By Chinwendu Obienyi
Nigerian banks successfully raised N2.4 trillion in fresh capital through the capital market within the first quarter (Q1) of 2025, as part of an ongoing recapitalisation directive by the Central Bank of Nigeria (CBN).
The initiative, unprecedented in scale, reflects the strength of the Nigerian capital market, which has been described as one of the strongest globally, with excellent returns on investment in recent years.
Also, the significant capital raised attracted increased investor interest, particularly in the banking sector, leading to heightened banking stocks patronage and contributing to the broader market’s positive performance.
This is coming after the All-Share Index (ASI) of the Nigerian Exchange Limited (NGX) showed resilience in the first quarter of 2025, after recording a year-to-date (YTD) gain of 2.66 per cent amidst broader negative market sentiment, particularly in the month of March.
Specifically, the index rose from 102,926.40 points on December 31, 2024, to 105,660.64 points as of March 28, 2025. In January, the NGX ASI increased by 1.53 per cent, rising from 102,926.40 to 104,496.12 points. February saw a more substantial gain of 3.09 per cent, closing at 107,723.22 points. However, in March, the index dropped 1.91 per cent, bringing the index down to 105,660.64 points as of the end of the first quarter of 2025. Despite the minor correction, the overall market performance in Q1 remained positive, reflecting investor confidence and sectoral resilience.
Further investigations reveal that despite mixed sectoral performance shaped by evolving market and macroeconomic events, the CBN-led banking sector recapitalization sparked heightened investor interest in banking stocks, leading to a 6.96 per cent increase at the end of Q1 2025 — a clear indicator of the positive sentiment surrounding the banking sector, which outperformed the NGX Consumer Goods (+4.86 per cent), Industrial Index (-2.30 per cent), Insurance Index (-2.71 per cent), and Oil and Gas Index (-9.34 per cent).
According to a newsletter by Proshare seen by Daily Sun, during the reported period, “banks collectively raised approximately N2.4 trillion in fresh capital, reinforcing market confidence and driving sectoral growth.
This has driven a rally in the sector and contributed to the broader market uptrend, as most banks are currently in the second phase of their recapitalisation plans.”
The newsletter added that major banks reinforced investor confidence through strong dividend declarations, with Zenith Bank announcing N4.00 per share, UBA declaring N3.00 per share, and GTCO proposing N8.03 per share.
While reacting to the development, market operators stated that the moderation in inflation — from 34.8% in December 2024 to 23.18% in February 2025 — has played a pivotal role in creating a more favourable macroeconomic environment for investments in the banking sector.
They added that lower inflation reduces operational costs for banks and businesses, increasing the attractiveness of equities as an investment vehicle. “The improved inflation outlook has supported consumer spending and business activity, further benefiting banks, as they experience growth in lending, deposits, and overall economic activity,” they said.
The recapitalisation process is designed to increase the stability and resilience of banks, ensuring they meet higher regulatory capital requirements and improve their capacity to absorb shocks in volatile market conditions.
Additionally, reforms such as the Investments and Securities Act 2025 are anticipated to further stimulate market activities and attract foreign investments.
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