How I Make Money from US Stocks – See Screenshots

The opportunity that I’m about to share with you could be the surest information you need to diversify and profit from the US stock market, week on week or month on month. In fact, it’s so profitable that I bet big on a stock using other people’s money – you are strongly advised to start with your own money.

If you are familiar with stock trading, you should know that capital appreciation is the most sort after strategies to multiplying your money in the market; this method requires one to pick a stock he or she thinks is undervalued relative to its fair value, buy at a low price and wait for an increase.

This idea works on every market, developing and emerging stock market. Unfortunately, we have experienced the opposite in the Nigeria stock market in the last 12 months. As of this update, my overall return on investment in the market is in the negative territory (-12%) with further downside expected; no thanks to the FGN and CBN’s never-ending unpredictable policies and political uncertainties.

In order to cut down overall losses on my combined equity portfolio, I have doubled-down on foreign equities (US stocks) by sourcing additional funds from some of my close friends, selected blog subscribers so that I can take advantage of the cash margin offered by my US stockbroker.

As of this update, I have closed 10 winning trades with each netting me an average of 20% return. I settled for a moderate 20% return so that I can easily compound my returns in 6 months to 1 year.

Here is a screenshot of my US stock brokerage account showing 2 of the 10 winning trades in my account history:

This stock market profits were boosted by margin trades; leverage that lets you borrow money from your stockbroker so you can buy more shares with less. For instance, if you opt for 1:5, it means you can use 5x whatever you are investing in the stock market. Let’s say you invested $200, it means you can buy $1,000 worth of shares in a company and if the price goes up by 10%, you will earn 50% return on your money or vice versa.

I don’t advise anyone to start trading US stocks like this unlike you have mastered the profit system I discussed in my video training.

Continue reading How I Make Money from US Stocks – See Screenshots

3 Reasons You Should Trade US Stocks & How to Start

The US stock market is dubbed the largest and most liquid exchange in the world with a market capitalization comfortably sitting above $50 billion. The exchange “houses” some of the best, finest and fast-growing global brands across different sectors like consumer, energy, financials, health care, industrial, IT, materials, real estate, telcos, and utilities.

Beyond the sectors mentioned, the US stock market also offers a variety of fund and ETF listings that reflects different categories of assets exposures one can think of; oil, gold, currencies, emerging markets, treasuries/bond up to cryptos. This means that whatever asset classes you may be interested in gaining exposure to, you can leverage on these diverse options to build foreign currency portfolio away from the Naira.

While investors are encouraged to invest in their local market so that indigenous companies will easily access capital for expansion, I strongly believe that the unique opportunities in the US stock exchanges are strong reasons one should diversify or hedge against the risk of single currency investments:

1. When you buy U.S.-listed securities… you’re buying the world

A larger percentage of the annual revenues generated by companies listed on the NYSE, NASDAQ, and AMEX actually come from outside the U.S. In 2018, an average of 52% of the sales posted by the top 500-listed companies ( S&P 500 index) didn’t come from the U.S. Well, you already know that a good number of companies listed in the US stock market are actually foreign companies – The reason the choose U.S. exchange is because that’s where the real money is.

Continue reading 3 Reasons You Should Trade US Stocks & How to Start

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.

Continue reading How Re-Investing Your Dividend Will Multiply Your Wealth Faster

Why Fidelity Stock Price Rally May Attract More Buyers to FCMB.

A few weeks ago, I alerted everyone on Fidelity bank, why the banking stock is still cheap at N2.38 and went on to share my technical and fundamental reasons you should quickly jump on the penny stock.  In line with my forecast, the stock did rally by 17% to N2.80 before reversing the 6 days bullish run to settle at N2.46.

While I still anticipate further upswing close to my estimated fair value on the release of the bank’s full-year result, we advise that you remain cautious by considering a 25-30% exit price of N2.9-N3.

Here is Fidelity stock’s Chart:

Based on the chart above, Fidelity might be set for another rally as evident by the bullish pin bar formation at N2.34 – N2.4 support level. The bank had already surpassed its 9-months figure in its previous comparable period (2017) and is expected to release better full year’s figures.

How does this translate to a buying opportunity on FCMB stock, you may ask?

Both banks, as of this analysis, have the same trailing twelve month EPS of 77k which when discounted by a modest adjusted risk premium rate of 19%, presents a fair value of N3.8 – N4.05. FCMB stock sells for N2.27 far behind Fidelity bank’s stock (N2.46).

Interestingly, FCMB formed a golden crossover today. Find more information on how I trade the golden crossover.

Continue reading Why Fidelity Stock Price Rally May Attract More Buyers to FCMB.

Why You Should Keep an Eye on NSE All Share Index Right Now

Investors seem to have ignored the political risk, shun the upcoming election and started hunting for cheap stocks ahead of the financial year-end result.

Last week, the NSE index closed on a positive note with the year to date return now on the green side. Even as I share this post, the market ended the trading session at 32,462 basis point, up by 2.14%, Year to date, the index is up by 3.28%

While this is in line with the stock market cycle, where gains are usually recorded in the first half of the year, it makes more sense to analyse the general market sentiments; a technical analysis that helps us ascertain the short term direction of the market.

Let us look at the NSE index direction on a weekly chart:

The market turned bearish in February 2018 as investors flee to safety on rising interest rate in the US, geopolitical tension between the US and Iran, brewing political uncertainties (battle between the two key parties )and trade wars between economic powers. While the first, second and fourth risk isn’t talked about like before, the third risk which seems to be the fundamental driver of the market direction.

Continue reading Why You Should Keep an Eye on NSE All Share Index Right Now

4 Reasons You Should Buy Learn Africa Stock at N1.40

When I shared a list of stocks you should watch closely before the general election, LearnAfrica was one of the stocks I asked my blog subscribers and Whatsapp group members to keep an eagle eye on.

The stock went up by 40% in 2018.

The stock, from the time we shared out first analysis, has appreciated by 12% to close at N1.4, from N1.24.

Here are 3 reasons we think the publishing company could go higher than its current market price.

The stock’s 50-day SMA had just crossed its 200-day to the upside.

When a stock is trending up as a result of increased buying interest, the moving average tends to follow the same direction and one of such is the 50-day SMA, an important average that reflects investors’ sentiment in medium to short term.

The 50-day MA also coincides with the 3-month period; this is the period every company is expected to release its quarterly results. A cross above the 200-day SMA indicates that the penny stock is attracting attention.

