For the first time since 2009, GTCO closes below the zenith.
On the local market, Nigeria Exchange Limited, shares of GTCO (previously GTBank) ended below those of Zenith Bank for the first time since 2009.
GTBank closed at a N0.05 discount to Zenith's finish of N25.50, marking a new milestone in investor valuation of the two arch-rivals vying for the title of Nigeria's most profitable lender.
This raises several important considerations, such as whether GTBank's above-board governance viewpoint has been clarified.
More so, given Zenith Bank's improved profitability and earnings per share, some analysts feel the stock should trade at a premium to GTCO, especially as Zenith Bank remains the country's most capitalised bank and has the second-largest balance sheet, among other good fundamentals.
"The premium value of GTCO over Zenith has historically been driven by market view on GTCO's above-board governance, rigorous execution of the Management, and unsurpassed profitability," according to Isaac Olorungbon, the Chief Executive Officer of Deep Trust Capital Limited. Intriguingly, Zenith Bank has been equally persuaded that market on these fundamentals, which are inherent in the Bank, for the past six years.
It, like GTCO, merits a premium price for its sustained profits growth, stable dividend policy, and broader fundamentals. Furthermore, although Zenith maintained its earnings increase, GTCO recorded a significant drop in profit, reinforcing investors' attractiveness to Zenith," he noted.
"GTCO is still priced at a slightly higher premium from a Price-to-Book value perspective at 0.88x, compared to Zenith Bank's valuation of 0.67x," said Mrs Ebiere Fumudoh, Chief Executive Officer Norrenberger Securities Limited, "which perhaps reflects the fact that GTBank's return on average equity of 20.8 percent is still higher compared to Zenith Bank's ROE of 18.6 percent.
GTCO closed at N25.45 at market closing on Thursday, January 13, 2022, while Zenith closed at N25.50.