African Banks: Their assets are increasing. How about their stock prices?

Dear Africa Interested Individuals:
                                                        When it comes to banking it is all about  size (more so in Africa with so many untapped or under-tapped opportunities.)  Banks in Africa keep striving to grow their balance sheets and intimidate customers to bank with them courtesy of their branch network and financial muscle.  

As their assets increase, are their prices also increasing?  How do African stock markets in 2015 feel about banks growing in size?  Are the markets euphoric or subdued as African banks keep growing in size?  I picked sixteen (16) popular sub-Sahara Africa banks (with December fiscal year ends) across five countries in my quest to find out from the markets their view on banks growing their balance sheets in 2015.  

Price reference date is August 31st, 2015 and for assets it is June 30th, 2015 all relative to 12/31/14.  

I picked four banks from Kenya and Nigeria each, three from South Africa & Ghana each and one from Mauritius and one all inclusive by the name of ETI.   

Kenya

1. I & M Group:   Assets have increased by 5.7% and its stock price has decreased by 11.4%

2. Equity Group:  Assets have increased by 16.4% and its stock price has decreased by 17%

3. KCB Group:    Assets have increased by 15.6% and its stock price has decreased by 22.8%

4. SCB Kenya:     Assets have increased by 2.6% and its stock price has decreased by 31.3%


South Africa

1. Barclays Africa:  Assets have increased by 6.2% and its stock price has decreased by 3.3%

2. Nedbank SA:       Assets have increased by 7.1% and its stock price has decreased by 5.2%

3. Standard Bank:   Assets have decreased by 2.5% and its stock price has increased by 1.8%


ETI (Ecobank Transnational Incorporated)

Assets have decreased by 3.7% and its stock price (Nigeria) has increased by 5.9%


Mauritius

1. SBM Holdings:  Assets have increased by 6.3% and its stock price has decreased by 17.6%


Nigeria

1. Zenith Bank:   Assets have increased by 3.4% and its stock price has decreased by 17.4%.  
2. GT Bank:        Assets have increased by 8% and its stock price has decreased by 9%

3. FBN Holdings: Assets have increased by 1.7% and its stock price has decreased by 30.2%

4. Access Bank:    Assets have increased by 13.7% and its stock price has decreased by 22.1%  


Ghana

1. Ghana Comm. Bank: Assets have increased by 14.3% and its stock price has decreased by 24%

2. Ecobank Ghana:        Assets have increased by 18.6% and its stock price has increased by 5.8%

3. SCB Ghana:               Assets have increased by 6.5% and its stock price has decreased by 16.6%

 
 My findings reveal that the markets are not excited about growth in balance sheet sizes and are punishing the banks to varying degrees.  
The two banks that shrunk their balance sheets over the first six months of 2015 (ETI & Standard Bank Group) have been rewarded with increases in their stock prices!   

I could not have selected two better banks to prove the markets right than Africa's largest bank by assets and by reach.

My findings are in line with what I expected and deemed market plausible.  We do have one anomaly in Ecobank Ghana.  Its assets increased and its price rose.  Given the fact that the bank has exhausted 92% of its deposits as net loans and increased its assets by 19% in six months, its stock price better rise.  Remember that Ecobank Ghana is Ghana's largest bank by assets.   

I guess it is time for African banks to consolidate what they have acquired.  The time has come for African banks to focus on extracting more from what they have and not getting more of what they already have.  The markets in 2015 so far agree with me.        

        Tell others to tell others about this Africa Research Blog; the financial truth is here

 

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