Some investment bankers have rejected calls for fund managers to avoid investing in banking stocks as the return on such investments keep dwindling.
They contend that even though the banks keep recording high Non Performing Loans (NPLs), current trends show a recovery in banking stocks which reflected in the 2016 half year results of banks listed on the Ghana Stock Exchange (GSE).
Speaking on the issue, Investment Banker and Senior Associate Financial Advisory at Bora Capital, Advisors Nana Agyemang Gyamfi said the banking stocks in the medium to long term will yield better results.
“It is true that NPLs are having effects on the bottom line of banks.
Investors will also want to be comfortable that if they are going on to invest, it’s all clear; that the banks are really out of their present challenges where high non performing loans are having a strain on their bottom line,
“So if you want to look into the future considering the performance of the banks now especially their half year reports then you might want to stick your neck out and invest in the stocks it is right,” he explained.
Nana Agyeman Gyamfi’s assertion comes after the chairman of IFS Capital Management Ltd, Samuel Agyapong Apenteng warned that banking stocks in the country are currently one of the high risk areas for fund managers to invest due to the rise in non performing loans among banks.
Speaking on the sidelines during the Annual General Meetings of the three unit schemes managed by the IFS Capital Management Ltd, Samuel Agyapong Apenteng said the year under review saw banking stocks drop massively leading to the my -wealth unit trust fund having to move its funds to other areas.
Nana Agyeman Gyamfi stated that the decline in the performance in the banking stocks can also be attributed to the trends in the economy which some stakeholders has described as being weak.
But he was quick to add that if things improve within the general economy and the banks’ clients are able to make good on the loans by paying back, then the recoveries will have a good impact on the bottom line of the banks.
“Considering the interest rate which is now above 20 percent and the current performance of the money market if you want a safe bet.”
“So the time is better for one to invest in banking stocks at this time because it will be too little too late when the investors think are all clear for them to invest in the banking sector.” he stated.