FUGAZ vs AZFEUG: Leading Tier-1 banks emerge in 2024

In an effort to reinforce the Afrinvest-inspired concept of FUGAZ, an acronym for First Bank, United Bank for Africa (UBA), Guaranty Trust Bank (GTB), Access and Zenith Banks, a new 2024 Bank Strength Index (PBSI) has been launched in Lagos.

The index, which evaluated banks using a pool of financial metrics based on audited financial statements for the financial year (FY) 2023, named Access Corporation, Zenith Bank, FBNH, ETI, UBA and GTCO (AZFEUG) as Tier 1 banks in 2024.

According to the latest Proshare report, Tier 1 banks tend to edge out their Tier II counterparts for big-ticket public and private sector transactions. Hence, the evaluation metrics for bank classification need to be continuously revised, especially when big appears to be beautiful.

Since FUGAZ classification has become the benchmark for quantifying the impact of fiscal and economic policies on the banking industry, investors have developed interest in the above assessment.

On investor preference among other parameters, investors’ preference during the reign of FUGAZ was evident in the volume of daily deals done on their stock on the floors of the Nigerian Stock Exchange (NSE).

For instance, a typical day (August 21, 2020) on the NSE saw FUGAZ account for 40 percent of the 158 million volume in the banking sector, taking up four of five top spots on the share price.

Similarly, the changing environment was evident in the performance of the latest tier 1 banks. Last week, Tier 1 banks, including Access, Zenith and FBNH, experienced positive changes in their stock prices. UBA was the top gainer for the week followed by GTCO with 5.57 percent week-on-week (w-o-w) change, according to information available from the Nigerian Exchange Group.

Among the Tier 2 banks, Wema and FCMB had positive Year to Date (YTD) returns, while the remaining banks’ share prices saw a decline within the week.

Stanbic share price performance for the week stood out amongst its Tier 2 peers with a 4.42 percent change w-o-w. Fidelity Bank stock value remained flat, while Sterling, FCMB, Wema and Unity saw negative growth in their share prices w-o-w.

Meanwhile, in recognition of its outstanding performance, Access Holdings was named the leading Tier-1 bank in the 2024 Proshare Bank Strength Index (PBSI) report.

This, according to analysts, underscores Access Holdings’ significant strides in the banking sector.

Reviewing bank performances in 2023, Proshare analysts observed that banks were pursuing increasingly aggressive approaches to acquiring digital market share while supporting lower operating costs (lower cost-to-income ratios (CIRs).

Access Holdings Plc announced N315 billion capital raise via right issue. The amount announced last week will close the bank’s funding gap to commence today.

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