Coronation Asset Management yesterday released its report on Nigerian Banks. The report, tilted: “Nigerian Banks, Resilience Built In” captured the developments in the Nigerian banking sector in the past 10 years.
The report released shows that Nigerian banks’ earnings have been remarkably resilient over the interest rate cycle.
According to the Coronation Asset Management report, banks’ profitability is improving over time and their stock values are cheap compared to Ghanaian and Kenyan bank stocks.
The report, written by Ope Ani and Guy Czartoryski of Coronation Research, examined what has happened within the Nigerian banking industry during the decade of coverage and also focusing on six listed banks.
The report is a unique 10-year study of the margins and profitability of six listed banks namely Zenith Bank; GT Bank; Access Bank; FBN Holdings; UBA, and Stanbic IBTC.
“These banks have adapted successfully to many changes in interest rates over the 10 years from 2010 to 2020. Therefore, they are well-positioned for the rise in rates in 2021,” the report said.
“While underlying growth in assets has been elusive, especially when data are adjusted for inflation, profitability has generally improved. The return on average equity (RoAE) and return on average assets (RoAA) of the six banks studied have both converged and improved over 10 years”.
This trend appears to be under-appreciated by investors, and the report shows the positive investment potential in the sector” says Guy Czatoryski a Senior Research Analyst at Coronation Research.
