Reading the equity market tea leaves: Overweight tier-1 banks

Must Read

- Advertisement -

Recently, the CBN reviewed the minimum interest payable on savings deposit by Banks from 30.0% of MPR (or absolute of 3.75%) to 10.0% of the MPR (or absolute of 1.25%), effective from 1st September 2020.

In line with the recent decline in the overall interest rate in the capital market, this is yet
another move by the apex bank to prop up the real sector, discourage easy money and bolster investment, following the 6.1% contraction recorded in Q2-2020.

Notably, the decrease in savings rate is expected to further drive down the cost of funds of Nigerian Banks, especially for the top-players like FBNH, FCMB, GUARANTY, UBA and FIDELITY with over 20.0% savings to total deposits ratio, respectively.

By implication, this will support Net-Interest Margin(NIM) across the industry, as we do not expect a drastic fall in savings deposit considering liquidity needs for households and corporates. Also, as cheap funds get even cheaper, we expect profit margins to improve.

However, this does not directly imply that Commercial Banks will become more aggressive about growing their loan books. No thanks to sustained uncertainties in the horizon. We
recall that the lower yield environment has already forced term deposit rates lower, hence, savings rate is merely playing catch up.

- Advertisement -

For investors, we are of the view that this move is positive for the Banks, as we expect margins to improve. Thus, this policy further strengthens the outlook for the Nigerian banking industry in 2020, as signalled by the Q2-2020 GDP report published recently by the NBS. In all, we maintain our preference for Tier-1 Banks, for discerning investors.

 

HEADLINES YOU MIGHT HAVE MISSED FROM BRAND SPUR

CredoLab raises USD 7m to expand its market reach in Africa and other new markets

CredoLab, a leading developer of bank-grade digital credit scorecards based on smartphone metadata which launched in Nigeria, Kenya, and South Africa, last year, has secured USD 7 million in its Series-A round funding led by GBG, the global specialist in identity data intelligence.

- Advertisement -

Cars with embedded connectivity to reach 200m by 2025, with 5G adoption set to soar

Read Also:  Equity Market Sustains Yesterdays Uptrend, Posts 1.03% Gain.

A new study from Juniper Research has found that the number of cars with embedded connectivity will reach 200 million globally by 2025; rising from 110 million in 2020. One of the main beneficiaries of this growth will be mobile

Nitro121 promises bespoke offerings to clients, celebrates 15th anniversary

The leading brand-building and marketing communication company, Nitro 121 (formerly known as 141 Worldwide), turns fifteen on the 1st of September 2020 and promises to continue to deliver bespoke marketing communications services to clients and other partners.

- Advertisement -

Top 25 most valuable aerospace and defence brands could lose over $22bn of brand value from COVID-19

Aerospace and defence sector heavily impacted by COVID-19 pandemic, brands could lose up to 20% of brand value, equating to a US$22.8 billion loss cumulatively

Ikeja Electric’s bilateral power attains first-year milestone as customers score service high

Ikeja Electric Plc (IE), Nigeria’s largest Electricity Distribution Company, is celebrating the first year anniversary of its Willing Buyer, Willing Seller initiative dubbed Bilateral Power by customers. The company’s Bilateral Power service promises customers a minimum of 20 hours of power supply and improved service in exchange for cost-reflective tariffs.

Read Also:  Gold Drops Ahead Of Federal Reserve Decision

Nigeria Rugby Union signs kit sponsorship deal with BLK Sports

British Apparel Company BLK Sport and The Nigeria Rugby Football Federation (NRFF) have signed an exclusive long-term kit sponsorship/partnership deal aligning with the Company’s global strategy.

Apple buys another company

Apple reportedly bought VR startup Spaces, the tech giant’s eighth disclosed acquisition of the year. We discuss Apple’s moves in the VR space — including a patent for reducing motion sickness while working virtually in a vehicle.

IITA invests in development and implementation of seed yam certification system in Nigeria

IITA renovated and equipped the diagnostic laboratory of the National Agricultural Seed Council (NASC) at their headquarter in Sheda, Abuja, with equipment worth $100,000 for seed quality control and Seed Tracker e-certification system. A PCR for DNA amplification and other laboratory equipment will allow technicians of the seed regulatory agency to conduct diagnostics and seed quality testing in line with the amended existing standards for seed yam.

 

- Advertisement -
spot_imgspot_img

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

FDA Seeks Public Comments On PMI Application To Market IQOS 3 As Modified Risk Tobacco Product-Brand Spur Nigeria

FDA Seeks Public Comments On PMI Application To Market IQOS 3...

The U.S. Food and Drug Administration (FDA) today opened a public comment period on Philip Morris International’s (PMI--NYSE: PM) application seeking authorization to market the IQOS 3 electrically heated tobacco system...
- Advertisement -
spot_imgspot_img

Latest News

FDA Seeks Public Comments On PMI Application To Market IQOS 3 As Modified Risk Tobacco Product

The U.S. Food and Drug Administration (FDA) today opened a public comment period on Philip Morris International’s (PMI--NYSE: PM) application seeking authorization to...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -spot_imgspot_img