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How is your week going so far?
Friday letters are usually dedicated to taking questions from our community. Do you have a question for us?
Please feel free to:
- send an e-mail to info@themoneyafrica.com; or
- send a DM to any of our social media channels, or
- simply fill out this form. Don’t worry, your responses are kept anonymous.
Question
Is it a good time to buy bank shares, especially from FUGAZ?
Answer
The 5 top tier banks in Nigeria, FBN Holdings (First Bank), Access Holdings (Access Bank), GTCO (GTBank), UBA, and Zenith Bank, collectively known as FUGAZ released their financial statements for the first quarter of 2024 and it seems to have brought a rave with it.
What about their financial statements this time?
Based on the Q1 financial statements they released last month, it is safe to say they all made significant growth and profit with GTCO having the most significant gains of about 686 percent increase compared to 2023. This was as a result of very strong interest and non-interest incomes, increased fees and commissions netted out to clients, and also foreign exchange gains. These banks also experienced a significant rise in their interest expense but were able to mask the surge with the interest income.
But where does recent bank recapitalisation come in?
Bank recapitalisation is when a bank increases its capital base to enhance the bank’s financial strength, improve its ability to absorb losses, and meet regulatory requirements. Banks across various categories in Nigeria were recently mandated to elevate their minimum paid-in common equity capital to specified thresholds ranging from 100% increments to as high as 900%.
According to CBN, the goal of the programme is to cultivate the emergence of robust and resilient financial institutions capable of propelling Nigeria towards achieving its ambitious US$1 trillion economy target by 2030.
This increased capital base can lead to better stability translating to increased capability to lend, potentially leading to higher profitability and share prices in the long-term.
In the short-term, however, after the announcement of the recapitalisation, a number of investors withdrew their shares. This led to a significant drop in the market capitalisation and market prices. However, with the recent Q1 financial reports, it’s obvious they have nothing to worry about.
Tell me, is it a good time to buy bank shares?
Based on all of the information above, you can safely say the banks to an extent are a safe bet if you choose to invest in the Nigerian stock market. As at the time of the recapitalization announcement, the share price levels dropped a bit; however, the bank shares are on average not expensive ranging from Accesscorp with the lowest at N16.95 per share to GTCO with the highest at N38. Also, the price-to-book ratio used to compare a company’s current market value to its book value shows the shares of these banks are undervalued. This means their market value does not reflect the full value of the stock and with time could grow higher providing the opportunity for capital gains for investors. Of course, you should do your research and buy the shares if they meet your investment preferences. This could be beneficial for long-term investors to benefit from dividends and capital gains, too.
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Question
I heard about the Ladda app. Can you tell me about it?
Answer
Sure! Ladda is an app designed by MoneyAfrica to make investing and saving easy for everyone. You should see Ladda as your smart financial buddy to help you save and invest towards achieving your financial goals without stress.
So, what kind of investment options does Ladda offer?
Ladda provides access to various investment products, including stocks, mutual funds, and fixed-income securities. You can choose from diversified portfolios tailored to different risk levels and financial goals.
That sounds interesting. Is it user-friendly?
Absolutely. The app has a very intuitive and easy-to-navigate interface that makes it accessible to both novice and experienced investors. You can manage your investments with minimal hassle.
Is Ladda certified?
Yes, Ladda is secure to invest in as this product in partnership with TrustBanc Asset Management Limited is regulated by the Securities and Exchange Commission (SEC) in Nigeria. The Robo-advisory product is provided in partnership with Drive Wealth, which is regulated by FINRA in the US.
Does Ladda support multiple savings plans?
Definitely. Ladda offers structured savings plans that you can customise based on your goals and timelines. It is a great way to set and achieve your financial objectives.
How about automated investing?
Ladda includes automated investing features. You can set up recurring investments, so you’re consistently contributing to your portfolio without needing to manage each transaction manually. We understand the power of consistency in building financial wealth, hence, the inclusion of this feature.
Tell me about the Ladda real estate investment!
Our High-Yield Real Estate (HYRE) investment is the key to unlocking your financial potential. A financial instrument that offers up to 20% per annum to retail investors. If you are interested in investing in real estate without going through the stress of buying a direct property, then this option is the perfect opportunity for you. To get started, download Ladda here for android, here for iOS and watch your money grow!
At MoneyAfrica, we encourage individuals in different phases of life to take charge of their finances. If you have any questions or concerns about your investments or you would like to discuss your portfolio strategy further, join our community by clicking here. See you soon!
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We often get questions regarding how to plan your finances to align with your relocation plans, especially for students seeking to further their studies. As always, we have heard you, and we have put together an e-book to help you navigate this. Follow this link, to get your FREE copy of the e-book: The Japa Encyclopedia.
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