Analysis: Does banking sector have some juices left?

Despite the deteriorating asset quality and two dramatic hostile takeovers, the banking sector has been the winner of 2017 in Dhaka Stock Exchange (DSE).

With only six weeks to go, the publicly listed banking sector has generated the highest trailing twelve months of return in DSE.

As of last week, the banking sector has posted a whopping 79 per cent return in the last twelve months, achieving the status of the best performing sector in DSE in last twelve months.

The second best performing sector was Telecommunication, with a staggering 78 per cent return in the last twelve-month period.

NBFI sector was the third highest return generator with 74 per cent. In the same trailing twelve-month, DSEX, the DSE Broad Index, was up by 34 per cent.

Therefore, banks, telecommunications and NBFIs outperformed the Broad Index by 45 per cent, 44 per cent and 40 per cent respectively.

The top three banks with the highest total return (adjusting for cash and stock dividends) were Rupali Bank, Shahjalal Bank and the City Bank respectively.

Share price of Rupali Bank increased by an astonishing 175 per cent in the last twelve-month, while Shahjalal Bank’s stock price had a total return of 158.5 per cent.

The City Bank was the second runner-up with a total return of 155 per cent.

Moreover, another important mover of the banking sector was Brac Bank, which had posted a total return of 99 per cent as of last week.

Even the decrepit Islami Bank had a return of 19 per cent during this period, which was the lowest in the sector.  

However, in the last six-month period, NBFI sector was out of the race and companies in the banking sector and Grameenphone dominated the gainers’ chart.

DSEX posted a return of 16 per cent in the six-month period while bank and telecommunication sector increased by 46 per cent and 48 per cent respectively.

In last week, despite the banking sector’s dominance over trading volume, telecommunication, food and allied, and pharmaceuticals were the top three sectors in terms of return.

In last week, 39 per cent of the total trading volume came from the banking sector but the sector increased by 1.4 per cent only.

Yesterday, among the 30 companies traded in the banking sector, 11 companies gained their prices, 17 banks lost their prices and 2 banks had their share price unchanged.

With the earnings season of the banking sector upon horizon, the question for investors at this moment is whether the banking sector has some juices left or the sector had run its course.