Sterling Bank shareholders lost a significant part of their investment in the lender last year, resulting from the creditor’s struggle to attract bullish (optimistic) investors to its stock.
The diminished investment was occasioned by investors being pessimistic about Sterling Bank’s growth, hence, deserting the bank’s share in the capital market.
This negative sentiment birthed a bearish run that saw the creditor’s stock devalue by 28.57 percent within twelve months after the capital market priced the equity low from January’s N2.10kobo down to N1.50kobo in December last year.
Ripples Nigeria analysis showed the dip represented a total loss of N14.97 billion in the total investment of shareholders, which fell to N45.48 billion at the end of December 31, 2021, against the N60.45 billion held January 1 of same year.
Although, the price of Sterling Bank share was up at N1.58kobo as of January 20, 2022, above end of last year’s N1.50kobo per share, but the lender needs more than 5.3 percent year-to-date growth.
Sterling Bank risks reclassification to Low-Priced stock group
Companies in the Nigerian capital market are grouped into three price categories, Low-Priced stock group, Medium-Priced stock group and High-Priced group.
To be grouped in any of this category, a company’s stock must trade high or low around, below or above a certain price for four months consecutively, and one of such trade is United Capital, which performance was reported by Ripples Nigeria in August 2021.
And for Sterling Bank, its stock traded mostly below N1.60kobo per share for six months straight last year since falling below the average price of N2 in the second week of July – the commercial bank hasn’t recovered since.
Although, the Nigerian Exchange Group hasn’t reclassified Sterling Bank, but if it continues to replicate its 2021 performance this year, a downgrade of its share will put a risk on the shares held by stakeholders, and have a ripple effect on their investment.
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