One Week After CBN Directive On 60% Min. LDR – ETI, GTBank and 7 Others Record Drop In Share Price

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Wednesday, July 10, 2019   /01:15PM / By Proshare Research 

 

Barely one (1) week after the Central Bank of Nigeria announced the directive that all Deposits Money Banks (DMBs) are hereby required to maintain a minimum Loan to Deposit Ratio (LDR) of 60% effective September 30, 2019, the share price performance of most listed banking stocks has been on the downwards trend. 

A review of the share price of the banks revealed that three (3) banks recorded price appreciation while nine (9) banks recorded depreciation in share price. However, one (1) Bank share price closed flat within the period under review. 

UNITYBNK recorded the highest gain within the one (1) week period with +4.62% gain recorded. ACCESS followed closely with +1.54% gain while STANBIC  recorded +0.12% gain to complete the list of the three gainers. 

On the other hand, ETI recorded the highest loss within the one (1) week period with -7.77% loss recorded. GUARANTY and WEMABANK followed closely with -6.67%  and -6.15% loss recorded respectively while STERLNBANK closed flat.

 

Table 1: Banks’ Share Price Performance

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A look at the Loan to Deposit Ratio (LDR) of banks as at Q1 2019 reflected that five (5) banks currently recorded LDR that is above the 60% minimum regulatory requirements while eight (8) banks recorded LDR that is below the minimum requirements.

FIDELITYBK recorded 95% LDR to emerge as the bank with the highest LDR. This is, however, considered unhealthy for the bank. UNITYBNK recorded the least with 24% LDR achieved as at Q1 2019.


Graph 1: Banks’ Loan to Deposit Ratio As At Q1 2019

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Source: Banks’ Financials,  Proshare Research


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