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Business > Money Market
FBN Capital projects slow growth in Nigerian banks' loans H2
By Ebenezer Ademola
August 9, 2012 18:59:31pm GMT
L-R: Head, Credit Risk Management, Access Bank Plc, Mr. Joe Osojie; Currency Analyst Consultant, ForexTime Trading, West Africa, Mr. Bade-Ajidahun Oludahun; Finance Editor, Vanguard Newspapers, Babajide Komolafe and Mr. Bunmi Asaolu, Head, Equity Research, FBN Capital at the FICAN Roundtable on the economy with the theme: The Economy in H1 2012 and Outlook for H2 2012 held at Sheraton Hotels, lagos on Wednesday, August 8, 2012.

WorldStage Newsonline—Analysts at FBN Capital believe that loan growth of Nigeria’s banks would likely slow through the second half (H2) 2012  due to further liquidity tightening measures.

In a presentation, ‘Half Year Performance of the Capital Markets in 2012’ by Olubunmi Asaolu, Head, Equity Research, FBN Capital, at the FICAN Roundtable on the Economy with the theme: The Economy in H1 2012 and Outlook for H2 2012, he projected- potentially negative for mid-tier banks; while larger banks with more liquidity likely to be unaffected in a worst case scenario.

The analyst rated Stanbic IBTC as still the most expensive “within our universe; while Skye Bank and Fidelity Bank are among the cheapest.

“Diamond, Access, UBA and Zenith in the sweet spot (all rated Outperform by FBN Capital Equity Research team) given that they are very cheap and/or their ROEs are high enough to be noticed by the market. Fidelity and Skye may remain cheap for a little while longer. FCMB’s delay in closing the merger with FinBank may be costing it,” he said.

On outlook of the non-financial firms, he said valuation was not particularly compelling for most consumer names as near-term headwinds weighing on earnings

“Current price-to-earnings multiples in most cases are above the average over the last five years; in some cases (Nigerian Breweries, Guinness, PZ), they are above the peak multiples,” he said.

On outlook for macro economy, he projected modest improvement in GDP growth in 2012 to 7.5 per cent (NBS  6.5%, IMF 7.1%); to accelerate slightly in 2013 to 8.0 per cent.

Other projections include; inflation ending the year at 12.0 per cent, slightly down from the mid 14’s currently; US$110/barrel average Bonny Light price in 2012; Official FX reserves improving gradually to US$44 billion by 2013.

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