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By NBF News
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The recent rally on the share prices of First City Monument Bank (FCMB) is beginning to generate controversy among stockbrokers in the Nigerian Stock Exchange (NSE) with many saying that they were stunned by the development.

Many stockbrokers that spoke to Vanguard on the rise noted that there was no positive development in the bank since it issued the profit warning for 2011 financial year that would warrant an upward movement.

They observed that the United Bank for Africa that had issued profit warning earlier followed it up with impressive projected quarter one results for 2012, saying that it has not happened with FCMB.

FCMB had last week declared N9.9 billion losses in its audited 2011 results, amounting to 225 per cent decline over N7.9 billion profits recorded in equivalent period of 2010.

The bank noted in an accompanying note to the NSE that the loss was as a result of observed deterioration in restructured loans and legacy investments due to additional net provisions and write-offs between the third and fourth quarter of year 2011.

A breakdown of the N9 billion loss declared showed that provision was made for impairments to equity underwritings to the tune of N4.9 billion, losses recorded on the sale of systematically significant and other loans  stood atN11.6 billion, while provision worth N13.0 billion was made for other loan losses and write-offs.

The bank however, announced 3 for 20 script issue for its shareholders.

Apart from Thursday, 15th March, 2012, when the bank recorded maximum five per cent loss on its share price as a result of the profit warning issued, the stock has been on steady upward movement, rising by 15.79 per cent between March 16th and 23rd, 2012.

Breakdown shows that the stock which opened the market on March 16th at N3.80 after losing N0.20 or five per cent the previous day, rose continuously to close transactions on Friday, March 23rd at N4.40, thus indicating 15.79 per cent increase within one week.

Reacting to the development, Mr. David Adonri, Chief Executive Officer, Lambert Trust and Investment Company, he was not aware of any positive price sensitive information that could have propelled such impressive movement on the stock, adding that the rally could not be sustained.

'Just like you, I am surprised by its upward price movement despite the poor full year result. I am not aware of any new positive price sensitive information that is now driving the price upwards. I doubt if this trend is sustainable,' he said.

Also denying being privy to any information that could have driven the stock up, Mr. Dele Odusanya, Managing Director, Quantum Securities Limited, said he suspected that the bank's acquisition of Finbank which is nearing conclusion could be a reason for patronage of the stock by investors,  adding, 'Though I have no information about the stage of the acquisition now.'

An analyst with Deloy Consulting, Mr. Tunde Oyediran, attributed the rise to bonus issue announced by the bank, saying that no other bank has so far declared bonus.

Also reacting, Sir Sunny Nwosu, National Coordinator, Independent Shareholders Association of Nigeria (ISAN) explained that several factors which ranges from declaration of positive quarter one results to the maximum limit allowed by the NSE could join to move the prices up.

He stated that it was possible that some individuals that do not want to see to the share depreciate are taking advantage of the 50,000 daily limit allowed for stocks movement to cross deal and maintain an upward movement.        File name: FCMB 26th march, 2012