CBN
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 after the first half of the year, investor confidence began to improve.
By the end of August 2024, the average YtD dip in bank stocks had narrowed to -1.20% from -2.48% at the end of June.
This trend continued as the banking sector rebounded, reaching an average YtD gain of 11.98% by September, 14.47% by October, and standing at 18.09% as of the close of trading on November 8, 2024.
Fidelity Bank: Following the completion of its N127.01 billion hybrid public offer and rights issue, Fidelity’s stock price has shown a robust recovery.
Starting from an initial YtD dip of -7.88% in Q1, the stock improved to -5.99% by midyear, then narrowed to -2.94% in August, and ultimately surged to a 37.33% YtD gain as of the close of trading on Friday, November 8, 2024.
This remarkable rebound reflects both renewed investor confidence and Fidelity’s resilience, building on its substantial 149.43% YtD gain in 2023.
FCMB Group: FCMB concluded a subscription offer for 15,197,282,219 ordinary shares at 50 kobo each at an issue price of N7.30 per share, generating gross proceeds of N110.94 billion and net proceeds of N108.117 billion.
As of November 8, 2024, the share price has further increased by 30%, closing at N9.50, significantly higher than the initial offer price of N7.30.
GTCO: After completing a N392.49 billion public offer in August 2024, also saw a resurgence in its stock price.
The bank’s strong financial performance, with a 223% increase in pre-tax profit for the first half of 2024 and interim dividend of N1.00 per share, has helped restore investor confidence.
Zenith Bank: Zenith Bank’s share price saw a notable improvement following its N290 billion hybrid offer launched on August 1, 2024. The share price gained 3% intraday on the offer’s opening day.
The bank’s impressive financial performance, highlighted by a pre-tax profit of N1.003 trillion for the first nine months of 2024, has further boosted market sentiment.
Access Holdings Plc: On July 7, 2024, Access Holdings Plc announced it had received approval from the Securities and Exchange Commission to execute a rights issue of 17.772 billion ordinary shares at N19.75 each, based on 1 new share for every 2 held as of June 7, 2024.
By the close of trading on November 8, 2024, the stock had risen to N24.65 per share, marking a 24.81% increase over the offer price of N19.75.
