•As FBN Holdings, Stanbic IBTC drive N25bn market loss

By Nkiruka Nnorom

The banking sector yesterday fell on the Nigerian Exchange Limited, NGX, amid controversy over the exclusion of retained earnings from the composition of new minimum capital requirement set by the Central Bank of Nigeria (CBN).

Results of trading on the NGX yesterday showed that six banking recorded price decline, five recorded gain while two closed flat and hence the Banking sector index fell by 0.1% 

The CBN had on March 28th announced the upward review of the minimum capital requirement for banks in the country, jerking up the minimum capital requirement for commercial banks with international, national and regional licences to N500 billion; N200 billion and N50 billion respectively.

The CBN also raised capitalisation baseline for merchant banks to N50 billion and non-interest banks to N20 billion and N10 billion for national and regional licenses respectively.

The CBN however, that minimum capital requirement is limited to Paid-up capital and Share premium of the banks, prompting controversy over the exclusion of banks’ retained earnings (REs).

Industry analysts had posited that the proposed recapitalisation along with the hike in the Monetary Policy Rate (MPR) would halt the rally recorded in the stock market in the first quarter of the year (Q1’24). 

The six  banking stocks that recorded price decline include  FBN Holdings Plc (2.11) and Stanbic IBTC Holdings Plc (1.8%), UBA (0.71%), Sterling Holdings (5.56%), FCMB Group (0.59%), and Jaiz Bank (0.86%).

The five banking stocks that recorded price gains include Access Corporation Plc (+2.0%) and Guaranty Trust Holding Company Plc (+1.1%), Zenith (0.11%), Fidelity Bank (1.0%), and Unity Bank (9.66%). On the other hand, Wema Bank and Ecobank closed flat.

Consequently,  the NGX started April on a negative note with investors losing N25 billion at the end of the day as the market capitalisation of all listed equities fell to N59.096 billion from N59.121 billion, representing a 0.04 percent marginal decline. 

Similarly, the All Share Index (ASI) fell by 0.04 percent to 104,518.14 points from 104,562.06 points at the beginning of the day’s trading.

Investment analysts and equity researchers had predicted that the bullish trend that pervaded the stock market in the first quarter of the year (Q1’24) may not continue given the policy shift in the macroeconomy, especially the hike in interest rate, which they projected would result in reallocation of assets to the fixed income market.