Continue reading 4 Reasons You Should Buy Learn Africa Stock at N1.40

Why Fidelity Bank Is Still Cheap at N2.38

If you had bought Sterlings bank’s stock when I shared my analysis of the banking stock and how it was grossly undervalued at N1.61, your equity investment should be up by 47%. The stock, as of this update, now sells for N2.36. Such return in 3 months is hard to come by in Nigeria, not even CBN Treasury Bill, FGN Bond nor your local bank’s fixed deposit can give you double-digit return.

Another stock I had mentioned on this platform is Newrest ASL. I bought this stock at N4.95 and sold at 7 after the company notified the exchange of its voluntary exit, which translates to 41% return.

While we can’t assign 100% accuracy to our stock picks, we believe, from results, that you have a higher chance to make more money consistently, beat the market and build a passive income investing business if you master and stick to the stock trading strategy shared here.

Continue reading Why Fidelity Bank Is Still Cheap at N2.38

3 Stocks to Watch Closely in this Pre-Election Season

We are a few weeks away from the general election, the stock market index is at bottom of the curve, a bearish trend that started last year (2018). But should you follow the crowd and wait for the stock market to pick before investing? I bet you, you may be paying more than what you can get right if you allow fear to drive your trade decisions.

According to Warren Buffet, the best strategy to make money in the stock market is to be greedy when others are fearful and the be fearful when others are greedy. While the latter is for the bullish market, the former is for a bearish market.

Although we might witness another market fall as election risks drive more fund flow from the equity market to safer fixed income instruments but 28,000 – 30,000 basis point seems like a strong support region to watch closely.

How can one be greedy in this market when the daily index fall is alarming amidst Election Fever?

For me, I use moving average crosses to pick good stocks that are outperforming the market index, this strategy account for 80-90% of my success in the Nigeria stock market. As simple as the tool is, it has helped me weed out sluggish stocks and scan for best performers even in a bearish market.

Continue reading 3 Stocks to Watch Closely in this Pre-Election Season

The Short term Stock Trading Strategy that Works

Trade Nigerian Stocks Using These Short-term Strategies – Learn the Best Short Term Trading Strategies that Works and Makes 20-30% Return in a Bearish or Bullish Market

The key secret to making money in the stock market isn’t all about jumping into a fast-rising stock because you don’t know when the trend is about to reverse but understanding and having a perfect trading strategy that spots the beginning of a bullish trend ahead of others.

In this guide, I will be sharing a short-term stock market trading strategy that can deliver an impressive gain of 25-30% return in 1-3 months. With this guide, you will weed out bad stocks, focus on momentum stocks that are attracting huge buying interest even in a bearish market.

My result:

I bought Sterlings bank and averaged down to N1.6 on November 4th, 2018 and after 1 month, I sold  50% of my units holding at N2 per share (25% profit), I left the other units because the banking stock could surpass the fair value estimate since it had delivered double-digit growth in the last 9 months.  As of this write-up, Sterlings is selling for N1.81 per share.

See – Analysis of Sterlings Bank stock during Golden Cross

To save time on this long story, the strategy I am talking about is Golden Crosses.

What is Golden Crosses? This is a moving average crossover that describes a rare cross between the 50-day SMA and the 200-day SMA. While the 50-day measures the average price of a stock in the last 3 months and widely used by short-term traders, the 200-day, used by long-term investors, measures the average price of stock in the last 1 year.

If you invest for a long-term, you shouldn’t be worried about short-term fluctuations, rather look for longterm sentiments and momentum stocks.

An effective Golden cross isn’t all about chart patterns but understanding the fundamentals behind price.

If a company is built on solid financials; impressive double-digit quarterly results and has a steady rising trend, and suddenly the 50-day moving average crosses the 200-day to the upside, it can bring the attention of a lot of existing and new investors.

You must also note that for a Golden Cross to happen, the stock’s price must have been moving up for a reasonable amount of time before the cross happened, say 3-6months.

After all, the shorter of the two moving averages are 50 periods. (EG 50 days), so for the price to pull the 50MA up to cross above a 200-day average, then there’s already been some significant strength in the price.

Please note that it is not all crosses that are golden, you need to understand the fundamentals of the stock, check recent results, opportunities and fair value estimate.

Here are my criteria for picking stocks that made golden cross:

  • The 50-day SMA should show a recent cross above the 200-day SMA; for instance, the 50-day price of Sterlings bank was N1.52, slightly above the 200-day average of N1.50.
  • The fundamentals of the stock should support the recent momentum: Sterlings bank’s PBT, PAT and EPS in Q3 jumped by 30%, 38% and 33% respectively.
  • The estimated fair value of the stock should be well above the 200-day SMA. The fair value of Sterlings bank as at when I bought was N2.44, which was far above the 200-SMA and 50-day SMA. If the fair value is below, the long-term average, avoid such stock, reversal is imminent.
  • The price should be trending in the last 1, 3, 6months before the golden cross. Sterlings bank year to date performance was 60%+ before it made a golden cross.

Sterlings Bank:

The stock went from N1.6 to N2 in weeks, that’s 25% return.

Away from Sterlings bank, here are some other stocks that made golden crosses recently and their recent performances:

Newrest ASL (Airservice)


I bought Newrest ASL at 4.95 after the stock made a golden cross (see my analysis here some days after purchases) in September 2018. As of this write-up, the stock price is N6.9, 39% profit in 2 months.

Newrest ASL had already surpassed its previous year financials, and from my fair value estimate, the stock should sell for N10.

As you can see, these are excellent stocks with beginnings of new momentum building. Golden cross mixed with fundamental analysis is a great short-term strategy that works in a bullish or bearish market.


This Short term Investment Strategy Offers Higher Return above T-Bills

Short term Investment Opportunity in Nigeria with High Returns 2019 – Best High Yield Investment Options to Make Guaranteed Income from Nigeria Stock Market.

Short-term investments, also known as liquid investments, are investments that mature in 6 months to 1 year. Unlike long-term investments, which is believed to offer higher yield over time, short-term investments typically come with lower risks, no wonder the returns are smaller.

When it comes to selecting the best options for your money, there is countless advice on why and how investing in long-term securities will help you accumulate wealth. But in the course of our day to day financial life, we frequently find ourselves in need of short-term cash flows to finance immediate needs which is why we must also seek investment opportunities that won’t take decades to build up and yet offer steady, low-risk and guaranteed return.

Ordinarily, the deposit account and CBN Treasury Bills are not only considered the best ideas but had been the widely adopted short-term investment options for amateur investors. But, the statistically-proven idea shared here will help you maximize the return on the cash in your savings account.

Although, you can’t rule out the risk involved, the combination of market timing and some level of exposure to government-backed securities will surely lower your risk. The average return on your investment can vary from 15% to30% in a 5-6 months

Who is this strategy suitable for:

  • Folks with idle cash in the bank
  • Folks that are looking for high return opportunities and at the same want to preserve their capital.
  • Folks that can invest now and wait for 6-12 months before exit.

