Is The New Access Bank Destined for Greatness?

Investors love banking stocks that beat the market index without getting ahead of its financials or risking sell-off on overvaluation. In this financial analysis, we looked at the new Access bank, short term chart analysis, and basic banking metrics to check if the recent financials support strong price growth.

What we’re looking for?

We will be looking at key areas like:

  • Net Interest and Profit After Tax
  • Efficiency
  • Return on Equity
  • Customers’ Deposit
  • Book Value Per Share

In the bank’s recent result, Access bank reported a significant growth in net interest income to N53b (from N39.6b in the previous first comparable quarter). This was largely boosted by interest on investment securities which grew by 227%.

This growth at the top level, coupled with the net gain of N6b on foreign exchange transaction, were supportive of the 86% growth in profit after tax to N41b.

On the efficiency level, a key metric that tells how the bank is able to manage its operating expenses. Access bank efficiency ratio prints at 54.6%, down from 55.7%. While this is below the industry standard of 60%, the bank needs to cut a chunk of its operating expenses to rank at per with its peer.

Return on Equity, a measure of how the bank utilised shareholder’s fund, prints at 7.1% compared with 4.5% reported in the previous quarter. This represents a 57% growth Q on Q.

Customer deposit from the newly merged entity also grew by 35% to N4.6tr which is a form of cheap money (that comes with lower interest expenses) expected to generate higher earnings from an investment in fixed income market.

The customer deposit to liability ratio, a key measure of how the bank generates cheap money is 79%, a slight increase from 77% reported in Q1 2018. The significance of higher deposit/liability to a bank is that it tends to pay lower interest on savings/term deposit compared to interest on debt instruments like commercial paper, and Eurobond.

Since we can’t ascertain the full year’s earning with the first quarter result, it makes sense to use the net asset valuation approach to estimate the value of the bank’s stock. An asset-based approach identifies a company’s net assets by subtracting liabilities from assets. The asset-based valuation is often adjusted to calculate the net asset value of a company based on the market value of its assets and liabilities.

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Here is Everything You Should Know About FGN Savings Bond

How to Invest in FGN Bonds in Nigeria – Everything You Should Know About FGN Savings Interest Rates & Current Yields Including How it Works and Get Started

If you have been receiving emails from your stockbrokers on latest FGN savings bond but don’t understand bond as a fixed income investment, here is a simple explanation and detailed guide on how it works, including steps to invest in FGN bond.

FGN Bond is a bond issued by the Nigerian government in exchange for cash at a given interest rate and a repayment period. It also states how payments of the principal and interest will be made. A bond is a confirmation from a borrower that it borrowed money from a lender at a given interest rate and repayable over a period. They also include a minimum amount that can be subscribed to by the lender and in what multiples.

The FGN bond is a major source of finance for capital projects; otherwise known as longterm infrastructural investments. This is the reason bond tenors span for up to 20 – 30 years.

Why you should invest in FGN savings bond

When you invest in the FGN bond, you earn a passive interest income that will be paid quarterly directly into your savings or current bank account. Interestingly, you really do not need to have millions in your bank account to invest as anyone with as little as N5,000 can invest in the bond.

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3 Things to Do if You’re in your 40 With No Passive Income

How to Plan your Retirements in your 40s – Learn How to Save, Use the Passive Income Ideas to Invest and Build Wealth for your Family.

Aside from your voluntary retirement savings and contributions to Pension account, everyone is supposed to invest independently for passive income before one clocks 40. While this advice also applies to the 20s, 30s are considered the most appropriate time because it is the period one should aggressively build and own potential lifetime passive income assets.

When you clock 40, you ought to have moved from earning a salary to investing and from investing to generating a sizable passive income that will take care of you and your family.

The question is how much is considered a passive income? Well, there is no single exact figure to consider a passive income but I always think that if everyone has an idea of his/her monthly/annual living expenses, then one can work towards building an asset that generates a cash flow that covers these expenses with extra savings, this, in my definition, is what my definition of passive income.

