Growth taking a back seat, fast
Growth-wise, Nigerian banks are experiencing their slowest year since the last crisis (2009). H1 2016 headline growth rates are flattering (because of the impact of naira devaluation); however, the underlying growth trends are subdued. Excluding the impact of naira devaluation, risk asset growth is likely to be flattish at best in 2016E. The true trend should be more visible in 2017E – we forecast a 6% average loan growth for seven of the nine banks we cover. The average ROAE for this group has been trending down since 2012 (21.5%), falling to 14.7% in 2015. On the back of fx-related gains, we expect a marked increase to 20.2% in 2016E but see a return to the previous trend subsequently in 2017E (11.4%), assuming no further fx-related gains.