Best Short-term Investment Opportunities with Higher Return

The two best investment options are Dividend Paying Stocks and Treasury Bills.

While you are wondering why dividend-paying stocks should be considered the best place investments for short term when the cash payout is small, please note that you aren’t buying these stocks for dividend purpose but to take advantage of the institutional money that flows into stock with an attractive dividend yield, then sell before the closure date.

Typically, when a company beats its previous financial records and is expected to increase dividend payout in the current year, investors would naturally flock to the stock when it is time to pay a cash dividend to shareholders whose names are registered before the closure date. An influx like this leads to a higher share price as buyers bid on the stock ahead of the payment date.

What you should do at this point is to scout for stocks that pass my 6 checklists for picking great dividend stocks and accumulate certain units at a lower price, like 5-6 months before the closure date. For instance, most listed stocks in the Nigeria stock market release their end of the year results (December) around February and March. Dividend payment date (which will be announced) usually falls between May and June. Between January to April/May, there is what analysts call “First Half-year optimism rally” while July to November is tagged “Second Half Pessimism rally

According to a research published by the BusinessDay Newspaper on 19th, November 2018 titled: How Investors Missed Out on Decades of Easy Profit, it was revealed that, in the first half of the year since 2000, the stock market has delivered positive returns 16 out of 18 years while in the second half of the year, the market has rallied 9 times out of the 18 years (from 2000 to 2018). This means that if you were a probability driven technical investor, you will see easily that there is an 88% chance of an upside in the stock market in the first half of the year and a 50% chance of suffering a market loss in the market in the second half of the year.

If an investor invested only in the first half of the year between 2000 and 2018, he would have earned an average annual return on his portfolio of around 14.23% versus an average annual portfolio loss of around 0.58% if he only invested in the second half of the year. This performance only assumed that the investor holds in his portfolio all the companies in the stock market at a market weight, (or bought the NSE index fund).

For investors looking for short-term opportunities in the stock market, if you had invested N10,000,000 in the year 2000 in using the H1 optimistic rally strategy, you would have grown to N100,000,000 as at the end of H1 in 2018, providing you with almost 10x return. If you had done the same in an H2 only portfolio, you will be N9,590,000 as at now. (November 2018).

While some analysts have tried to give different reasons for this historical stock market rally, we believe that the market can’t come close to efficiency. For me personally, I found one particular reason for such rally which is a great opportunity for short-term players and that is dividend investing.  A lot of corporate actions are released to the investing public between February and May with the company’s shareholders’ closure date for dividend qualifications falling in the same period.

Besides, a larger number of stocks that offer attractive dividend above market average are found at this period and if you miss it, you might not find any again till the following year. So, it is natural for big funds from insurance companies, pension fund managers, asset and investment managers to chase these stocks at this period hence push the share price to the north, after the closure date, they liquidate their holding since they are already qualified for dividend payment.

This explains the usual rally you see every first half of the year. So, your entry as a short-term trader is to screen for stocks that offer attractive dividend yield above 8-10% using my 6 criteria, buy at a lower price around November and December and sell before the closure date (you will see notifications under corporate action). This strategy can net you a modest 15-30%.

Where will I invest for the remaining part of the year? you can explore the money market by investing in Treasury Bills or put your money in a safe fixed income mutual fund with positive historical track records.

While this short-term investment opportunity in Nigeria has been proven to generate impressive returns over an 18 year period, it is not devoid of risk, hence, due diligence is required when picking Nigeria stocks to buy.

If you follow my guide on how you should invest your money, this short-term opportunity is suitable for young and aggressive investors below 40 years and not for aged folks.

Top 7 Stocks That Could Offer Mouth Watering Returns in 2019

Best Stocks to Buy and Hold In Nigeria 2019 – Banking and Insurance Stock Recommendations In Nigeria – Best Performing Dividend IncomeStocks To Invest Your Money.

Nigeria still relies on oil as a key revenue driver but this year, the energy market has had an insignificant impact on the country’s stock market index, down year to date by 16%, despite the rising price of crude oil in the international market, now above $60 per barrel.

As we wrap up 2018 and prepare for the new year, I would like to discuss the economic indicators, and market risks that will influence equity market investment decisions and key sectors to focus on.

See – ” Sure Growth Stocks, That Started Well in 2019, You Should Buy Now

Where Are We Economically – Risk Perspective?

Nigeria relies on imported products for its daily personal and business needs as such exchange rate stability is very important to the sustainability of the economy.

This is the sole reason…

The CBN has shown its resolve to keep the Naira from weakening against the dollar at all cost, even if it’s going to starve the private sector of credit and burn through the country’s external reserve as a record price.

(Source: BusinessDay)

Foreign capital exit to high-yielding assets in the developed countries., at the same time, is expected to intensify on the back of a rising yield on US Treasuries as the Fed plans more rate hike in 2019 and growing political uncertainties which will impact the risk premium on Naira-denominated assets and put pressure on the exchange rate.

The Naira has already weakened from N360, the rate it exchanges to a US dollar at the beginning of the year, to N363.32 at the I & E windows. This, coupled with massive equity sell-offs in the local bourse, is a clear indication that foreign investors are already exiting the economy for greener pastures.

Here is a big opportunity for smart investors:

Since the CBN has vowed to protect the weakening Naira, it surely would have to find a way to reduce Naira sales at the I & E window by enticing these foreign investors with higher rates on fixed income securities like Treasury Bills and Bonds.

Using the recently concluded Auction on Wednesday, 31/10/2018, where Treasury Bills worth N145 billion were issued the stop rate on 91-day T-bills trended upwards to 10.975% compared to the stop rates at the previous auction, 10.96%, it is also visible that the apex bank has started its drive to make Naira asset attractive.

The rate of 182 days and 364 day T-bills rose to 13.49% and 14.4% respectively from 12.69% and 13.45%. I expect this to continue in the coming auctions.

With average bond yields at around 14%, the rise in T-bill yields is gradually taking us back the era of “FREE MONEY IN THE MONEY MARKET“, last seen in 2017 when the yield on short-term securities rose to 17% record level, above long-term rates. This will no doubt mount pressure on the government as debt servicing cost may rise to 69% by the end of the year.

When yields on T-bill starts rising and becomes attractive, funds that would have been channelled to private sector lending would be diverted to these safer government securities.

If CBN T-bills slow-down hurts bank’s profitability in the first and second half of 2018 financial year, it makes sense to say that the rising yield on T-bills issued will also drive the financial sector’s profitability in which the bank, insurance, and other asset managers are part of.

