NB will likely remain in a loss position in FY'23, primarily due to the significant impact of naira devaluation on its huge FX-denominated payables. However, we like the company's aggressive expansion of market footprint, and current drags are likely to create long-term entry opportunities for patient capital. We retain our HOLD recommendation on the ticker with an unchanged 12-month TP of N43.10.
UBA’s H1 2023 audited numbers showed a strong 66.4% y/y growth in Interest Income to N428.3bn driven mainly by a significant growth in Interest Income on Investment Securities and on cash and bank balances. Net Loans to customers grew 43.5% in H1 compared to December 2022, inclusive of the impact of devaluation on foreign currency loans. Interest Expense also grew strongly, up 88.0% y/y on the back of a 237% y/y growth in Interest Expense on deposits from banks, 80% y/y growth on Interest Expense on Customer Deposits, and a 49% y/y growth in Interest Expense on borrowings. Customer Deposits were up 42.4% in June compared with December 2022. Overall, Net Interest Income was up 56.7% y/y to N278.1bn in June 2023 from N177.5bn in June 2022 and up 32.5% q/q to N158.5bn in Q2 2023 from N119.6bn in Q1 2023.
Nestle Nigeria Plc’s (Nestle) reported Revenue growth rate of 17.7% y/y to N261.77bn in its H1 2023 earnings result from N222.45bn in H1 2022. The company’s EBITDA also advanced by 30.6% y/y to N66.27bn from N50.76bn in H1 2022. However, Nestle’s Net Finance Cost grew significantly to N129.91bn from N2.44bn in H1 2022. This resulted in a Loss before tax of N69.19bn in H1 2023 compared with a profit before tax of N43.74bn in H1 2022.
Following the slight sell-offs that trailed the new administration-inspired rally, local equities embraced corporate actions/announcements as key catalysts in August. Notably, the disclosure on the proposed merger of DANGSUGAR, NASCON, and Dangote Rice Limited was released on the 1st of August 2023. GSK UK also disclosed its intention to cease commercialising its prescription medicines and vaccines through the GSK local operating companies and plans to transit to a third-party distribution model two days later. The disclosure also highlighted the consequent decision of GSK Nigeria to cease operations in Nigeria, with its next steps expected to include submission of a scheme of arrangement to SEC and drive accelerated cash distribution and return of capital to shareholders. In the light above, there were strong rallies in the share prices of the linked companies, with DANGSUGAR, NASCON, and GSK accelerating by 103.7%, 55.5%, and 87.8% MoM, respectively.
Fidelity Bank’s recently released its H1 2023 audited numbers showed significant y/y and Q/q growth in Pre-tax profit, driven by significant growths in both Interest and Non-Interest Income. Interest Income grew 39.4% y/y, which according to the bank’s Management, was driven by expansion in earning assets and improved yields on assets. Net Loans to Customers were up 25.1% in H1 compared with the December 2022 position. Growth in Non-Interest Income on the other hand, was driven by foreign currency revaluation gains, trading gains and strong growth in several Fee Income lines.
GTCO’s H1 2023 audited numbers showed a 53.5%y/y growth in Interest Income to N225.95bn driven by growth in Interest Income on Net Loans and Investment Securities. Net Loans and advances to Customers was up 22.8% in H1 2023 relative to December 2022 (inclusive of the impact of devaluation of foreign currency loans). The bank has been very reluctant to increase risk assets amidst the negative headwinds. On the other hand, Interest Expense also grew strongly, up 84.0% y/y to N48.5bn. Customer Deposits grew moderately, up 39.1% (inclusive of the impact of devaluation) in June 2023 compared with December 2022. Overall, Net Interest Income grew 46.8% y/y to N177.5bn.
