With a gain of 9.82%, the banking index ended the week on a high note to take the top spot among sectoral indices.
The market capitalization and NGX All-Share Index both increased by 3.40% to end the week at 63,040.41 and N34.326 trillion, respectively.
All other indices also ended higher, with the exception of the NGX Consumer Goods Index, which declined by 0.22%, and the NGX ASeM and NGX Sovereign Bond Indices, which ended flat.
Market capitalization climbed by N556 billion over the course of the year as investors intensified their buying pressure, particularly on blue-chip equities.
The Nigerian Exchange Limited reports that the banking index increased by 9.825%, or 63.35 basis points, to conclude at 708.77 index points as opposed to its opening index of 645.42 index points at the start of the week.
NGX data showed that the banking industry has had a favourable year-to-date performance of 69.77%.
As of June 30th, 2023 the NGX Banking Index had climbed from 417.50 index points to 645.42 index points, compared to the closing value of 417.5 index points on December 30th, 2022.
The Monetary Policy Rate was raised by the MPC by 50 basis points, from 18% to 18.50%, at its 291st meeting.
The Deposit Money Banks now get to reprice their risk assets following the new MPR, in turn, this increased their net interest income as seen in the Q1 results of most of the banks.
The Managing Director of Cowry Asset Management Limited, Mr. Johnson Chukwu, stated on the sector’s outlook for the second half of the year that rising interest rates on loans can boost banks’ profitability through higher net interest income and attract more deposits from savers seeking higher returns.
Chukwu pointed out that increased financial efficiency and profitability can also help banks grow and spread out as banks with sizable foreign currency assets will probably revalue those assets to reflect the current exchange rate.
Therefore, he continued, “As a direct result of this foreign exchange revaluation gain, we anticipate an upturn in profitability.”
The change in Central Bank administration, according to Chukwu, has given investors more confidence leading to expectations of improved performance in the sector.
