Like other banking stocks, the share price of FBNH has seen a significant appreciation in the year 2017. Yesterday, December 06, 2017, the bank’s share price hit N8.49k to push its YTD return to +153.43%.
Unlike other banking stocks however, only STANBIC and FIDELITYBK outperformed FBNH during the period under review (2017); as they both recorded +180% and +167.86% YTD gains respectively. Interestingly, while the NSE banking index recorded +77.98% YTD gain as at December 6th, 2017, FBNH achieved +153.43% gain in the same period to reflect the markets renewed optimism about the bank’s transformation plan and strides. In effect, the stock has so far outperformed the NSE banking index during the year.
Recall that in our Q1 2017 Performance Assessment Report on FBNH published in August 2017, we highlighted the latent potential in the FBNH stock based on the reinvigorated bank fundamentals and the performance since 2016 which trailed both NSEASI and NSE Banking Index. The share eroded 57% of its market value as against 21% and 12% drop by NSEASI and NSE Banking Index respectively. (See Page 17)
Also, a similar review done in H1 2017 and published in October 2017, incorporating the Q3 2017 results led us to highlight the strong recovery in the stock share price in the last one year as it increased value by 88%. (See Page 18)
The recommendation made to the market in the report was enhanced by a deliberate engagement by the bank to effective and timely communications with the investment community.
This, it is expected, will help the bank maintain a healthy valuation as the communication of its key strategy and decisions aid sound decision making.
Other recommendations include, but not limited to – improvement in capital adequacy ratio, focus on non-interest income, improved asset quality, rationalization of costs and leveraging of technology to maximise size and scale of its operations. (See Pages 59 and 60)
A review of the recommendation(s) on FBNH by the analyst community revealed the stock’s share price has hit and crossed the set target price(s) of most analysts as at November 2017, except for Vetiva Capital’s target price which was put at N8.64k while the stock closed at N8.49k on December 6th, 2017. Kindly find below some of the Target Price Recommendations, viz:
General View of FBN Holdings Plc As Captured By The Market and How This Has Changed from Q1’2017