₦airaland Forum

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rebekah2011:
Chevron Escravos bombed by the avengers. It is going to be a long route to freedom for Nigeria.

Haba! Ol boy these guys mean business o. This is why I restructured my portfolio to more of long term holds than short term.

November looks set to be a predominantly bearish month with maybe a bit of respite here and there. NSEASI also looks set to break the 27000 support, and who knows how low it will tank? Maybe much further below. I dey sidelines dey look sha but for the money I already have trapped, unfortunately.



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123ABCXYZ:
One of the reasons why our market is hugely driven by sentiments is lack of disclosures and it is just painful. Usually, when an amount is very huge in relation to other items in a disclosure note and it is possible that various classes of transactions have formed that item, a note should have been added breaking down that item or providing further information.

I can't explain what UBA has reported cos there are no disclosures; but to answer your question. reclassification of foreign exchange gains or losses to P or L would only occur in the case of the disposal of a foreign operation. In the case of a foreign subsidiary, it is simply derecognized since it would have been included in the gain or losses on disposal of the subsidiary (in essence it enters the P or L through the backyard ).

There are still some complex rules involved when we dig down to some complex financial instruments but in summary
1. Foreign exchange gain or losses on monetary items - P or L
2. Foreign exchange gain or losses on non-monetary items - P or L OR OCI depending on where the gain or loss on the non-monetary item would usually go to
3. Exchange gain or losses on translation of foreign operations/ subsidiary - OCI

Re-classifications
1. Disposal of foreign operations - reclassify to P or L
2. Disposal of foreign subsidiaries - derecognize

Thanks bro! There goes all my lofty dreams for UBA. I hereby downgrade UBA from a buy to outperform. LoL

123ABCXYZ:
Hi... Although IFRS permits "variety" and a lot of judgment in reporting some Financial statement (FS) items, there are no loopholes in the requirements of the standards u have quoted.

IAS 21 requires all foreign exchange gains and losses on monetary items to be presented in the statement of P or L (this is non negotiable). The only items (apart from a few complicated shit) that are to be presented in OCI are:

1. Foreign currency gains or losses on translation of component reports
2 Non monetary items (if the IFRS permits the item to be presented in OCI)

Thanks and God bless for your input! I actually studied a breakdown of IAS 21 a bit before putting up my post but as you can tell Finance is not my forte.

I did already state that it isn't a loop hole in my response to @Kentoto, that it's within their right to do so. Though I wasn't so clear to what extent and I didn't know that it's non-negotiable.

The notes to this financial item on their report (note 10) just said 'FX revaluation gains'. Which just seemed unclear. But thanks again for the clarification.

Please can you help expatiate on that of UBA? There were no notes attached to theirs so I'm assuming it's the input from investments in Foreign Operations/Subsidiaries rather than than other monetary items at play (just like you said above). My question is: what are the chances of it's reclassification within this same financial year?

kentoto:
Bros,
Thanks for the clarification...

I think one bank is taking advantage of the reporting loop hole.. the other just been strategic..

UBA is probably setting it's self up for potentially better result for (EPs) at year end.

GT bank under pressure to stay thru with their brand.

The other banks, thinking of what to do.

Most times Q3 gives an indication of how good the Q4 will eventually be, portfolio mangers will be deciding where to invest now for dividend and capital appreciation.

Good luck people.

K

Thanks Sir,

Yeah, I guess it's just to watch and see how things go. I do have faith in both of them sha...especially as a lot can still happen in 4th qtr. Also I may not refer to it as a loop hole, IASB rules actually favor their (GTB's) presentation especially if those FX gains are already realized -I think. It's just that it helped masked a problem (i.e. much higher impairment charges) and yet it may not offer a consistent means of income.

Cheers.

.

This is not to over flog the issue but just to educate some of us here, especially the investors with a mid to long term view. (Personally at the end of this year, my portfolio is getting divided into two parts strictly i.e. JIJO and long term. This is by choice and not by bull trap or force )

Well we discussed UBA and GTB's result earlier so here are a few things to note about the Statements of Profit and Loss and Other Comprehensive Income based on IFRS

1. Entities currently have a choice and can present profit or loss and other comprehensive income in either:
• A single statement of comprehensive income; or
• Two statements: a statement displaying components of profit or loss (an income statement), and a second statement beginning with profit or loss and displaying the components of OCI (a statement of other comprehensive income).

2. IAS1 proposed:
• To present a statement showing as two separate sections:
i. profit or loss; and
ii. all items of ‘other comprehensive income’ (OCI); and
• To present separately:
i. those items of OCI that might be reclassified subsequently; and
ii. those items of OCI that will not be reclassified subsequently.

3. Profit or loss is a key performance measurement tool and Earnings Per Share (EPS) calculations are based on this alone and not on Other Comprehensive Income

4. The commonly suggested attributes for differentiation between profit or loss and OCI (realised/unrealised, frequency of occurrence, operating/non-operating, measurement certainty/uncertainty, realisation in the short/long-term or outside management control) are difficult to distil into a set of principles. However there are general guidelines set out by the IASB.

