Investor Confidence Rises as Nigerian Banks Secure N2.4 Trillion in Q1 2025 Capital Raise
In the first quarter of 2025, Nigerian banks raised an impressive N2.4 trillion through the capital market as part of the Central Bank of Nigeria’s (CBN) ongoing recapitalisation program. This marks a significant move to strengthen the banks’ financial standing and improve their ability to withstand market shocks. The recapitalisation initiative has helped demonstrate the robustness of Nigeria’s capital market, which continues to attract global attention for its strong returns and performance.
Investor sentiment has significantly improved, particularly in the banking sector, which saw a surge in stock purchases following the capital raises. This contributed to the positive performance of the Nigerian Exchange Limited (NGX) in Q1 2025, despite some fluctuations in the market. The NGX All-Share Index (ASI) gained 2.66% during the quarter, bolstered by strong gains in January and February, although a slight drop in March did not dampen the overall market positivity.
Despite a mixed performance across various sectors, the banking sector stood out with a notable 6.96% rise in stock value by the end of the first quarter. The recapitalisation process has invigorated market interest in banking stocks, making them the most favored sector of the period. Major banks such as Zenith Bank, UBA, and GTCO declared strong dividends, further boosting investor confidence and reinforcing the positive outlook for the sector.
The improved inflation outlook, with a significant decrease from 34.8% in December 2024 to 23.18% in February 2025, has also played a crucial role in enhancing the investment climate. With lower inflation, banks have seen reduced operational costs, spurring growth in lending, deposits, and overall economic activity. The ongoing recapitalization, alongside upcoming reforms like the Investments and Securities Act of 2025, are expected to continue attracting investments and further solidifying Nigeria’s banking sector.
Source: the sun