Banking index rose by 3.16% as the Nigerian Exchange reversed downward trend with investors increasing positioning in some banking names, halting a six-day selling rally in the market.
Healthy earnings growth bolstered investors sentiments as yields appeared to have peaked in the fixed income market.
There was massive buying interest in banking names, a signal that had started since intraday trading session in the equities market. UBA, Zenith Bank, Access Bank, Fidelity Bank, and FBN Holdings were among the banking stock that drive the index higher.
Stockbrokers said investors are seeing better prospect on banking index due to significant increase in earnings performance in the third quarter of the year.
Tier-1 banks drove the momentum as investors raised bets on UBA, Zenith and Access Holdings in particular. There is also buying interest in some Tier-2 banks stocks with marginal gain coming from the insurance segment.
UBA gained +9.87%, ZENITHBANK was up by +5.78% why ACCESSCORP jump higher by +4.89% in the market as total market valuation of the top five lender rose to N5. Trillion,
Trading activity was strong, with increases in deals, volume, and value by 2.82%, 194.37%, and 79.64%, respectively. A total of 3,602.24 million shares were traded in 10,679 deals, amounting to ₦25.57 billion.
Nigeria’s largest banks are poised for a stock rally as record-high interest rates drive profits, Daba Finance said in a report. Bank earnings are benefiting from a significant rise in the Central Bank of Nigeria’s policy rate–from 18.75% to 27.25% over five meetings this year—aimed to curb inflation and stabilize the naira.
This rate surge has fueled a sharp increase in net interest income for banks, which benefit from high yields on fixed-income securities. Guaranty Trust Holding, Zenith Bank, United Bank for Africa, and FBN Holdings–reported more than doubling their net interest income.
Brokers expect Guaranty Trust’s shares to rise nearly 11% and Zenith’s by 42% this year, with FBNQuest revising its estimates in favor of Guaranty Trust. Further rate hikes could boost net interest income further.
Economists predict another increase on November 26, as inflation, rising to 32.7% in September, is expected to climb, according Daba Finance. Jaiz Bank Value Increases by 11.2% to N86 Billion.