5. So with respect to UBA’s result, those items presented in OCI may - as already stated on the report - be reclassified into profit and loss on the FY2016 reports which would then result in a much higher EPS than usual. This remains to be seen anyway.

6. I think GTB was counting on this freedom of presentation of it's reports as explained in point 1 above and the tendency for people to focus primarily on the bottom line, to present all it's income for the period under profit and loss knowing the effect the high EPS will have. It is still ok as it's within their right.

This of course is not a buy or sell recommendation, just something to bear in mind for those interested when perusing reports of BaOFI

http://www.herald.ng/exclusive-cbn-helped-big-banks-make-record-profits-expense-ordinary-nigerians/



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pluto09:
Which ever way you look at it,at the current price,uba gives a better value for money.However, you have to look at thier history and antecedent,then one would understand while investors are cautious about uba.If uba shows more consistency in its operation,then,i will say it is only a matter of time,it will be rightly priced.

Ok, but what is it about their history? not consistent in dividend payment or in revenue growth? kindly enlighten, cos I've not really followed these stocks for that long...

It's pertinent to note that UBA's total earnings has perhaps for the first time in a long time exceeded that of GTB. While NSE sentiments may favour GTB for now, I do think that UBA is a much better buy considering present SP and value (i.e. if they get to add the FX gains to their dividend pay for FYE 2015). If they add the FX gains, their EPS would be very close to that of GTB (it ought to be higher but for the fact that they have a 23% higher OS than GTB).

We are watching, unfortunately my money is tied down in UCAP. So I no fit enter UBA.

This no be buy or sell recommend o

feelamong:
why is GT adding its FOREX revaluation gain to its income while UBA does not add its own?

UBA obviously has a materially better report, but I think they are doing that for one of two reasons:-
Either to show how well they've done through regular banking activities rather than just the (bad)luck of devalued naira/FX gains, of which they may combine both at the FYE and declare the full sum as Profit

OR

They don't plan on declaring FX gains as part of their profit for the year at FYE. (I.e. they don't intend to pay dividend of it, may be transfer it to some reserve or something - I don't know how that works )

But then again in compliance with IFRS standard, at FYE the audited report for banks probably has to differentiate between profit and other comprehensive income.

I'm just postulating...

Considering that UBA is the most performing bank stock right now, and that it must touch and exceed N5 within the next 4 - 5 months, for those mid to long termers, I'd say this is a good buy now.




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Na wa o. I just dey laugh...




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DeRuggedProf:
Pride/avoidable TSUNAMI will not allow them attempt that....

I hope so o. I guess their loan loss for Q3 will tell us everything.

On a scale of 1 to 10 how possible is it for FBNH to seek Tier 1 capital?



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fxuser:
highly probable
- the timing of the back log clearance
- the technical devaluation of allowing Travelex to sell to BDC at 375/$ (prev 358/$)
- reserves about to drop below $24 bln
- dem gat no choice, i think after banks Q3

Yeah, I guess that would be a determinant if at all they're going to do it

Sometime between now and end of the year, CBN is going to have to release it's grip on the Naira, allow it depreciate a little in order to allow some of these banks breath i.e. considering the rising NPLs.

We know that's why they devalued close to the end of June. Policies to favour the elite

bigass:
I am tired of all these insurance companies. Which insurance company offers the best Comprehensive insurance in Nigeria.

I've heard good things about Mansard, never had reason to make a claim personally though

ExLaidback:
On Thursday/Friday when UCAP may trade at it's lowest price for the next 2 months (at a likely price of N2.3x), you may want to buy. This is taking into consideration, the improving energy price situation worldwide and assuming Niger Delta Avengers will calm down at least for now.

Also most stocks that would produce good Q3 would not trade as low as they are trading now till late December or early next year i.e. you may be seeing their lowest prices for a full quarter.

This is a buy recommendation for UCAP. Yes. Please buy it let it swell. Thank you.
Short to mid-term traders kindly take note.

#ForecastofLife

Who wrote this with my name! My account was hacked. They hacked Kemi Adeosun now it's mine. SMH

UCAP is obviously finding support much higher at 2.5x just like I said last week.

Willie2015:
Most of us are aware of the component of these bank,s result but short term trading is the order of the day. I still make a N4 gain on the same GTB after releasing their H2 result and interim dividend while I made a loss on Zenith with a far better cleaner result with an almost non-existent fx-related gains in its PBT. You will wonder while folks still buy Skye Bank even with all their bad news and still make money, same goes for FBN and their loan portfolio.

Thats the wonder of NSE.

Sure a number of people understand these things. But I only started taking stocks seriously this year and so only recently started seeing the intricacies of the NSE. So there are still lots of peeps who don't quite grasp it

robobo:
the fact that some things are in d opening and glaring does not mean it wld be seen by everybody

good job

Thanks

fxuser:
Yhuup !
And If inter-bank drops also before year end, it follows similar fashion.

