Market | Stock & Analyst Updates

Banking Sector’s Equity Market Performance Year-to-Date 2022: A Tale of Mixed Fortunes

Sep 16, 2022   •   by Tobi Ogundeko   •   Source: Proshare   •   eye-icon 548 views

The Nigerian Banking sector started the year positively with the NSE Banking Index rising to 0.79% at the end of Q1 2022. Analysts note that this occurred at a time the Central Bank of Nigeria’s (CBN’s) Monetary policy Rate (MPR) was 11.5% in Q1 2022 with inflation settling at 15.92%. The banking sectors Index was elbowed up by Wema Bank which posted a Q1 YTD return of +279.2% and Ecobank with a YTD return of +37.9% while GT holdings and Unity Bank topped a short losers’ list with YTD returns of -13.8% and -13% respectively.

The fall of the NSE Banking Index in Q2 was attributed to the ongoing war in Ukraine which saw the CBN raise the Monetary Policy Rate (MPR) from 11.5% to 13% with the Inflation rate rising from 15.92% to 18.6%. A -2.8% Index decline was recorded in Q2 2022, with the Index closing at 397.79 basis points against 409.28 basis points in Q1.  On the list of gainers, Wema Bank and Fidelity Bank recorded a YTD return of +343.1% and +34.1% respectively. On the loser’s list GTCO, Unity Bank, and Zenith Bank recorded a -21.2%, -16.7%, and -13.7% respectively.

With tighter monetary policy to ward off a rise in inflation rate investors turned bearish, shifting away from banking sector stocks to prospect for higher market yields elsewhere. Q2 financials were positive across banks but it was not enough to raise investors’ faith in the sector (See table below)



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