•Sector index climbs 0.9% on strong market confidence
By Chinwendu Obienyi
Investors on the floor of the Nigerian Exchange Limited (NGX) have maintained a strong appetite for banking stocks, driving the NGX banking index to consecutive gains in the last two trading sessions.
The sector had shown much resilience, emerging the best performing indicator in January 2025, rising by 9.76 per cent year-to-date (YTD) to close at 1,190.35 basis points.
This outperformed the overall market, with the NGX All-Share Index (ASI) appreciating by 1.53 per cent in the same period.
Despite the banking index surging by 4.66 per cent last week Friday, the banking index resumed on a negative note, owing to profit-taking in tier-1 lenders. However, bullish sentiments returned to the market on Tuesday with the banking index gaining +0.4 per cent.
Specifically, at the close of trading yesterday, all (except three) quoted banks appreciated in value. For example, Jaiz Bank appreciated by 3.03 per cent to close at N3.40, ETI garnered 2.24 per cent to close at N32, UBA added 1.29 per cent to close at N39.30 while FBN Holdings gained 0.92 per cent to close at N32.80.
Similarly, the share value of Sterling Bank increased by 0.50 per cent to close at N5.99, Fidelity Bank added 0.51 per cent to close at N19.70, Wema Bank increased by 0.44 per cent to close at N1.40, Zenith Bank gained 0.29 per cent to close at N51.45 while GTCO garnered 0.16 per cent to close at N63.
Daily Sun observed that the ongoing recapitalisation efforts mandated by the Central Bank of Nigeria (CBN) has driven banks to strengthen their positions in the market. Furthermore, strong performances from Wema Bank and FCMB led to price appreciation, gaining 25.8 per cent and 17.55 per cent respectively earlier in January.
Some banks, Daily Sun learnt, have already reported significant profit increases for the full year of 2024 with the likes of Wema Bank reporting a 134 per cent rise to N102.1 billion in profit and FCMB posting a 12.3 per cent increase in its profit for the same reporting year.
Market operators who spoke to Daily Sun via emailed notes, noted that the momentum in banking stocks reflects investors’ optimism and anticipation of continued growth in the sector despite broader economic challenges such as surging inflation and steady hike in interest rates.
“This continued preference for banking stocks aligns with the sector’s strong start to 2025, building on the momentum already established in January when the banking index emerged as the best performing indicator”, they said.