-0.7 C
New York

NGX banking index surges 9.76% in January amid recapitalisation drive

Published:

Nigeria’s banking sector surged in January as the NGX Banking Index jumped 9.76%, driven by recapitalisation efforts and strong investor confidence

 

 

Nigeria’s banking sector recorded an impressive start to the year, with the NGX Banking Index rising by 9.76% in January, significantly outperforming the broader market.

Also read: Banks urged to resolve debt issues with Telecoms amid NCC’s USSD threat

According to a corporate report from the Nigerian Exchange Group (NGX) on Tuesday, the rally was driven by increased investor confidence amid the ongoing recapitalisation exercise.

The first phase of the recapitalisation process saw banks raise a total of N1.7 trillion in new equity capital, with robust participation from investors.

The Securities and Exchange Commission (SEC) confirmed the figures, highlighting strong demand for financial stocks.

While the NGX All-Share Index grew by just 1.53% during the same period, the banking sector’s outstanding performance was led by key players:

Wema Bank Plc recorded a 25.8% increase, pushing its share price from N9.10 to N11.45.
FCMB Group Plc followed with a 17.55% rise, closing at N11.05 from N9.40.
Stanbic IBTC Holdings gained 11.71%, moving from N57.60 to N64.35 per share.

These gains were underpinned by strong financial results, as the three banks reported significant profit growth in their full-year 2024 earnings.

The Central Bank of Nigeria’s (CBN) recapitalisation directive, which mandates higher minimum capital requirements for banks by March 2026, has been a key factor driving market momentum. Under the new framework:

International commercial banks must hold N500 billion in capital.
National commercial banks require N200 billion.
Regional commercial and merchant banks must meet a N50 billion threshold.

Three banks have already met the new capital requirements, while seven others raised funds through public offers in 2024, many of which were oversubscribed.

Industry experts believe the recapitalisation drive will continue to fuel investor confidence.

According to Aruna Kebira, Managing Director of Globalview Capital Limited, the strong market performance reflects growing investor appetite for banking stocks.

He noted that with N1.7 trillion already raised, banks are on track to meet the recapitalisation deadline without the forced mergers seen in 2004.

Similarly, Mallam Kasimu Kurfi, Managing Director of APT Securities & Funds, highlighted that the 24-month timeline provides banks with enough flexibility to explore various capital-raising strategies, including private placements and foreign investments.

With bullish investor sentiment, analysts expect the NGX Banking Index to continue outperforming the broader market as more banks announce their financial results and recapitalisation plans.

Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management, emphasised that recapitalised banks will be stronger, more profitable, and better positioned to deliver higher shareholder returns.

“As Nigeria’s banking industry moves towards compliance with the CBN’s new capital framework, the recapitalisation drive is expected to deepen market liquidity, enhance financial stability, and sustain long-term growth in the sector,” Amolegbe stated.


Discover more from NaijaOne

Subscribe to get the latest posts sent to your email.

Related articles

Updates