United Bank for Africa Plc, a Nigerian lender with operations in 19 countries, gained for a fourth day, its longest winning streak since December.
The stock jumped 4.8 percent to 1.98 naira by the 2:30 p.m. close in Lagos, the commercial capital, trimming its loss this year to 23.5 percent compared with a decline of 1.4 percent in the Nigerian Stock Exchange All-Share Index. United Bank is trading with price-to-book value of 0.45, according to data compiled by Bloomberg. A P/B ratio below 1 signals a cheaper valuation.
United Bank’s price fell “significantly” following the profit warning by the bank, Abiola Rasaq, a Lagos-based analyst at Vetiva, said by phone today.
The bank expects a loss in 2011, “driven principally by one-off write-offs against earnings, including those arising from the transfer of loans to the Asset Management Company of Nigeria,” it said Feb. 8, leading to a sell-off in the company’s stock. Management does not anticipate similar write-offs in 2012 and pretax profit is forecast at 15 billion naira in the first quarter, the company said.
Vetiva’s target price for this year is 5.85 naira, with a “neutral” rating. The company does not expect the bank’s return-on-equity to catch up with its peers until 2014, “when the full earnings accretion from the African expansion kicks in,” Rasaq said.