The All-Share Index (ASI) has skilled vital stress all through November 2025.
A significant factor contributing to this decline is the efficiency of banking shares.
The ASI was at 144,646 factors as of November 19, reflecting a every day lower of 0.25 % and a month-to-month decline of three.55 %.
The All-Share Index year-to-date (YTD) return stays optimistic at 40.53 %. Market capitalization has fallen from earlier highs above N99 trillion to roughly N92 trillion, leading to over N7 trillion losses for traders this month.
The banking index dipped by 1.22% on the mid-week buying and selling session. It recorded its worst efficiency since March 2010, with a weekly decline of seven.27 per cent in mid-November, performing as a big drag on the ASI.
The Nigerian banking business faces a number of challenges. Sector asset progress is anticipated to be restricted to twenty% per 12 months till the tip of 2025, primarily on account of rising asset values and anticipated forex stabilization.
Different considerations embrace a brand new windfall tax on international alternate income, growing regulatory prices, a required reserves coverage of fifty%, and excessive inflation charges. The World Bank predicts that inflation will decline between 2025 and 2027. Consequently, banks might want to focus their lending on extra worthwhile sectors, comparable to know-how and agriculture, as different sectors develop into saturated, thereby limiting credit score growth.
A number of interconnected components have contributed to this bearish development, significantly affecting main banks:
Capital Good points Tax (CGT) Reforms: Proposed adjustments to triple CGT charges have precipitated panic amongst each international and home traders, resulting in vital selloffs. Finance Minister Wale Edun’s intervention on November 15, which promised consultations and attainable exemptions for international reinvestments, led to a partial rebound however did not cease the general downward momentum.
Geopolitical Tensions: Threats from U.S. President Donald Trump relating to navy motion towards Nigeria—on account of reviews of violence towards Christians—have shaken investor sentiment. His proposals for tariffs starting from 20% to 60% on imports from rising markets have additional accelerated capital outflows, impacting medium- and large-cap banks the toughest.
Revenue-Taking and Sector Rotation: Traders have been cashing in on positive factors amidst indicators of an overheated market following a outstanding 59% year-to-date surge earlier within the 12 months. Banking shares, which account for about 25% of the All-Share Index (ASI), have seen vital profit-taking.
Nigerian banks’ market fundamentals nonetheless wholesome
Based on latest NGX information, Tier-1 banks with giant market caps (above N1 trillion every) dominate the highest banking shares by buying and selling quantity. These shares are among the many high 5 most traded shares on the alternate every day.
The Central Bank of Nigeria (CBN) applied a recapitalization coverage requiring Nigerian banks to lift their capital base by 2026 to advertise monetary stability and help the nation’s financial system.
Consequently, 2025 has been a outstanding 12 months for the Nigerian banking business.
A latest infusion of N4 trillion into the Nigerian market has considerably improved bank liquidity and investor confidence.
The whole asset worth of banks listed on the Nigerian Inventory Trade reached N169.5 trillion in 2024, reflecting a substantial improve from N112.39 trillion in 2023. Additional progress is anticipated within the 2025 fiscal 12 months.
The sector’s market capitalization rose from N3.2 trillion in 2020 to N10.5 trillion by mid-2025. This progress could be attributed to a number of components, together with elevated digitization, robust curiosity revenue from authorities securities (which accounted for 4.8 trillion within the first 9 months from the highest banks), and a inventory market the place banks executed the biggest monetary transactions.
Market outlook
GTCO and Zenith outperformed the market, whereas Entry Holdings underperformed on account of a ten% decline weekly decline within the early weeks of November
The current market correction has generated extra income because the ahead P/E ratios are locked in at 10-15x whereas the typical market costs are round 25x.
These dividends are denoted at a excessive of 7-12% in 2025, and thus, the sector is deemed engaging to traders.
There are excessive returns anticipated to be higher within the high banks, although it might be levelled on account of stricter guidelines in regulatory scopes in regards to the banks.
There are expectations to be levelled at a median of round 15x for the UBA and Zenith banks, subsequently resulting in excessive projections of round 20-30% for the returns within the coming monetary calendars. The revenue margins for the Zenith, GT, and UBA stay excessive, however bid warning for the smaller banks as they’re anticipated to have thinner revenue margins and are on increased ratios.
Continued market volatility is anticipated till the tip of this quarter. Nonetheless, catalysts comparable to company earnings bulletins or coverage clarifications may present some stability.
Traders ought to give attention to diversified, essentially robust banks like UBA, Stanbic, Zenith and GTCO for long-term investments, whereas the market has proven resilience with a year-to-date improve of 41%, steering away from speculative performs.
Monitor bulletins from the Nigerian Trade (NGX) or seek the advice of a licensed dealer for up-to-date info,
This correction might supply shopping for alternatives, however warning is suggested, contemplating world financial challenges.