The Banks

[Salida]

CBN creates Risk Management Group in 2013

[hispy99]

Banks earnings model may change on lower interest rates

[hispy99]

Originally Posted by hispy99

AMCON Defies Court Order to Vacate Capital Oil Premises, Articles | THISDAY LIVE

AMCON Insists on Retention of Capital Oil’s Assets, Articles | THISDAY LIVE

[Salida]

Originally Posted by Salida

CBN: Removal of ATM Charges Effective Next Monday, Articles | THISDAY LIVE

Lagos banks stop N100 ATM charges

[Salida]

Originally Posted by Salida

Nigeria bad bank reports $15 bln post-tax loss | Reuters

AMCON Audited Results 311212 – ‘Harm Averted is Benefit Unseen’ - Proshare

[eniyanman]

Originally Posted by Salida

AMCON Audited Results 311212 – ‘Harm Averted is Benefit Unseen’ - Proshare

Hahaha, why don't they recognise this benefit as "Goodwill" in their books! AMCON in itself was a good idea, however, what it subsequently did by flogging off the distressed banks at ridiculous prices can best be described as a con on the Nigerian people.

When AMCON sold Intercon, Oceanic et al, it crystallised a loss of at least N1trillion. In other words, AMCON 'transferred' N1trillion to the shareholders of Access, FCMB, ETI etc. It begs the question, "What was the NAV of these banks before they were sold ?"(http://www.amcon.com.ng/documents/AM...cial_Full.aspx)

AMCON needs to explain to the Nigerian people what harm was averted by 'giving away' N1trillion.

There needs to be an inquiry into AMCON.

[hispy99]

Wonder bank: Traders beg EFCC to help recover N60m

[goldsun]

Originally Posted by Salida

Lagos banks stop N100 ATM charges

i this affect their revenue

[Oracle]

Originally Posted by hispy99

Wonder bank: Traders beg EFCC to help recover N60m

People like awoof! They like miraculous monies!

[Babs_O]

Originally Posted by hispy99

Banks earnings model may change on lower interest rates

so the top five banks are
First bank
Zenith Bank
GTB
UBA
Access

wonder what the impact on lower interest rate will be on the various banks. Does this mean another bear market is expected in coming years and months on banking stock pricess. Which banks will be hardest hit ? I can nearly forecast 2013/2014 will withness a price high and a pull back in 2014/15. Better not to get emotionaly attached and exit in due time. Once beaten twice shy. The short end of the stick from FirstInland, Oceanic, Platinum (BankPHB) is still hurting people.

[knightofdelta]

Originally Posted by Babs_O

so the top five banks are
First bank
Zenith Bank
GTB
UBA
Access

wonder what the impact on lower interest rate will be on the various banks. Does this mean another bear market is expected in coming years and months on banking stock pricess. Which banks will be hardest hit ? I can nearly forecast 2013/2014 will withness a price high and a pull back in 2014/15. Better not to get emotionaly attached and exit in due time. Once beaten twice shy. The short end of the stick from FirstInland, Oceanic, Platinum (BankPHB) is still hurting people.

First bank and Zenith bank are traditionally net placers of fund in the interbank market and enjoyed good net interest margins due to high interest rates. Access bank is always in the market raising funds, even at high interest rates, both from interbank and customer deposits. UBA's style is unpredictable, they demand for deposits at any interest rates and then withdraw and provide crappy rates. GTB doesn't do interbank and they are not interested in your deposits at high interest rates.

How will low interest rates affect each of them?

First bank has cheap deposits and they have a strong retail arm that can push out loans if interest rates drop and the interbank market becomes unattractive. They can always fall back on their strong balance sheet. High or low interest rates, First bank will remain profitable. The low interest rate scenario will increase profitability beyond what we saw with high interest rates. Reason: retail loans always come at a higher rate than what interbank offers.

Zenith bank has poor retail arm but strong corporate arm (First bank has an advantage over Zenith since they can also push loans into the corporate space). Zenith bank will be forced to take risk since they need to lend out high volumes, and given the penchant of Nigerians for walking away from loans since Amcon is there. Subjectively, low interest rates will also be profitable for Zenith bank and likely to be at the same level with then interest rates were high.

UBA, as usual, has poor retail arm and high risk corporate arm that give big loans with 50/50 chances of becoming exceptional items, regardless of interest rate regime. UBA will continue to be volatile.

Access bank will remain profitable for as long as Jonathan is in power. Don't ask me how. They have a poor retail arm and they borrow money from customers and interbank at high rates. They are always in need of money for "business runs" with the Government. They have a strong pipeline into the national cake.

GTB. High or low interest rates, profitability continues. At the same pace.

I remain impressed with Diamond bank model. They have cheap funds at their disposal. Very little borrowing from interbank and usually get deposits from customers are lower rates than Zenith and First bank. Strong retail bank and the most prepared bank to take advantage of SME banking if interest rates drop. High interest rates scenario is bad for Diamond but watch the bank do wonders as interest rates drop.

