Investors in Bank PHB Plc and Sterling Bank Plc are wearing broad smiles as their investments have witnessed significant recovery at the stock market in the first two months of 2010.
While some stocks are still shedding value and others struggling to recover, Bank PHB and Sterling Bank have posted the highest recovery among the banks by the end of February 2010. Following the global stock market meltdown, bank stocks generally suffered heavy depreciation in 2008 and 2009 and the sack of the chief executives of eight banks, compounded the already low demand for bank stocks last year.
However, as the reform programme of the Central Bank of Nigeria (CBN) takes root, some discerning investors began to buy into the banks ahead of the expected turnaround in the fortunes of these banks by the end of this year. This led to significant recovery in all the bank stocks except one that recorded a decline. An analysis of the bank stocks showed that Bank PHB and Sterling Bank led the recovery as at the close of February. Bank PHB rose by 49 per cent, from N1.32 at the beginning of the year to N1.97 as at close February 2010.
Sterling Bank occupied the second position with a growth of 41 per cent, appreciating from N1.23 to close at N1.73 per share. Sterling Bank is one of the banks that passed the CBN special audit and has reported one of the lowest losses for the period ended September 30, 2009 after making the full provision for toxic assets as request by the CBN. Market operators said that the board and management of the Sterling Bank have been able to drive the bank in a way that is now attracting investors given the upside potential in the years to come.
“Sterling Bank has been a surprise to many investors who never gave the bank a chance to stand the post-consolidation competition. But with a reliable board and well focused management, the bank has been able to weather the storm and going forward, there are prospects. Hence, investors are taking advantage of the current price and buy into the bank now,” a stockbroker said. Operators said that despite the change in the management of Bank PHB, investors' loyalty to the equity remained unchanged. According to them, robust plans of the current management to improve the fortunes of the bank are also encouraging more investors.
Bank PHB recently reduced its staff strength by 13 per cent as part of measures to achieve stability in its operations, achieve efficiency and increase productivity for the benefit of all stakeholders.The Chief Executive Officer of the bank, Mr. Cyril Chukwuma, explained that a holistic strategy has to be adopted to ensure extensive stakeholder engagement that would deliver a fair and equitable outcome for all parties. He said that the exercise would save N4.5billion.