Banking Stocks Trading to Surge on High Dividend Payments, Analysts Say

Talking about Fidelity Bank's half-year earnings, profit after tax came in up 157.8 percent at 159.8 billion Naira. Asking you what the key highlights of those or key takeaways from those numbers were for you. So I would say basically for Fidelity Bank we've seen that its core banking income has improved significantly. And we've seen that the bank has been able to take advantage of the higher interest environments to improve its net interest income margin, which is the core income of the bank. So we've seen about a triple digit growth in its core banking income, which is the net interest income. So we saw interest income rise significantly to about 500 billion. And it's just a little good and also an interest expense altogether. And its interest income just improved significantly. So as a result of that, we saw that also trickle to the bottom line. And this led to the bank declaring a more than 100 percent increase in its dividend. So last year the bank declared about 30 COPO Naira per share for its dividend. But this year the bank is declaring about 85 COPO Naira per share in its dividend, which is kind of impressive. So as a result of that, we've seen the performance of the stock printing higher in the stock market. And staying with the banking sector, some significant news around Axis Bank in the last couple of days. First, there was a merger with ARM Pensions to become Axis ARM Pensions. And now the bank has announced that it's received approval in principle to establish a banking subsidiary in Namibia. Talk to us about what this is doing for the stock so far in terms of trading, in terms of advancing at the market. And what are your thoughts in terms of how you will be assessing this stock going forward? So for Axis, we've seen that the company has embarked on a journey which we see the bank definitely trying to expand its reach, expand its customer reach, also expand its footprint, geographical footprint. So as a result of that, we've seen the asset of the bank increase significantly. And in due time, we expect the bank to definitely start to consolidate on these same goods that they've recorded in the future. So as a result of that, in the future, we expect the bank performance to improve significantly compared to where it is now because of the larger economies of scale, the improvement in the economies of scale, also improvement in the cash in the future. Right. Let's move on to obviously Q3 earnings still on investors' radar. Talk to me, what names are you eager to see, the financials of the companies that you are looking forward to seeing? So first of all, I'm very, very eager to see the bank, the bank, banking accounts, stock in the banking accounts. I'd like to see their financials. In the sense that we've seen the CBN embark on a monetary tightening trial this year. Just a few weeks ago, we saw the CBN hike interest rates further. So as a result of this, we expect a rising of assets to occur. So definitely, I'll be looking at the bank and stocks that the bank got their performance. Not just that, I'll also be looking at the oil and gas firms, the likes of Seplat and Tuta, which are upstream, that's operating the upstream sector. So for the oil and gas firms that are operating the upstream sector, some of their revenue are definitely in dollars. So looking at year-on-year basis, the dollar performance, we've seen about from $900 to about $169 per share. So definitely, in that sense, the translation effect will definitely play out. We'll likely see their revenue also increasing there. So definitely, that will also improve their, also trickle down to their performance. And also for the downstream sector, we're also looking at, we've seen increasing price of BMS, definitely expect to also see this also trickle into their performance. Right. You're not looking forward to seeing any names from the consumer goods sector or industrials? For the consumer goods, we're also looking at, we expect the current economic headwind to continue to impact the performance of the consumer goods sector. So as a result of that, we'll just be cautiously optimistic about that sector and just keep watching how it plays out. All right. We have about a minute left. What is your outlook for trading this week? Where should we expect to see top volumes and those top stocks that will be, where investors will be bargain hunting? So definitely, the banking stocks will definitely, we'll see the trading volumes in the banking stocks. The likes of Fidelity, not just that, even UBA, looking at most of the banking stocks, majority of them have increased their dividend payout, their interim dividend payout by 100%. We've seen the likes of Zenits, Jitsi, increased their interim dividend by 100%. We also saw UBA did more than 100%, UBA did maybe close to maybe 300% increase in their interim dividend. So that's from 50% to 2.5%. So definitely, this will definitely support investors' interest into that stock and expect that to definitely drive performance for the sector this week. All right. Olumide, we'll leave you there. Thank you so much for talking to us today. We appreciate your time on the show. Olumide Shole, Head of Financial Institutions Research at Renaissance Capital Africa.

Analysts at Renaissance Capital Africa expect trading activity on banking stocks to print higher this month on the back of higher dividend payments. Olumide Sole, Head of Financial Institutions Research at Renaissance Capital Africa joins CNBC Africa for more market updates.

Rencap: High dividend payment to drive banking stocks trading

Analysts at Renaissance Capital Africa expect trading activity on banking stocks to print higher this month on the back of higher dividend payments. 

Rencap: High dividend payment to drive banking stocks trading

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Rencap: High dividend payment to drive banking stocks trading

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