Banking sector sell-offs current shopping for alternative — Nairametrics CEO, Ugodre Obi-Chukwu
The latest dip in banking stocks triggered by the Central {Bank} of Nigeria’s (CBN) new forbearance coverage could also be extra of a possibility than a threat, in response to Ugodre Obi-Chukwu, CEO of Nairametrics.
Talking on the enterprise present MoneyLine with Nancy, throughout a phase titled “CBN Coverage on Forbearance,” Mr. Obi-Chukwu steered that the decline in banking stocks might provide enticing entry factors for value-focused traders.
Requested whether or not it is a good time to purchase into the banking sector, he mentioned:
“I’m a elementary investor. I all the time like to purchase when costs are low. With the present drop in share costs and the robust fundamentals many Nigerian banks nonetheless keep, this could possibly be an amazing alternative.”
He famous that whereas the market sentiment across the banking sector has been shaken by the CBN’s coverage, Nigerian banks have traditionally demonstrated resilience.
“These banks survived earlier recapitalization shocks that additionally led to share value declines, and so they bounced again. I don’t assume this shall be any completely different.”
Mr. Obi-Chikwu defined that lots of the loans beneath forbearance are tied to the oil and fuel sector, which has began to carry out higher attributable to rising oil costs. Consequently, banks are actually in a stronger place to recuperate these funds and doubtlessly exit the forbearance checklist extra rapidly.
He expressed optimism about FUGAZ banks, particularly Zenith {Bank}, stating they’re financially robust and well-positioned to fulfill CBN necessities, with many prone to exit the forbearance checklist by the third quarter.
Whereas dividend payouts could also be affected, Mr. Obi-Chukwu famous that many of those banks have subsidiaries that may nonetheless upstream earnings to help shareholder returns, although maybe not as strongly as in earlier intervals.
On the broader market sentiment, the CEO said that traders will modify over time.
“Markets all the time transfer on. As soon as traders see indicators of restoration or readability in coverage course, confidence returns.”
Backstory:
In a round issued Friday, the Central {Bank} of Nigeria (CBN) directed all banks presently beneath regulatory forbearance, whether or not attributable to credit score exposures or breaches of Single Obligor Limits, to droop dividend funds, defer government bonuses, and halt any new offshore investments.
The market reacted.
- When buying and selling resumed on Monday, June 16, 2025, the NGX Banking Index opened deep within the crimson as traders swiftly offloaded main banking stocks in response to the CBN’s coverage shift.
Though the index clawed again some floor from pre-market losses that exceeded 7%, it nonetheless closed the day down by 3.98%.
By Tuesday, June 17, the wave of sell-offs had begun to ease.
- The index slipped a milder 0.20%, with 4 of the 5 FUGAZ banks posting average losses—an indication that investor nervousness was starting to chill.
By Wednesday, market sentiment turned bullish.
Inexperienced Wednesday:
Banking stocks bounced again on Wednesday, July 18, with the sector gaining 3.25% as investor sentiment turned constructive after days of uncertainty.
Earlier within the week, the market had struggled, as issues over the CBN’s coverage shift triggered a wave of sell-offs.
Confidence returned midweek following reassuring press statements from main banks, which outlined proactive measures to handle investor issues.
This renewed optimism additionally lifted the broader market, with the Nigerian All-Share Index leaping 1.63%, a achieve of 1,876 factors, breaking by way of the 116,000 barrier for the primary time.
