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FBNH Declines as Market Awaits Earnings Release

Diversified financial service company, FBN Holdings Plc, share price declined by 2.7% over the last seven days’ trading sessions in the stock market ahead of the group’s 2022 financial year earnings release.

The decline was however below 4.9% lost by the banking index, according to trading data from the Nigerian Exchange (NGX) last week.

FBNH was sold at N10.70, per share on Friday, down from N11 as trading activities at the local bourse ended on a bearish note – its market valuation fell to N380 billion.

With 35.895 billion outstanding shares, the bank’s share price hit N12.40 some 52 weeks ago, and its lowest within the period was N8.20. The group valuation had climbed to N440 billion after Femi Otedola’s large share purchase changed the boardroom composition.

In the third quarter of the financial year 2022, FBNH declared N39.77 billion as pretax profit, which was a significant increase compared to N7.7 billion it posted earlier.

The group’s successful balance sheet cleanup helped earnings performance but the elephant is getting too heavy to get up and run farther.

FBNH stock lack capital appreciation potential and its dividend payment is not the best in class for a Tier-1 category. A slew of analysts has placed the stock on sell buckets over weak upside potential.

You can imagine the bullish momentum in the Nigerian stock market since the beginning of 2023 has had no positive impact on FBNH valuation, despite a surge in the NGX banking index.

The stock market lost steam last week as big bank crashes in the United States sent jitter across the global market. Somehow, the Nigerian market reacted to the development negatively despite the absence of a red signal.

How investing in FBNH adds value to shareholders has been subjected to discussion across Broadstreet – relatively weak dividend payment versus peers and negative share price movement.

Stockbrokers in an effort to gain insight into client investment profiles have understood that some shareholders pursue a strategy of investing in stocks that issue regular dividends in order to get consistent income, while simultaneously benefiting from any appreciation in that business’ share price.

FBHN share price has no skin in this, though stable dividend, it hasn’t proven to be competitive enough for retail investors to rush. Market analysts maintain that when it comes to investing there’s no magic bullet.

While dividend stocks may add stability to a portfolio, they’re unlikely to outperform healthy growth stocks significantly. # FBNH Declines as Market Awaits Earnings Release Naira Steadies as Banks Issue Update on FX Purchase
The post FBNH Declines as Market Awaits Earnings Release appeared first on MarketForces Africa.

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