Equity investors put N2.62trn market valuation on Nigeria’s top lenders

Ahead of the earning season, which draws closer by the day, and which has seen tier-1 categories of listed banks eager to release their full financial year 2021 earnings, equity investors have placed a market valuation of N2.62 trillion on Nigeria’s tier-1 capital banks which accounts for about 10 percent of the total market capitalisation of the entire Nigerian stock market.

A breakdown of the valuation analysis as noted by several market analysts puts Zenith Bank as the most valuable tier-1 lender in Nigeria currently; and it is trailed by Guaranty Trust Holding Company (GTCo), which has always been noted to be a very agile provider of financial services in the country.

Standing next to GTCo is Access Bank, the largest financial behemoth by total assets in the country, according to equity investors and it is trailed by Africa’s global bank, the United Bank for Africa (UBA), which is another pan-African market rival in the banking space.

However, these investors’ valuations differ in their respective perceptions of these top tier banking institutions, even as there are not-too-close similarities in their funding costs, earnings and dividend payment records.

On that score, Zenith Bank received the highest valuation from investors at N811.6 billion on about 31.4 billion outstanding shares with a market share price of N25.85 as at the close of trading on Thursday, January 20 and having maintained an uptrend in the last seven trading sessions on the local bourse.

In the same vein, Guaranty Trust Holding Company got investors valuation worth N750.50 billion as of Thursday on its 29.431 billion outstanding shares priced at N25.50. GTBank, as it is fondly called, was the Tier-1 bank leader, and the stock had moved near the N1 trillion mark before a price action onslaught by its main rival – Zenith. Meanwhile, the financial services boutique has seen its share price relatively steady despite the ongoing buying interest at the local bourse.

FBN Holdings, which is known as the oldest bank among the Tier-1 lenders category has risen through the rank from the bottom after a strategic incursion by Nigerian billionaire investor, Femi Otedola last year. At the moment, FBN Holdings commands a market valuation to the tune of N430.74 billion with 35.895 billion outstanding shares price at N12.

Access Bank after it acquired its former rival Diamond Bank in 2019 became one of Nigeria’s biggest lenders, today, the financial behemoth is worth less than its size in the Nigerian banking industry as the largest bank by total asset valued at N348.34 billion on its 35.55 billion shares outstanding, priced at N9.80.

Meanwhile, Access Bank, having adopted an acquisition expansion strategy, has increased its footprints across the continent’s markets with several acquisitions across Africa.

Similarly, in 2021, Access Bank issued a $500 million Eurobond, priced at 9.125 percent in a bid to boost its financial position and also unlock equity capital position. The issue, which is Basel-III compliant perpetual bond, was the first of its kind for a Nigerian bank and this saw the bank raising a total of $1 billion from the Eurobond market in September and October.

However, United Bank for Africa is at the bottom of the ring in terms of the value that investors place on its outstanding shares. UBA is currently valued at N280.435 billion on 34.199 billion outstanding shares price at N8.20 on Thursday market close.

In a related development, the pan-African financial institution in November last year announced the issuance of its $300 million Eurobond at a yield of 6.75 per cent to fund growth.