Offering a higher yield on short-term securities may not be the only resolves of the apex bank, it is also “upping” dollar interventions to save the Naira from devaluation but the former seems to be more effective but expensive.

Going Forward – Key Sectors to Watch in 2019


Bank lending, as shared on how bank wants to make more money, is already dipping on the account of weak economic activity and political uncertainties with big banks cutting their loan book while increasing their investment securities. In 2019, we expect banks to park more of deposit generated in T-bills.

  • My top 3 banks to watch are Zenith, UBA and GTB; they all offer attractive dividend yield and may appreciate in price.

Based on my 6 checklists for picking dividend income stocks, UBA and Zenith are my preferred dividend stocks.


Insurance companies are also expected to invest more of the net premium income generated from policyholders on these fixed-income assets. I would advise you key into profitable insurance stocks with above average return on equity and a combined ratio of less than 100%.

  • My top insurance stock picks are Custodian Investment plc (dividend and share price appreciation) and NEM (share price).

Asset Managers

Investment firms that provide investment banking, asset management, securities and insurance services to corporations, governments, high net worth, institutional and retail clients are also not left out of the interest income from rising yield on T-bills in 2019.

  • My top picks for dividend income and share price appreciation are UBA Capital and Africa Prudential

While these best stocks to buy and hold in Nigeria 2019 have had their past profitability driven by rising yield on T-bills, it doesn’t in any way imply a BUY or SELL recommendation nor negate other listed equities, you are advised to do your homework.

One of my results – I shared an analysis of Cement Company of Northern Nigeria ( CCNN ) in February and why you should buy the stock. The price has increased from N16 to hit N31, 90%+, now at N22.

How Nigerian Banks Want to Make More Money

How Do Banks Make Money in Nigeria – Analysis of Banking Stocks In Nigeria Stock Market and How They Make Money From Loan, Treasury Bills and FGN Bonds

Understanding the business of banking isn’t an option for investors looking for good banking stocks to buy but a required process that will help you uncover and weigh profit opportunities and inherent risks.

It is easier to say that banks accept deposits from individual and corporate customers and lend to borrows at a higher rate or invest in fixed income securities but knowing which of these categories accounts for 80-90 of the profits declared is critical to selecting the right bank that is positioned to make more money and pay higher dividend per share.

A bank can be loan driven if it gives most of the money generated as deposits to qualified borrowers at a higher rate while paying less as interest expenses. On the other hand, an investment-driven bank is one that is constantly increasing and investing deposits in fixed income securities like CBN Treasury bills, FGN bonds or other risk-free securities. The return on these two (2) income-opportunities is called “interest income”

As more banks deploy advanced technology infrastructures to ease transaction processes like payments, transfers, account inquiry and statements, the fees and commissions, earned on transactions performed on their platforms, are called non-interest income.

I won’t be talking about non-interest income.

How is your bank making money?

Before investing in a bank’s stock, I always take my time to understand their key revenue drivers and align with banks that are well positioned to grow their bottom line based on economic realities.

As of this writing, some banks had just released their 9-month results and it makes more sense to use their recent results to know whether they are loan or investment-driven, this will help me analyse their revenue opportunities and industry risks.

The three key metrics to focus on are the customer deposits, loan to deposits, and loan to assets ratio.

  • Customer deposit reveals the cash held on behalf of its customers, both savings, current and term deposits.
  • Loan to deposit ratio shows the proportion of the customer deposit that is advanced to customers at a higher rate.
  • Loan to asset ratio shows the proportion of the bank’s total asset that is advanced to customers.

Guaranty Trust Bank

GTB in its Q3 results reported a total asset of N3.4tr against N3.3tr in 2017. A breakdown of the total asset showed that N1.27tr was advanced to customers compared to N1.44tr in the previous comparable period, a decrease of 11%.

The bank’s loan/asset fell from 43% to 37% which shows that it is cautious in its lending to the private sector. Investment assets stood at N598 billion against nil figure in 2017.

GTB generated more cash as the deposit grew from N2tr to N2.2tr.

Loan to deposit ratio, a metric that tells us the percentage of customer’s deposit that is advanced to borrowers, fell from 72% to 57%.

While GTB is still a loan driven bank, we can easily deduce that the bank is lowering exposure to loan risk and investing more in fixed income securities.

Watch out for rising yield as inflation and economic risks increase; this might be another opportunity to key into the bank’s stock in 2019.

Zenith Bank

Zenith bank, in its Q3 results, grew its customers’ deposit to N3.2tr (from N3tr) which is 6% growth.

The total asset as of September 2018 was N5.6tr, up from N5.1 in 2017. A breakdown of the bank’s asset showed that it has reduced its exposure to loans and advanced to N1.8tr, from N2.1. Loan/asset ratio as 25% (compared to 41% in the previous quarter).

The loan to deposit also fell from 70% to 56%.

The bank, from my analysis, is also cautious of private sector lending, rather it is gradually investing more in CBN treasury bills as evident in additional N100b injected in the short-term securities.

United Bank for Africa (UBA)

The bank in its Q3 result reported a total asset of N4.5tr, up from N4 in 2017. A break down of the bank’s asset showed that loan and advances to customers fell from N1.6tr to N1.5tr while investments securities were shored up to N1.5billion against N1.2 billion.

Loan to assets ratio is at 33% against 40% in the previous comparable period.

Based on the Customers’ deposit,  which grew from N2.17tr to 3.1, loan to deposit ratio stands at 48% (compared to 59% in 2017).

Access Bank

The bank, as of this writing, reported a total asset of N4.3tr against N4.1tr in the previous comparable period. Out of this value, loan and advances stood at N1.97tr, a slight decrease from N1.99; the bank is still focused on private sector lending.

Based on data presented, loan to asset ratio fell from 48% to 45%

Deposits from customers increased from N2.2tr to N2.4, hence, loan to deposit ratio was 82% as it maintains stance on increasing interest income from loan portfolio.

Investment securities as at the reporting period were N446 billion, up from N276 billion.

In summary, Access bank is more of a loan-driven bank but gradually building up its investment securities to take advantage of the free money in the fixed income market.

From my analysis, you will notice that Tier 1 banks are lowering exposure to loan risks, and expanding their fixed income portfolio. A smart investor should pay attention to economic risks, the biggest driver of yield in the fixed income market.

When economic risks are high, investors clamour for high yield on FBN bonds and CBN treasury bills to compensate for the risk and such earn more.

As banks build their fixed income portfolio, it is a clear indication that they want to make more money from the fixed income market and less from loan and advances, since it comes with a greater risk.

