This archive report was first published on 29 June 2021.
Published on June 29, 2021, a report by Coronation Asset Management highlighted the undervalued nature of Nigerian banks' stock values in comparison to their Ghanaian and Kenyan counterparts.
The report, a 10-year study of six listed banks - Zenith Bank, GT Bank, Access Bank, FBN Holdings, UBA, and Stanbic IBTC - revealed that despite a significant rally in share prices over the past year, Nigerian bank stocks remain remarkably cheap.
According to the report, the median prospective price-to-earnings (PE) ratio for Nigerian banks has decreased from 5.0x five years ago to 2.5x currently, exposing meaningful value for investors.
While four of the banks' shares have changed very little over the 10-year period, Access Bank has experienced a significant market share gain, and FBN Holdings has seen a remarkable shrinkage in its relative standing.
Notably, the report showed that Nigerian banks' earnings have been resilient over the interest rate cycle, with their profitability improving over time.
"These banks have adapted successfully to many changes in interest rates over the 10 years from 2010 to 2020, and are well-positioned for the rise in rates in 2021," said Guy Czartoryski, a Senior Research Analyst at Coronation Research.
