Nigerian Equities Market Faces Concerns Amid Bank Recapitalisation


The Nigerian equities market experienced its third consecutive weekly decline as investors grapple with the potential effects of the recently announced bank recapitalisation by the Central Bank of Nigeria (CBN).

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Notably, Tier-1 banking stocks such as First Bank Nigeria Holdings (FBNH), Guaranty Trust Company (GTCO), Access Corporation, and Zenith Bank witnessed significant selling pressure, with declines ranging from 4.5% to 14.2%. Additionally, profit-taking in MTN Nigeria contributed to the market downturn.

As a result, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) fell by 1.1% week-on-week (WoW), leading to a moderation in the Year-to-Date return to 38.3%. Market capitalisation also decreased by over N623 billion WoW, closing at N58.497 trillion.

Despite the overall decline, trading activity surged, with total traded volume and value increasing by 104.0% and 11.2% WoW, respectively. The Banking Index saw the most significant decline by 6.7%, followed by the Insurance Index at 0.9% and the Industrial Goods Index at 0.3%. However, the Consumer Goods Index gained 0.9%, while the Oil and Gas Index remained flat.

Analysts attributed the bearish trend to ongoing bank audit releases, corporate actions, and the impending recapitalisation plans. Stanbic IBTC and Wema Bank presented strong performance figures for the financial year ended December 31, 2023, but with relatively low dividend payouts compared to their earnings and share prices.

Stanbic IBTC reported a 62% increase in earnings and a 74% rise in profits, translating to earnings per share of N10.62 and a final dividend of N2.20. Wema Bank exceeded expectations, posting a top-line of N226.91 billion and a bottom line of N35.99 billion, resulting in an EPS of N2.80 and a dividend of 50 kobo.

Looking ahead, analysts anticipate a choppy trading pattern dominated by cautious sentiment, influenced by macroeconomic developments and corporate actions. They expect mixed and bearish sentiment amid positioning, profit-taking, and portfolio rebalancing in response to the banks’ recapitalisation plans and dividend announcements.

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Godwin Okafor
Godwin Okafor
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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