How I Trade US Stock Ahead of Earnings Releases

How To Trade The News and Earning Releases In US Stock Market – Learn The Best Strategy To Buy Foreign Stocks At Low and Sell At Higher Price for Profit

As of this writing, we had just wrapped up the 3rd quarter and are at beginning the final quarter of the year.

Any moment from now, listed companies in the US equities market will be expected to release their 3rd quarter reports so that investing public can take decisions as whether to hold the stock or sell.

Earnings seasons are characterized by market noise and high volatility due to investors’ reactions to several companies reports and announcements. While some listed stocks’ prices will experience massive sell-off on disappointing results, other stocks, with the impressive report will attract positive sentiments.

The third and most confusing are stocks that would go in the opposite directions; what I mean is you will see earnings beat expectations, instead of prices to follow the same trend, it will nose-dive as profit-taking volume outweighs bidders. In such, scenario, you need to quickly understand that investors have already priced in earnings expectations before the actual releases.

In the midst of this market noise, how do you cut through the needle, capture trading opportunities ahead of other traders and exit with a sizeable profit?

Here is how I am trading Apple stocks ahead of earnings release:

Screen for Stocks With Positive or Negative Sentiments

The sentiment of a stock is the culmination of past financial results, expectations and company-specific news. It shapes investors’ emotion around the stock and overall lead to buy or sell decisions.

When investors’ sentiment is positive, the affected stock’s price tends to increase which may be a result of the last earnings report or potential growth opportunities.

Below is the chart of Apple, a stock that has been enjoying positive sentiments and had just hit $1trillion market capitalizations.

How To Trade The News and Earning Releases

Look At Past Earnings & Analysis Forecast

Apple is expected to report its next quarterly earnings on November 1, 2018, past earnings had shown positive surprises with 11 analysts’ forecasting EPS for the next quarter at $2.77 against the reported EPS( for the same quarter last year) of $2.07.

With such positive sentiments, Apple is expected to trade higher before the earnings date as investor’s take position ahead of November announcement.

Best Entry and Exit Strategy

The overall stock trend is bullish as indicated by my favourite moving averages which I have already explained on analysis of MasterCard stock.

The best strategy to trade Apple stocks is to enter and exit before the earnings date.  Why should one close one’s trade before the announcement? we still can’t rule out of the fact that the market could turn sideways if Apple’s earnings come out below expectations; to be on a safer side and lower my trade risk, I’d rather exit the market and take profit.

The trade idea is to take advantage of the positive sentiment driving the stock by waiting for a dip, on profit-taking, to the 50-day SMA support region, buy on the resumption of the uptrend and sell at a higher price per share.

On the chart shared earlier, notice how price had bounced off the 50-day SMA (the 3 big circled regions) thrice before moving up to a new level in the last 2 months.

This strategy to trading stocks ahead of earnings releases had been very profitable, at least, I made money on MasterCard, Visa Card and Amazon’s last earnings expectations using this method.

How to Analyse Stock Market Trend: a Lesson from my Profit on MasterCard Stock

How to Predict Nigerian Stock Market Trend & Analyse Movement – Learn Stock Market Analysis, Know When to Buy and Sell Easily for Maximum Profit

Have you been in a situation where you bought a stock because it made the list of top gainers and on the next day the price suddenly fell to an extent that you were stuck; couldn’t sell at a loss again but rather decided to turn it to a long-term investment, even after months, you still couldn’t recover the loss suffered earlier but watched your stock sank more? Then, this guide is for you.

Your mistake was that you didn’t analyse the trend of the stock before buying or taking a position. The trend of a stock doesn’t have anything to with daily price fluctuation or else, you will keep checking the stock market table or market prices every day. When I buy stock based on my pre-determined setup, I try to avoid market noise; whether it’s up today or down tomorrow, I have always cut the noise and focus on my overall profit target.

As of this writing, my MasterCard stock just hit the profit target. I bought the US stock on the 16th, July 2018 at $205.5 and after 7 days, the stock touched $209. Did the price rise without a fall? No, at times it might even fall to $203; my account would be in a loss position but I wasn’t moved because I understood how to analyse a stock’s trend. My hope was intact and I said to myself, “as long as you did your homework well, have a trading plan, there is no need to panic”. Now, look at the result, I ended up in the green region.

What gave you confidence in this stock, you may ask? My simple response is, I understand the overall market trend. A stock trend is a very important factor to consider before taking a position. You could be lucky to go in the direction of the trend and cash out but you know what? You just played a gamble and won! Yes! you did. You could have entered another trade and lose your trading capital. So, isn’t smarter to understand a stock’s trend before opening a position?

What is a trend?

In the stock market, we say, a trend is a direction which could be up or down. When you see a stock closing higher on a daily, weekly or monthly basis, it’s an uptrend but if the market closes at a level that is lower than it’s previous closes, we say it’s trending down. This is a lay man’s definition of a trend and it’s not devoid of confusion.

Let’s say a stock add 50k to close at N1.5 on day 1 and shed 30k to close at N1.2 and added another N1 to close at N2.2. On the last trading day of the week, it lost, 75k to close the week at N1.25, do you say it’s bullish, bearish, bullish, bearish? This is a clear definition of confusion and imbalance, only a trader who is glued to his computer 24/7 will be bothered about this fluctuation. Recall my trading experience on MasterCard, the stock fell sharply after I opened a position and after 7 days of patient, it hit my target price.

More Details About a Trend

Understanding a stock’s trend increases your chance of trading in the market direction which ultimately makes more profit. When a stock is clearly in an uptrend, the best decision is to open a long position (buy), set a reasonable profit target and go engage yourself in other activities. You don’t have to stay glued to your system all day.

How to Analyse Stock Trend

To analyse a stock’s trend, I use a simple indicator called moving average. Moving average lets you measure the average price of a stock over a specified period so that you can gauge the overall trend of the market.

The most popular moving averages as of this writing is the 20 days, 50 days and 200 days moving average. The reason these three moving averages are popular is that they coincide with a month, quarter and a year respectively. Investors love to watch the performance of a stock within this period but the most popular and effective moving average is the 50 days.

Why 50-day moving average?

This moving average mimic the performance of a stock in a quarter which is the period listed firms are expected to release their interim report. It’s generally believed if the quarterly earnings beat analyst estimates and outperform previous quarter’s result, the 50 days moving average will rise, and the price tend to stay above it, which means that fund managers are clearly bullish on the stock.

