₦airaland Forum

DOLLARTEX:
PLS if you know anybody that has oando,up to 2m units,that wants to sell fast at 7naira or more~let him sell it.it is none of my business.happy weekend people!

hello chief

wld appr8 if u oblige the insight that informed ur statement

mendes911:
Na for Tier 2 banks wey money dey. Both profit and loss, in abundance....

Tier 2 banks are Bae.

my oga i totally agree with you on d bold. though d loss is what pursued me b4 now

Hence i am currently undergoing schooling for tier 2 banks cos na only Agba and fxuser (price movement) approach dey work for that side

and until d schooling is over my kobo no dey see dat side

Agbalowomeri:
I dobale o; Me no sabi anybody anywhere so make I stick to my price movement

Chief Agba

nothing wrong with ur approach (just dat one shldnt dabble into it if you are not adept at it, dats y i am trying to learn it as much as possible for now)

every approach has its upside and downside and each its usefulness to d market. if price movement pple like u dont come into d market hence price discovery might be poor and belaboured.

emmanuelewumi:
L. Toyota Nigeria limited is different from RT Briscoe, I just learnt that Ade Ojo divested from RT Briscoe some few years ago when he couldn't agree with other major shareholders on the way forward for the company.


These other major shareholders were Investment bankers and portfolio managers.

More like his antecedent that i am aware of.

parting ways must have been due to his insistence on doing what is right for d company (hence take longer time to make money) unlike the investment banks and portfiolio managers that wld want quick money which might have eventually kill the coy.

emmanuelewumi:
The man is now close to 80 years, he is represented on the board by his son.

He is also in Eterna oil and Meristem group ( stock brokers, Registrars, Trustees, Asset management, investment banking) and a lot of unquoted investments that are generating steady cash.

ok thanks for the info

TLAX:
Banks with street smart managers will make money most of the times because they see opportunities many seasons before others do. In 2016 they made money on FX and people were concerned about 2017. In 2017 they made money from Govt. securities and people are concerned about 2018. In 2018 they will most probably make money from loans granted to the premium borrowers while the usual laggards will come mid year or last quarter and create loans that will go bad.

In business school, they thought me to take courses based on professors and not course contents. Forget the bank names and invest in managers that have a track record and system of making money in this market. If they stumble, it will hardly be material.

i totally agree with you smart bank managers wld always make u money

however next meal might already be cooking from corporate bonds (e.g. Dangote is already preparing a 300b meal) the small snag is spread might come with some risk and not as wide as former FG Tbills

RabbiDoracle:
Since we are small money players, na tier 2 be our home o. So na to wait for them at 80kobo and hammer.

Una wey dey trade in billions can continue in your tier 1.

my chief
where the billion dey?

but i claim am.

my running from tier 2 is from previous experience (cos of their immunity to all known projection)

TLAX:
@Bolded....Discipline really? What happened to his own company RT Briscoe? How did it turn out? He is still in Custodian though.

RT briscoe was a competitor i think he bought in other to kill it for his cash cow Toyota Nigeria continue to thrive (my take from hindsight i cld b wrong though) jst as accused of coca cola did to some local bottling companies some few years back

the downside is, if that is what he truly did he wnt b losing anything cos as an insider he must have taking advantage to get his share of the dying coy and those who suffer wld be minority shareholder.

my knowledge here is limited (cos RT Briscoe had never been of interest to me so i had never paid it more than a passing look) so you might as well be right

RabbiDoracle:
If these banks (Access and UBA) are like this, what will be the fate of the tier 2 banks?

i dont do tier 2 (they ve taught me enough lesson)

so i dont really care for the results for now

except something extra ordinary happens in that space

RabbiDoracle:
When doing comparisons like this, don't look at figures only. Convert it into percentages.

Example : Do the following

Parameters 2017. 2016
Ratio of PBT/net interest income
Ratio of PBT/net int. Income after impairment
Ratio of PAT/ net interest income

Etc.