For instance, if your family expenses on a monthly basis are between N100,000 – N150,000, (which translates to N1,200,000 annually), a true annual passive income, say N1,400,000 should cover these monthly expenses with extra cash savings.

Now if you are in your 20s or even 30s, you have enough time to start building your investment portfolio or asset for passive income. But if you are already above 40, that window may become narrower especially for the late 40s.

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Is It Worth Buying Stanbic IBTC Despite Higher Prices?

Among the three banks trading above N20 per share and have released their 2018 full year’s result, Stanbic IBTC bags the most impressive bottom line figure having recorded a significant increase in profit after tax and EPS to N74 billion (from N48b) and N7.04 (from N4.6), representing a high double-digit growth of 54% and 53% respectively. Not only is the bank doing a great job of maintaining its market share in its core investment banking business, and generating a better than expected non-interest revenue in a tough environment but also growing shareholders’ wealth.

The question now is, How is Stanbic IBTC able to grow her earnings faster? 

Let us look at the performance of the bank in the last 4 years, 2015 – 2018 period.

Source: Financial Statement 2015 and 2016

Source: Financial Statement 2017 and 2018

Revenue

The bank’s gross earnings grew from N140b in 2015 to N222b representing 12.22% average annual growth in 4 years. This is largely driven by non-interest revenue which went up by an average of 16.17% year on year (from N56b in the last 4 years to N102b).

Interest income is also growing by an average of 16.05%.

We know that banks make money by lending at a higher rate than what they pay to depositors. Banks collect interest (the money a borrower pays for the ability to use the bank’s money) on loans and pay interest (the money a bank pays depositors for allowing their money to be held). The difference between these two rates is known as net interest margin (or ‘the spread’) and is how traditional banks make money.

Stanbic IBTC net interest margin, a measure of the bank’s profit on its interest-generating assets, is still well above the industry standard of 4%, 8% (2015), 9.3% (2016), 11.9% (2017) and 9.2% (2018). Based on its 4 years of history, it has an average margin of 9.6%.

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4 Short-Term Investment Apps That Offer Higher Interest Rates Than Your Bank

Best Investment Apps in Nigeria – Earn Higher Interest Rates Returns Than Your Bank Fixed Deposit Accounts – Best Short-Term Investment Opportunities for Salary Earners.

I have some cash I will like to save and hold for 6-12 months but don’t want to keep it in my savings account, what are the risk-free options I can explore to earn a high-interest return above my conventional savings account rate of 2-3%? 

If you have asked a similar question, and are still looking for the best answer, this is for you, pay attention to the information shared, this might be one of your best short term investment guides this year.

We already know that the interest on a savings account is low to the extent that they can’t keep pace with inflation (now at 11.3% as of this update), so your money loses value over time.

For some of us that don’t know how money loses value every year, Let me share a practical example of how a typical N100,000 was worth more 3-5 years ago than it is right now.

We will compare savings returns when the average inflation rate as of 2013 was 8.5% and the latest 2019 figure of 11.3%.

Assuming you kept N100,000 in the bank in a savings account which earned 3% per annum in 2013. The real value of your money isn’t N103,000 at the end of the year but N94,000 (1+3%/1+8.5%). In Finance, we call this inflation-adjusted return.

Fast forward to 2019, the same N100,000 in a savings account that offers the same return of 3% after adjusting for a high inflation rate at 11.3% will be worth N92,000 (1+3%/1.11.3%).

You see how Inflation eats away the value of every stream of cash flow, including salaries, and pension. Although, you will get the same nominal value of N100,000 or N103,000 (interest included) the value of what you can buy with it has reduced from N94,000 to N92,000, down by 2% and that is how your cash savings lose an average of 2% of its value year on year.

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Will the NSE All Share Index Rebound Next Week?

The 2019 presidential election is over with the incumbent president emerging after polling 15.19 million votes to defeat Atiku Abubakar, his key opposition. The result has however been rejected by the opposition party citing violence in some areas and election malpractices.

Is this a sign of another political uncertainties? 