The rule of thumbs on moving averages indicator are:

  • When the 20 day is above 50-day, and 50-day is above 200-day it is a short-term and long-term bullish trend.
  • When the 20 day is above 50-day and the 50-day is below 200-day, it is a short-term bullish and long-term bearish trend.
  • When the 20 day is below 50-day and 50-day is below 200-day, it is a short-term and long-term bearish trend.
  • When the 20 day is below 50-day and 50-day is above 200-day, it is a short-term bearish and long-term bullish trend.

This was the exact tool I explored to determine the overall trend of MasterCard stock before taking a position, I saw the bullish opportunity when the 20 sma was clearly above the 50 sma and 200 sma.

So, when you want to trade your next stock, don’t forget trend analysis, you will increase your chance of making money consistently in the stock market. The idea is to follow the trend or else you would be stopped out.

I hope this helps?


How I Trade US Stocks

How To Trade US Stocks From Nigeria & Overseas – Learn How to Open a US Stockbrokerage Account, Pick Profitable Stocks As Non-Resident Citizen Living Abroad.

As a Nigerian who is looking for overseas investment opportunities in a market like the US, it is quite difficult to find an online broker that offers unrestricted access to the financial market. If you doubt, then you can spend some time to research all the regulated stockbrokers in the US, you will notice that one of the countries that are hardly accepted into their client record is Nigeria.  While I understand the regulatory reasons for such decline, and the need to ensure sanity in their global financial market, I still feel there are sincere local traders and investors to consider.

Why are foreigners/non-US resident showing increasing interest in US stocks despite the presence of the local stock exchange and online equities trading platforms in their respective countries? The US stock market remains the world’s largest and most liquid stock exchange in the world. Not only does it give you opportunities to trade fast-growing global brands, but also lets you diversify your portfolio into foreign-currency-denominated assets.  As an investor, you need to hedge your asset against currency risk by diversifying into foreign assets.

As of this update, the number of publicly listed US stocks representing major sectors is more than 7000, and that of foreign listed stocks in the market keeps increasing as they seek access foreign currency capital for expansion.

For us here in Nigeria, the market is a perfect alternative to trade stocks and diversify equity portfolio away from the Naira, especially now that the NSE index performance has shrunk from a peak of 45,000 points in February 2018 to a multi-year low of 24,000.

As of this writing, the NSE index has just returned to a negative path, posting -15% YTD on the back of higher than expected selling pressure. Besides, after the 2008 equity market crash, it seems retail investors do not have confidence in our local bourse again; most stocks in the banking, consumer, oil and gas, insurance and industrial sector are down from their highest price level; some stocks that traded as high as N100 – N150 are even selling for a paltry N5 to N10.

This bearish trend as pointed out in my post on how to pick stocks in a bearish market is very strong, the dollar against emerging market currencies is gaining momentum as the FED reserve increased US rate from 1.5% to 1.75%. Normal, foreign portfolio investors, who are looking for “carry trade opportunities”; buy currencies with increasing yield and sell currencies with falling yield.

Also, the political landscape isn’t clear again; no thanks to political insecurity. Even after impressive year-end results, fund managers are re-adjusting their portfolio to cushion the effect of political risk.

If you look at the NSE market outlook in near-term, it makes more sense to cut equity exposure as a short-term trader until the market regains its strength and diversify into the foreign stock market.

The best investing strategy for Nigeria investors:

Diversifying into the US stock market offers a perfect hedge against exchange rate risk arising the US dollar strength against the Naira. The US stock market lets you trade various asset classes beyond equities; metals, energy, and indices. Each of these asset classes tracks the performance of virtually all the segments of the US and world economy, for instance as the US dollar index continues to strengthen against emerging market currencies, there is a tradable ETF that tracks that movement, and as the Oil price increases on rising tension in the middle east, there is also an Oil ETF shares to trade, even the overall market indices, S & P, Dow 30 and Nasdaq have their ETFs too. Right now, everyone is talking about AI (artificial intelligence), and fintech, you can also leverage the stock market and tap into the multi-billion dollar opportunities in this emerging technology.

Another catch I love so much about US stocks is that there is no limit to their daily price movement, a stock can rise and fall by more than 100% depending on investors’ sentiment. Take a look at the snapshot of two stocks that gained 143.12% and 105.23% on a single day:

You won’t find such an opportunity in our local bourse as regulatory and allowable changes are capped at +/- 10% daily.

The summary of these is that you need to look beyond the local stock market by giving foreign stock trading a try, but not without having a proper understanding of strategies for picking stocks that will rise.

Click here to join my private Whatsapp group and learn how to diversify into foreign assets for massive growth.

I have also added US Equities Market to this blog so you can follow my weekly US stock analysis and trade setups.

How to Pick Stocks In a Bearish Market

How I Pick Nigerian Stocks To Buy In a Bearish Market – Learn How To Analyse The All-Share Index Using Technical Analysis and Pick Fast-Rising Stocks

The Nigerian stock market seems to have lost the momentum it gathered at the beginning of the year. As of this writing, the YTD performance of NSE index is less than 5% compared to the impressive 16% return achieved.

What could have been the driver of the bearish market? Some analyst attributed the fall to normal market correction, others felt there is no major news that could support the next bullish run. I had earlier expected the upward trend in the oil market to be a key supporting factor but as the price of oil inch higher every week, the market seems to have taken a “U” turn. My next question is “should one sell-off existing stocks and wait for a bullish signal “? and How can one pick a good stock in a bearish market like we are seeing now?

For traders with existing stocks, I believe it’s time to cut your loss and cash out as the bearish market trend. Take a closer look at the chart below, the market sell-off seems to be stronger every day.

Maybe you should look into my low-risk and high yield investment ideas right now pending when the stock market will bounce back.

pick stocks in bear market

This chart may look confusing to you but if you had bought my trading strategy course on “Little Secrets that Make Big Money In Stock“, you should be able to understand the market trend displayed on the chart above.

The summary of this chart is that NSE all-share index may go down further as pointed out by the MACD and DMI. We could see the index fall to 38,000 level as selling pressure continues to increase week by week.

According to BusinessDay (publication on May 28th, 2018), this bearish trend is connected to a massive repatriation of the foreign portfolio as the yield on US 10-year bond rises to 3-year high above 3% following the US interest rate hike to 1.75%. Ordinarily, a rate hike in a country attracts investors to fixed income securities, so this is a normal capital flows that affect emerging markets more. Another factor is the political tension and party congresses as the country’s election draws near, besides, the USD/NGN exchange rate is under pressure right now: the naira has depreciated to N368 from N360 in the investors and exporters window.

To address the second question which is “How can one pick stocks in a bearish market”, I would be discussing my top 2 stocks to watch closely this year. They are Cement Company of Northern Nigeria (CCNN) and BetaGlass. From the time I recommended these stocks, the former has added N6-N10 to its share price while the latter has added N4-N5. What caught my attention to these two stocks is that they keep hitting new highs as the general market witnesses further sell-offs.

