₦airaland Forum

Moody's: Top five Nigerian banks face common credit challenges ahead

London, 10 October 2016 -- While Nigeria's five biggest banks share common credit challenges related to the slowdown in Nigeria's oil and gas dependent economy, their ability to withstand weak economic growth and volatile monetary conditions varies, Moody's Investors Service said in a report published today.

The banks -- Zenith Bank Plc (Zenith) (B1 stable, b1), Guaranty Trust Bank Plc (GTBank) (B1 stable, b1), Access Bank Plc (Access) (B1 stable, b2), United Bank for Africa Plc (UBA) (B1 stable, b2) and First Bank of Nigeria Limited (FBN) (B2 negative, b3) -- have all been affected by the weakening domestic operating environment following the prolonged period of lower oil and gas prices.

The more challenging environment, coupled with Moody's view of the high likelihood of support from the Nigerian government (B1, stable), largely explains the narrow range of issuer ratings of the five banks.

"However, despite shared credit challenges, there are differences among the banks in terms of their respective abilities to withstand weak economic growth and volatile monetary conditions, which are reflected in their differing baseline credit assessments (BCAs) that range from b1 to b3," said Akin Majekodunmi, a Moody's Vice President -- Senior Analyst and co-author of the report. "Overall, Moody's views Zenith and GTBank as best placed to cope, followed by Access and UBA, and then FBN."

The publication of the peer comparison report follows Moody's announcement on 15 September that the ratings agency has assigned first-time ratings to Zenith, GTBank, UBA and FBN, which account for approximately 48% of Nigeria's banking assets.

Looking across the whole of the Nigerian banking sector, Moody's expects non-performing loans (NPLs) to increase to around 12% over the next 12 months, compared to the 5% as of December 2015 recorded in central bank data. The forecast rise in NPLs stems from lower oil prices, a weakening naira, slower GDP growth and rising inflation.

Likewise, the agency expects foreign currency deposits, which have fallen around 30% since the start of 2015, to stabilise over the next 12 to 18 months as the impact of lower oil prices and the central bank's adoption of a Treasury Single Account fades.

Moody's expects loss-absorbing capital buffers to hold steady on account of muted loan growth of around 5-10% over the next 12 to 18 months. However, as a result of this weak loan growth, net interest income and fee and commission income will remain depressed.

On the upside, Nigeria's economic potential remains strong and continues to attract investment. Depositor confidence and local currency buffers at the banks also remain robust.

The report, "Zenith, GTBank, Access, UBA and FBN -- Peer Comparison of First Tier Nigerian Banks -- Challenging Operating Conditions Ahead", is available on www.moodys.com. Moody's subscribers can access this report using the link at the end of this press release. The research is an update to the markets and does not constitute a rating action.

End Quote

Link:
https://www.moodys.com/research/Moodys-Top-five-Nigerian-banks-face-common-credit-challenges-ahead--PR_355842?WT.mc_id=AM~UmV1dGVyc05ld3NfU0JfUmF0aW5nIE5ld3NfQWxs~20161010_PR_355842


- #NothingNewHere

ExLaidback:
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.

$$$

- yes ur right on fx gain. if we rank fx gains, UBA will be 4th
- also with fx gains comes NPL growth too.
- its just a conservative projection ! cud be very wrong

Proj Q3 pbt

- GTB >100bn
- Zenith >100bn
- Access > 50bn
- UBA <40bn

#imo #safeHaven

Zenith
- strong pull back this past week

ExLaidback:
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?

yup its early but if ur planning to hold say 10m & above for example then its not early.

realman2015:
..

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

fxuser:
UCAP

- will open at 2.58 (4m bid on queue
- clearly offers will dry up instant
- next test is 2.84 (prev high)

on to d next ! this train has left d station

- offers at N2.70 ! !
- make dem calm down

UCAP

- will open at 2.58 (4m bid on queue
- clearly offers will dry up instant
- next test is 2.84 (prev high)

on to d next ! this train has left d station

ExLaidback:
You mean 78k.

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

#imo

rebekah2011:
http://nse.com.ng/Financial_NewsDocs/15081_UNITED_CAPITAL_PLC_Q3_SEPT_2016_FINANCIAL_STATEMENTS_OCTOBER_2016.pdf

EPS 78k

on point !

that FCMB pull back ongoing

fxuser:
Zenith bank
- bearish

Ucap
- positive
- testing 2.40
- moving out of reach

Fcmb
- hold steady

Ucap
- pre Q3
- running out of offers
- sigh !

Zenith bank
- bearish

Ucap
- positive
- testing 2.40
- moving out of reach

Fcmb
- hold steady

cadno:
Crude Oyel now $51.86...as at 2:43pm..Still Tracking..

