By Taofik Salako, Deputy Group Business Editor
A considerable selloff in the banking sector moderated the performance of the Nigerian equities market; with average decline in the banking sector some 5,280 per cent more than average overall market decline and a double of the other nearer worse-performing sector.
Nigerian equities market closed at the weekend with average decline of 0.05 per cent, equivalent to net capital depreciation of N7 billion. Average year-to-date return thus inched up to -4.66 per cent.
Trading data at the Nigerian Stock Exchange (NSE) indicated that the large selloffs in major first tier banking stocks were the major cause of the decline in the overall market position, in spite of modest gain in the large-cap industrial goods sector.
The NSE Banking Index- the value-based weighted index that tracks share prices in the banking sector, closed weekend with a five-day negative return of -2.69 per cent, more than double the second worse performance of -1.25 per cent posted by the NSE Oil and Gas Index. The NSE 30 Index- which tracks the 30 largest companies at the NSE closed with average return of -0.19 per cent. The NSE Insurance Index dropped by 0.66 per cent while the NSE Consumer Goods Index depreciated by 0.27 per cent. The NSE Industrial Goods Index- where Nigeria’s largest cement companies are listed, played the sole contrarian with average gain of 0.35 per cent for the week.
There were considerable selloffs in many leading banks including Guaranty Trust Bank, Zenith Bank, United Bank for Africa and FBN Holdings.
Trading in the shares of Custodian Investment, Zenith Bank and United Bank for Africa accounted for 404.171 million shares worth N3.847 billion in 3,910 deals, representing 32.97 per cent and 35.48 per cent of total equity turnover volume and value respectively.
The Nation had reported last week that Nigerian banks’ margins were shrinking. Analysis of Nigeria’s seven largest banks, which account for more than 75 per cent of the banking industry, indicated that while top-line were steady and growing, the underlying profitability of the sector declined by almost two basis points in first half 2020.
The seven first tier banks included Guaranty Trust Bank (GTB), Zenith Bank Plc, Stanbic IBTC Holdings, Access Bank, United Bank for Africa (UBA), FBN Holdings and Union Bank of Nigeria (UBN).
The underlying profit-making capacity of the sector declined during the period with average pre-tax profit margin for the top seven banking group dropping from 28.46 per cent in first half 2019 to 26.94 per cent in first half 2020. With the exception of Stanbic IBTC Holdings and FBN Holdings, the two bank-led holding companies within the group, all the other banks suffered decline in underlying profitability.
Total turnover during the week stood at 1.23 billion shares worth N10.84 billion in 19,529, compared with a total of 2.21 billion shares valued at N10.96 billion traded in 18,013 deals two weeks ago.
The banking-led financial services industry was the most active on the activity chart with 980.48 million shares valued at N6.99 billion in 11,634 deals; representing 79.99 per cent and 64.44 per cent of the total equity turnover volume and value respectively. The conglomerates industry occupied a distant second with 59.76 million shares worth N72.46 million in 550 deals while the consumer goods industry placed third with a turnover of 58.87 million shares worth N1.35 billion in 2,862 deals.
Also, a total of 54,457 units of Exchange Traded Products (ETPs) valued at N283.940 million were traded in 18 deals compared with a total of 126,119 units valued at N655.92 million traded in 36 deals penultimate week.
In the secondary debt market, a total of 7,125 units valued at N7.76 million were traded in 15 deals as against a total of 1,016 units valued at N1.1 million traded in eight deals two weeks ago.
Aggregate market value of all quoted equities at the NSE dropped from its week’s opening value of N13.358 trillion to cose weekend at N13.351 trillion. The All Share Index also slipped from the week’s opening index of 25,605.64 points to close weekend at 25,591.95 points.
There were 23 advancers and 38 decliners during the week compared with 41 advancers and 19 decliners recorded in the previous week. Eterna led the advancers, in percentage terms, with a gain of 28.85 per cent to close at N2.68 per share. C & I Leasing followed with a gain of 11.11 per cent to close at N4. NEM Insurance rose by 8.70 per cent to close at N2.25. NPF Microfinance Bank rallied 8.66 per cent to close at N1.38 while Academy Press chalked up 7.41 per cent to close at 29 kobo per share.
On the negative side, Royal Exchange led with a drop of 15.15 per cent to close at 28 kobo. Consolidated Hallmark Insurance declined by 14.71 per cent to close at 29 kobo. Livestock Feeds dropped by 10.61 per cent to close at 59 kobo. Ardova depreciated by 9.92 per cent to close at N11.35 while Arbico dropped by 9.65 per cent to close at N1.03 per share.
The performance at the Nigerian stock market mirrored the performance of the African markets during the week. Egypt’s EGX 30 Index dropped by 1.0 per cent. Mauritius’ SEMDEX Index depreciated by 0.9 per cent while Ghana Stock Exchange Composite Index dropped by 0.7 per cent. However, South Africa’s FTSE/JSE All Share Index rose by 4.1 per cent while Kenya’s NSE 20 Index and Morocco’s Casablanca MASI Index appreciated by 1.1 per cent and 0.4 per cent.