Nigerian banking stocks have been on an upward trajectory since January 7, 2025, following capital-raising efforts by major lenders to meet the Central Bank of Nigeria’s (CBN) new capital requirements.
The NGX Banking Index, which tracks banking stocks, rose by 12.24% as of February 14, reflecting growing investor confidence.
Banking Stock Performance
- GTCO: Closed at ₦63.45, up 12.90% since January 7.
- Zenith Bank: Closed at ₦51.60, up 4.03% after its capital raise announcement.
Why Are Banking Stocks Rallying?
The rally comes amid a broader wave of renewed investor confidence in Nigeria’s economy, supported by:
- Over ₦1 trillion ($662 million) raised in new capital by banks to meet the CBN’s 2026 capitalization deadline.
- Currency reforms and economic stabilization measures that are attracting foreign investments.
- Declining sovereign risk spread, indicating improved economic stability, according to Bloomberg.
Capitalization & Market Response
In March 2024, the CBN raised minimum capital requirements for banks tenfold, excluding retained earnings from qualifying capital. This forced banks to seek additional funding from the stock market.
- GTCO: Raised ₦209 billion in the first phase of its recapitalization plan.
- Zenith Bank: Secured ₦350.4 billion through a rights issue and public offer.
- Other banks have also raised funds, pushing the total past ₦1 trillion.
With additional capital, banks can expand lending, strengthen balance sheets, and improve profitability, further boosting investor confidence.
Will the Rally Continue?
Analysts predict that banking stocks will remain stable but may not see further growth until banks:
- Release audited financial statements.
- Announce dividend payments.
However, the long-term sustainability of the rally depends on macroeconomic stability and regulatory clarity. While January typically sees heightened market activity, investors will watch for fundamental economic improvements to sustain the momentum.