Nigerian banking stocks have delivered a strong run in 2026, with the NGX Banking Index rising 67.96% year-to-date as of September 14. The rally has added more than N11 trillion to the combined market value of 12 banks reviewed, pushing their total valuation from about N16.44 trillion at the end of 2025 to N27.61 trillion. Despite the impressive gains, Nigerian banks trade at a discount to several African peers in markets such as Kenya, South Africa, Ghana and Tanzania.
The surge has also pushed average banking valuations higher, although the re-rating has not been evenly spread across the sector. The average price-to-earnings ratio of the banks increased from 4.38x in 2025 to 5.83x, while the average price-to-book ratio rose from 0.86x to 1.26x. However, some major lenders still trade below the value of their net assets, with Access Holdings and ETI among the banks trading at significant discounts to book value.
Analysts point to several developments supporting investor interest in Nigerian bank stocks, including the completion of the Central Bank of Nigeria’s recapitalisation exercise, stronger earnings and attractive dividend yields. ARM said the completion of the recapitalisation exercise removed an overhang that had weighed on investor sentiment, while Afrinvest Research linked the sector’s performance to recapitalisation, earnings growth and dividend appeal. Morgan Capital Group Research Analyst Meshach Ukpoma also described banking stocks as still relatively cheap and said increased demand could follow the inclusion of some Nigerian banks in the FTSE Russell Frontier 50 Index.
However, questions remain over how sustainable the banks’ recent earnings growth will be. The naira’s sharp depreciation following the 2023 foreign-exchange reforms generated significant foreign-currency revaluation gains for some lenders, boosting reported profits. As the foreign-exchange market stabilises, investors may increasingly focus on whether banks can maintain earnings growth through lending, fees, transaction income and other recurring sources. Inflation, exchange-rate stability, interest rates, regulation and the broader business environment are also factors influencing how investors value Nigerian banks.
FirstHoldCo has emerged as the standout performer among the banks reviewed, gaining about 194.4% this year, while only FirstHoldCo and Zenith Bank currently have market capitalisations above N5 trillion. GTCO is valued at more than N4.7 trillion, followed by Stanbic IBTC at about N2.4 trillion, while UBA and Access Holdings are valued at approximately N1.9 trillion and N1.5 trillion respectively. With the sector already up nearly 68%, the valuation gap between Nigerian banks and their African counterparts remains a key talking point for investors watching the banking sector.
source: nairametrics
