Market capitalisation of eight banks rises to N7.2 trillion

The combined market capitalisation of eight Nigerian banks stood at N7.20 trillion as of December 24, an increase of N109.1 billion from N7.09 trillion as of December 23, PidomNigeria reported.

Market performance was mixed among key players, with some stocks rising while others remained stable or fell slightly.

United Bank for Africa led the gains, with its share price rising 2.86% from N35.00 to N36.00, increasing its market capitalisation from N1.20 trillion to N1.23 trillion. Trading activity surged with 51.17 million shares traded in 563 deals, up from 26.38 million shares traded in 686 deals in the previous session.

Zenith Bank PLC was stable at N46.00, maintaining its market capitalization at N1.44 trillion. However, trading volume dropped significantly to 15.12 million shares in 338 trades, compared to 34.65 million shares in 500 trades on December 23.

Access Holdings PLC rose slightly by 0.61% to close at N24.70 from N24.55. Its market capitalization increased from N872.64 billion to N877.97 billion, despite a drop in trading volume to 10 million shares in 302 trades from 18.41 million shares in 541 trades the previous day.

FBN Holdings PLC rose by 2.76% to N27.90 from N27.15, increasing its market capitalization from N974.56 billion to N1.00 trillion. Volumes fell to 2.89 million shares in 164 trades from 5.06 million shares in 275 trades on December 23.

Fidelity Bank PLC shares rose 5.11% to close at N17.50 from N16.65. Its market capitalisation increased from N533 billion to N560.21 billion with a trading volume of 12.51 million shares compared to 21.98 million shares the day before.

Guaranty Trust Holding Company PLC shares fell 1.36% to N57.95 from N58.75, resulting in a decline in market capitalisation from N1.73 billion to N1.71 billion. The company saw lower trading activity. 17.42 million shares were traded in 179 trades compared to 39.38 million shares in 345 trades on December 23.

Sterling Financial Holdings Company PLC recorded the highest percentage gainer, with its share price rising 6.36% from N5.50 to N5.85. Its market capitalization increased from N158.35 billion to N168.42 billion, with 8.53 million shares traded in 163 deals, compared to 9.79 million shares traded in 218 deals the previous day.

Wema Bank PLC closed higher, with its share price rising 2.86% from N8.75 to N9.00. Its market capitalization increased from N187.51 billion to N192.87 billion, with 5.6 million shares traded in 125 deals, up from 4.25 million shares traded in 136 deals the previous day.

In an interview, Charles Sanni, CEO of Cowry Treasurers Limited, stressed that banks are key drivers of the economy, which naturally fuels investor sentiment to buy shares of these institutions. He explained that banks provide liquidity, making them a key asset for investors who want to easily convert their holdings into cash. Sanni said that foreign investors are more likely to choose banks as their first choice when entering the Nigerian market.

He also noted that banks use their capital strategically when raising funds, which is particularly important considering the high inflation rate, which also contributes to the rise in bank profits. Sanni pointed out that while most banks have been cautious in lending, resulting in difficulties for borrowers, the recapitalization of the banking sector has provided a major boost. He said this has provided banks with more capital for their operations.

“Banks are an important engine of the economy and of course people will be happy to buy bank shares.” He explained that banks provide liquidity, adding: “As an investor, you look for ways to convert assets into cash.” Sani was quick to further emphasize: “If foreign investors are identified, banks are their first stop.”

He explained that the banking industry remains a constant money machine, whether it is government spending or consumer activity.

“When banks raise capital, they put it to work. Inflation is high, so their profits are also high.”

Sani pointed out that “most banks’ loans are not clean, so borrowers suffer losses”, but stressed that “recapitalization is a huge boost” because it provides banks with more capital for operations. ”

In March, the CBN announced new capital requirements for banks, aimed at strengthening financial institutions and achieving President Tinubu’s goal of a $1 trillion economy. The directive raised the minimum capital requirement for internationally licensed commercial banks to N500 billion from N25 billion in 2005. The central bank set the new capital requirement at N200 billion for national banks and N50 billion for regional banks.
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