The Bank of Nigeria (First Bank) saw a notable 31.81% surge in its share price during the second week of September 2024, following its strategic decision to sell its entire stake in FBNQuest Merchant Bank.
The sale, announced on Friday, September 7, 2024, to EverQuest, has been perceived as a crucial move in the bank’s ongoing effort to streamline its operations, focus on core banking services, and improve its balance sheet.
The timing of the divestment has been seen as fortuitous, coinciding with First Bank’s robust first-half results, which showcased a remarkable 100.9 per cent year-on-year growth in pre-tax profit.
Analysts view the bank’s decision to divest from non-core assets like FBNQuest Merchant Bank as a sign of its sharpened focus on efficiency and profitability, positioning it well for future growth in a competitive sector.
The new policy created ripples across the banking sector, leading to a sharp decline in bank stocks. In April 2024, First Bank experienced a 32 per cent drop in its share price, with further declines pushing the stock down to N20.95 by the end of July.
However, the tide began to turn following the release of the bank’s half-year results in August, which reported an 18.9 per cent increase in net interest income and an astonishing 132 per cent surge in pre-tax profit.
A key highlight was the significant increase in interest income, which jumped 155 per cent, reaching N947.6 billion for the period between January 1 and June 30, compared to N371 billion in the same period the previous year.
The bank’s earnings per share (EPS) from common stocks also doubled, climbing to N10.11 from N5.19 in 2023, further signaling the bank’s improving financial health.
Industry analysts now believe that First Bank’s ability to navigate sector-wide uncertainties while delivering strong financial results could set the stage for sustained growth, making it a standout performer in Nigeria’s financial market
Market analyst Adebayo Aluko commented, “First Bank’s strategic decision to divest from non-core banking operations is a smart move in this volatile environment. The divestment not only reduces operational costs but also strengthens the bank’s balance sheet.