But wait o, Hope Fuel pump no go move up again from N145 with the FX scarcity and Oil becoming expensive ...

its inevitable , only a matter of time

Intendy:
stocks with new 52 weeks low

caverton #0.64k

Vitafoam #2.78k

stocks with new 52 weeks high

okomu #39.90k

Caverton marking register back to back !

FCMB
- SP touches 1.18
- growing bids

#holdsteady

fxuser:
Fidelity
- positive divergence
- buy d support

Update
- bids finally outweighs supply for the first time in days / weeks
- downside pull back easing off further

Diamond (stingy pple lol)
- SP breaks 1.20
- bids picking up , some +ve sentiments

umm

locodemy:
There will be pull back if Q3 result is bad but if ok........i dont see any pull back.....

- some will not mind cashing in some of that 15% - 20% profit
- surely a decent Q3 will bring add further support.
- i just ff d TA, its still positive for now

#holdSteady

FCMB

- found some new support at N1.10 - N1.11 (downside risk covered)
- expect pull back or profit taking btw 1.15 - 1.20
-

locodemy:
fcmb is capable of paying dividend next year.......is fidelity capable?

no idea . .

Fidelity
- positive divergence
- buy d support

UBA
- bargain hunters positioned below N4.00 junction waiting

Broker Feedback

Just opened another account with Morgan. Impressed with the online platform, far more robust than Investment One.

Willie2015:
Whats driving Access Bnk, there is gradual build up in volume though price is still stable. Pls assist with the chart covering Access

SP almost looks like a gravestone, not a perfect one (day low 5.45, close 5.46, high 5.57)

(Gravestone Doji is created when the open, low, and close are the same or about the same price . The most important part of the Graveston Doji is the long upper shadow. The long upper shadow is generally interpreted by technicians as meaning that the market is testing to find where supply and potential resistance is located.

The construction of the Gravestone Doji pattern occurs when bulls are able to press prices upward. However, an area of resistance is found at the high of the day and selling pressure is able to push prices back down to the opening price. Therefore, the bullish advance upward was entirely rejected by the bears. #investopedia)

- so brother , the sellers won d battle today.

UBA
- in some serz bearish pull !
- SP N4.01

#watch

FCMB
- took its time but finally breaks N1.10 levels
- some profit taking to be expected
- um

Last one for d road !

UCAP
- one of the most anticipated dividend play loading
- memories of the last 35kobo remains fresh, some are projecting 0.45 + for 2016FYE (time will tell)
- bearish pull back seems to be over for now
- SP is back above 50dma (positive)
- 50dma is still above 200dma (long term bullish) , evern 5dma is above 10dma (short term positive)
- some resistance at 2.38, many more to come
- long term folks shud buy d pull backs
- is it too early to position for next year ? YESS . this is nyjer , plenty unforeseen policy somersaults still de ahead . (but who knows? )

Div play scenario
- 6 months is not too far away !
- 0.45kobo dividend at last SP of N2.34 is ard 19% +/- yield in 180days wt a strong potential upside
- no risk , no gain loll

FCMB
- after Q2 , FCMB looked attractive on p/e & EPS levels but market remain irrational
- SP trading below 50dma & 30dma (bearish)
- H'ever 5dma now > 10dma , indicating a short term positive shift (bullish)
- MACD crossed signal line 7 trades ago (bullish crossover / some call a BUY signal)
- SP is testing 20dma again , found some resistance ard 1.07
- RSI no longer oversold
- personally i was nt patient enuf to wait for TA signal confirmation (i'm -3/4% down for now wh is okay)
- na siddon look
- expect pull back or profit taking ard 1.10

(very similar to fidelity at 0.89 levels wt lower bearishness pull #sidebar)

- if the bears come back, we wud be waiting at N1.00 again ! doubt it but u never know !

Disclosure:
- hav very little FBN, just sharing thots. Hav friends who are currently experiencing draw downs with FBN

FBNH
-SP just under 50DMA
-5dma > 10dma , short term positive momentum
-MACD still above signal line
- Bollinger band no longer sloping downwards , currently in a squeeze , wt SP above 20dma
- SP will re-test tN3.20
- lower downside risk but expect pull backs along d way

#JustObserving

Godisfaithful:
Our life is full of ups and downs moment but there's always an assurance of upside moment from Almighty God. In this new month of October 2016, our cups shall overflow, we shall experience an extraordinary peace of mind, we shall eat and be satisfied, we shall experience a divine healing, and the good Lord shall bless our struggles beyond measure. Our expectations and hope shall never be disappointed. The good Lord shall have mercy upon our dear country, Nigeria. Happy New Month!

amen

ihedioramma:
Do you have this stock sir? or is it good to buy it?

No & No