June 25, 2021/Coronation Research
Coronation Asset Management today releases its report on Nigerian Banks “Nigerian Banks, Resilience Built In”. The report shows that Nigerian banks’ earnings have been remarkably resilient over the interest rate cycle, their profitability is improving over time. and their stock values are remarkably cheap compared to Ghanaian and Kenyan bank stocks.
In this report we look at these in the context of a 10-year study of these variables, which we present in our introduction. First, we look at the banks’ Net Interest Margins and spreads over the long term and find a remarkable degree of resilience through several interest rate cycles. This suggests that investors have little to fear when it comes to current fluctuations in interest rates, while the banks themselves state that they are confident they can re-price deposits and loans advantageously this year.
We also look at the growth record of the banks and find that, with one notable exception, balance sheet growth has been elusive, something that becomes clear when we re-state key metrics for the effects of inflation over time.
Third, we look at the Return on Average Equity (RoAE, or more simply RoE) and the Return on Average Assets (RoAA, or RoA) of the banks over 10 years, making note of the gradual improvement and convergence in RoAEs over this period.
Finally, we look at the challenge posed by Fintech in general and by digital banks.
To get the full report please click on the link below
Click here to read full PDF copy of report
