NGX Banking Index Surges 9.76% in January, Outshines Market Amid Recapitalization Drive
Banking Stocks Lead Market in January 2025
The NGX Banking Index emerged as the best-performing index in January 2025, recording a 9.76% Year-to-Date (YtD) gain, significantly outpacing the NGX All-Share Index, which rose by just 1.53% YtD. This strong performance was driven by high demand for banking stocks, fueled by optimism surrounding the ongoing bank recapitalization exercise.
In contrast, other sectors of the market struggled:
• NGX Industrial Goods Index was the worst performer, declining 8.52% YtD
• NGX Oil/Gas Index dropped 1.61% YtD
• NGX Insurance Index fell 1.1% YtD
Top Gaining Banking Stocks
Leading the banking sector’s rally in January were:
• Wema Bank Plc → +25.8% (NGN 11.45 per share, up from NGN 9.10)
• FCMB Group Plc → +17.55% (NGN 11.05 per share, up from NGN 9.40)
• Stanbic IBTC Holdings → +11.71% (NGN 64.35 per share, up from NGN 57.60)
These gains reflect investor confidence in the sector, supported by strong financial results from banks that have already reported their unaudited full-year 2024 earnings.
Strong Financial Performance Fuels Growth
So far, three banks have disclosed their full-year 2024 financial results, showing significant profit growth:
• Wema Bank → N102.1 billion profit (+134% from 2023’s N43.66 billion)
• FCMB Group → N117.29 billion profit (+12.3% from 2023’s N104.43 billion)
• Stanbic IBTC Holdings → N303.8 billion profit (+76% from 2023’s N172.91 billion)
These results have further strengthened investors’ bullish sentiment toward banking stocks.
Recapitalization: Banks Race to Meet CBN’s 2026 Deadline
The rally in banking stocks is closely linked to the ongoing recapitalization exercise, with banks working to meet the Central Bank of Nigeria’s (CBN) new minimum capital requirements ahead of the March 2026 deadline.
CBN’s new capital structure includes:
• NGN 500 billion for commercial banks with international licenses
• NGN 200 billion for national commercial banks
• NGN 50 billion for regional commercial and merchant banks
So far, three banks have already met the new capital requirements, while seven banks raised funds through public offers in 2024, with oversubscriptions reported. The Securities and Exchange Commission (SEC) confirmed that banks have collectively raised N1.7 trillion in new equity capital within the first phase of the recapitalization period.
Despite strong investor demand, analysts caution that most banks still need to increase their share capital and share premium to fully comply with the new rules.
Market Experts Predict Smooth Recapitalization
Industry analysts believe that Nigerian banks will successfully meet the recapitalization requirements without the large-scale mergers and acquisitions seen during the 2004 banking consolidation exercise.
• Aruna Kebira, MD of Globalview Capital Limited, noted that banks have stronger fundamentals and higher transparency today compared to 2004, making it unlikely that forced mergers will be necessary.
• Mallam Kasimu Kurfi, MD of APT Securities & Funds, stated that the 24-month timeline gives banks ample time to raise capital through strategic options like private placements and foreign investments.
• Olatunde Amolegbe, MD of Arthur Steven Asset Management, emphasized that banks’ strong fundamentals and large investor base will ensure successful capital raising efforts.
Looking ahead, investors expect that recapitalized banks will be stronger, more profitable, and capable of delivering higher returns, further fueling interest in the sector.
Outlook: Banking Sector Poised for More Growth
With banks already off to a strong start in 2025, the recapitalization exercise is driving renewed investor confidence. As more banks announce their financial results and capital-raising plans, market analysts anticipate continued momentum in banking stocks.
If the positive sentiment persists, the NGX Banking Index could continue outperforming the broader market, reinforcing its status as the key driver of Nigeria’s stock market performance in 2025.
Banking Stocks Lead Market in January 2025
The NGX Banking Index emerged as the best-performing index in January 2025, recording a 9.76% Year-to-Date (YtD) gain, significantly outpacing the NGX All-Share Index, which rose by just 1.53% YtD. This strong performance was driven by high demand for banking stocks, fueled by optimism surrounding the ongoing bank recapitalization exercise.
In contrast, other sectors of the market struggled:
• NGX Industrial Goods Index was the worst performer, declining 8.52% YtD
• NGX Oil/Gas Index dropped 1.61% YtD
• NGX Insurance Index fell 1.1% YtD
Top Gaining Banking Stocks
Leading the banking sector’s rally in January were:
• Wema Bank Plc → +25.8% (NGN 11.45 per share, up from NGN 9.10)
• FCMB Group Plc → +17.55% (NGN 11.05 per share, up from NGN 9.40)
• Stanbic IBTC Holdings → +11.71% (NGN 64.35 per share, up from NGN 57.60)
These gains reflect investor confidence in the sector, supported by strong financial results from banks that have already reported their unaudited full-year 2024 earnings.
Strong Financial Performance Fuels Growth
So far, three banks have disclosed their full-year 2024 financial results, showing significant profit growth:
• Wema Bank → N102.1 billion profit (+134% from 2023’s N43.66 billion)
• FCMB Group → N117.29 billion profit (+12.3% from 2023’s N104.43 billion)
• Stanbic IBTC Holdings → N303.8 billion profit (+76% from 2023’s N172.91 billion)
These results have further strengthened investors’ bullish sentiment toward banking stocks.
Recapitalization: Banks Race to Meet CBN’s 2026 Deadline
The rally in banking stocks is closely linked to the ongoing recapitalization exercise, with banks working to meet the Central Bank of Nigeria’s (CBN) new minimum capital requirements ahead of the March 2026 deadline.
CBN’s new capital structure includes:
• NGN 500 billion for commercial banks with international licenses
• NGN 200 billion for national commercial banks
• NGN 50 billion for regional commercial and merchant banks
So far, three banks have already met the new capital requirements, while seven banks raised funds through public offers in 2024, with oversubscriptions reported. The Securities and Exchange Commission (SEC) confirmed that banks have collectively raised N1.7 trillion in new equity capital within the first phase of the recapitalization period.
Despite strong investor demand, analysts caution that most banks still need to increase their share capital and share premium to fully comply with the new rules.
Market Experts Predict Smooth Recapitalization
Industry analysts believe that Nigerian banks will successfully meet the recapitalization requirements without the large-scale mergers and acquisitions seen during the 2004 banking consolidation exercise.
• Aruna Kebira, MD of Globalview Capital Limited, noted that banks have stronger fundamentals and higher transparency today compared to 2004, making it unlikely that forced mergers will be necessary.
• Mallam Kasimu Kurfi, MD of APT Securities & Funds, stated that the 24-month timeline gives banks ample time to raise capital through strategic options like private placements and foreign investments.
• Olatunde Amolegbe, MD of Arthur Steven Asset Management, emphasized that banks’ strong fundamentals and large investor base will ensure successful capital raising efforts.
Looking ahead, investors expect that recapitalized banks will be stronger, more profitable, and capable of delivering higher returns, further fueling interest in the sector.
Outlook: Banking Sector Poised for More Growth
With banks already off to a strong start in 2025, the recapitalization exercise is driving renewed investor confidence. As more banks announce their financial results and capital-raising plans, market analysts anticipate continued momentum in banking stocks.
If the positive sentiment persists, the NGX Banking Index could continue outperforming the broader market, reinforcing its status as the key driver of Nigeria’s stock market performance in 2025.