Bank stocks drop by N141bn

Despite the fact that the Nigerian capital market ended the year on a positive note, the banking sector saw its value fall by 5.5% from N2.57 trillion in 2021 to N2.43 trillion at the end of trading in 2022.

According to data available on the Nigerian Exchange Limited, all five Tier-1 banks' share prices fell at the end of 2022 compared to what they recorded in 2021.

Analysts who spoke exclusively to The Nigerianwatch blamed the slump on a lack of foreign investors in the Nigerian capital market.

Meanwhile, according to NGX data, GTCO led the pack with an 11.54 percent depreciation from N765 billion in 2021 to N676.9 billion in 2022. The bank's share price was also reduced from N26 to N23 per share. In the fiscal year 2022, the bank lost 88.3 billion in valuation.

Access Bank was close behind, with a value depreciation of 7.5%. Its valuation fell from N330.6bn in 2021 to N305.7bn at the end of trading in 2022. The share price of the bank fell from N9.3 to N8.5 kobo per share.

The United Bank for Africa also lost N13.7 billion in market value in the 2022 fiscal year, falling from N275 billion in 2021 to N261 billion in the following year. Its share price has also dropped from N8.05 to N7.6 kobo per share.

Meanwhile, Zenith Bank Plc's market value fell by 1.6% from N789 billion in 2021 to N777 billion in 2022. The market share price of the bank fell by N1.15 kobo per share.

First Bank Nigeria's market capitalization fell by 0.44 percent to N407 billion in 2022, down from N409 billion in 2021. The bank's share price fell to N10.9 kobo per share, down from N11.4 kobo per share.

Wole Sam Adeyeye, a capital market analyst, attributed the decline to the absence of foreign investors who patronize banking stocks due to the sector's high regulations.

"The fall is due to foreign investors abandoning Nigerian stocks," he explained. They are unwilling to visit the country due to insecurity, the February elections, and currency issues."

"If they are not ready to come, the banking stocks may not improve significantly," Adeyeye added.

According to Rotimi Fakayejo, an economy and capital market analyst, the overall market performance in 2022 will be relatively low.

He stated that large-cap stocks, particularly those in the telecommunications sector such as MTNN, Airtel, Seplat, and Geregu, added value to the market.

In an interview with The Nigerianwatch on Tuesday, David Adonri of High Cap Securities stated that the drop in share price could be attributed to the company's stagnant fundamentals in the fiscal year just ended.

"Their profits after tax in the three quarters did not change materially," he says. Typically, investors reward companies based on their expectations."

He observed that, while banks' profitability was stable, they did not grow materially, as seen in other sectors.

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