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Vetiva presents Q3 review of Nigerian banking sector, performance of Vetiva Banking Sector ETF

by Editor

October 19, 2017 | 12:18 am
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Vetiva Fund Managers Limited (Vetiva) recently presented its review of the Nigerian Banking Sector and the performance of the Vetiva Banking ETF for the third-quarter (Q3) ended September 30, 2017.

Olalekan Olabode, head of research at Vetiva in the presentation noted that “Nigerian banks continue to report impressive performance across the Tier-1 banks despite the tough operating environment”.

“Although credit growth has been tepid in the sector, the elevated interest rate environment continues to support top line – particularly for top Tier banks. However, earnings from Tier II and Tier III banks have been less impressive,” he said.

Speaking on the impact of the macro-environment on the sector, Olabode said “With a rebound in oil prices, production levels and stability in FX liquidity, the banking sector has managed to overcome the peak of the crisis, supporting our expectation of a moderation in NPL (Non-performing loan) formation. We believe that earnings run rate is on track to beat the modest performance recorded in FY’16.”

In addition, Oyelade Eigbe, head, investments at Vetiva noted that the Vetiva Banking ETF, which replicates the yield and price performance of the Nigerian Stock Exchange Banking Sector Index, returned approximately 12percent in the third quarter of the year and circa 59percent year-to-date (outperforming the broader equity market).

She stated that “the performance was driven majorly by a rally in the banking index in July amidst investor positioning for impressive performance across Tier 1 banks, an improved sector outlook, and a softening macroeconomic environment. On the other hand, the months of August and September were muted as investors began to take profit on stocks that had previously seen buying momentum”.

The Vetiva Banking ETF tracks the top 10 banks listed on the Nigerian Stock Exchange in terms of market capitalization and liquidity. In response to questions on how to access the ETF, Eigbe indicated that investors could purchase units of the Vetiva Banking ETF on the floor of the Nigerian Stock Exchange (“NSE”) through any broker.

Vetiva Fund Managers Limited is a wholly owned subsidiary of Vetiva Capital Management Limited and is registered with the Securities & Exchange Commission to carry on business as Fund/Portfolio Manager.


by Editor

October 19, 2017 | 12:18 am
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