Banking Sector Outperforms with 7.76% YtD Gain as Recapitalisation Efforts Gain Momentum
In 2025, the Nigerian banking sector has emerged as a standout performer on the Nigerian Exchange Limited (NGX), with the NGX Banking Index gaining 7.76% Year-to-Date (YtD). This growth follows the Central Bank of Nigeria’s (CBN) recapitalization directive, which has spurred demand for bank stocks. The index outperformed the broader NGX All-Share Index, which recorded a gain of just 4.76% by February 28, 2025. Following strong market performance in 2024, bank stocks have continued to show bullish signs, with oversubscriptions on capital raising offers from major banks.
Several banks have led the way in stock price growth during the first two months of 2025. Wema Bank, FCMB Group, and Stanbic IBTC Holdings saw impressive stock price increases of 30.8%, 12.8%, and 11%, respectively. The price hikes align with solid profit reports for the year 2024, where Wema Bank’s profit grew by 134%, FCMB’s by 12.3%, and Stanbic IBTC’s by 76%. These strong earnings reflect positive market sentiment toward the banking sector’s continued growth and stability.
The ongoing recapitalization exercise for Nigerian banks is nearing its final phase, with several banks working to meet new capital requirements set by the CBN. These include N500 billion for mega banks, N200 billion for national commercial banks, and lower limits for regional banks. While many banks have successfully raised significant capital, some are still in the process of meeting these thresholds. By the end of March 2026, all banks must comply with the updated capital rules, signaling that the recapitalization effort is crucial for the sector’s future.
Despite concerns, experts remain optimistic that banks will successfully meet recapitalisation targets. Investor interest in Nigerian bank stocks, including both local and foreign investors, has been robust, supporting the sector’s growth. Industry leaders, including Aruna Kebira from Globalview Capital, predict that the sector will avoid the mergers and acquisitions that marked the 2004 recapitalisation. With strong earnings and the potential for increased dividends, investors are hopeful for continued success as the recapitalisation process concludes.
SOURCE: THIS DAY