Stocks for the largest bank in Africa’s second largest copper producer Zambia just got an outlook boost after the British International Investments extended a $50 million credit line to Zambia National Commercial Bank. Listed on the local bourse the Lusaka Securities Exchange, ZM:ISIN0000000250 is one of the red metal producers best performing stocks having recorded a resilient profitability trajectory that crossed the K1 billion after tax earnings mark in 2021. The credit line secured will be used to fund small to medium sized businesses for which the lender will prioritize women based and climate related initiatives aligning to global environmental and social requirements. The world has a very strong decarbonization drive at the moment which will shape capital allocations from deep pools to entities willing to calibrate their strategies towards fulfilling environmental preservation and solving social imbalances such as gender.
The ZNCO stock is currently trading for K2.6 a share representing a 36.8% rally year todate and 453.0% capital gains from end of 2020. The equity price bulls are supported by a plethora of factors to include general exponential growth across most key metrics ranging from credit book to deposits. Zanaco exudes market leadership in client size, revenue and profitability second to none as other financial institutions are yet to levitate to those levels. This has made the stock attractive the period 27-29 September having seen the stock flirt will all-time highs of K2.95. other drivers of the stellar performance include a digital strategy alongside mining of key value chains that leverage off scale of it massive clientele base. The injection from BII does entail an K800 million kwacha equivalent potential increase in its loan book that could by estimate increase lending by K200 million annually which is good for the stock. Given the 2H22 results the bank is on course for another stellar year which continues to cause exuberance is stock buys causing the price upward kinks as per graph below.
“The growth of Zanaco stock is on an upward trajectory as the Zambian stock markets are set for a boom given low inflation and rising growth momentum. The Zanaco stock is one of the flagship billion kwacha equity that are leading the chart,” Zatu Financial Consultants Managing Partner Munyumba Mutwale carried in a note to clients.
With rising agribusiness investment supported by global and regional food deficits, SME stimulus, digitization and the advent of ESG finance growth, the big strong reliable bank is well positioned to absorb the red metal producers economic growth possibilities, he said.
Key risks hovering over the global markets include recessionary pressures which could systematically expose the banking industry to credit defaults. Other strategic threats stem from the mobile money growth explosion whose constant collaborations with Fintechs are breeding competition across the banking sector as a whole.
Despite the highlighted headwinds K4.5 a share remains an attainable forecast in the medium term for ZM:ISIN0000000250, during the next wave of rallies and once global markets skew towards recovery post recessionary fears.
Zanaco recently launched the Zee women’s banking proposition that will prioritize women owned business by offering both financial and non-financial products. Collateral free loans capped at K200k are a game changer for the big strong reliable bank that have partnered with the Africa Guarantee Fund on a risk share agreement for SME finance purposes.
Climate and social sensitive liquidity pools are fast shaping lending models which is creating lower funding cost opportunities for entities that are ESG compliant compared to those that are not. Businesses that are skewed towards the states 8th National Development plan are likely to stand greater chances in accessing finance.
The Kwacha Arbitrageur