Investors have also reacted negatively to the uncertainties surrounding this development as the NSE All Share Index failed to break 33,000 basis point, rather went opposite direction to close the week at 31, 827.24 with the year to data return inching close to the negative territory, now at 1.92%.

Similarly, all other indices finished lower with the exception of the NSE Insurance and NSE Industrial Goods indices which rose by 3.01% and 0.93% respectively while the NSE ASeM index closed flat.

Let us analyse the NSE All Share Index Chart:

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How Re-Investing Your Dividend Will Multiply Your Wealth Faster

How to Build Wealth in the Stock Market (in your 20s and 30s) – The Secret to Plan, Retire and Double Your Stock Market Portfolio Faster.

When it comes to building wealth in the stock market, dividend investing is the least loved of the strategies practised. This is not far from the fact that the reward is small compared to the attractive and quick gain on share price appreciations which can come in days, weeks or months. Well, that is about to change as this guide will not only teach you strategies to picking dividend stocks and earn above CBN T-Bill rates but also strengthen and help you understand key secrets to generate a regular passive six-figure dividend income in a bearish and bullish market.

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Why Shares of Oando is Rising Amidst Huge Debt.

The price of Oando stock has been trending higher in the last 6 days, a bullish run with no recent corporate announcements. As of this analysis, the oil stock trade for N7.25, up by 9.85% in today’s trading session with YTD return now at 45%.

Let us look at the performance of the stock on a chart and analyse the trend of the stock for short term traders who might want to buy at the current market price.

On the chart above, I added the 50-day simple moving average (SMA) to gauge market sentiment towards the oil stock. Between November 2018 and December 2018, Oando stock was resisted at the 50-day line; each time the stock trend close to average, it turned bearish. (as indicated by A, B, C and D) But, notice how that same 50-day SMA rejection (which would have occurred at the region marked E ) was broken as the price went up through the resistance with a stronger run from N4.76 (and cross above the 200-day SMA) to N7.25, 52%.

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Where to Invest your Money & Earn Multiple Streams of Passive Income

Where to Invest your Money in Nigeria for Passive Income – High Yield Short and Long Term Financial Investment Opportunities in Real Estate and Property Development, Dividend Stocks, Treasury Bills, Fixed Deposits & Mutual Funds

Mike, a business consultant in an IT firm, often wondered how his closest colleague, Efe who was on the same executive level, with the same annual benefits and who also had the same skill and working experience could afford to migrate from his place of resident to a decent place at Lekki, buy a new Toyota Camry and even take his wife on a trip to some of the best places in Lagos and Abuja while he (Efe) was still struggling to make efficient use of his monthly pay and have some to save in a savings account.

Mike has been very smart about how we could use his salary to generate passive or side income. He didn’t just save his monthly earnings in a fixed deposit account, that earns a low-digit interest return while his money is lent to qualified corporate borrowers at a higher rate, but explored some double-digit interest return opportunities  only a few know in Nigeria, with the extra cash flow credited to his account month on month, quarter on quarter and year on year, he is on his way to achieving a total freedom from salaried job or monthly paycheck while securing his kid’s education and family’s fortune.

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Will NSE Index Go Up or Down After Election? Here a Technical Analysis

The NSE Index has recorded impressive appreciation. On a year-to-date basis, the index is up by 3.45% as investors take positions on stocks believed to be undervalued ahead of year-end results.

As of this analysis, the market closed the session at 32,515.52 basis point, down by 0.16%. Interestingly, this is the last trading day before Nigerians decide on who leads the country in the next 4 years.

Let us first look at a weekly performance of the index.

The NSE All-Share Index and Market Capitalization depreciated by 0.61% to close the week at 32,515.52 and 12.126 trillion respectively. Similarly, all other indices finished lower with the exception of the NSE ASem, NSE Banking, NSE Insurance NSE-AFR Bank Value and NSE Oil/Gas indices which rose by 0.96%, 0.68%, 0.02%
0.95% and 0.13% respectively.

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