By Alex C
As capital market participants await the Banks to release their second quarter (Q2) results at the Nigerian Stock Exchange (NSE), analysts have expressed confidence that there will be improvements when compared with the Q1 results.
Analysts at FBN Capital in Q2 2014 results preview said they “expect the banks to report a similar return-on-average equity (ROAE) for full year 2014, as they did in 2013. As such, we believe Q2 will see slight improvements over Q1.”
According to the analysts, “We expect the market’s reaction to be muted to slightly positive, give that our full year expectation for ROAE is flattish year-on-year (y/y). We expect some banks to show significant quarter-onquarter (q/q) growth in earnings, particularly Skye Bank and Fidelity Bank.”
They noted that Q1 2014 results showed that “our universe of Nigerian banks reported an average ROAE of 17.7 percent compared with full year 2013 ROAE of 18.5 percent.
“Besides revenue growth, we believe an easing of opex in Q2 for certain banks (e.g. UBA) will also help Q2 earnings growth. Q1 opex can be unusually high as we saw this year (over and above year end effects such as AMCON levy, NDIC premium) because of over-accruing. With regards to their full year guidance, we expect the banks to reaffirm what they guided to after their Q4 2013 or Q1 2014 results.
“Loan growth is likely to be in the range of 15- 20 percent for most of our banks. Even as concerns of a slowdown in H2 for loan growth increase, we believe lending opportunities are generally greater than they have been in the past such that banks will be able to meet their guidance.”
They further noted that “it appears that the recent change of guard at the central bank is unlikely to lead to a worsening regulatory environment. However, the changes put into motion by the previous governor are still being felt by the banks.”