What's making First Citizens' share price go down, and up

It's the law of gravity – “what goes up, comes back down.”

For a list of scientific reasons the earth and all the materials on it adhere to this very rule, keeping everything down to earth (no pun intended).

However, the laws of the stock market and the share prices may be a little different. In this regard, what goes down may eventually come back up.

This may be the case with First Citizens Group, whose share prices have been on trending down for months, seemingly settling on a steady plain.

The share price decline has raised questions from several areas, including “former” politicians, on the health of the bank and its future.

Earlier this month former minister of finance, Colm Imbert described the situation as “frightening,” as he highlighted a 26 per cent decline in the share price

In a post on X on November 11, he said “something sinister is happening” with the share price noting that the FCGFH shares saw a high of $42 in April, but fell to $31 on November 10.

“FCB’s earnings have continually improved over the years and there is no way its share price can drop 26 per cent from $42 on April 28 to $31 on November 10 unless someone is manipulating the price,” he said.

Former prime minister Dr Keith Rowley also raised alarm at the decline in shares on November 17 out of the “office of the former Prime Minister” – his house.

He alleged that the decline may have had something to do with the changing of the guard at First Citizens Group Financial Holdings (FCGFH).

“That is an issue that must attract the attention of the government, because the government retains the majority shareholding, expresses an intention to sell more shares in FCB and the shares have so collapsed because of the misbehaviour of the government when they tried to fire the leadership. More importantly, who is driving down the shares of FCB when the bank’s performance does not warrant that?

“I am asking the government to tell the population, people who have bought shares in FCB, who see their worth plummeting…”

However, when asked about the share price on the second day of the Institute of Chartered Accountants of TT (ICATT)’s annual international finance and accounting conference on October 21 at the Hyatt Regency in Port of Spain, Minister of Finance Davendranath Tancoo didn’t seem worried at all.

“I am 60 years old, as I like to boast. I have focused a lot on the banking sector over my period of time, both in office and before – and I understand that share prices go up and go down based on national and international events. It’s part of the system.

“It will go down. I assure you, it will go back up.”

So said, so done. The TT Stock Exchange (TTSE) reported a strong finish for the group, for the week ending on November 21. FCGFH shares went up, opening at $32 a share and closing the day at $34 – a four per cent increase from the day before.

The turnaround showed signs of a reversal from earlier this week, when it highlighted a 19 per cent decline for the year. The TTSE now says it is seeing a 15.43 per cent decline.

A share’s price is what buyers and sellers are willing to buy or sell for a certain stake in a company. Share prices are influenced by a range of factors which included company performance, market liquidity, other investment opportunities, evolving legislation and investor sentiment.

A share’s value is determined by more fundamental factors. That can be determined by the company’s historical and expected performance and valuation multiples, which are financial ratios used to compare a company’s value to specific metrics such as earnings before interest, taxes, depreciation and amortisation (EBITDA), revenue or net income.

Of the factors that influence the share price of any company, one of the more direct and hard-to-read factors is investor sentiment and investor confidence.

Newsday spoke to stockbrokers who said investor confidence has the most direct impact on share price. Indirectly, investor confidence could also impact the value of shares, by adjusting valuation inputs such as applied trading multiples, discount rates and cash flow estimates.

In general, the more confidence investors have in a company, the higher the price of the shares and vice versa.

In some markets, a sharp drop in prices could be attributed to a change in investor sentiment, which can change based on several factors, which include but are not limited to:

*Company performance dropping below expectations

*Lower confidence around a market or economy, unexpected adverse legislative changes such as higher taxes or legal restrictions

*tighter liquidity conditions; or *event-driven uncertainty

In some markets, like the TTSE, sudden price drops could also be caused by small retail trades where an investor exits a position because of an urgent need for liquidity.

There is no question about the value of the group’s shares. Its 2024 annual report highlighted a profit before tax of $1.27 billion and after tax, it reported $957 million in profits.

The group has an asset base of $47.1 billion and has an investment grade rating of BBB/stable according to Standard & Poor.

Its total dividend for the financial year 2024 was $2.37 per ordinary share, which was an 18.5 per cent increase over the prior year.

This year, the group’s financial report for the nine-month period ending June 30, reported a profit before tax of $987.4 million as compared to $933.1 million for the same period the year before, along with a profit after tax of $719.5 million, up from $684.4 million for the same period the year before.

So, if the value of the shares and the performance of the company is not in question, why is the price of the shares seeing such volatility?

A few investors have speculated that recent events, starting with the somewhat controversial departure of the FCB CEO Karen Darbasie, FCGFH may have wobbled investor confidence.

Newsday reported that a letter of resignation was submitted to Tancoo, Corporation Sole, on August 20.

However another paper reported that the letter was an indication that her retirement date was in May 2026, but she was prepared to demit office once the terms of her contract were honoured. The report noted that she did not indicate an intention to resign.

Darbasie went on approved vacation leave on August 21, ahead of pre-retirement leave, with then group deputy CEO Jason Julien taking up the role of acting group chairman. She retired on October 21 and Julien was officially named CEO on October 22.

On August 21, the TTSE reported that the company’s share price closed on August 21 at $40.71 per share. On August 20, the group closed trading with a share price closed at $41.17

On October 7, the day before a special general meeting to elect a new board for the group, Newsday confirmed that the rest of the board tendered their resignations. On October 7 the group’s share price was $37.23.

Newsday spoke to shareholders at National Academy for Performing Arts (NAPA) on October 8, when the new board was elected.

Shareholders had mixed views with some raising concern of political interference in the board’s business.

“The reason the board resigned is because of this political business,” one shareholder said frankly. “I feel there was political pressure to change the board. It makes me worried about how it will run.

Another shareholder said she does not know much about the new board, but commended the group’s professionalism.

“My concern is the decline in share price since this whole hoorah started,” she said. “I believe a lot of people had a lot of confidence in the former CEO and when she departed, I checked immediately and it went down significantly. That is my concern. I hope they do what they need to do.

“Even though there are some new people there are some on the board like Sterling Frost would have been on the previous board,” said a third shareholder. “From listening to the bios, we think it is a good mix of people. We will just have to wait and see.”

Still concerns over recent changes may not necessarily be the cause behind the decline in share price.

Newsday contacted Julien with questions on what the group believes is contributing to the decline in the share price and its plans for the future.

He didn’t answer.

Instead, he highlighted the group's rebound at the end of the week and pointed out that the TTSE’s composite index was down by 13 per cent for the year.