Exactly.

People on this thread don't really go through results. They just check the PAT and that's it. I'm not of a Finance and Accounts background but some of the basics are there to read for whoever is interested.

Like has been posted before, which is not news, FX will be this biggest player on most bank results this year. FX gains/losses and loan losses

GTB (the almighty bank) in it's Q2 had to add FX translation/transaction gains to it's PAT (instead of under OCI as ZIB and UBA did or else it would have declared a loss for the 3 months ended June) due to very high Loan impairment charges. That's one of the most stable banks. FCMB did the same thing. So these are banks wit good NET FX Assets.

Now imagine banks with Net FX liabilities (rather than Assets), also having high loan loss to deal with this year. My take is this: for any bank whose Q3 you are expecting, just check the Q2. If there was a considerable increase in it's loan loss therein don't expect anything too fantastic in Q3. If even worse, it has a net FX liabilities rather than Assets, you might even want to sell because there'd be nothing to cushion the rise in loan losses (except cutting down drastically on operating expenses, I guess).

Or what do you think?

On Thursday/Friday when UCAP may trade at it's lowest price for the next 2 months (at a likely price of N2.3x), you may want to buy. This is taking into consideration, the improving energy price situation worldwide and assuming Niger Delta Avengers will calm down at least for now.

Also most stocks that would produce good Q3 would not trade as low as they are trading now till late December or early next year i.e. you may be seeing their lowest prices for a full quarter.

This is a buy recommendation for UCAP. Yes. Please buy it let it swell. Thank you.
Short to mid-term traders kindly take note.

#ForecastofLife

Oga @FXUSER perhaps you're envisaging high net gain through FX transactions? But if that's the case why you go put UBA at less than N40B, they have good net FX Asset like the rest.






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locodemy:
just the 13-15% profit as usual.......entered yesterday @3.07..........the anticipated result will push it to #3.50.......na so we dey go jejeje......

Nice, na jeje dey win this race pass sha. With the shocking reversal of UCAP today, you may see it to enter at 2.30/2.35 (nut nothing less I promise) next week (I said 2.42 before so i don change mouth ). Enjoy.

locodemy:
you no like am like that?me i want it down so when i jump out of FBN,i go use the proceed buy UCAP just for 15% profit..........abeg those that keep their belly for ucap make una no vex ooo.

Any better news for FBNH? Let us know o biko.

fxuser:
Ucap
- big volumes, strong open
- but SP dropped from 2.70 to 2.55 by close
- dat initial bullish gra gra was neutralised by some serz profit taking
- umm .

#markets

Ol boy, frankly I'm quite surprised it came way down to 2.51 today o, not what i envisaged at all. NSE na bros. Be that as it may, I'm expecting a continuous battle between those trying to take position for dividend and profit takers, with the former keeping it above a certain price and the later keeping below a certain price too.

bigjay01:
present sir!

My average price is N1.05.

You're a chairman na, you no get problem

I mentioned on this forum earlier that UCAP would not close at less than N2.2 again before it trades at N3.00 (it only closed twice below N2.2 though it traded below on about three occasions due to way too much bears at that time and some people were waiting to buy it at N2.00 or even N1.80 ), some 'gurus' laughed at moi. Who's laughing now? Let me just add that if you're the type that holds stocks for 6 months or more you better buy UCAP now, cos the least price it will ever trade between now and March/April next year is N2.42 (actually more like N2.5 if at all it reaches there). Mark it.

I missed the bus this time around because I was riding FCMB and UCAP was trading sideways for too long, but I've jumped in nonetheless, even though i know it might still trade lower than today's close price soon.

fxuser:
yup . 0.78k
my proj FYE EPS 0.96 , wt a 60% +/- pay out ratio
till den , who knows really !

#imo

Your projection is very reasonable. The average payout ratio over the last 3 years is 67.5% with a minimum of 56% if I'm to go by what some one posted earlier (it's why I like people posting accurate figures). So 60% is very reasonable, as I also noticed from their cash flow report that they've done a lot investments this year hence a reduction in their cash and cash equivalents.

Some say though that it's still early to jump in and take position. But what do you think?

angelo82:
Again the EPS for now is 88k.They will pay from that as it stands for their earnings and it may increase depending on the 4th quarter.

You mean 78k.

agisky1975:
Sell a stock because the company's fundamentals are deteriorating, not because the sky is falling

-Peter Lynch

Good advice. For long termers. I'm not speaking as one.

I think I should have added that I was speaking as a very short term trader, specifically for those who are buying with hopes of a wonderful Q3 result (JIJO guys). If you're looking at holding any of the stocks I mentioned for a long while, you're not likely to get significantly better prices than what obtains presently.

Then again if you read the link that Intendy shared you'd find that the mentioned banks had weakened fundamentals with possibility of further deterioration.