Stock/ Money
‘UBA, Access Among Under -Valued Banks’
Nigeria’s banking industry is undervalued by 36 per cent, African Alliance said, identifying its top picks as United Bank for Africa PIc, Access Bank PIc and Diomond Bank PIC.
Asset Management Corp. of Nigeria, the company established by the government to purchase bad debt from lenders, said it will buy back 2.2 trillion naira ($14.6 billion), more than a forecast of $10 billion by the Central Bank of Nigeria. Loans backed by shares in listed companies will be valued at about 60 per cent of the 60-day average price to November 15, Amcon said last week.
“The price at which Amcon is willing to purchase margin loans is sending a strong signal to the investing public that the sector is materially undervalued,” African Alliance said in an emailed statement in Lagos, the commercial capital.
Bank shares plunged after a debt crisis resulting from loans to speculators in the domestic stock market and operators in the oil and gas business threatened to cripple the banking industry. The Central Bank fired the chief executive officers of eight of the country’s 24 lenders, and took stakes in some of them, spending 620 billion naira to recapitalize the industry.
Amcon’s valuation represents about a 70 per
cent premium to the lenders’ share values at September 30 “and we expect that the majority of banks will participate,” African Alliance said.
The Bloomberg NSE Banking Index, which tracks the performance of the 10 biggest banks by market value, fell 0.3 per cent to 387.99, the lowest since November 9. It has gained 22 per
cent this year, matching the increase in the Nigerian Stock Exchange All-Share Index over the same period. Bank stocks make up 42 per
cent of the West African nation’s market.
Access gained 0.3 per
cent to 9.13 naira at the 1 p.m. close in Lagos, its lowest since November II. Diamond Bank fell 0.1 per cent, to 7.5 naira, its lowest since November 8, while UBA was unchanged at 9.45 naira.