Wema Bank Plc, Stanbic IBTC Holdings Plc, Guaranty Trust Holding Company Plc (GTCO) and Zenith Bank Plc have outshone peers in the NGX Banking Index in 2025.
The NGX Banking Index is a basket of 10 stocks comprising the most capitalised and liquid companies in the banking sector.
Stocks of these four banks yielded returns in excess of 50 percent, led by Wema Bank with a year-to-date (YtD) return of 119.23 percent as at July 28.
It was followed by Stanbic IBTC Holdings with YtD return of 73.18 percent, GTCO (+65.09 percent), and Zenith Bank (+59.78percent).
Read also: Investors gains N5.49trn in June as consumer goods, insurance, bank stocks rally
As of July 28, the NGX All Share Index (ASI), which tracks the general market movement of all listed equities on Nigerian Exchange, was up this year by 31.32 percent.
The NGX Banking Index is designed to provide an investable benchmark to capture the performance of the banking sector.
Other stocks in the NGX Banking Index and their returns this year are: Access Holdings (14.47percent), ETI (+21.43 percent), FCMB Group (+4.26percent), Fidelity Bank (+20percent), First Holdco (+24.96percent) and UBA (+37.21 percent).
The capitalisation of the bank as at July 28 stood as follows: Access Holdings (N1.455 trillion), ETI (N623.884 billion), First Holdco (N1.467 trillion), FCMB Group (N388.133 billion), Fidelity Bank (N1.054 trillion), GTCO (N3.427 trillion), Stanbic IBTC Holdings (N1.586 trillion), Wema Bank (N427.532 billion), UBA (N1.914 trillion), and Zenith Bank (N2.985 trillion).
“Market performance will reward recapitalisation progress, dividend reinstatement given the recent forbearance policy, and continuous profitability on bottom-lines. The sector’s narrative is evolving from exponential growth to sustainable profitability, anchored in capital strength and risk discipline,” said Comercio Partners in its recent outlook for the second half (H2) of the year.
“Banks like GTCO, with clean balance sheets and consistent dividends, will outperform. Those under regulatory pressure and investor caution (example Access, Zenith, First Bank) may face valuation discounts until dividend clarity emerges.”
Comercio Partners said the Nigerian banking sector stands at an inflection point, noting that the shift to core operations, the recapitalisation drive, and the forbearance clampdown demand a playbook centred on operational excellence, capital prudence, and strategic foresight.
It said that banks adapting to balancing regulatory compliance with innovative execution will unlock long-term value.
“For investors, the outlook is cautiously optimistic: resilience persists, but selectivity is paramount. Prioritise institutions with diversified earnings, disciplined risk management, and robust fundamentals, as the era of easy gains yields to a performance-driven landscape,” Comercio Partners further said.
Though the market opened this week on a positive note, investors began profit-taking in banking stocks, leading to the index’s negative close on July 28.
Read also: Bank stocks dip after CBN’s directive on dividends, bonuses
Coronation Research analysts, in a recent note, said it anticipate that bullish sentiment will persist in the market, underpinned by expectations of strong earnings, particularly from the banking sector.
“Additionally, investor focus is likely to tilt toward fundamentally sound stocks with attractive dividend yields, as market participants continue to reallocate positions in anticipation of further half-year financial publications.”
Lagos-based Vetiva analysts said in their post-trading note on Monday that optimism could remain broad-based as investors digest the latest earnings results.
“However, further weakness may persist in the banking space, as market participants lock in recent gains ahead of earnings releases from key names in the sector.”
Also, Meristem analysts said in their July 28 note that the Nigerian equities market is expected to maintain its upward trajectory this week, underpinned by sustained investor appetite for risk assets and strategic positioning in fundamentally undervalued tickers.
“We see considerable headroom for further repricing, particularly within the banking sector and the industrial and consumer goods sectors, which continue to benefit from favourable valuation multiples and sector-specific tailwinds,” Meristem analysts added.
Earlier this month, the Nigerian Exchange Limited (NGX) released the results of its full year market index review but there was no change in the NGX banking index.
Vetiva Research recently published its second half (H2) 2025 outlook, offering a sector-by-sector analysis of Nigeria’s macroeconomic environment and market dynamics.
The report reflected diverse perspectives across key industries, shaped by a complex interplay of global trends and local policy shifts.
For the banking sector, Vetiva presented a cautiously optimistic view.
“Despite macroeconomic headwinds, we expect the banking sector to remain resilient in H2’25, buoyed by robust net interest income, sound capital raising strategies, and improving cost efficiency,” said Oluwayemisi Sunmola, banking analyst.
Read also: UBA leads as Nigeria’s tier-1 bank stocks power NGX growth
The Central Bank of Nigeria (CBN)’s tight monetary policy, keeping the monetary policy rate (MPR) at 27.50 percent, continues to support elevated yields. Net interest income is projected to grow 20 percent year-on-year (y/y) in FY’25, aided by loan repricing and attractive returns on government securities.
However, a likely moderation in interest rates as inflation softens may slow income momentum. Banks with strong low-cost deposit bases are expected to maintain margin resilience. In the report, Vetiva Research expects non-interest revenue to remain subdued, with a forecast 17.4 percent y/y growth in H2, following the first quarter (Q1) contractions due to trading losses and weaker market activity.
A key pressure point is the projected 86 percent increase in impairment charges as regulatory forbearance is phased out and previously restructured loans are reclassified. “This will weigh on earnings, particularly for banks with high legacy exposures,” Sunmola cautioned.
