reports
- Olabisi Ayodeji
Access Bank Q2 review: Core revenues and asset quality ratios improve ...
Access recorded consolidated Q2 19 net attributable profit of NGN22bn incorporating Diamond. This represented an increase of 25% yoy (versus Access standalone in Q2 18; up by 15% yoy *like-for-like), and was moderately below our NGN25bn forecast. Unchanged interim DPS of NGN0.25 was declared as expected, implying a yield of c3.9%.
- Olabisi Ayodeji
Fidelity Bank Q2 review: Significant impairment reversal drives bottom...
Fidelity’s Q2 19 operating performance was weaker than expected, as pre-provision profits (PPP) fell 34% yoy to NGN6.6bn (versus our NGN10.2bn forecast). This was due to a 3% yoy decline in net interest income, as asset yields moderated yoy and operating expense increased by 22% yoy. These offset strong non-interest income growth as cost/income rose 13ppts yoy to 77% (versus our 67% forecast). There was a net impairment reversal of NGN6.5bn, which outweighed a loan de-recognition of NGN4.7bn a...
- Faith Mwangi
NIC Bank: Merger costs and Tanzania unit weaken earnings; reiterate Ho...
NIC Bank’s H1 19 EPS declined by 4% yoy to KES 2.70. For Q2 19, the EPS declined by 9% yoy to KES 1.38, which was 17% lower than our expectations. The variance was due to the inclusion of pre-merger related costs ahead of the CBA Group and NIC Bank merger in H2 19. Excluding this cost, EPS was up by 21% yoy for Q2 19, which was 5% above our expectations. NIC recorded a 40% yoy jump in non-interest revenue in Q2 19, likely related to trading income from government securities. Fees and commissio...
- Faith Mwangi
Cooperative Bank: Management targets held back by loan book; reiterate...
Co-op Bank recorded a 5% yoy increase in H1 19 EPS to KES1.27. On a quarterly basis, Q2 19 EPS rose by 5% to KES0.66, just 1% below our expectations. Key highlights include a 31% yoy jump in non-interest revenue, mainly on increased fees and commission income. Performance was negatively impacted by a 106% yoy jump in loan loss provision charge, with NPL ratio rising 10bps qoq. Unlike Tier 1 peers, Co-op recorded a low balance sheet growth with 3% yoy growth in loans and 9% yoy in deposits. The b...
- Olabisi Ayodeji
Stanbic IBTC Q2 review: Profits moderate as expected; reiterate Buy
Stanbic’s Q2 19 results were broadly in line with our forecasts. Pre-provision profits (PPP) fell 7% yoy to NGN22.0bn, weighed down by weaker asset yields (in line with the sector trend) and a reduction in fee margins for the wealth segment (due to revisions to pensions regulations).
- Olabisi Ayodeji
- Tolu Alamutu CFA
Zenith Bank: Equity and Debt – equity worth another look
Buy Zenith Bank shares, Hold ZENITH 2022 bonds: We think it may be worth taking another look at Zenith Bank stock. We recently downgraded our recommendation on the ZENITH 7.375% 2022 bond to Hold from Buy. As stated at the time of the downgrade, the change reflects the bond’s performance. Zenith Bank’s fundamentals remain best-in-class and we expect profitability and other metrics to continue to compare well to peers. We have maintained a Buy recommendation on Zenith Bank equity, our top pic...
- Rahul Shah CFA
- Rohit Kumar
FM & EM Banks: Falling interest rates – friend or foe?
Recent central bank rate cuts in Egypt and Sri Lanka follow similar moves in the US, India, Philippines, Mexico, Thailand and Peru. In this report we analyse the likely impact on bank margins in the 21 markets we cover and overlay this with our bottom-up views to find where the opportunities and risks lie. We remain positive on Nigeria and Ghana banks, and cautious on GCC names. For Egypt banks, falling margins could temper their positive volume growth story.
- Faith Mwangi
Kenya Commercial Bank: Mobile banking drives non-interest revenues
KCB Group’s EPS rose 5% yoy to KES4.15 in H1 19, (flat qoq at KES 2.27). This was 19% above our expectations driven mainly by better-than-expected non-operating income and low operating costs. Mobile banking drove the bank’s non-branch revenue to jump by 131%. Overall non-interest revenue rose 15% yoy with management upbeat about achieving a 20% yoy growth in FY 19. The loan book growth was impressive at 14% yoy, with KCB now moving to lending following lower interest rates on government sec...
- Faith Mwangi
Diamond Trust Bank: Lower loan loss provision charge boosts earnings
DTB’s EPS rose 11% yoy to KES13.89 in H1 19. On a quarterly basis, Q2 19 EPS was up 13% yoy to KES7.34. This was 4% above our expectation, mainly on lower than expected loan loss provision charge. Excluding the loan loss provision charge, performance was much weaker with pre-provision earnings down 11% yoy on weaker net interest margin as a consequence of lower interest rates and preferential pricing. Balance sheet performance was also disappointing, with net loans down 4% yoy. DTB has consist...