A stock that keeps gathering momentum in the midst of stronger bearish market is worth looking into, there must be something peculiar only few traders are seeing. While a good number of stocks are falling off the cliff, creating more south-ward space away from their the green territory, CCNN and BetaGlass have continued to top gainers chart, and eventually, become investors’ appetite.

Well, you could be partly right to attribute the performance to fundamentals, but I rely more on technical when picking stocks in a market like this.

As a smart trader, here is what I do to find great stocks in a bearish market:

  • Check the overall market performance and bearish sentiment.

The NSE market index began its bearish run in February 2018 after it posted an impressive run of 16% in January. The market has since dropped from a peak of 45,000 basis point to 40,213, that’s like 12% off the 16% to bring the YTD return to 4.9%.

  • Look for stocks that are showing bullish strength in the same period.

Sincerely, it is very risky to play in this type of market. If you do, you are already going against the first general trading principle. don’t trade against the trend, the trend is your friend, so why make the trend your enemy? If you insist, then don’t trade what you can’t afford to lose.

The NSE market index is down by 12% in the last 4 months (February – May), but here is a stock that had also increased in the same period.

pick stocks in bear market

BETA GLASS is a company that manufactures and sells glassware. The Company provides glass bottles and containers for soft drinks, wine and spirit, pharmaceutical, and cosmetics companies.

The stock, as of this writing, has gained close to 17% in the same 4-month period the NSE market index lost 12%. From the chart above, BETA GLASS has continued to post a positive monthly return since the start of the year, rising from N52 in January, crossed February, the exact month all-share index showed a sign of sell-off, to hit an all-time high of N87.

BETAGlass is currently trading for N83 per share with YTD return of 56.6%, a clear market-beating figure.

See – How I Make Money Trading Penny Stocks

  • Check Fundamentals of the stock

Even though I employ technical analysis when picking stocks in a bearish market, it doesn’t mean that that the fundamentals of the stock doesn’t matter, at least, your selected stocks should be posting good numbers on key line items. This will help you avoid pump and dump stocks that are only growing on one-time news.

Read my guide on how to analyse the quarterly result of a company. You will have a better understanding of fundamental analysis.

  • Is this the time to buy?

BETAGLAS stock may be due for reversal; all indicators on the monthly chart point to an overbought stock; expect a sell-off as traders look to take profit soon.

pick stocks in a bear market

On the daily chart, MACD bearish crossover is a warning sign that BETAGlass stock sell-off is imminent, so I would advise you to wait for a bullish sentiment as long as the fall doesn’t exceed the general market index.

pick stocks in a bear market

Back to my question, is it the right time to buy? No, wait for a pullback and ride the next move once MACD bullish crossover surfaces on the daily chart.

In summary, this is how I pick stocks to buy in a bearish market and I hope you would find this guide useful for trade decisions. But like I said earlier, this strategy isn’t devoid of risk, you may lose you cash.

How To Make Money In Stock Market Without Trading Stocks Yourself

How To Make Money From Nigerian Stock Exchange Without Trading Shares Yourself – Let Professional Mutual Funds Pick Top Performing Stocks, Invest for You While Your Get Returns.

After the 2008 global market crash that led to massive stock sell-off, sending the NSE index to an all-time low, interest in the Nigerian stock exchange market seems to be gathering momentum again. The equities market posted one of the best impressive performance of 42% in 2017; thanks to the reversed bullish trend in the oil market and innovative investors’ and exporters’ window introduced by the CBN to help make forex available at a market-determined rate without intervention.

This return which was far better than -16.1%, -17.4% and -6.2% in 2014, 2015 and 2016 respectively, was driven by Dangote Sugar Refinery (227%), International Breweries (195%), and Fidelity bank (193%). Other notable stocks that contributed to this positive close were Fidson, Stanbic IBTC, First Bank, UBA, NASCON and Nestle.

Since this news broke out early this year, I have been receiving several emails from my blog visitors and messages from retail traders on the best stocks to buy.  The interesting discoveries in these messages emails were that these senders weren’t experienced in stock market trading; no prior knowledge of the stock market investment or technical analysis of stocks, yet, they just wanted a simple and low-risk guide to taking their share of the potential wealth-creating opportunities in the stock market.

This is not even a local trend, foreign investors have are also keying into the trend.

Investors’ participation, at both local and foreign level, in the NSE market is now higher than it was last year.  While foreign portfolio investment is up by 59% to N132bn (against N82bn in February 2017), local investors have expanded their money flows by 51.48% to N140bn (against N128bn) (Source).

This actually shows that local investors invested more money than foreign investors.

How To Make Money From Nigerian Stock Exchange

This is a summary of the transaction flows from foreign and local investors. You will notice the spike from N83.22bn to N132bn; a lot of hot money is currently flowing to the financial market right now. Besides, as of 2018 YTD, local investors currently hold 56.56% of the market transaction while 43.44% is from foreign investors.

What did you see from this analysis? interest in the local stock market is at all-time high right now but what percentage of this traders are experienced and professionals traders? I can confidently say that only a few are actually making the real money.

As a smart beginner who isn’t a genius in the stock market but would like to invest in stocks, here is what you should do: instead of using trial and errors to pick stocks and lose money, isn’t it smarter to look for professionals that have a track record of positive returns in the stock market.

A brief look at mutual funds and their performance:

Mutual funds are professionally managed investment funds that pool money from investors to buy securities. While some funds are sector-focused, others are diversified. Your focus here is to look at equity funds; mutual funds that invested in listed securities for medium to long-term capital appreciation.

In Nigeria, we have a lot of professionally managed mutual funds that are creating more wealth for their retail clients. Why not find one,  let them manage your money for you while you focus on other businesses?

Let’s take a look at some mutual funds and their performance in 2017:

How To Make Money From Nigerian Stock Exchange

In percentage terms, FCMB Legacy Equity Fund topped the list to post the best return of 52%, followed by ARM Aggressive Growth Fund (46%) and FBN Nigeria Smart Beta Equity Fund (45%). While the past performance isn’t a key determinant of the future trend, it still serves as a guide to selecting the fund to select.

Here is my guide, I love equity funds not only posted positive return (above inflation figure of 14%) but also beats the NSE  market index.

