External broker reports(aggregated public sources), CardinalStone

CardinalStone

External broker reports(aggregated public sources)

CardinalStone is an independent, multi-asset investment management firm offering an assortment of financial services to a diverse institutional, high net worth and retail clientele base. The company began operations in June 2008 and its business is conducted across six divisions – Investment Banking, Asset Management, Securities Trading, Trust Services, Registrar Services and Financing. Headquartered in Lagos with offices in Abuja, Nigeria, the firm and its licensed subsidiaries diligently works with its clients to create bespoke solutions for their needs.

Equity Bottom-Up

<ul><li>For FY'25, we maintain the view that FIRSTHOLDCO's earnings dynamics will highlight the rising shift towards interest income.</li><li>This tilt should reflect sustained increases in interest-earning assets amid the elevated yield environment.</li><li>The improvement in interest income is expected to flow through to Net Interest Income (NII)— assuaging pressures from interest expenses and softening the impact of the material contraction in non-interest revenue (NIR) as FX-induced gains on derivative holdings wanes.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

For FY'25, we maintain the view that FIRSTHOLDCO's earnings dynamics will highlight the rising shift towards interest income.This tilt should reflect sustained increases in interest-earning assets amid the elevated yield environment.The improvement in interest income is expected to flow through to Net Interest Income (NII)— assuaging pressures from interest expenses and softening the impact of the material contraction in non-interest revenue (NIR) as FX-induced gains on derivative holdings wanes.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

First Holdco Plc - Positive Earnings Outlook Drive Stock Re-Rating

<ul><li>First Holdco Plc (FIRSTHOLDCO: TP – N27.58) reported a 17.9% YoY decline in profit after tax (PAT) to N167.4 billion, in its unaudited Q1’25 results.</li><li>The performance was primarily weighed down by a sharp contraction in non-interest revenue (NIR), which offset the strong growth recorded in net-interest income (NII) and limited the expansion of gross earnings.</li><li>Furthermore, significant increases in operating expenses (OPEX) offset the gains from lower impairment charges, further pressuring net income.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

First Holdco Plc (FIRSTHOLDCO: TP – N27.58) reported a 17.9% YoY decline in profit after tax (PAT) to N167.4 billion, in its unaudited Q1’25 results.The performance was primarily weighed down by a sharp contraction in non-interest revenue (NIR), which offset the strong growth recorded in net-interest income (NII) and limited the expansion of gross earnings.Furthermore, significant increases in operating expenses (OPEX) offset the gains from lower impairment charges, further pressuring net income.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

First Holdco Plc - PAT Moderates as NIR Weakens

<ul><li>Aided by a stronger Net Interest Margin (NIM) (+1.0ppt YoY) and higher fair value gains on financial instruments, FBNH reported a 2.1x surge in operating income to N1.5 trillion in 9M'24.</li><li>This impressive operating income print highlights the impact of a 76.3% YoY expansion in interest-earning assets (IEA) to N19.3 trillion and a 3.2ppts increase in asset yields that aligns with the elevated interest rate environment.</li><li>Hence, accounting for these improved gains as well as broadly stable core drivers, we revise our gross earnings and PAT projections to N3.1 trillion and N734.0 billion, respectively.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Aided by a stronger Net Interest Margin (NIM) (+1.0ppt YoY) and higher fair value gains on financial instruments, FBNH reported a 2.1x surge in operating income to N1.5 trillion in 9M'24.This impressive operating income print highlights the impact of a 76.3% YoY expansion in interest-earning assets (IEA) to N19.3 trillion and a 3.2ppts increase in asset yields that aligns with the elevated interest rate environment.Hence, accounting for these improved gains as well as broadly stable core drivers, we revise our gross earnings and PAT projections to N3.1 trillion and N734.0 billion, respectively.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FBN HOLDINGS PLC - Interest Income to Propel FY’25 Earnings

