The Nigerian banking sector has seen a remarkable 9.8% month-on-month surge in banking stocks, driven by the Central Bank of Nigeria’s (CBN) recapitalisation initiative. This effort aims to strengthen banks’ financial foundations as they prepare to meet new minimum paid-up capital requirements by March 2026. As a result, banking stocks have been a major contributor to the overall growth of the Nigerian stock market, which saw an increase of N1.95 trillion in market capitalization by the end of January 2025.
The recapitalisation drive, initiated in March 2024, is pushing banks to raise substantial funds to meet new capital thresholds. International banks must reach N500 billion, national banks N200 billion, and regional banks N50 billion in paid-up capital. The capital raise efforts have attracted significant investor interest, with notable banks such as Zenith Bank, GTCO Plc, Fidelity Bank, Access Holdings, and FCMB securing billions in funding.
Zenith Bank’s capital raise of N350.4 billion was oversubscribed by 160.4%, while GTCO Plc completed its first tranche of N209.4 billion. Meanwhile, Fidelity Bank’s combined N127.1 billion offering saw a significant 114% capital appreciation for investors, while Access Holdings saw a 41% capital gain. FCMB’s capital raise of N147.5 billion also led to a 62% increase in its share value.
This increased capital is expected to enhance banks’ lending capacity and drive future growth initiatives such as product enhancement and market expansion. The positive performance of banking stocks has significantly contributed to the broader market growth, with the NGX-All Share Index rising 1.5% m/m in January 2025, reaching 104,496.12 points.
Despite ongoing challenges such as inflation and exchange rate volatility, analysts remain optimistic about the banking sector’s ability to drive further market performance, with continued investor interest and the potential easing of monetary policy by the CBN. The recapitalisation process is expected to position Nigerian banks for long-term success in an evolving economic environment.
Source: THE SUN