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Is FBNH a good buy?

Proshare

Thursday, July 13, 2017 11:00AM/Proshare Research

A cursory review of FBN Holding Plc by our analysts showed that the stock recorded strong top line in the recent period and is efficiently managing its operating costs as well. However, high provisioning and deteriorating asset quality has badly affected the valuation of the bank.


Though, each bank in Nigeria had its own share of the economy headwinds, FBNH appears to have suffered the most due to weak investor sentiments towards the bank.


FBNH’s share price has drastically fallen in the last three years (eroded around 57% of market value). In contrast, the NSE ASI and Banking Index have fallen by 21% and 12%, respectively. This presents a good opportunity for investors seeking a long term position for capital gains, as the Year to Date (YTD) performance of the share price shows a positive of 86.57% as at July 12, 2017.


FBNH Share Price Performance vs. NSE ASI & Banking Index


Source: NSE, Proshare Research                     Figures for the period 9-Jun-2014 to 8-Jun-2017 

Sequel to the management changes made in recent times across the group, and the overhaul of its risk management framework, we expect these key strategic decisions as well as FBNH’s keen interest in leveraging on technology to have positive impact on the stock; while we encourage the management team to pursue investor oriented initiatives in order to maintain a healthy valuation that will be attractive enough for future capital raising prospects.   

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