Random Musings: Nigerian Banks and a little bit of Kenya
Dear Africa interested professionals: It is banks' earnings season and the prominent Nigerian banks have already released their earnings: Zenith Bank, GT Bank, etcetera. Despite the double digit dividend yields, only approximately 300 basis points lower than the coupon rate on Nigeria's thirty-year bond ( 13.2%) , investors do not appear excited enough to maintain a consistent surge in demand in excess of supply leading to capital appreciation. This is not the first time investor apathy towards Nigerian banking results and corporate actions has reigned supreme. The journey to find out why started in earnest and here is a summary of my thoughts. 1. Naira devaluation (especially during persistent downturns in oil prices) makes items more expensive in the local economy and makes banks lose their sense of value from an investor perception perspective. " How good can these banks be when their prices are persistently low on an absolute basis?" The highest priced