100 Days After CBN's Board Removal: The Analyst Buggy Train


Thursday, September 30, 2021 05:20 AM / by Proshare Research/ Header Image Credit: EcoGraphics

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Technical Analysis

The Objective:

  • To evaluate the returns on the FBNH stock compared to those of tier one banks and the NGX Index.
  • To ascertain the relative volatility or risk associated with the FBNH stock again with comparison; and
  • To employ the Auto-regressive Moving Average model to predict future (majorly short-term) market trends.


Technical Analysis generally does not take the stock's intrinsic value into account, unlike in fundamental analysis. Investors' psychology creates patterns that anticipate when stock will be in high demand and when demand would fall. Analysts and investors rely on technical analysis of equities on the NGX. The ARMA model is one major form of technical analysis that employs the patterns historical data follow to determine good stock price increase or fall predictors.


Comparative Stock Performance of Tier 1 Banks- Year to Date

In the thirty-two weeks since the beginning of 2021, FBNH's share price recorded a year-to-date loss of -1.36% from N7.35 on January 8, 2021, to close at N7.25 on August 13, 2021, trading session. With this drift, FBNH ranks 2nd behind Access Bank in terms of the year-to-date share price performance of Tier 1 banks. Notably, FBNH's share price dipped in April, resulting from investor pessimism arising from the CBN's decision to sack the Bank's board. Overall, the negative stock price performance indicates that investors are concerned about the bank's business. Comparing FBNH's price movement with other banks over the same period, Access Bank topped with a YTD market appreciation of +3.4%.


All other Tier 1 banks appeared to have recorded negative YTD growth in market share prices. Behind FBNH and in the third place, Zenith Bank Plc managed a -3.9% depreciation, while UBA came in fourth, having recorded a -12.79% fall in its share price. GT Bank, whose share price fell from N33 in January to N28 in August, ranked fifth place with a -13. 93% decline in its share price. The overall banking sector of the NGX recorded a -6% decline in its index, thus making Access Bank, FBNH, and Zenith Bank the only tier 0ne banks to outperform the Subsector index. However, the negative trend so far recorded in the price movement of the shares of FBNH shows that the Management needs to address underlying issues.


The ASI, FBNH, and Others

 The All-Share Index (ASI) and the share price of FBNH have moved in the same direction for most of the year. FBNH's Beta coefficient was estimated by Proshare Analysts at 0.40, indicating that FBNH shares are a good hedge against the market risk. Similarly, there was a positive correlation coefficient of 0.4 between the share price of FBNH and the ASI. Likewise, FBNH stock marginally outperformed the ASI in the year (see chart 23 below).


Chart 23: Indexed Chart of FBNH'S Share Price and NGX ASI

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Source: NGX, Proshare Markets



In the first half of 2021, UBA's share price fell by -12.79% YTD, which was worse than the ASI fall of -1.49%. UBA's share price fell below the NGX ASI until April, when it appeared to converge as the year progressed (see chart 24 below).



Chart 24: Indexed Chart of UBA Share Price and NGX ASI

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Source: NGX, Proshare Markets


GT Bank (now GTCO)

GTB's share price demonstrated a high positive correlation with the NGX ASI. Proshare computed a correlation coefficient of 0.74, although using weekly data covering the three years between February 2018-August 2021, GTB's equity Beta was estimated at 0.39. The implication was that GT Bank shares were protected from adverse systematic risk. Year-to-date, the shares recorded a -0.14% return, a return similar to the ASI (see chart 25 below).


Chart 25: Indexed Chart of GTB Share Price and NGX ASI

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Source: NGX, Proshare Markets


Access Bank

Access Bank's shares returned a year-to-date gain of +3.4%. The shares sold for N8.8 in January 2021, and as of 13 August, N9.1. The share price fell to its year-to-date lowest in April. Overall, the bank's shares outperformed the NGX ASI, which slipped by -1.49%. Analysts used three-year weekly data and found that Access bank's share price had an equity beta of 0.40, suggesting that the bank was less exposed to volatility than the market (see chart 26 below).


