22 June 2018 ( Lagos ) : Nigerian banks tanked hard starting in February on worries about rising interest rates in the developed markets, domestic political play, and concerns on FX stability. For context, Nigerian banks gained 26% in January alone and later shed 20% between February and May.
With market sentiment remaining subdued ,it could be time to look at high dividend yielding banks. In trying to ascertain how attractive Nigerian banks are from a dividend yield perspective, we have assumed two scenarios (a) dividend yield using 2017 dividend payment (b) dividend yield using the analyst’s 2018e dividend payment.
Based on their analysis, analysts see dividend yields of some banks in their coverage reaching over 10%. Specifically, across the tier 1 banks, they like Zenith and UBA, while Fidelity Bank remains their most preferred Tier 2 pick. Moreover, their positive valuations on these banks supports its alluring case in the near term.
Source : Kayode Omosebi and Emmanuel Adeleke from ARM Securities Limited