Since the Central Bank of Nigeria (CBN) announced a capital requirement increase for banks earlier in 2024, the market sentiment surrounding the banking sector has fluctuated.
The initial response to the recapitalization policy was cautious, turning bearish as concerns about mergers, acquisitions, and licensing changes grew.
These shifts led to a decline in the sector’s performance in the first half of the year. By the end of Q2 2024, the average year-to-date (YtD) return across the 13 listed banks had dropped to -2.48%, with a market capitalization of N6.5 trillion, a decrease of about N1.6 trillion from Q1.
The banking index saw a sharp decline of 7.47%, making it the worst-performing sector on the Nigerian Stock Exchange in the first half of 2024.
Analysts attributed this downturn to investor caution as speculation surrounding potential mergers and acquisitions heightened, raising concerns about sector stability.
However, as banks moved forward with public offers and rights issues…