Chart 26: Indexed Chart of Access Bank Share Price and NGX ASI

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Source: NGX, Proshare Markets


Zenith Bank

Zenith Bank's share price recorded a year-to-date loss of -3.95%, having opened the year at N25.3 and stood at N24.3 as of August 13, 2021. This means that Zenith bank has not performed as well as the NGX ASI. The bank's shares fell to their year-to-date low of N21.45 in March but soon reversed to an upward trend in April after the bank announced a +5% rise in Profit After Tax for Q1 2020 (see chart 27 below). 



Chart 27: Indexed Chart of Zenith Bank Share Price and NGX ASI

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Source: NGX, Proshare Markets


FBNH: In Search of Value

Moving average of market valuation compared to book valuation

Technically, First Bank Nigeria Plc share traded above its 200 days moving average, suggesting that its shares would be slightly bullish in outlook. However, when we consider the 20-day moving average as of the end of July 2021, we find convergence at N7.4, implying that FBNH's price would for some time remain in what technical analysts call a neutral flag (see Chart 28 below).




Chart 28: Moving Average Of FBNH's Share Price Feb 2018 - July 2021

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Source: NGX, Proshare Markets


While the Moving average of the share price is N7.4, the company's book value per share as of FY2020 is N21.36; this further lends credence to the fact that investors are not very optimistic about the expected stream of earnings from holding FBNH's shares.

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Downloadable Versions of 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards Report (PDF)

1.      Executive Summary: 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards -  September 19, 2021

2.     Full Report: 100 Days After CBN's Board Removal: First Bank's Shaky House of Cards  -  September 19, 2021

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Related Articles/References

1.    Of First Bank and Bad Debtors; A System's Throbbing Headache - Apr 30, 2021 - Proshare Editorial

2.  CBN Removes Boards of First Bank of Nigeria, FBN Holdings; Appoints New Chairmen - Apr 29, 2021 - Proshare News

3.   Analyzing the H1 2017 Performance of FBNHoldings Plc - A Comprehensive Report/Review on the Company - Oct 23, 2017, Proshare Research

4.   FBNHoldings Plc Q1'2017 Performance Assessment Report Updated - Sep 25, 2017, Proshare Research

5.   Bank NPLs (23) - The Case for a New Approach - Jun 07, 2020 - Debtors Africa

6.  W. Chan Kim and Renee Mauborgne (2004) "Blue Ocean Strategy" 

7.  Board Governance: A Thin Line Between Oversight and Operations - Sep 28, 2020 - IoD Centre for Corporate Governance

8. Leadership, Change and Corporate Transformation - The Nigerian Experience  Nov 07, 2017, Olufemi AWOYEMI - Proshare

9.   CEO Remuneration 2021 Report: From COVID to Collaboration - Aug 01, 2021, Proshare Research

10. Memo to the Market - The NSE, Oscar Onyema Foundation and Corporate Governance - Aug 20, 2018, Olufemi Awoyemi, Proshare

11.   FBN Holdings Plc - IR Page on Proshare Markets - Proshare Research

12.  Annual Accounts - IR Page in Proshare - Proshare Research

13.  Bernard Longe wins suit against First Bank Plc, Supreme Court decides today - Mar 05, 2010, Proshare

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Related News from the Report

1.      FBN Holdings Valuation: Turning the Analyst's Lenses on FBNH's Value - Sep 29, 2021

2.     FBNH 100 Days After CBN's Board Removal: The FUGAZE - Sep 28, 2021   

3.     Of FBNH Numbers and Tables: A Look at the FBNH Ratios - Sep 27, 2021   

4.     Of FBNH Numbers and Tables: The Statement of Financial Position - Sep 26, 2021

5.     Of FBNH Numbers and Tables: The Trend of Cost and Profitability - Sep 25, 2021

6.     Of FBNH Numbers and Tables: Understanding Performance Patterns - Sep 24, 2021

7.     Adeduntan's Need for New Glasses: Confronting the Legacy Question -Sep 23, 2021

8.     First Bank Board Removal: When Boards Blur Vision - Sep 22, 2021

9.     First Bank and Institutional Learning - A Sense of History - Sep 21, 2021

10.  100 Days After CBN's Board Removal: First Bank's Shaky House of Cards - Sep 19, 2021

Proshare Nigeria Pvt. Ltd.

 Proshare Nigeria Pvt. Ltd.


 Proshare Nigeria Pvt. Ltd.

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