With ratios you will be able to see percentage differences rather than just looking at figures in billions.

I understand that there is no distortion in trading income and impairment as could be seen in other banks.

Use percentages and tell.me what you see.

as said earlier wld take a deeper look at the big four later (9-5 job is quite tasking). for now just looking at the obvious (figures) and noting key take aways (which cld change with deeper dive). that is why i said i wld appr8 ur perspective.


However as u am also concern by the sustainability of the banks profit going forward that is why my quick check is zeroing in on the key line income NI vs Trading (tbills and fx derivative) as a rough guage of how sustainable their result are

currentprice:
I agree. If the performance is for real. Custodian have no place below 10

That is the discipline the likes of Ade Ojo (Elizade ) can bring into a coy. im not sure if he is still there though

my phobia for insurance didnt make me pay it too much attention which might change soon if i get the time to scan through its books for some years back

RabbiDoracle:
Is this market marking (MM) not manipulation?

Season 2.

Market Making is not peculiar to a stock. i think its something put in place by NSE for every stock (kindly correct me if i am wrong) so it doesnt convey any advantage on any stock, however im not sure if this is same practice on other exchange. My personal opinion is that it distort price discovery , just like the 5% movement range.

however that is my personal opinion but since its something that is put in place by NSE itself i wld just have to live with it if i want to play in the market.

RabbiDoracle:
Nonsense result.

Just tell me how they will surpass this result when there is no high Tbills rates seen in 2017

How do u mean nonsense result

would appr8 if u are precise which part (or is it whole) is nonsense so we can all learn

for me the Op exp is quite high and it is a negative

however unlike ur statement this bank was able to generate MORE of its revenue from traditional banking (i.e. lending, i.e. NI after impairment) and even grew same compared to last year by abt 27% (174b compared to 137b). Trading income (TBILLS and FX derivative) cant be said to be major at 49b (2017; 43b- 2016) versus 174b from NI and is even more stable in comparision to last year figure .

i think UBA shld be able to sustain this result going ahead (bar any surprise from impairment)

wld appr8 ur pespective.

n.b im here and not intending to either buy or sell at current price range wld rather collect my dividend and see how scenario unfolds going forward which might change my perspective

PharmAlfred:
UBA did well than Access Bank when you compare margins. UBA took lesser impairment, (correct) giving out better dividend (correct) and more efficient (not totally correct check growth in op exp).

Though result still fell short of expectation. Zenith Bank is the king this year. Emefiele might be helping Zenith sha. Emefiele and Jim Ovia alliance.

Up next, tier 2 banks and First bank.

Overall however its beta than Access if u consider that PAT also grew albeit just by upper single digit unlike decline in all of ACCESS (PBT / PAT / OCI) and there is no OVERSIZE FX (derivative) income coming to the rescue (like ACCESS)

Although OCI fell as spotted by Oga Wanajo (im would only be concerned about this if this income line (i.e. OCI) is distributable which i doubt, as i think its largely accounting entries).

i doubt if UBA mm wld be as efficient as Access if it face similar avalanche on Monday.


N.B i hold both

wld take a closer look later in d day

fxuser:
the longer the time frame , the more the ''potency'' but it's never immediate
on d other side , a positive div on d lower time frame helps to show bearish fatigue in d short term

Thanks chief appr8

Agbalowomeri:
On 1st of April

i beg no kill me
they might even do it COB on 31st March

rebekah2011:
https://www.zenithbank.com/media/2486/group2017fye-conference_call.mp3

Thanks much appreciated

pluto09:
Can you shed more light on how banks make/loose money on derivatives.