As of this writing, we had just concluded the first quarter of 2018, let’s look at the top mutual funds that are posting market-beating returns above NSE index of 7%:

  • Meristem Equity Mutual Fund – This fund, owned by Meristem securities, focus on high-quality equities securities for long-term capital gain. Meristem Equity Fund created more wealth by 41% in 2017 and as at the end of Q1, 2018, it is already up by 17%.
    • If you had invested N1m in January 2018, in 3 months, you would have added N170,000 ( which is far better than fixed deposits or treasury bill).
  • Stanbic IBTC Aggressive Fund – When I contacted Stanbic IBTC to know more about this fund, they said, it’s targeted at high-class investors who can invest a minimum of N20m. While 60% of the fund is invested in equities, 40% is in fixed income market. Stanbic IBTC Aggressive fund posted 41% return in 2017. So far, the fund is up by 12.58% in Q1, 2018
    • If you had invested N1m in January 2018, in 3 months, you would have added a gain of N125, 800 to your investment.
  • Frontier Fund – This fund’s primary objective is to build long-term wealth for its clients by investing in carefully selected equities and money market securities. The fund gained 22% in 2017 but has now moved up to the ladder to be among the top 3 in the first quarter, up by 10.55%.
    • If you had invested N1m, you should have added N105,500 to your mutual fund portfolio in 3 months.
  • UBA Equity Fund – This fund is suitable for investors with a long-term outlook. It uses an internally generated fact-sheet to pick stocks that will deliver a long-term capital gain. The fund grew her client’s wealth by 41% in 2017 and also already up by 10.45% in Q1, 2018.
    • If you had invested N1m, your investment, at the end of March 2018, would have increased by N104,500.

While these aren’t a mutual recommendation, I shared this investing guide to let you know that,  even if you don’t know how to pick stocks, there are still alternative wealth-creation opportunities you can explore in the Nigerian stock market.

So, when you think of how to make money from Nigerian stock exchange market without spending hours analysing stocks or reading financial statements, go find a professional equity mutual funds that have good track records.

How I Compare & Trade Nigerian Banking Stocks

How I Compare & Trade Nigerian Banking Stocks Online – Learn How to Analyse Nigerian Stocks, Do Financial Ratio Analysis & Pick The Best Stocks To Buy.

Nigerian banking stocks are one of the most sensitive and volatile sector stocks to trade in the stock market; a fact that is not far from the strict regulatory presence of the CBN.  Well! It shouldn’t be a surprise to you; your money is held in banks and if there is no effective regulation governing the management, safety and investment of these deposits, public confidence in the financial system will definitely be lost.

Let’s look at the business model of banks and how investors should approach stock selections in the sector. How do banks generate and make money? This is the first question every investor, looking for a profitable bank to buy shares, should ask. You don’t just rush into a bank because they declared a profit after tax of N200b, probe their profit drivers, analyse the trend and understand the prospect of sustaining such performance.

I have already discussed in depth, the practical process of analyzing banking stocks here, go check it.

For the purpose of comparing two banking stocks and understanding stock selection, I will share a summarized and quicker approach to know which stocks to buy using Zenith and GTBank Q1, 2018 report.  Both banks, rank as top performing and most profitable banks, had just released their first quarter result as of this writing.

Now, let’s compare GTB and Zenith bank:

Who generates cheaper money more?

Banks generate money by accepting deposit from customers or issuing debt securities like commercial paper, Eurobond, etc.  While deposit comes with cheaper interest expenses, debt securities are subject to market risk and if it’s a foreign debt, exchange rate becomes an indicator to watch closely.

To answer these questions, I will be using their Q1, 2018 result to compare customer’s deposit and deposit/liabilities ratio to check which of the banks generates cheaper money than the other.

From GTB’s Q1 2018, the total customers’ deposit grew by 7.4% to N2.2tr against N2tr (in 2017) while Zenith bank’s customers’ deposit in the same period fell to N3.3tr (from N3.4 in 2017), that’s like 2.9% decline.

Lest I forget, Zenith bank has overtaken First Bank as to become the largest bank by customers’ deposit.


On deposit/liability ratio, I like to know which of these banks generate cheap money in percentage terms than the other. A higher deposit ratio means that more money flows at a lower cost (interest) while a lower ratio means the bank would have to issue more debt securities to fund loan and advances.

GTB has N2.2tr customers’ deposit and total liabilities of N2.9tr as at the end of Q1, 2018, representing 75.8% (a rise from 74% in Q1, 2017). Zenith bank’s ratio has 67.3% (N3.3tr in customers’ deposit and N4.9tr in total liabilities) against 71%.

From this analysis, GTB generates cheaper money in percentage terms.

Which bank is growing its core earnings?

A bank can use the money generated from customers’ deposit or debt issue to make more money by advancing it to retail and/or corporate customers or invest in the financial market. While the former comes with the risk of default which could lead to an impairment charge, investing in the financial market isn’t devoid of market risk. As of this writing, the yield on bond, treasury bills is currently on a free fall as the federal government reduces her exposure to domestic debt by issuing more foreign currency denominated bond at a lower interest rate.  This alone is a big threat to the profitability of banks that were holding back on loan and advances.

When comparing the performance of two banks for a better decision, I love to look their core earning: interest income from loan and advances or investment securities. Non-interest income is also important but when a higher percentage of banks’ earnings isn’t tied to its interest income, watch out for that red flag.

For GTB,  interest income fell by 4%,  from N84b to N80b driven major by the decline in interest on loan and advances to customers. As you would expect, this affected the net interest income as it fell to N59.6bn, from N66.1bn.  Impairment charge reduced significantly by 52%, from N3.4bn to N1.8bn; the bank is lowering her cost of risk but the introduction of IFRS 9 is another factor they have to grapple with.

Also, Interest expenses rose significantly to N17bn ( from N13bn in Q1, 2017). From all indication, the bank seems to have financed its deposit more by 30% than it did in the previous quarter.

Zenith bank, in the similar quarter,  grew its interest income by 20.3%. In figures, interest income stood at N142.6bn against N118bn while net interest income after impairment charge increased to N91.3, from N62.7. Just like it peer, the bank would have to find a way to deal with the challenge of IFRS 9 as its wind-down its bad loans (impairment charge) by 42% (from N7.9bn to N4.5bn).

As the future outlook reveals the end of free money from fixed income securities, I expect these banks to cautiously increase their loan and advances to customers but not without due diligence to avoid unprecedented spike in non-performing loans.

Having looked at the interest income, the next line of comparison is to look at their net interest margin, a measure of the ability of banks to earn from existing assets, cost of risk, profit after tax and EPS. All these have been simplified on my post on “How to analyse banking stocks“. I only shared this to help you understand the process of comparing and trading Nigerian banking stocks easily.

If you are looking for reliable website where you can find all market and financial data to analyze Nigerian stocks, get a copy of my book here.