Nigeria’s major banking institutions are under pressure in the equity market following a generally uninspiring third-quarter earnings performance. Aside from United Bank for Africa (UBA), none of the Tier-1 lenders posted year-on-year profit growth, as asset-quality concerns spurred higher expected-credit-loss charges and rising cost burdens.
Net interest margins narrowed, and analysts warn that the trend may intensify as the Central Bank of Nigeria (CBN) moves to cut its policy rate — an action likely to squeeze interest-earning assets further. Banks under regulatory forbearance remain dividend-restricted, prompting increased provisioning.
Legacy loan portfolios continue to stain overall performance, though regulatory headwinds appear to be easing.
Broadstreet analysts interviewed by MarketForces Africa indicate: “With the central bank in the mood to cut rates for the economy to expand, banks will have lower net margins. Competition will hit bottom line and lower FX gains will have effects on performance.”
In the stock market:
- UBA’s share price has declined to ₦41 from a 52-week high of ₦50.55, valuing the bank at ₦1.682 trillion.
- Zenith Bank trades at ₦59.90, down from a 52-week high of ₦78.50, with market capitalisation of ₦2.460 trillion.
- Access Holdings PLC is priced at ₦22.50, down from ₦28.90 twelve months ago, market cap at ₦1.19 trillion.
- GTCO has fallen to ₦85.50 from a 52-week high of ₦103.20, with market value at ₦3.1 trillion amid sell-pressure.
- First Holdco now trades at ₦31.50, down from ₦37.50, and has a market value hovering at ₦1.319 trillion.
The muted earnings outlook, combined with expectations of rate cuts and foreign-exchange headwinds, leave investors questioning whether banks can deliver the returns seen in previous cycles.
