Early this week, precisely on Monday April 16, 2018, the Nigerian Stock Exchange (NSE) migrated four companies to its Premium Board.
The companies are Access Bank Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc and United Bank for Africa Plc. These companies applied and met the Exchange’s listing requirements for the Premium Board.
Access Bank Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc and United Bank for Africa Plc all passed the Corporate Governance Rating System (CGRS) and had market capitalisation of N347.12billion, N378.60billion, N391.37billion and N374.48billion respectively as at the time of their applications.
These four companies joined Dangote Cement Plc, FBN Holdings Plc, and Zenith International Bank Plc who were migrated to the Premium Board in 2015, bringing the total number of companies on the Premium Board to seven.
“Access Bank is pleased to have attained this status. We have always adhered to international corporate governance best practices, which is line with our aspiration to become Africa’s gateway to the world,” Herbert Wigwe, Managing Director/Chief Executive Officer of Access Bank Plc said.
The shares of Access Bank Plc which closed the trading week ended April 13, 2108 at N11.45 implied returns in excess of 9.6 percent, surpassing the NSE All Share Index (ASI) which yielded returns 7.02percent returns in same period.
Lagos-based Cordros Capital Limited in their April 16, 2018 weekly stock recommendation urged investors to “hold” the shares of Access Bank Plc. In the analysts view, their current 12-month Target Price (TP) for Access Bank Plc is N11.58, which “implies upside potential of 1.14percent from current level”.
Research analysts at Lagos-based Capital Bancorp Plc said in a recent note to clients that, “Migration to the premium board of the NSE means that the stocks and companies they represent are of strong financial footing backed by strong management and operational ethics”.
“The premium list could also be referred to as the new blue-chip stocks for the NSE, having qualified the test. You can safely buy them knowing that they respond only to market fundamentals.
“Their financial results filings are adequate and timely. Company management is competent and issues in corporate governance are well defined –that is the meaning of premium board listing,” according to the analysts in a recent note.
Access Bank’s capital and liquidity levels of 22.5 percent and 47.3 percent respectfully in the financial year ended December 31, 2017 remained robust, well above the required regulatory minimum, providing a strong buffer against the macro challenges and room to expand its business.
Access Bank Plc audited results for the full year ended December 31, 2017 showed resilient growth in total income. The Group reasserted its capacity to deliver steady earnings despite a tighter operating environment.
In the audited financial results released to the Nigerian Stock Exchange (NSE) on Wednesday, March 21, Access Bank Plc reported group earnings of N459.1billion, representing an increase of 20 percent over N381.3 billion recorded in the same period in 2016.
The bank’s growth in gross earnings was boosted by a 29 percent increase in interest income to N319.9billion in 2017, from N247.2billion in Full Year (FY) 2016 while net interest income grew by 17 percent, from N163.452 billion in FY 2017, from N139.148 billion in the comparative period of 2016.
Loans and advances grew 11 percent to N2.064 trillion in 2017, from N1.855 trillion in December 2016. Total assets grew 18 percent to N4.102 trillion in December 2017, from N3.484 trillion in the corresponding period in 2016.
Additionally, the Group recorded an increase of 13 percent in Shareholder returns of N515 billion in December 2017, from N454 billion in the corresponding period in 2016.
The year 2017 was pivotal for Access Bank as it concluded its 2013-2017 corporate strategic plans. “Its successful implementation was hinged on discipline, hard work and an unwavering commitment to our set objectives,” said Access Bank’s CEO who is also excited about the next phase of the bank’s evolution centred on an integrated global franchise.
“The execution of the 2018-2022 strategy commences with focus on deepening our retail offerings, underpinned by strong digital and payment solutions. Throughout the next phase, we will continue to invest in technology as we establish a universal payments gateway with an ecosystem of local and international partnerships,” Wigwe had noted.
The bank’s Premium Board listing for the elite group of issuers implies it met the Nigerian Stock Exchange’s most stringent corporate governance and listing standards.
The Board is a platform for showcasing companies who are industry leaders in their sectors. Premium Board features companies that adhere to international best practices on corporate governance and meet the Exchange’s highest standards of capitalisation and liquidity.
Patrick Ezeagu, chairman, Association of Stockbroking Houses of Nigeria said on the trading floor of the Nigerian Stock Exchange that these four companies have joined the other three to become the “seven wise people”.
Ezeagu, who is also the Managing Director and Chief Executive Officer of Solid Rock Securities and Investment Plc added that the companies listed on the Premium Board have roles to play to ensure the market is well placed for the development of the economy.
“These companies cumulatively value is over N1.5trillion. Stockbrokers will continue to count on them and others earlier listed on the Premium Board to ensure the market is sorted out,” said Emeka Madubuike, Managing Director of Compass Securities Limited who is also immediate past chairman of Association of Stockbroking Houses of Nigeria (ASHON).
The Premium Board gives a company access to a global pool of investors who are focused on companies managed in conformity to the highest standards in their target markets.
Oscar N. Onyema, Chief Executive Officer, NSE, said, “This migration affirms the strides our listed companies are making towards meeting the highest standards of corporate governance and underpins the robustness of our market. The new companies have consistently demonstrated their inherent values to be globally competitive brands and we congratulate them on the attainment of this migration”.
“Companies on the Board are already enjoying the highest levels of visibility and appeal to investors looking for large companies with highest standards of corporate governance. From inception to date, the Premium Board Index continues to outperform the benchmark NSE ASI with the Premium Board recording a total return of 84.99percent versus the NSE ASI’s 41.79percent as at 11 April 2018. The Premium Board’s performance continues to reinforce the sentiments of both foreign and domestic investors on the importance of corporate governance and sustainability”, he added.
To be listed on the Premium Board of The NSE, the aspiring companies must attain a minimum market capitalization of N200billion as at the date of application, a minimum score of 70percent on the Corporate Governance Rating System (CGRS), and maintain a minimum free float of 20percent of their issued share capital or a free float value equal to or above N40 billion, as well as meet other standard listing criteria. The NSE Premium Board and the associated Premium Board Index were launched on Tuesday, August 25, 2015.