By Ademola Alawiye

Thursday, 6 Jan 2011

The stocks of Sterling Bank Plc led other stocks in the banking sector as the highest price gainer at the Nigerian Stock Exchange in 2010.

The bank’s stock recorded an appreciation of 87.8 per cent, rising from N1.23 at the beginning of the year, to close at N2.31 per share, representing a capital gain of N1.08.

Skye Bank Plc and Oceanic Bank Plc followed with a capital appreciation of 60.2 per cent and 47.9 per cent, while Unity Bank Plc rose by 42.8 per cent.

According to market analysts, the year 2009 was a year of intervention, while 2010 was the sanitisation year. The year 2011 would be the consolidation year and 2012 will be the year of growth for banks.

Analysts added that the growth posted by the banks showed that investors‘ confidence was gradually returning.

Other stocks that recorded capital appreciation include-Wema Bank Plc, FinBank Plc, Intercontinental Bank Plc and Bank PHB Plc, with an increase of 38 per cent, 37.7 per cent, 34.1 per cent and 32.5 per cent respectively.

The NSE‘s All-Share Index rose to its highest level since the announcement by the Asset Management Corporation of Nigeria in November, to issue bonds to enable it buy up the bad loans of banks.

The Managing Director of the corporation, Mr. Mustafa Chike-Obi, told our correspondent that AMCON had sealed deals with 21 banks.

He noted that AMCON would sell N1tn ($6.5bn) of consideration bonds and use the proceeds to buy debts arising from the banks‘ non-performing loans.

He said, ”Our estimate of the amount of loans we will be buying in this first phase is in the neighbourhood of between N800bn and N1tn. And we are pleased to say that, from the submissions we‘ve received, we are in that range. It is important to note that the amount we are paying for these loans is different from the face value of the loans. The aggregate face value of those loans is about N2.2tn. We are buying them at an appropriate price of between N800bn and N1tn.

”The end process is that we take delivery of the non-performing loans, and the banks, instead of being stuck with illiquid, non-performing assets, have bonds that they will cash, as they make new loans, and use the proceeds to fund the new loans. They can create new portfolio of loans in line with CBN‘s prudential guidelines. And as they make loans, they will be able to fund them.”

 

Source: Punch