₦airaland Forum

Sunrisepebble:
Ive taken some small profit off the table just now sha

Unless you needed the money, you should have held on.

At current price, book value for Access bank is 92.87

Price to book ratio is 0.3

Forward p.e is 1.68.

Once again, I think you sold way too early.

Make investment decisions based on valuations not price.

KarlTom:
The movement of the banks is sweet to behold...

Journey never start

starpower:
That what makes financial stocks risky and with low p/e it the quality of assets and earnings. You cant derive high interest from low risk loans. It a wide guess

Ok. I don't agree Sha but ok.

starpower:
inflation means borrowers are passing cost to consumers, high interest rate causes deflation, credit needs a booming economic on small steroids I.e healthy I inflation. Currently banks are soon going to be honest with bad loans that got cbn asking them to shore up equity for shocks. Abi otedola action 🎬 😏 film not letting you know what up soon.

Are you suggesting that NPL's are being hidden?

Agbalowomeri:
Means bank bears is around the corner in the coming months

RSI is not forming new high the same way price is forming new high

Am I a contrarian?

I truly hope price of bank stocks come down

pluto09:
I think one should have taken position before now.
If I am to buy any of the banks now, my decision would mostly be influenced by TA more than FA.

I got in earlier but if I get money and valuations remain where they are, I'm buying more.

Remember that price and valuation are not the same thing. I am looking at valuation not price

pluto09:
Even if you use P/B, the tier banks are still cheap.
Zenith P/B is less than 0.5, Access is around 0.3..post dilution access will still not be up to 0.4.
Note: my contributions to the discussion on valuation of Nigeria banks doesn't mean I will buy bank shares at current market price.

You won't see these banks for less than what you are seeing now. Either you buy now, not higher or don't buy at all

HesInMe:
Careful. Banks aren't typically valued using price-to-earnings (P/E) ratios and almost always trade at a deep discount to market P/E. So a low P/E doesn't necessarily mean they are cheap.

Price-to-book (P/B) is a better metric. Banks are asset-heavy, and most of those assets are financial, so their P/Es are particularly sensitive to accounting adjustments like loan-loss ratios and revaluations. Think Oando's accounting on steroids.

If you want to bet on banks now, I'd look at the ones that are still growing their more predictable fee income.

And the price to book for Nigerian banks is still very low

HesInMe:
I agree. But you're actually making the case for not investing in banks. You and I can go and buy the very same high-interest FGN and corporate bonds the banks are accumulating. Why pay executive salaries and office space for the privilege?

Investing is not a team sport. For every buyer there is a seller. Only one is them will be right

ositadima1:
There seems to be a misunderstanding between you and Nosa. Both of you are raising questionable points, so let me start with yours. Why should banks experience a fall in interest margins? That gap is set by the CBN (I’m about 85% sure) and is independent of interest rates. If such a fall should happen, it would likely be due to high-interest rates reducing the demand for loans.

I don’t think there is a ceiling to banks' earnings; as long as the economy is growing, banks will grow along with it. A growing economy needs financing, which banks provide.

Now, to address Nosa’s point: the equity being raised through new shares is not likely to be used for generating returns. I believe it will be kept as reserves to absorb shocks. So, the argument about returns on equity may not hold in this case.

The dilution caused by the additional shares will likely be balanced by growth, some of which will come from their substantial dollar gains.

Disclaimer: As always, I’m no expert on the matter. This is based on bits and pieces of information and some imagination.

There is no way banks will raise more capital and not deploy it. Return on equity just shows the efficiency of the company in milking out profit from the capital they have.

Please don't forget that as rates fall bond prices go up. So bonds being bought today will be more valuable as rates come down in the future

HesInMe:
I didn't think it was a controversial position. Nearly all new equity issues are dilutive in the short term: You're expanding the number of shares chasing a given amount of profit. Except you think the profit will grow at a faster pace than the share count.

So the real question here is: How will the banks grow their earnings from here on? We all just assume the music will go on and on and on. No one is seriously tackling this question. Keep in mind that we're supposedly at peak interest rates, so their net interest margin (the difference between loan and deposit rates) should fall going forward. And the formal sector is nearly fully banked, so opening another branch in Opebi will not help much.

Access is the only bank that seems to appreciate this challenge, but they're currently on an acquisition binge.

You're right that we are at peak interest rates but guess what? (I suspect) Banks are buying the FGN bonds at record pace. And when rates start to fall these bonds will go up in value and we will potentially have another windfall.

