GTBank, Zenith & First Bank: How the Valuations Stack Up?
Category: Money Market
May 27, 2012/ Proshare Research
The categorization of Nigerian banks into regional, national and international - based on their minimum capital base is generally seen as one of the CBN’s core strategies for repositioning the banking industry as well as strengthening bank operators for economic growth and development.
Recent results from these banks have been on the northward direction portraying them as institutions in good standing on all indicators. Beyond the pressures on liabilities in some of the banks, if not most, especially as they prepare to submit H1 2012 results widely assumed to form the basis of the banking stress test; we decided to take a cursory look at the Q1 2012 financials of some top three banks in the country.
Q1 2012 Review - Financials
The Gross Earningsfigures of the banks as presented shows that First Bank Plc recorded N92.2bn, Zenith Bank Plc posted N72.3bn while GTBankPlc declared N52.6bn gross earnings figure.
The PBT and PAT figures presented equally moved in that order. In terms of efficiency, it would appear that GTBank Plc is, in relative terms, the most efficient with the resources available to it.
Increasingly, Zenith Bank Plc appears to be shedding off excess weight relative to its efficiency needs and the H1 012 financials for theses banks should prove insightful.
Q1 2012 Review – Equity Price Trend
The share prices of Zenith Bank and First Bank Plc has both recorded -68.38% and -72.52% price decline respectively from their last public offer price while GTBank Plc recorded a price appreciation of +33.21% using the same barometer i.e. compared to Yr 2012 opening prices.
However in the current year, all three banks - GTBank, Zenith and First Bank - recorded positive YTD performances of +11.47%, +21.14% and +23.48% respectively.
Q1 2012 Review - Deposits
A review of the customer deposit base of the three banks-GTBank, Zenith and First Bank Plc over a period of five (5) different quarters Q1 2011 to Q1 2012 shows that the deposit base of both First Bank and Zenith Bank Plc kept growing steadily as it moved from N1.58trillion and N1.43trillion in Q1 2011 to N2.29trillion and N1.67trillion respectively expect for a slight drop in First Bank Plc’s deposit base in Q4 2011 to N1.94bn while GTBank Plc’s deposit base fluctuated within a band.
The growth in the deposit base of these banks which did not participate in the M&A’s that took place reflects the strength of their brands to attract customers shifting from other banks.
Q1 2012 Review – Closing Remarks
It would appear that the Nigerian banking industry is on a path of stability and subject to any challenges from AMCON and the impending stress tests, will continue to be profitable. How well it establishes proper linkages to the economy by acting as a catalyst for growth remains to be seen. The three banks profiled however offers hope that our financial system stability will endure.
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