First Atlantic Leads Banking Sector Capital Gains
This Day (Lagos)
March 15, 2005
Posted to the web March 16, 2005
Ayodele Aminu
Lagos
At a time when most of the quoted companies on the Nigerian Stock Exchange (NSE) especially banks suffered significant setbacks in their market value in 2004 First Atlantic Bank Plc recorded the highest capital gain in the banking sector.
First Atlantic Bank which is presently shopping for N7.5 billion had opened year 2004 with a share price of N1.15 but closed the year with share price of N3.26, indicating a growth of 183.5 per cent.
An analysis of the banking stocks in 2004 showed that out of the 29 banks that started the year, 18 had their share value nose-dive while two others stagnated at their opening values. First Atlantic led the eight other banking stocks, including Intercontinental Bank Plc, First Bank of Nigeria Plc, Guaranty Trust Bank Plc, Access Bank Plc, NAL Bank Plc, Inland Bank Plc, Lion Bank Plc and Trade Bank Plc on the capital appreciation list.
Mirroring the development in the market, the official report of the NSE showed that the All Share Index which measures overall share pricing trend of equities recorded a growth of 18.5 per cent. From its opening value of 20,128.94, the All Share Index closed in 2004 at 23,844.45. First Atlantic Bank's capital appreciation of 183.5 per cent therefore depicts a whopping 892 per cent increase over the year-end growth of the NSE's All Share Index which stood at 18.5 per cent.
Reviewing the activities at the NSE in 2004, it's Director-General, Dr. Ndi Okereke Onyiuke said: "The performance of the index reflects the difficult economic environment quoted companies operated in 2004."
That First Atlantic Bank which was also ranked as the most traded stock for the year was able to not only weather the storm but also emerge with the highest capital appreciation during this turbulent period indicates that mouth-watering returns awaits those who invest in the bank's on going public offer which closes on March 21.
Further analysis of the banking sector showed that about 62 per cent of the entire stocks suffered price depreciation; seven per cent remained stagnant, while 31 per cent enlarged their market capitalization at the end of the year through higher closing prices compared with their opening prices. Apart from the share value of Manny Bank, Liberty Bank and Afribank which did not ascend beyond their values on board for the year, 25 other banking stocks rose beyond their opening values, but relapsed at the end of the year.
Trailing First Atlantic Bank in terms of capital was Intercontinental Bank which recorded a growth rate of 83.76 per cent. First Atlantic Bank's 183.48 per cent capital appreciation indicates a leap of about 119 per cent against that of Intercontinental Bank.
Market value par share of Intercontinental Bank had opened at N4.25 and closed at N7.81. It however peaked at N8.20, some 93 per cent above its opening value.
Next came Inland Bank with a growth of 32 per cent. From 81 kobo opening value for 2004, the bank's share price closed at a frozen price of N1.07 following the technical suspension placed on it during the merger with GTB which later collapsed.
Further review of the banking sector performance indicated that six banking stocks were able to set new individual best records in terms of share price during the review year. Wema Bank peaked at an all-time high of N6.67 per share, its best within the five year period (between 2000 and 2004); Cooperative Bank peaked at N3.30 and EIB International Bank with a high of N3.07 per share. First Atlantic Bank, GTB and Intercontinental Bank had enviable track records of unbroken upswing in year-on year ceiling prices - meaning that investors every year attach greater values to equities of these three banks compared with the previous year.
Further analysis showed that First Atlantic Bank rose from a high of N1.68 per share in 2002 to N1.93 per share in 2003 and in 2004 improved by 69 per cent to N3.26 per share. Intercontinental Bank peaked at N6.20 per share in 2003, its first year on NSE and rose further by 32 per cent to a high of N8.20 in 2004. Ditto for GTB which has maintained successive yearly best record for itself from a high of N4.13 in 2000, it moved up to N7 in 2001, peaked at N8.14 in 2002, crossed to a high of N10.09 in 2003 and in 2004 rose as high as N17.47 per share.