[dr.abrahamb]

Originally Posted by knightofdelta

First bank and Zenith bank are traditionally net placers of fund in the interbank market and enjoyed good net interest margins due to high interest rates. Access bank is always in the market raising funds, even at high interest rates, both from interbank and customer deposits. UBA's style is unpredictable, they demand for deposits at any interest rates and then withdraw and provide crappy rates. GTB doesn't do interbank and they are not interested in your deposits at high interest rates.

How will low interest rates affect each of them?

First bank has cheap deposits and they have a strong retail arm that can push out loans if interest rates drop and the interbank market becomes unattractive. They can always fall back on their strong balance sheet. High or low interest rates, First bank will remain profitable. The low interest rate scenario will increase profitability beyond what we saw with high interest rates. Reason: retail loans always come at a higher rate than what interbank offers.

Zenith bank has poor retail arm but strong corporate arm (First bank has an advantage over Zenith since they can also push loans into the corporate space). Zenith bank will be forced to take risk since they need to lend out high volumes, and given the penchant of Nigerians for walking away from loans since Amcon is there. Subjectively, low interest rates will also be profitable for Zenith bank and likely to be at the same level with then interest rates were high.

UBA, as usual, has poor retail arm and high risk corporate arm that give big loans with 50/50 chances of becoming exceptional items, regardless of interest rate regime. UBA will continue to be volatile.

Access bank will remain profitable for as long as Jonathan is in power. Don't ask me how. They have a poor retail arm and they borrow money from customers and interbank at high rates. They are always in need of money for "business runs" with the Government. They have a strong pipeline into the national cake.

GTB. High or low interest rates, profitability continues. At the same pace.

I remain impressed with Diamond bank model. They have cheap funds at their disposal. Very little borrowing from interbank and usually get deposits from customers are lower rates than Zenith and First bank. Strong retail bank and the most prepared bank to take advantage of SME banking if interest rates drop. High interest rates scenario is bad for Diamond but watch the bank do wonders as interest rates drop.

Oga KOD I troway salute. Please, how then does GTB do it? I thought its capital structure that made them more profitable than Zenith(speaking as an investor here)? And banking on them to do it at the same pace? Whats their model like?

[goldsun]

Originally Posted by knightofdelta

First bank and Zenith bank are traditionally net placers of fund in the interbank market and enjoyed good net interest margins due to high interest rates. Access bank is always in the market raising funds, even at high interest rates, both from interbank and customer deposits. UBA's style is unpredictable, they demand for deposits at any interest rates and then withdraw and provide crappy rates. GTB doesn't do interbank and they are not interested in your deposits at high interest rates.

How will low interest rates affect each of them?

First bank has cheap deposits and they have a strong retail arm that can push out loans if interest rates drop and the interbank market becomes unattractive. They can always fall back on their strong balance sheet. High or low interest rates, First bank will remain profitable. The low interest rate scenario will increase profitability beyond what we saw with high interest rates. Reason: retail loans always come at a higher rate than what interbank offers.

Zenith bank has poor retail arm but strong corporate arm (First bank has an advantage over Zenith since they can also push loans into the corporate space). Zenith bank will be forced to take risk since they need to lend out high volumes, and given the penchant of Nigerians for walking away from loans since Amcon is there. Subjectively, low interest rates will also be profitable for Zenith bank and likely to be at the same level with then interest rates were high.

UBA, as usual, has poor retail arm and high risk corporate arm that give big loans with 50/50 chances of becoming exceptional items, regardless of interest rate regime. UBA will continue to be volatile.

Access bank will remain profitable for as long as Jonathan is in power. Don't ask me how. They have a poor retail arm and they borrow money from customers and interbank at high rates. They are always in need of money for "business runs" with the Government. They have a strong pipeline into the national cake.

GTB. High or low interest rates, profitability continues. At the same pace.

I remain impressed with Diamond bank model. They have cheap funds at their disposal. Very little borrowing from interbank and usually get deposits from customers are lower rates than Zenith and First bank. Strong retail bank and the most prepared bank to take advantage of SME banking if interest rates drop. High interest rates scenario is bad for Diamond but watch the bank do wonders as interest rates drop.

my oga, what is responsible for the retail disparity between first bank and UBA despite the large branch network of UBA. Also how has diamond bank position themselve to take advantage of SMEs

[knightofdelta]

Originally Posted by dr.abrahamb

Oga KOD I troway salute. Please, how then does GTB do it? I thought its capital structure that made them more profitable than Zenith(speaking as an investor here)? And banking on them to do it at the same pace? Whats their model like?

At the same pace is a subjective reference. The pace may be 5 - 30% higher when interest rates are low than the current run rate with high interest rates, but I don't see any significant increase in profitability with interest rate reduction.

GTB has kept their cost of funds low and this low is not likely to drop much lower than it is. A drop in savings rate from 2% to 1% is not likely to have a massive impact. Their cost of funds doesn't show much volatility like other banks, since they don't even do interbank. Their business model is, therefore, relatively immune to sharp movement in rates.

