NIGERIAN Stock Exchange (NSE) on Friday closed the week on a negative note as the all- share-index (ASI) and market capitalisation depreciated by 0.95 percent to close at 27,596.82 and N9.479 trillion respectively and coming on the heels of profit- taking. “Similarly, all other Indices finished lower during the week with the exception of the NSE Industrial Goods Index that appreciated by 0.52%, while the NSE ASeM Index closed flat,” according to the NSE weekly stock market update. The report says at the close of the week’s trading, a turnover of 674.721 million shares worth N7.657 billion in 12,290 deals were traded by investors on the floor of the Exchange compared to a total of 1.163 billion shares valued at N9.251 billion that exchanged hands last week in 14,992 deals. According to the NSE, the Financial Services Industry measured by volume led the activity chart with 495.992 million shares valued at N2.767 billion traded in 6,522 deals; thus contributing 73.51 percent and 36.14 percent to the total equity turnover volume and value respectively. The Conglomerates Industry followed with 80.885 million shares worth N95.212 million in 536 deals. The third place was occupied by the Construction/Real Estate Industry with a turnover of 32.484 million shares worth N18.498 million in 70 deals. At the end of the week’s trading on the local bourse, top Three Equities namely – Law Union & Rock Insurance Plc, Ecobank Transnational Incorporated and Transnational Corporation of Nigeria Plc measured by volume accounted for 263.199 million shares worth N1.033 billion in 637 deals, contributing  39.01 percent and 13.49 percent to the total equity turnover volume and value respectively. Also traded during the week were a total of 10,779 units of Exchange Traded Products (ETPs) valued at N63,890.18 executed in 22 deals, compared with a total of 119,743 units valued at N600,589.51 transacted last week in 25 deals. A total of 1,700 units of Federal Government Bonds valued at N1.518 million were traded in 1 deal compared to a total of 1,510 units of Federal Government Bonds valued at N1.558 million transacted in the previous week in 1 deal. A summary of price changes in the review week shows that 16 equities gained in price, lower than 22 of the previous week. On the flipside, 38 lost in price, lower than 42 of the past week, while 126 equities remained unchanged higher than 116 recorded in the preceding week. Improved performance of FBN Holdings (FBNH) buoyed by its commercial arm, First Bank of Nigeria Limited (FirstBank), in H1 2016 is gradually yielding positive sentiment on its shares at the Nigerian Stock Exchange (NSE). The stock price, which has been inching up since a new strategic focus was unveiled by the new management of its commercial banking arm, according to analysts, is expected to follow similar trajectory till year-end. FirstBank, the major contributor to the bottom-line of FBNH had been reeling on poor loan book and impairments, which made FBNH churn out declined profit in the last financial year ended December 31, 2015. But the new management at FirstBank has put in place machinery to effectively tackle its NPL and impairment which is yielding positive results. FBNH stock price specifically appreciated 3.5 percent to N3.57 from N3.45 as at the close of trading Tuesday 26, the highest since July 19, according to Financial Times data. This was after news filtered in that the bank has turned in profit albeit at 13.3 percent less than it did in the equivalent quarter in 2015. Net profit was N15.13 billion compared to the N17.46 billion of 2015. Pretax profits were also down 5 percent to N23.84 billion from N25.14 billion in the period. Buyers of the stock cared little of the bank’s inability to significantly deal with impairments, the lacuna which led to the profit warning and the consequent missing of target in the last financial year. Impairments shut up 209 percent from N18.5 billion to N57.16 billion. The little control over the course of these charges may well do with the continued depressed state of the oil market, an exposure to which is hounding most Nigerian lenders. In the year under review, the bank experienced a slowdown in its ability to earn interest as interest income fell 22.4 percent to N85.75 billion from N110.5 billion. This is despite a 16.2 percent rise in its loans portfolio to N2.11 trillion from N1.81 trillion. Deposits grew at a slow pace of 4.3 percent mainly due to the lull in the economy but the bank gave out N68 of every N100 as loans, spiking up its credit risk. But the bank’s assets can cover the loans portfolio one and half times. A bright spot for the bank and perhaps a critical one is that the bank made a 614.2 percent gain on foreign exchange thanks to the weakened position of the naira against major international currencies. Net gain on forex rose to N51.52 billion from N7.21 billion. The bank remains a hot property in the portfolio of investors and portfolio managers alike, because according to the FT, “As of July 22, 2016, the consensus forecast amongst 16 polled investment analysts covering FBN Holdings Plc advises investors to hold their position in the company. This has been the consensus forecast since the sentiment of investment analysts deteriorated on April 29, 2015. The previous consensus forecast advised that FBN Holdings Plc would outperform the market.” According to the London based financial publication, “The 14 analysts offering 12-month price targets for FBN Holdings Plc have a median target of 4.36, with a high estimate of N10.29 and a low estimate of N3.20. The median estimate represents a 26.38 percent increase from the last price of 3.45.” The last time FBNH traded below the low estimate was Thursday, March 31. The bank had assured in the wake of faltering profits last year that it is making moves to ensure better performance in the 2016 financial year, including identifying which of its businesses are likely to help deliver on the promise. “The bank has commenced active remedial action on the specific impaired accounts. Our merchant banking and asset management as well as insurance business remain strong and resilient,” the bank had revealed. The management of the group, however, reaffirmed that it would focus in 2016 on restoring shareholder value by driving improvements in underlying asset quality, cost efficiency, enhancing revenue generation and extracting synergies across the group, as well as growth through innovation. Year-on-year, FBN Holdings Plc had net income fall -81.71 percent from N84.23bn to N15.41bn despite a 4.08 percent increase in revenues from N482.22bn to N501.88bn. In 2015, FBN Holdings Plc increased its cash reserves by 25.15 percent, or N133.91bn. The company earned N482.57bn from its operations for a Cash Flow Margin of 96.15 percent. In addition the company used N214.03bn on investing activities and also paid N138.89bn in financing cash flows. Year-on-year, growth in dividends per share increased 50.00 percent while earnings per share excluding extraordinary items fell by -81.71 percent. Additionally when measured on a five-year annualised basis, both dividend per share and earnings per share growth ranked in-line with the industry average relative to its peers.


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