From the foregoing, it means that First Atlantic Bank is a growth stock with high liquidity and great potentials for capital appreciation. In the first full year on NSE, the bank ranked as the fifth most active stock, beating 206 other stocks in 2004 to emerge the most traded stock. Presently, the bank appears to be heading for another enviable performance. Its current share value of N3.41 per share represents an increase of 4.6 per cent above its high in 2004. It lowest value per share this year was N3.25.
Besides, in January 2005 First Atlantic Bank was also ranked as second most active stocks in the 207 stocks equity market in spite of the market awareness about the impending break of its public offer and enormous discount. First Atlantic Bank is offering for public subscription N3 billion ordinary shares of 50 kobo each at N2.50; a discount of about 36 percent from its current market price of N3.41 per share on the Exchange.
The stellar performance of First Atlantic Bank on the secondary market is obviously because of its strong fundamentals. For instance, the bank recorded a 46.4 per cent growth in earnings for the year ended June 20, 2004.
The results showed that the bank is achieving marked improvements in various performance indicators following a 66.7 per cent growth in deposits, from N14.3 billion in 2003 to N23.9 billion in 2004. The growth reflected the trend in the 2002/2003 year during which its deposits grew by N5.2 billion from N8.68 billion to N14.3 billion.
Relying on the boost in its deposit portfolio, the bank drove earnings up from N2.83 billion in the 2003 financial year to N4.14 billion during the period under review. The 66 per cent growth was a sharp improvement on the attainment of 13.5 per cent growth from N2.49 billion in 2002 to N2.83 billion in the year ended June 2003.
The bank's balance sheet size was similarly on the increase, with its asset base notching N38.2 billion as at June 2004, up 69 per cent from N22.6 billion at the start of the financial year.
Also on the upward trend, the bank's profit before tax rose 41.7 per cent to N821 million, up from N609 million recorded in the previous year. The growth in profit is remarkable given the huge investments made by the bank in rapid branch expansion.
In the 2002/2003 financial year, First Atlantic's profit before tax grew marginally by 7 per cent from N601 million in 2002 to N609 million on account of similar investments in branch expansion. The improved growth in profit in 2003/2004 in spite of the huge investment resulted from the bank's ability to rein in on costs and enhance earnings.
The bank also recorded a 38 per cent growth in profit after tax, which rose from N436 million as at June 30, 2003 to N562 million for the year ended June 30, 2004.
The bank, which recently won the Pearl Award Highest Dividend Growth Award for 2003 and the African Export-Import Bank (AFREXIM) 2004 Gold Award in the Financial Institutions Category for outstanding performance in trade and business development in Africa, set aside the sum of N396 million from its profit for issuance of bonus shares to shareholders in the ratio of one to four.
With enhanced shareholders' funds of N4.45 billion, and a rapidly growing branch network of over 50 at the last count, First Atlantic is being tipped for sterling performance in the current financial year
The bank has achieved consistent growth in all performance indicators since its re-positioning in 1998. It is reputed as the leading player in the niche electronic banking market, and has been pursuing an aggressive branch expansion programme as part of its strategy to take its brand of quality services closer to the public.
And since First Atlantic Bank is a member the Astrabank - a group of four dynamic and innovative banks (Assurance Bank Limited, First Atlantic Bank Plc, Guardian Express Bank Plc and Manny Bank Plc), the synergy of these banks would definitely make the share price of the emerging bank appreciate. For instance First Atlantic is noted as the pioneer of Internet banking in Nigeria and has over 50 branches in all parts of Nigeria while Guardian Express Bank is known as an innovative bank and is the first and, so far, only bank paying commission on Turnover (COT) to its current accounts customers. It also has subsidiaries in mortgage, banking, capital market and insurance industries. Assurance Bank on the other hand, is reputed for its niche in private, commercial and consumer banking, with a formidable pool of expertise and aggressive market drive that saw its amazing transformation into one of the fastest growing banks in the last two years while Manny Bank is a strong brand name in the Eastern parts of Nigeria with strong selling products that appeals to small and medium scale entrepreneurs. The bank also has an associated company in the oil and gas sector.
Make allAfrica.com your home page
