Nigerian firm, Vetiva Capital Management has expressed confidence that core banking will drive growth next year.
This was stated by the sub-saharan banking research analyst at Vetiva Capital Management, Olumide Sole, during an interview on Arise TV on Monday.
Sole claimed that the majority of coverage banks such as Zenith, GTCO, and UBA recorded a massive jump in their ends majorly driven by Forex evaluation gains in 2023.
Speaking on the cost of funds, Sole stated that as interest rate rises, the cost of funds also rises. He said, “As interest rates rise, banks also have to pay more interest rates for their customers’ deposits.”
He also added that the Standing Deposit Facility which the Central Bank of Nigeria removed the two billion limit which banks can deposit daily.
He said this now gives banks ample opportunity for more earning potential for their revenue or core banking income to grow better. “Banks can now earn more as they can deposit all excess liquidity via the window.”
Speaking on stocks, Sole added that Access is now the largest bank as per asset size and it is expected to keep growing. Concerning First Bank of Nigeria, he claimed that the recent creation of more shares will help in the bank’s expansion.
He spoke on other banks like the FCMB Group which just completed its additional tier one capital issuance which is expected to position the bank to give out more loans and expand the banking operations in general.
“Fidelity Bank recorded the largest expansion net in the first margin. Fidelity Bank’s acquisition of Union Bank UK will also improve the earnings of the bank while GTCO has one of the highest payout ratios and this is expected to play out even until next year.
He however stated that the dividend payout for Stanbic was N1.5, the same as last year and this might not be in line with the expectations of the investors. He added that Stanbic Bank launched a fintech subsidiary recently.
“UBA recorded impressive performance this year, with one of the largest recorded non-interest margins, we expect this to support the banks’ performance into 2024.
“Zenith Bank has about 40% dividend payout on average, a very impressive one for investors, so expect this to continue to support the banks’ performance in the stock market even to 2024. he said.”