only average knowledge mysef

it consist of several type (forwards/ futures / swap e.t.c)

inlayman terms it means taking a bet on what the future exchange rate / price of financial instrument (e.g. currency) would be. something more like what short term traders on NSE do. so those who trade in it make money when rate / price move for them and losses when it move against them

pls note that nothing is wrong with derivative itself (it is a class of financial instrument which is quite useful for a more efficient functioning of the financial markets) . my concern is on the volatility of its income line for a traditional bank (that should be more involve in lending).

and for fundamentalist it make projection difficult if not impossible. so i would expect banks who had this income line as a MAJOR to be more suitable for short term traders (kind of like an alignment of its income to the traders it attract) because of surprises in its result(a la Access Bank 2016 -- 2017 FY) which is not suitable to my personal risk appetite

Agbalowomeri:
Has UBA ever paid more than Access?

since the last two FY

fxuser:
super risk management move , good reaction . kudos madam
i'm also at my highest cash level since dec also
anyway , this is d worst weekly performance for bank Index. Week to date is a massive -8.35% (massive weekly red engulfing candle)
Personally , got my first humble pie, fidelity holdings was bady out of position wt an avg cost of ard N3 ..
i dont know how to avg down , i chop my humble pie without fuss (blame d itchy finger issues later)
every market likes to serve humble pies ard every now and den (crypto community de chop am back to back dis yr lolx)
dis sell off is likely to continue into the new week ..
opportunities will present themselves again , we wud patiently wait and not be drawn into chasing them lol


Key reminder to Self:
Never ignore negative divergences

@fxuser

which of the time horizon negative divergence do you think is more potent

Daily? weekly? or monthly?

learning ooo

wanaj0:
GTB bank stated that they did not partook in the CBN swaps

ok beta for them

to buttress what i am talking about above.

the decline of Access bank result for 2017FY was largely due to a loss of N33.63b from derivative instruments. a line of income that produced N53.32b profit for 2016FY, this speaks to the volatility of this line of income which is giving me concern as stated above.

rebekah2011:
Access Bank shashe, 107b in forex income. Is our bank doing banking at all.

thats my fear going forward for nigerian banks after the extra ordinary FX gain and TBills income of last two years (which brings with it sustainability question)

same thing i.e FX gain (from derivatives) was pivotal for Zenith (yet to critically look at GTB) for 2017 and Zenith had stated as per conference call that they expect more from that line of income (which might have necessitated the current sell off).

if you understand derivative to be a very volatile and risky venture then u might start getting concern for Nigerian banks.

N.B I am heavy on the banks though seriously thinking of taking advantage of next bull to cut down cos of this concern except this concern is allayed before then

Agbalowomeri:
Abi na Jim Ovia dey sell
Another 100mlu today

im positive he wld b on either side of d fence

amount sold since last three trading days is beyond d remit of retail investor.

its quite scary

Jejebaba:
Zenith might end in full bid today

possibly but dont bet on it
that Friday guy is d real badt guy
cld be preparing to rain it on them
wld rather w8 till 2moro and pay a small premium

Zenith

Avalanche over or bait?

Agbalowomeri:
Never ignore correlations

ominous sign hmmmmmmmmmmmmmmmmmmm

fxuser:
hey chief
Not privy to details.

Thanks appr8 ur response

onegentleguy:
I've heard some folks screaming that the few banks that have so far released their YE 2017 result only managed to grow their top line because of the earnings remittances from trading income. ...to them this would not be sustainable and so they argue that they do not see the banks surpassing or even repeating the feat come 2018.
Well, I thought so myself too when the banks particularly those in the 1st teir category grew their top line majorly from fx related earnings in 2016. ...for just like now, I was also among those who argued that the big banks may not be able to sustain those record earnings of 2016 going into 2017. ...but then, they just did.
Looking ahead of 2018, some persons now also have a similar doubt. ...understandably so but before we drive up conclusions, let's try and put a few things in perspective;

