The NGX Banking Index, a key benchmark capturing the performance of the banking sector, has witnessed a remarkable surge of 95.35%, according to market data as of the closing of trading on Tuesday, December 12. This surge highlights the sector’s resilience and attractiveness to investors.
The index comprises major capitalised and liquid companies, including Access Corporation, ETI, Fidelity Bank, Jaiz Bank, Sterling Financial Holdings, Unity Bank, Wema Bank, UBA, and Zenith Bank, representing the stalwarts of the banking industry.
Analysts from Coronation Research attribute the substantial growth to the announcement of the liberalisation of the foreign exchange market in June. By strategically increasing notional exposure from 16% in June to 33% by late July, analysts calculate an incremental gain of 317 basis points (bps) through their performance attribution model.
Despite an additional rally of 0.33% on Tuesday following the week-open surge, the NGX Banking Index has outperformed the NGX All Share Index (ASI) by a significant margin, with the ASI showing a +40.30% increase over the same period.
“We anticipate continued positive trading, as sentiments from the last week still prevail. We advise investors to invest in high-quality stocks with strong fundamentals backing them,” suggested analysts from Futureview in their December 12 stock recommendations. They specifically recommended stocks like Access Corporation and Zenith, while advising holding positions in UBA and FCMB Group.
Notably, all Nigerian banking stocks have reported positive returns year-to-date (YtD), showcasing the sector’s overall strength. UBA leads the pack with a remarkable +205.3% increase, followed by Sterling Financial Holdings (+181.4%) and Access Corporation (+140%).
Other notable YtD increases include ETI (+115.1%), FBN Holdings (+112.4%), FCMB Group (+76.6%), Fidelity Bank (+109.2%), GTCO (+71.7%), Jaiz Bank (+63%), Stanbic IBTC (+97.3%), Unity Bank (+161.8%), Wema Bank (+33.1%), and Zenith Bank (+47.9%).
“We expect buying interest to persist in the market, particularly in the banking sector, driven by an optimistic outlook,” commented analysts from Meristem in a recent note.
As the banking sector continues to show robust performance and positive sentiment prevails, investors are urged to closely monitor high-quality stocks with strong fundamentals for potential opportunities in this thriving market.
