ETI Stocks Soar As Foreign Portfolio Investors Return To Market


Tuesday, May 28, 2019    / 7:30PM / Teslim Shitta-Bey, Managing Editor /Header Image Credit: CMC Markets

Ecobank Transnational Incorporated (ETI) has seen its share price rise 32.2% in four days of aggressive trading activity by traders taking strategic positions in the stock. The banks share price rallied from N9.15 on Wednesday 22, May 2019 to N12.10 per share on Tuesday 28, May 2019. The sharp rise in the bank’s shares appears to reflect a return of foreign and local investors to the stock market, with foreign investors particularly eyeing underweight equities. However, although the return of investors explains the rise in the prices and volumes of a number of stocks, the rise in ETI’s share price and volume  is still a matter of conjecture.


Chart1 ETI Share Price and Volume Movement May 2019

Proshare Nigeria Pvt. Ltd.

Source: NSE/Proshare research

Market movement on the bank’s shares has whipped up broad speculation over the rationale for its quick pace. The bank in the last one week witnessed heavy traded volumes except for Tuesday 28, May, after which market traded volume leaped from 46,937 units on Thursday to 807,860 units on Friday, 23, May 2019, which represented a day-on-day volume leap of 1,621%. By Monday 27, May 2019 ETI traded shares rose to a further 876,031 units or an additional 8% growth in traded quantities. But before the Wednesday holiday break the number of ETI traded stocks again pulled forward by another 7.4m units exchanging hands, which represented a day-on-day rise in traded volume of 741.5%.

There is obvious strategic intent by investors to make a bid for the bank’s shares but what has motivated that move is yet to be understood. Several brokers contacted by Proshare are equally puzzled by the spike in the bank’s price and traded quantity.

This is particularly difficult to explain when the Public Investment Corporation (PIC) of South Africa, a shareholder in the bank, is currently being investigated as to determine the propriety of its investment in ETI, against allegations of poor corporate and financial governance and increasingly weakening financial performance. Since South Africa’s PIC invested local Pension Funds resources in ETI and the bank has since fallen short of Investment grade by a recent Fitch Rating Agency rating of B, the current heavy trading in the banks stocks have been speculated to reflect Pension Fund related investors in ETI realigning their portfolio. But this has not been confirmed.  

As at the close of trading on Tuesday 28 May, 2019 the key drivers of ETI’s stock price and volume momentum could not be ascertained but the increased trade in the bank’s stock has not gone unnoticed by traders anxious to look out for the continuance of the trading pattern on Thursday May 30, 2019 when the market reopens for business.

 ETI’s Q1 Result was modest, and except a number of select investors have asymmetric knowledge of an exceptionally improved performance in H1 2019, the current rally in the banks stock involves a signaling of recent price and volume increases.

The bank is still in a rebuilding mode as it tries to strengthen its statement of financial position. For example, its cost of risk (CoR) slipped between 2017 and 2018 falling from 3.3% to 2.4% but capital adequacy virtually caved as it slumped from 28.8% to 13.6% mainly as a result of provisions that had to be made for bad loans. Nevertheless, the bank’s non-performing loans (NPLs) declined from 61.8% in 2017 to 61.5% in 2018, negligible but still indicative of the direction of the banks NPLs.

Table 1 Selected Bank Ratios 2017-2018

Ecobank (ETI)




Cost of Risk



Capital Adequacy Ratio



Liquidity Ratio






NPL Ratio



Source: ETI Audited Annual Accounts FY 2018


Last year most of ETI’s positive pretax earnings growth came from write backs, IFRS9 day one adjustments and IAS 21 reviews (the bank took to the NAFEX basis for calculation of foreign exchange translation only for December 2018 rather than the full year, this enabled it achieve a higher earnings outcome than would otherwise have been the case).

Investors are keenly watching the stock’s price against the new trading day to establish reasons for the rising momentum and determine appropriate market play.


Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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