First Bank Sees Stock Surge By Over 30%

First Bank of Nigeria experienced a remarkable 31.81 percent surge in its stock price during the second week of September 2024.

This significant rise came after the bank’s announcement on Friday, September 7th, of the 100 percent sale of its stake in FBNQuest Merchant Bank to EverQuest. The news followed the release of the bank’s stellar first-half results, which featured an impressive 100.9% percent year-on-year growth in pre-tax profit.
The divestment highlights First Bank’s ongoing efforts to streamline its operations, focusing on core banking activities while implementing cost-saving strategies to strengthen its balance sheet. This strategic shift was well-received by investors, leading to the sharp rise in the bank’s share price the following week.
First Bank maintained a long-term upward trajectory since 2020, albeit with periodic corrections. However, the banking sector was hit by uncertainty earlier this year when the federal government introduced a recapitalisation policy. The policy triggered a 32 percent drop in First Bank Holdings (FBNH) shares in April, a decline that extended through July when the stock price closed at N20.95.
The release of the bank’s half-year results marked the turning point. The results, which highlighted an 18.9 percent year-on-year increase in net interest income and an astonishing 132 percent rise in pre-tax profit, reignited investor confidence, leading to a strong recovery in August.
The sale of FBNQuest Merchant Bank further fueled optimism in the market, with investors interpreting the move as a strategic realignment aimed at unlocking value and boosting future profitability
First Bank’s financial statement for the first half of 2024 revealed robust growth. Pre-tax profit skyrocketed to N411.9 billion, up from N205 billion recorded in the previous year. Interest income soared by 155 percent, reaching N947.6 billion, compared to N371 billion in the same period last year.
Additionally, the bank’s earnings per share doubled to N10.11, up from N5.19 a year earlier. The bank’s total assets also grew by 38 percent, with cash and cash equivalents spiking by an impressive 86.7 percent .
The bank’s strong performance and strategic moves have translated into robust activity on the Nigerian stock market. By the second week of September, First Bank was trading with a monthly volume of 205 million shares, surpassing the 194 million shares traded throughout the entire month of August.
The 31.81 percent stock surge was driven by a weekly volume of 175 million shares, rebounding from the July low of N20.95. First Bank’s impressive 30 percent weekly gain sets it apart from other tier-one banks, which have struggled to recover following the sector-wide downturn triggered by the recapitalisation policy earlier this year.
With the sale of its subsidiary and a solid financial outlook, First Bank is well-positioned to capitalise on new opportunities, signalling further potential growth for investors and stakeholders in the coming months.