Zenith Bank flips Guaranty in share price for the first time since 2011

At the close of trading on Thursday, the market witnessed a flip that last occurred 11 years ago between the banking giants – Zenith Bank and Guaranty Trust Bank, being one of the top liquid stocks listed on the Nigerian stock exchange.

For the first time since September 22nd, 2011, Zenith Bank share price traded higher than that of Guaranty Trust. At the close of market, Zenith Bank witnessed a 0.20% gain for the day, with its stock closing at N25.50, with a trading volume of 4.5 million units valued at N114.2 million, while GTCo remained flat for the day, trading at a share price of N25.45, with a trading volume of 10.9 million valued at N277.9 million.

This flipping increases the gap by approximately N51 billion in terms of market capitalization between the two banks as Zenith Bank’s market capitalization soars above N800 billion while GT Co’s remains at approximately N749 billion.

What you should know

GT Co’s shares have started the year on the downside as it has lost 2.12% Year-to-Date (YtD) in 2022. We see the opposite in Zenith Bank as its share price is up by 1.39% YtD.

A reason for the flipping may be as a result of their financial performance. According to the third-quarter financial statement, Zenith Bank’s net interest income stood at approximately N234.8 billion while GTCo was able to generate N162.9 billion in the same period.

Although Zenith Bank has more shares outstanding than that of Guaranty’s, the difference in income level is beginning to play out. Zenith Bank’s third quarter Profit After Tax (PAT) stood at N160.6 billion, which is just N2.3 billion shy of Guaranty’s interest income even as Guaranty’s PAT stood at N129.4 billion.

Akinbamidele Akintola, an analyst at Stanbic IBTC Stockbrokers, explained in an investor note why the flipping happened. He stated, “GTCO as a company has a lot of foreign shareholder bases. GTCO and Nestle are the first names investors buy coming into Nigeria and they are the last names investors sell when they are throwing in the towel on Nigeria. To me, the current trends suggest that whilst investors might have thrown in the towel on Nigeria, and still awaiting ways of getting their FX out of the country, they have decided to exit GTBank and switched into other names that are demonstrating growth in a tough and challenging environment.”

He further added, “Banks have been squeezed this year and if they deliver flat earnings, I will consider them to have done well and outperformed my expectation. I expect to see negative earnings versus last year. That itself does not suggest that they are doing anything wrong as a business or as a management team, it just tells me that these are peculiar and turbulent times for any bank CEO.”

Bottomline

At the end of yesterday’s trading session, the NGX’s All-Share Index lost marginally by 0.01% to currently seat at 44,604.74 basis points. A total of 321,753,226 shares in 4,565 deals, corresponding to a market value of N3,655,003,165.22, were traded. Compared with the previous NGX trading day, yesterday’s data shows 21% improvement in volume, 4% decline in turnover, but 1% improvement in deals. The current market capitalization of the Nigerian Exchange Group is approximately N24.03 trillion.

Investors now await the full-year result of these companies as well as their dividend payouts. Both companies are known for paying relatively good final dividends but with the current result performance, this may not be the case this time.

-Nairametrics