Fbn Holdings Plc  - Interest Income to Propel FY’25 Earnings

Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Credit

Asia’s Additional Tier 1 (AT1) bonds outperformed Tier 2 and Senior Unsecured securities, despite rather constrained credit risk sentiment. In rate markets, US Treasury curve steepening roared back. Concurrently, interest rate futures rose considerably on even higher federal stimulus expectations. Rate markets may be over-pricing the potential for a "True Blue-Sweep". The risk at this point is an effectively split ticket in which Senate Republicans, aided by conservative-Democrats, water-down federal stimulus bills. Treasury yields may gap down as a result. Bank valuations could follow. The sell-off in US Treasuries was not met with increased buying in Emerging Market (EM) or High Yield (HY) markets. EM investors were more focused on early 2021 fund flows while risk-free rates rise. HY investors contemplated the potential for higher default rates over the next year. An unsynchronized global economic recovery will make single name selection more important over the near term.Asia’s HY markets slightly outperformed the US’ as both indexes tightened slightly during the week. The relative outperformance of Asia versus the US resulted in slight spread compression between the two indexes, although the remain wide of last year’s average and this years’ tights.EM capital inflows and US dollar index levels were essentially unchanged during the week despite yuan appreciation. China’s yuan hit the strongest level against the US$ since 2018. As the week closed, a spokeswoman from China’s State Administration of Foreign Exchange suggested an official tolerance of the higher currency level. Lower US-China tensions under a Biden administration could push the yuan even stronger. This may be beneficial for regional banking systems.Financial institutions issued over US$14 billion in USD and Euros. Amongst Asia-headquartered banks, the <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-financial-group-inc" target="_blank" data-smartkarma-citation="entities:217:1" rel="noopener">Sumitomo Mitsui Financial Group (8316 JP)</a> and <a href="https://www.smartkarma.com/entities/kb-capital-co-ltd" target="_blank" data-smartkarma-citation="entities:3646:1" rel="noopener">KB Capital (021960 KS)</a> were the only financial institutions to access global capital market during the week. The <a href="https://www.smartkarma.com/entities/fbn-holdings-plc" target="_blank" data-smartkarma-citation="entities:27846:1" rel="noopener">First Bank of Nigeria (FBNH NL)</a> brought a five-year note with an 8.625% coupon for Frontier Market investors. Meanwhile, oversubscription  in the Investment Corporation of Dubai’s note suggests positive investor sentiment towards Dubai, which should be supportive for the <a href="https://www.smartkarma.com/entities/commercial-bank-of-dubai" target="_blank" data-smartkarma-citation="entities:29706:1" rel="noopener">Commercial Bank of Dubai's (CBD UH)</a> recently issued AT1 bond. For our thoughts on this security, please see: <a href="https://www.smartkarma.com/insights/commercial-bank-of-dubai-vs-bank-of-east-asia-a-tale-of-two-at1s-in-covid-19-uncertainty" target="_blank" data-smartkarma-citation="insights:44387" rel="noopener">Commercial Bank of Dubai Vs Bank of East Asia: A Tale of Two AT1s in COVID-19 Uncertainty</a>.   In terms of Q3 earnings, Thai banks reported mixed results and, despite missing expectations, <a href="https://www.smartkarma.com/entities/bangkok-bank-public-co-ltd" target="_blank" data-smartkarma-citation="entities:213:1" rel="noopener">Bangkok Bank's (BBL TB)</a> notes outperformed other Thai Bank bonds, all of which, also tightened week-on-week. For our thoughts on Bangkok Bank and Thai banks more broadly, please see <a href="https://www.smartkarma.com/insights/bangkok-bank-s-new-at1-overweight-on-relative-value" target="_blank" data-smartkarma-citation="insights:43402" rel="noopener">Bangkok Bank’s New AT1 – Overweight on Relative Value</a> and <a href="https://www.smartkarma.com/insights/thai-bank-capital-and-chronic-covid-19-sensitivity" target="_blank" data-smartkarma-citation="insights:44011" rel="noopener">Thai Bank Capital and Chronic COVID-19 Sensitivity</a>, respectively. As the week closed, <a href="https://www.smartkarma.com/entities/yes-bank-ltd" target="_blank" data-smartkarma-citation="entities:767:1" rel="noopener">Yes Bank (YES IN)</a> reported second quarter, to September, results which beat expectations. The bank managed to generate a profit, versus expectations of another loss, on positive operating jaws as interest and operating expense declines offset lower operating revenues. The bank reported a Common Equity Tier 1 ratio above its minimum requirement for the first time in one year following its capital raise in July and after incorporating the Reserve Bank of India’s recent asset risk-weight reductions. Yes Bank’s results should be positive for its 2023 US$-maturity note.Market Outlook: U.S. Treasury market moves this week suggest that the risk is now election outcome driven. The question is whether Democrats will truly sweep the Senate, House, and Presidency. Effectively conservative-Democrats could water-down federal stimulus efforts. At the same time, although stimulus may be positive for US risk assets, higher long-term rates may not be EM friendly. However, a rise in long-term rates may be tempered by the return of US Treasuries as a favored carry-trade option and by more targeted Federal Reserve asset purchase program operations. Eventual reflation is bank credit and equity positive, getting to reflation is not.