One of the major concern of those who doubt the sustainability of a fantastic result like that of ZENITH BANK going into 2018, is that they believe that loans to the real sector has had little or no effect to their growth in earnings. ...according to some, a situation where profit had increased by over 60% while loans and advances to the real sector had decreased by over the same margin is virtual and can not hold much water.
But then I ask, was there really any better option for the banks in 2017?. ...or put in a more specific light, would the banks have been able to grow their earnings if they had tour the path of lending to the real sector?
Pls we do not need to pretend. This is Nigeria. ...a country where our level of credit worthiness is near zero. A country with a very harsh business environment. ...where the ease of doing business has been treading downwards since the inception of this administration. ...and the last time I checked, a bank like ZENITH is also nigerian.
No one should blame the banks for taking advantage of a clear opputunity of low risk arbitrage from government securities. ...just like they did from mainly fx related gains in 2016. The banks were basically trying to be flexible with a view to better their margins.
Besides, the weak economic indicators of 2017 coupled with the reccession clearly shows that a bank like ZENITH and GTB took the best decisions there was to grow their top line.
As a bank, been competent would mean that they go for risk free govt securities at high interest ahead of any 'damn' loan with high risk and which would've only aggravated their already fragile NPL ratios. ...for there was even a higher chance of a loan default given the inflationary pressure and many struggles on the fiscal side of the economy in 2017.
Before anything else, the banks are in business and strictly so to make returns.

Going into 2018, my take is that the big banks will most likely sustain their growth. ...and I have every reason to believe so looking at the core single indices and the general economy at large. ...well at least for now.
Let's not also forget that there are several revenue streams for the banks. ...and interest income is just one of them.

In all, the overall performance from the management of a coy like ZENITH shouldn't go without a good measure of commendation. ...apart from the small matter of provisioning, which I believe is an industry wide issue, the bank performed exceptionally well.
...an in-depth look at the 2017 YE result and that driving from their perfomance of 2016, gives less room for doubt going into 2018.
I was really impresed by the result, particularly the spike accross all major revenue lines.
I already stated it here that ZENITH BANK retains a BUY rating from my end. ...and at a good margin at that.
As at todays closure, I have a fair value that is at a nearly 51% discount from todays closing price of N28.75.
My fair price remains N43.

But then again, the market has its own way of thinking.

Disclosure: I currently do not hold zenith in my portfolio. ...but I intend to do so in ernest.

Disclaimer: This analysis is purely suggestive and is merely the opinion of Onegentleguy. ...It shouldn't be interpreted to mean any kind of recommendation.
DD still always advised pls.

Hello Chief

while i agree that banks have several income line, my take is that apart from the two mentioned above all others except interest income (risk asset) cant deliver exceptional growth as done by the two (i.e FX and TBills). at best they wld deliver some growth but it wld be largely benign. hence the only play i think could fit into the magnitude of FX and tbills growth of last two season is NPL unwounding and possibly tax assets.

That said where in your experienced view where do you think the next growth story is going to come from considering that the avenue for growth in last two years is currently being closed (FX and TBills).

wld appreciate yours and others (Rabbi/ Agba / Pluto / Emma/ Wanajo / CP e.t.c) insight / perspective

BullBearMkt where a thou??/

currentprice:
he is catching fun bro. thank God the post is not coming from mendes119 . pple could have put e-types on his neck and put fire

a stock with N56 fairprice for N28 @ 8.7 dividend yield wouldn't be a bad deal for some to hav.

ok then i ws jst trying to be sure im not be blindsided

as for mendes i guess its only those who dont know what they are buying and reason for buying as well as a handle on their own emotions that wld be bothered by his banters though he also need to exercise some patience on his banters in other to avoid unnecessary battles so as to conserve his energy for possibles wars

longlife20:
It will get to 15, just wait.

Hello Chief
wld appr8 if u share what informed above, is it cos of current bear? or something rooted in fundamentals? or just gut feelings?

robobo:
@ fxuser can u pls give more insight as per bold?

wld appr8

@fxuser

chief wld appr8 ur response to above

thank you