Stocks on the Nigerian Stock Exchange dropped to a 9-month low despite the positive half year results from two of the country’s most profitable banks.
GTBank released its half-year results on 8 August with profit after tax coming at N96 billion which was 14.2 percent higher than the N84 billion made in the comparable period of 2017. The bank also proposed an interim dividend of 30 kobo per share with dividend of 0.8 percent.
Similarly, Zenith Bank on 6 August released half year interim results showing profit after tax of N82 billion, which was 8.5 percent higher than the comparable profit of N75 billion as of June 2017. The bank had also proposed a dividend of 30 kobo per share resulting in a dividend yield of 1.3 percent. Both financial institutions are known to be the most profitable banks in the country.
However, the release of their interim results has failed to lift the market as concerns over the rising level of political uncertainty in the country overwhelm positive investor sentiments.
Attempts by officers of the state security services to take over the National Assembly on Tuesday as well as the subsequent freezing of the bank accounts of two opposition state governors by the Economic and Financial Crimes Commission (EFCC) has soured the political environment and raised the concerns of investors. Laura Duara, the Director General of the DSS was subsequently sacked over the siege on the National Assembly while the EFCC has reportedly of the Akwa Ibom and Benue state governments.
High profile defections between the two leading political parties has also raised the level of uncertainty over the outcome of the 2019 general elections.
At the end of trading on Thursday, the All Share Index (ASI) fell for the fifth straight session, down 0.4 percent to 36,154 points. The fall means that the year to date return now stand at -5.1 percent.
Topping stocks that declined today was Mobil Plc which dropped 5.56 percent to close at N170 per share. FBN Holdings also dropped 4.52 percent to N9.50 while even Zenith Bank dropped 0.63 percent to close at N23.6. Other top decliners were Fidelity Bank Transcorp, Diamond Bank and FCMB, all down more than 4 percent. Nigerian Breweries, the local unit of Dutch brewer Heineken , shed 2.9 percent.
Sterling Bank led the gainers chart advancing 9.56 percent to close N1.36 per share, information on the Website of the NSE shows.
Second-quarter earnings have been mixed, with most lenders posting declines in loan growth, citing a weak economy, while several consumer goods companies have recorded lower profits.
Newly-listed fertiliser firm Notore reported a wider loss before taxes for the nine-months to June. Its shares have dropped 8.8 percent in the week after listing.
Political developments ahead of an election next year, in which President Muhammadu Buhari is seeking re-election, have also dented investor sentiment, analysts say.
“Recent declines have been concentrated on a few large-cap stocks. Pressure on Nigerian Breweries may be on the back of slightly disappointing first half earnings, but Dangote Cement numbers were in line with expectations,” said Michael Famoroti, chief economist at Vetiva Capital told Reuters.
Last week, Senate President Bukola Saraki, Nigeria’s third most senior elected official, defected from Buhari’s ruling party to the main opposition and is fast becoming a leading critic of the president.