- Ayodeji Dawodu
- Nkemdilim Nwadialor
- Olabisi Ayodeji
- Rahul Shah CFA
- Rohit Kumar
Ghana mobile money: Exploring Africa’s fastest growing market
The prospects for mobile money in Ghana are exciting. A recent World Bank report highlighted Ghana as the fastest growing mobile money market in Africa, with an 85% compound annual increase in the value of Ghana’s mobile money transactions in 2015-18. In this report, we explore the structure of Ghana’s mobile money space and identify the companies that are adapting and thriving.
- Olabisi Ayodeji
Guaranty Trust Bank Q2 19: Earnings hold steady, as expected; reiterat...
GTB’s Q2 19 results were broadly in line with our forecasts. Pre-provision profits rose by 2% yoy, supported by improved cost efficiency (operating expenses fell by 7% yoy), as net interest income and non-core revenues declined. However, PAT fell by 2% yoy, as the effective tax rate rose by 3ppts yoy to 15%, and offset the impact of higher loan and other recoveries (the cost of risk was -0.8% versus -0.6% in Q2 18).
- Anh Nguyen
- Lam Nguyen
- Rahul Shah CFA
- Rohit Kumar
Vietnam Banks: VAS inflates EPS and BPS versus IFRS
Most Vietnam banks report results under local accounting standards (VAS), which may present net profit and shareholders’ equity at a materially higher level than under IFRS accounting standards. For VP Bank, which reports under both, the difference in both these metrics has averaged 10% over the past five years. Investors may wish to consider adjusting PE and PB multiples when comparing Vietnam banks to international peers.
- Olabisi Ayodeji
Nigeria Banks: Q2 19 earnings preview
Nigeria banks should begin releasing audited H1 19 results over the next couple of weeks. We highlight our expectations for Q2 19, following a better-than-expected Q1 19, and reiterate our long-term Buy ratings on most of our coverage. Our top picks remain GTB, Zenith and Stanbic.
- Ayodeji Dawodu
- Nkemdilim Nwadialor
- Olabisi Ayodeji
Stanchart Ghana: Q2 19 – asset quality issues weigh on PAT; reiterat...
SCB reported a 21% drop in PAT in Q2, largely due to a sharp rise in net impairment charge (up 4x yoy), even as pre-provision profit rose 39% yoy. Net interest income rose 30% yoy and non-interest income rose 35% yoy, while the cost/income ratio fell 4ppts to 36%. The net interest margin trend was mixed; net interest income/assets was flat yoy at 9.0%, but up 120bps qoq due to improved asset yields (up 140bps qoq).
- Rahul Shah CFA
- Rohit Kumar
GCC Banks: Q2 19 results round-up – UAE banks preferred
Time to rotate into UAE banks. Monetary policy will likely shift from a support to a drag for GCC banks, with the US Fed widely expected to cut rates this week. This could limit appetite for the most highly-rated markets such as Saudi and Kuwait banks (Figure 5). Potential easing of foreign ownership limits in the UAE could drive passive inflows that have been the principal price drivers in the region in recent years. UAE banks are also typically less aggressively priced than their neighbours (T...
- Rahul Shah CFA
- Rohit Kumar
Banks: Our favourite markets and top stocks for H2
Our global financials coverage comprises 82 bank stocks across 18 developing markets. The breadth of our coverage enables us to rank markets, identify common themes across the industry and discover the outliers – those markets and companies that should outperform. We are now more positive on banks in Egypt, Nigeria, Kenya and Mauritius. We are more negative towards banks in the GCC and Sri Lanka. Our four top picks in the large-caps are HBL, KCB, MBB and Zenith. Our four top picks in the small...
- Nkemdilim Nwadialor
- Rahul Shah CFA
- Rohit Kumar
- Ayodeji Dawodu
- Olabisi Ayodeji
Lafarge Africa: Planned divestment to support margins and balance shee...
We expect the announced sale of Lafarge Africa’s South African subsidiary, Lafarge South Africa Holdings (LSAH) to boost margins, while the use of the proceeds to repay all existing shareholder loans will result in a stronger balance sheet position, and support investments and growth. As the group successfully sheds off significant dead weight, management’s focus will be on efficiency and market share gains in Nigeria, in response to heightened competition.
- Ayodeji Dawodu
- Olabisi Ayodeji
Nigeria Banks: CBN plans sector recapitalisation…after IFRS 9 forbea...
The Governor of the Central Bank of Nigeria (CBN) announced that a recapitalisation of the banking sector is being planned, during a press briefing on 24 June 2019 to discuss the CBN’s five-year policy direction. The recapitalisation is intended to enhance financial sector stability and counter the impact that the NGN devaluation has had on Nigerian banks’ global positioning. During an exercise in 2010, the threshold for internationally licensed banks’ shareholders’ funds was set at NGN5...
- Christopher Dielmann CFA
- Faith Mwangi
Kenya: Treasury proposes rate cap repeal via Finance Bill
In the budget statement for FY 19/20 released today, Kenya's Treasury Cabinet Secretary Henry Rotich proposed the removal of Section 33 (B) of the Banking Act, which would essentially repeal the loan rate cap entirely. Rotich said that the rate cap had been introduced to reduce the cost of borrowing and increase access to credit, but had not lived up to expectations. Hence, the Treasury noted that the proposed repeal would address the need to enhance access to credit and minimise the adverse imp...
Unfortunately, this report is not available for the investor type or country you selected.
Report is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.