Shares of FBN Holdings ended the week on a high note, recording a 7.86 per cent increase week-to-date (WTD) to close at N30.20 on January 10, 2025.
This positive performance comes amidst an escalating loan dispute with General Hydrocarbons Limited (GHL), raising questions about the market’s optimism in the face of ongoing legal battles and operational tensions.
The contentious loan dates back to the tenure of Oba Otudeko as chairman of FBN Holdings. The agreement with GHL involved using profits from Oil Mining License (OML) 120 to reduce First Bank’s non-performing loans (NPLs) and avoid substantial provisioning in 2021.
However, GHL claims the bank has failed to uphold its commitments, leading to arbitration proceedings and a Federal High Court Mareva injunction freezing $225.8 million of GHL’s assets.
The injunction, issued on December 30, 2024, has further strained relations between the two parties. GHL alleges that the asset freeze violates an earlier court ruling that prohibits First Bank from acting against its OML operations or loan transactions.
Despite the legal wrangling, FBN Holdings’ stock continues to show resilience. After starting 2024 at N23.55, the stock experienced a bullish rally, peaking at N35.55 in March before facing setbacks due to regulatory uncertainties surrounding the Central Bank of Nigeria’s recapitalization mandate.
By mid-2024, bearish sentiment dragged the stock to a low of 20.95 in July. However, the stock began recovering in August, closing at N28.05 in December and delivering a year-to-date gain of 19 per cent.
Market analysts have offered mixed opinions on the stock’s performance amidst the ongoing legal challenges. Financial expert Dr. Tunde Alabi suggests investor optimism stems from confidence in FBN Holdings’ long-term fundamentals.