Asia’s Additional Tier 1 (AT1) bonds outperformed Tier 2 and Senior Unsecured securities, despite rather constrained credit risk sentiment. In rate markets, US Treasury curve steepening roared back. Concurrently, interest rate futures rose considerably on even higher federal stimulus expectations. Rate markets may be over-pricing the potential for a "True Blue-Sweep". The risk at this point is an effectively split ticket in which Senate Republicans, aided by conservative-Democrats, water-down federal stimulus bills. Treasury yields may gap down as a result. Bank valuations could follow. The sell-off in US Treasuries was not met with increased buying in Emerging Market (EM) or High Yield (HY) markets. EM investors were more focused on early 2021 fund flows while risk-free rates rise. HY investors contemplated the potential for higher default rates over the next year. An unsynchronized global economic recovery will make single name selection more important over the near term.Asia’s HY markets slightly outperformed the US’ as both indexes tightened slightly during the week. The relative outperformance of Asia versus the US resulted in slight spread compression between the two indexes, although the remain wide of last year’s average and this years’ tights.EM capital inflows and US dollar index levels were essentially unchanged during the week despite yuan appreciation. China’s yuan hit the strongest level against the US$ since 2018. As the week closed, a spokeswoman from China’s State Administration of Foreign Exchange suggested an official tolerance of the higher currency level. Lower US-China tensions under a Biden administration could push the yuan even stronger. This may be beneficial for regional banking systems.Financial institutions issued over US$14 billion in USD and Euros. Amongst Asia-headquartered banks, the Sumitomo Mitsui Financial Group (8316 JP) and KB Capital (021960 KS) were the only financial institutions to access global capital market during the week. The First Bank of Nigeria (FBNH NL) brought a five-year note with an 8.625% coupon for Frontier Market investors. Meanwhile, oversubscription  in the Investment Corporation of Dubai’s note suggests positive investor sentiment towards Dubai, which should be supportive for the Commercial Bank of Dubai's (CBD UH) recently issued AT1 bond. For our thoughts on this security, please see: Commercial Bank of Dubai Vs Bank of East Asia: A Tale of Two AT1s in COVID-19 Uncertainty.   In terms of Q3 earnings, Thai banks reported mixed results and, despite missing expectations, Bangkok Bank's (BBL TB) notes outperformed other Thai Bank bonds, all of which, also tightened week-on-week. For our thoughts on Bangkok Bank and Thai banks more broadly, please see Bangkok Bank’s New AT1 – Overweight on Relative Value and Thai Bank Capital and Chronic COVID-19 Sensitivity, respectively. As the week closed, Yes Bank (YES IN) reported second quarter, to September, results which beat expectations. The bank managed to generate a profit, versus expectations of another loss, on positive operating jaws as interest and operating expense declines offset lower operating revenues. The bank reported a Common Equity Tier 1 ratio above its minimum requirement for the first time in one year following its capital raise in July and after incorporating the Reserve Bank of India’s recent asset risk-weight reductions. Yes Bank’s results should be positive for its 2023 US$-maturity note.Market Outlook: U.S. Treasury market moves this week suggest that the risk is now election outcome driven. The question is whether Democrats will truly sweep the Senate, House, and Presidency. Effectively conservative-Democrats could water-down federal stimulus efforts. At the same time, although stimulus may be positive for US risk assets, higher long-term rates may not be EM friendly. However, a rise in long-term rates may be tempered by the return of US Treasuries as a favored carry-trade option and by more targeted Federal Reserve asset purchase program operations. Eventual reflation is bank credit and equity positive, getting to reflation is not.

Bank Credit Weekly: Election Risk Rises as Asia’s AT1s Outperform

Nigeria

First HoldCo Plc operates as a holding company. The Company, through its subsidiaries, provides offers merchant, investment banking, trusteeship, fund management, registrars, and advisory services, as well as sells insurance policies and mortgages via subsidiary companies. First HoldCo serves customers in Nigeria.

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First HoldCo (FIRSTHLD NL)

First Holdco Plc - Positive Earnings Outlook Drive Stock Re-Rating

For FY'25, we maintain the view that FIRSTHOLDCO's earnings dynamics will highlight the rising shift towards interest income.

CardinalStone

First Holdco Plc - PAT Moderates as NIR Weakens

First Holdco Plc (FIRSTHOLDCO: TP – N27.58) reported a 17.9% YoY decline in profit after tax (PAT) to N167.4 billion, in its unaudited Q1’25 results.

CardinalStone

FBN HOLDINGS PLC - Interest Income to Propel FY’25 Earnings

Aided by a stronger Net Interest Margin (NIM) (+1.0ppt YoY) and higher fair value gains on financial instruments, FBNH reported a 2.1x surge in...

CardinalStone

Fbn Holdings Plc - Interest Income to Propel FY’25 Earnings

Aided by a stronger Net Interest Margin (NIM) (+1.0ppt YoY) and higher fair value gains on financial instruments, FBNH reported a 2.1x surge in...

CardinalStone

Bank Credit Weekly: Election Risk Rises as Asia’s AT1s Outperform

A must-read on US$-risk sentiment derived from high yield and equity markets, interest rates, dollar levels, capital flows and issuance to frame...

Hank Calenti, CFA

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