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Nigeria’s Stock Index May Gain 15% This Year: FBN Capital

Nigeria’s benchmark All-Share Index could gain 15 percent this year, with banking stocks expected to benefit from “attractive” dividend yields, FBN Capital said.

The measure, which advanced 35 percent in 2012, could reach 32,250, the Lagos-based brokerage said in an e-mailed report from analysts Gregory Kronsten, Olubunmi Asaolu, Tunde Abidoye and Uwadiae Osadiaye. The gauge traded at 29,687.80 as of 2:32 p.m. in Lagos, the commercial capital.

“In the very near term, we believe equities will see some support because of attractive yields on banks’ 2012E dividends,” the FBN Capital analysts wrote. The analysts set a year-end target price of 8.2 naira for Diamond Bank Plc, FBN’s “top pick” for equities. FBN gave an outperform recommendation on Diamond, Skye Bank Plc, and United Bank for Africa Plc.

“After some extremely disappointing years in the banking sector, we believe that 2012 will be remembered as the year when the long-awaited recovery in the sector finally arrived,” the analysts wrote. The Central Bank of Nigeria set up the Asset Management Corp. of Nigeria, or Amcon, which bought bad debts from the nation’s lenders after a debt crisis in 2008 and 2009. This enabled the banks to enter 2012 with cleaned-up balance sheets, and with reduced loan-loss provisions, FBN Capital said.

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