Heads banks win, tails banks win

Redoil:
what about share dilution due to the right issue

Banks use money to make money. Having more money only means they will make even more money. Hence return on equity is important.

ojeysky:
No way Zenith and GTB will move without slight movement in Access/UBA it's just people's instinct. If not for access and their buy buy up and down UBA should not be senior to them

If not for the problem there won't be a problem.

ChukaLupin:
Guys, GTCO and ZENITHBANK and FIDELITYBK reached their all time highs this week.

Any ideas?

The journey is just starting. If you have money buy Zenith and/or GTCO

Sunrisepebble:
Pls explain your position with the bank recapitalization and the dilution effect. Maybe there’s something I’m missing in my own view also.
Personally I feel these banks are still very cheap on FA terms, even with dilution effect, the PEs are not high at all.

His reasoning is not fully thought out.

ojeysky:
Good, at least my access will get to move as well

It's not a horse race oh. Return on equity for access Bank is not impressive when compared to the likes of GTCO and Zenith

HesInMe:
It is beyond perplexing o. The market seems to be telling us that banks can just issue new equity, then -- abracadabra! -- turn around the cash and grow their earnings per share in a few short months.

So why don't they keep issuing new shares in perpetuity?

Because it's more efficient for them to borrow. Look at the meaning of return on equity

megawealth01:
Then Oando will cross that $1 I usually say amusingly

designking:
Dilution is coming...I am only going to buy bank shares after dilution.

It is in my best interest for you not to buy. I have bought and I will buy again if valuations stay at these levels when next I'm liquid

Mpeace:
Gtco at 60 is a good sign for others

GTCO is heading to N400. Just relax and enjoy the ride

Sunrisepebble:
You want to scare Nigerians away from capital markets?
I think the 10% rule is fine. It has its pros and cons. For instance without it, this our Wapco news (in an efficient market) would have taken the price from 58 when the news was announced straight to around the 100 figure where the buyout figure is. However in our case, we will have to slowly crawl day by day and deal with profit takers along the way. Knowing how impatient and fearful Nigerians are with money, if stocks lose more than 10% in a day and there’s no limit, nobody would invest again. It’s the 100k block rule I personally don’t agree with

I think the rule is rubbish for the exact same reasons you mentioned.

megawealth01:
Na only crypto I see for the list. Where is it trading FUTURES?

I dont understand

bastardson:
Abeg me self wan make 500m.

Can everyone quote this with their top 5 for the next 1 year.

It might help some of us know which to also go for.

I go first.

1. Aradel
2. Access
3. GTB
4. Transcorp
5. Japaul.

Thinking of replacing Japaul with Unilever


Don’t Air me guyz, I know say una be big boys. Let others join your league

In no particular order

GTCO

Zenith Bank

Kujira coin (Crypto)

Alibaba

BYD auto

Locotrader:
The cheapest stock I can sight now is CHAMS.

Imagine over Billion naira profit in Q3.

If you no do 10% full bid today.........

What's the pe ?

Agbalowomeri:
Yes it has not changed since SMN

Back then back PE's was around 15 na

Agbalowomeri:
When last did you experience PE of 4 in Nigerian banks?

Dont know. Didnt look at the NIgerian market for almost a decade

megawealth01:
@nosa you can search more to see

I don see am. To be honest I didn't think I was active here back then. Either that or I skimmed over the post thinking it was OANDO related

Agbalowomeri:
Ololo wan enter town be that
Nothing is impossible
I will be amazed if any bank cross reach N100, unless dem pay N10 dividend

At N400 GTB will have a PE of 10. That's not crazy given it's historical valuations and current growth rate.

This economy will normalize eventually, either that or we end up in a civil war.

Ades1:
Big man, aside from GT, what other stocks do you currently hold or see value?

I currently hold GTB and zenith in Nigeria and that's it

Xidget:
#Observation

Most FA investors advised people to sell banks stocks 2months ago when price was low because of dilution from recapitalisation. And buy back at Q1 2025 when it will become cheaper.

Same people are encouraging people to buy now that price is high. Now, I am wondering, does the dilution not matter anymore?

I didn't. I looked at the fundamentals and I couldn't believe my eyes. I still can't.

People are saying 60% I'm looking for 400% conservatively

Mpeace:
That gtco should shake body quick quick. Its 100 we want before year end.

Funny enough I don't want to to rally just yet.

megawealth01:
UNILEVER wey dey seriously undervalued

And you are just mentioning this now

yMcy56:
Quite some stocks on full bid.......
UNILEVER also joined......
it's well o

GT moved back up to 56......

Leave Dem to be focusing on OANDO