FOLLOWING the Central Bank of Nigeria (CBN)’s recent policy and regulatory measures, only the share prices of Guaranty Trust Holding Company (GTCO) and three other banks increased. In contrast, those of the others fell, according to The ICIR’s analysis of last week’s stock market report.

In a notice on June 13, the CBN instructed that all the banks with unresolved forbearance exposures halt dividend payments, defer executive bonuses, and suspend all new investments in offshore subsidiaries.

The directive was aimed at strengthening capital buffers and ensuring adequate provisioning against impaired loans, especially with the banks that have breached the regulatory Single Obligor Limit (SOL).

But it sent a negative sentiment among investors towards the banking shares, following a report released on June 16 by Renaissance Capital, which indicated that many banks were likely to suspend dividend payments to shareholders.

At the beginning of the trading session last Monday, June 16, negative sentiment greeted the banking shocks as the CBN directive triggered panic selling across the financial sector, leading to a sharp dip in market value.

The selloff was, however, short-lived as banking stocks rebounded before the close of the week’s trading on Friday, June 20, after the apex bank moved to reaffirm the resilience and soundness of the banking sector, which market watchers said helped restore confidence among investors.

However, only four banks share prices appreciated out of the 12 banks listed on the NGX.

GTCO led the banking shares table, gaining N13.45 to close at N84.95 per share. Stanbic IBTC Holdings followed, gaining N7.65 to close at N87.

The shares of Ecobank Transnational Incorporated gained 50 kobo to close at N30.50 while Fidelity Bank’s share appreciated by 0.15 kobo to close at N19.4.

All other bank shares closed in the red, with United Bank for Africa (UBA) leading the pack and losing N1.75 to close at N34.4. First HoldCo followed with a loss of N1.25 to close at N26.95.

While Zenith Bank lost N1.6 to close at N48.5, Access Holdings shed 45 kobo to close at N21.9.

The share prices of other banks, including FCMB Group, Jaiz Bank, and Sterling Financial Holdings.

Despite the negative sentiment that the trading session of the week at the floor of the NGX, the stock market extended gains as the benchmark All-Share Index (ASI) appreciated by 2.35 per cent to close at 118,138.22 basis points.

This saw investors gaining over N1.7 trillion in one week as the stock market capitalisation increased by 2.40 per cent to close at N74.53 trillion.

A look at the stock market performance last week showed it was driven by renewed investor interest, particularly in the oil and gas, consumer goods, and banking sectors.

In its weekly market report, the NGX stated that a total turnover of 3.566 billion shares worth N115,403 billion in 99,960 deals was traded last week by investors, compared to a total of 2.057 billion shares valued at N51,015 billion that exchanged hands in the week before in 65,016 deals.

The financial services Industry (measured by volume) led the activity chart with 2.166 billion shares valued at N62.046 billion traded in 45,851 deals, contributing 60.73 per cent and 53.76 per cent to the total equity turnover volume and value, respectively.

The consumer goods Industry followed with 580.893 million shares worth N10.896 billion in 10,909 deals.

Zenith Bank, Champion Brewery, and Access Holdings (measured by volume) accounted for 1.003 billion shares worth N26,076 billion.
In 14,232 deals, contributing 28.14 per cent and 22.60 per cent to the total equity turnover volume and value, respectively.

Analysts at Cowry Asset Management were cautiously optimistic that the stock market would do well in the coming weeks.

“With over N283 billion worth of NT-bills (Nigerian Treasury Bills) set to mature in the coming week and no fresh NT-Bills auction scheduled, excess liquidity may spill into the equities space.

“In addition, the continuation of the dividend season and expectations of undervalued stocks gaining ground are likely to drive further buying
momentum,” the researchers said.

They, however, advise investors to maintain a disciplined approach, focusing on fundamentally sound, dividend-paying companies amid ongoing policy and macroeconomic uncertainties.