The Nigerian banking sector experienced a positive close on December 24, 2024, with the eight listed banks recording a cumulative market capitalization of N7.20 trillion, representing a N109.10 billion increase from the previous day. This growth, driven by a mix of gains and steady performance across the sector, underscores the continued strength and investor confidence in Nigerian financial institutions. While some banks saw significant share price appreciation, others maintained their positions or experienced minor declines, reflecting the dynamic nature of the stock market and individual bank performance. This overall positive trend highlights the banking sector’s resilience and its crucial role in driving the Nigerian economy.
United Bank for Africa (UBA) emerged as a top performer, posting a 2.86% increase in its share price, reaching N36.00. This surge propelled UBA’s market capitalization to N1.23 trillion, further solidifying its position as a major player in the Nigerian banking landscape. The increased trading activity surrounding UBA shares, with a significant rise in both volume and value, further indicates strong investor interest. Meanwhile, Zenith Bank, another heavyweight in the sector, maintained its share price at N46.00, preserving its substantial market capitalization of N1.44 trillion. However, Zenith Bank experienced a notable decrease in trading volume, suggesting a potential shift in investor focus or profit-taking after recent gains.
Access Holdings, a significant player in the financial services sector, also witnessed growth, albeit more modest, with a 0.61% increase in share price to N24.70, pushing its market capitalization to N877.97 billion. Despite this positive movement in share price, Access Holdings experienced a decline in trading volume, mirroring the trend observed with Zenith Bank. FBN Holdings followed a similar trajectory, recording a substantial 2.76% increase in share price to N27.90, which significantly boosted its market capitalization to N1.00 trillion. However, trading volume for FBN Holdings also decreased, indicating a possible cooling-off period after the price surge.
Fidelity Bank showcased impressive gains, with a 5.11% surge in its share price to N17.50, resulting in a market capitalization increase to N560.21 billion. While this demonstrates strong investor confidence in Fidelity Bank, the trading volume experienced a decline compared to the previous day, possibly reflecting profit-taking or a temporary lull in buying activity. In contrast to the positive performance of many of its peers, Guaranty Trust Holding Company (GTCO) witnessed a decline in its share price, dropping by 1.36% to N57.95, leading to a slight decrease in its market capitalization to N1.71 trillion. The reduced trading activity for GTCO further suggests investor caution or a potential reassessment of the bank’s value.
Sterling Financial Holdings emerged as the day’s highest gainer, recording a remarkable 6.36% increase in share price to N5.85. This substantial jump propelled its market capitalization to N168.42 billion, indicating strong investor sentiment towards the bank’s future prospects. Wema Bank also closed on a positive note, with a 2.86% increase in share price, reaching N9.00 and pushing its market capitalization to N192.87 billion. The increased trading activity observed for Wema Bank further reinforces the positive sentiment surrounding its performance.
Charles Sanni, CEO of Cowry Treasurers Limited, provided expert commentary on the performance of the banking sector, highlighting the critical role banks play in the Nigerian economy. He emphasized that banks are fundamental drivers of economic activity, attracting investor interest due to their inherent liquidity and their role as key facilitators of financial transactions. Sanni pointed out that banks are often the primary target for foreign investors entering the Nigerian market, further underscoring their significance in the financial landscape.
Sanni also elaborated on the strategic deployment of capital by banks, particularly in the context of high inflation. He explained how banks leverage this environment to generate increased profits, though he cautioned about the challenges faced by borrowers due to tighter lending practices adopted by many institutions. Sanni highlighted the positive impact of the recent recapitalization of the banking sector, noting that the increased capital base empowers banks to engage in more robust business activities and further contribute to economic growth.
Sanni reiterated the importance of banks as essential engines of the economy, emphasizing the natural investor inclination towards acquiring bank shares. He stressed the liquidity provided by banks, making them an attractive asset for investors seeking readily convertible holdings. Furthermore, he underscored the central role banks play in attracting foreign investment, positioning them as the initial point of entry for international capital seeking opportunities in the Nigerian market.
Sanni further explained the dynamics of the banking sector’s profitability, emphasizing how banks effectively deploy raised capital and leverage high inflation rates to enhance their earnings. He also pointed out the challenges faced by borrowers due to the cautious lending practices adopted by many banks in the current economic climate. Sanni emphasized the significant boost provided by the recapitalization of the banking sector, equipping banks with greater financial capacity to engage in business activities and drive economic expansion.
The recent upward revision of capital requirements for Nigerian banks by the Central Bank of Nigeria (CBN) further reinforces the focus on strengthening the financial sector. This move is aimed at enhancing the stability and resilience of financial institutions and contributing to President Bola Tinubu’s ambitious $1 trillion economic target. The increased minimum capital requirements, significantly higher than the previous thresholds, represent a decisive step towards bolstering the financial system and positioning it to support robust economic growth. This regulatory action further underscores the commitment to developing a robust and resilient banking sector capable of driving significant economic expansion and achieving ambitious national economic goals.
