Directors’ scramble for Nigeria’s best-performing bank stock quickens ahead of earnings release

Directors at Sterling Financial Holdings are placing a bigger bet on its shares as the market awaits its half-year earnings report.

Already, a steep slide in the exchange rate of the naira to the dollar has opened up the pathway for lenders to boost revenue from loans priced in foreign currencies.

Turning in sizeably bigger profits is often a motivation for equity investors to plough in their cash in stocks, given its potential to buoy up dividends and earnings per share.

Sterling Financial Holdings Company, which completed a mutation from commercial banking into a holding company at the start of the second quarter, has yielded 157 per cent so far this year, making it the country’s best-performing bank stock.

It is backed by telecoms billionaire and Africa’s sixth richest person by Forbes rating Mike Adenuga and his nominee company Silverlake Investment Limited.

His stake in Sterling Financial Holdings through Silverlake Investment combined with what he directly holds in it comes to 30.6 per cent, according to the group’s 2022 financial report. That is the biggest interest held by a single Nigerian investor in any of the listed banks.

Shares totalling 87.5 million and purchased at N328.1 million were acquired by four members of the company’s directors board including Managing Director Yemi Odubiyi, according to PREMIUM TIMES calculation from regulatory filings.

Tunde Adeola and Raheem Owodeyi (both also executive directors at the commercial banking division Sterling Bank), Abubakar Suleiman and Mr Odubiyi bought 14.7 million, 14.7 million, 23.1 million and 35 million shares respectively at N3.75 per unit.

That takes their total stakes (direct and indirect) in the group to 157.4 million, 135.8 million, 321.2 million and 254.2 million also in that order.

Positive Dynamics

Nigeria’s bank stocks raced to their pinnacle in 20 years on 14 June, gaining 23 per cent that day alone, after a wave of liberalisation policies in the foreign exchange system accelerated market confidence, helping lure foreign investors back.

According to the bourse’s Domestic & Foreign Portfolio Investment Report, foreign inflow into equities listed on the Nigerian Exchange surged 650 per cent to N27.5 per billion in May, the month President Bola Tinubu who introduced the reforms took office, compared to the month before.

As of Monday, Sterling Financial Holdings Company had beaten the NGX BANKING, the bourse’s index tracking the performance of banking sector equities, almost three times in return so far this year.

The firm, like its peers, is also hanging on to the momentum created by cycles of monetary policy rate increases since last May, which has allowed them to charge more from borrowers, to drive earnings.

Only FBN Holdings has issued its half-year earnings report, showing net profit quickened three times to N187.2 billion as investors await those of the 12 other listed commercial banks.