healthy at the middle of the curve, whilst sell pressure was observed across the short and long ends of the space. On average, yields on benchmark bonds advanced 3bps yesterday. With system liquidity still positive (estimated at ₦401 billion), we anticipate another mop up from the CBN today. We therefore expect trading to remain mixed across the Fixed Income market.