What may increase their profitability if interest rates drop is going to be an increase in demand for loans at lowered rates. The profits will then be spread over rising volumes of loans rather than concentrated in a few high quality loans as seen with high interest rates.

[knightofdelta]

Originally Posted by goldsun

my oga, what is responsible for the retail disparity between first bank and UBA despite the large branch network of UBA. Also how has diamond bank position themselve to take advantage of SMEs

UBA goes on an aggressive deposit drive but go and meet them and they will demand for a whole arm before you can get a loan, as an individual, or even a corporate entity. Getting loans is far more easier with First bank than UBA. UBA is more interested in the Maduka-Uba kind of deals where they can throw 30 billion naira at a go. They are not interested in your demand for a 500K loan; go somewhere else. First bank will gladly give you a 250K loan.

SMEs the world over have the same characteristics, the world over. The risk profile is similar and success is dependent on the ability to grow a one-man shop to a thirty-man shop. While each business may differ, they all have essentially the same blueprint to success. Diamond bank is the only bank in Nigeria that has developed the capacity take the hand of a budding entrepreneur and lead them to success, if the idea is well grounded. As the economy opens up, if electricity, transport, etc are resolved, SMEs are going to boom and Diamond bank is well positioned.

First bank is also trying to build capacity in the SME area but they are far behind Diamond bank.

This is where the success in SME banking lies. The other banks will look at the standard Cs of credit before giving out a loan to an SME; at the end of the day only SMEs that don't need a loan that will qualify. They do this in order to reduce risk of default. It is not their fault. A bank that has an SME capacity will recognize a sound business model even though it has zero cash flow but they will also know how to guide them to success.

[Babs_O]

Originally Posted by knightofdelta

First bank and Zenith bank are traditionally net placers of fund in the interbank market and enjoyed good net interest margins due to high interest rates. Access bank is always in the market raising funds, even at high interest rates, both from interbank and customer deposits. UBA's style is unpredictable, they demand for deposits at any interest rates and then withdraw and provide crappy rates. GTB doesn't do interbank and they are not interested in your deposits at high interest rates.

How will low interest rates affect each of them?

First bank has cheap deposits and they have a strong retail arm that can push out loans if interest rates drop and the interbank market becomes unattractive. They can always fall back on their strong balance sheet. High or low interest rates, First bank will remain profitable. The low interest rate scenario will increase profitability beyond what we saw with high interest rates. Reason: retail loans always come at a higher rate than what interbank offers.

Zenith bank has poor retail arm but strong corporate arm (First bank has an advantage over Zenith since they can also push loans into the corporate space). Zenith bank will be forced to take risk since they need to lend out high volumes, and given the penchant of Nigerians for walking away from loans since Amcon is there. Subjectively, low interest rates will also be profitable for Zenith bank and likely to be at the same level with then interest rates were high.

UBA, as usual, has poor retail arm and high risk corporate arm that give big loans with 50/50 chances of becoming exceptional items, regardless of interest rate regime. UBA will continue to be volatile.

Access bank will remain profitable for as long as Jonathan is in power. Don't ask me how. They have a poor retail arm and they borrow money from customers and interbank at high rates. They are always in need of money for "business runs" with the Government. They have a strong pipeline into the national cake.

GTB. High or low interest rates, profitability continues. At the same pace.

I remain impressed with Diamond bank model. They have cheap funds at their disposal. Very little borrowing from interbank and usually get deposits from customers are lower rates than Zenith and First bank. Strong retail bank and the most prepared bank to take advantage of SME banking if interest rates drop. High interest rates scenario is bad for Diamond but watch the bank do wonders as interest rates drop.

In my own simple words the definition of risk by Warren is not understanding what the underlying drivers of what one is investing in are.

Thanks for this insightful lead. I have been intersted in UBA recently because of what currently looks like a discounted price viz-a-viz potential end 2012 PAT. FBNH looks relatively fair and GTB/Zenith/Access look relatively over priced. Diamond is not on my radar. Thus as the effects of the interest rates unfold UBA should not be held for long (execpt one gets a better understanding on if exceptional items will be unlikely and who can really know if not an insider). Thus one can buy FBNH for long term positioning right now, while GTB should be watched for possible entry should bandwagon effect brings down its price while its fundamentals is intact in 2014/15. It is good to still be watchful and generally exit in 2013/14 should prices rise driven by current high interest rates before the impact of the low rates and bandwagon effect hits.

[hispy99]

AMCON confirms ownership of 60% stake in Aero - The Punch - Nigeria's Most Widely Read Newspaper

At least AMCON staff can now travel on Aero on "employee" discount

[hispy99]

CBN Reads Riot Act to MFBs, PMBs, Articles | THISDAY LIVE

[hispy99]

Customers plead with banks to service ATMs efficiently during Christmas

[hispy99]

Why We Re-opened Capital Oil’s Depot, By AMCON, Articles | THISDAY LIVE