Market experts and analyst have explained why the banking sector performance ended the year out of the loop as five banks saw their value downed by 5.5 per cent from N2.57tn in 2021 to N2.43tn at the close of trading in 2022.
The five banks collectively known as Tier-1 banks all saw a decline in their share prices by the end of 2022 compared to what they had seen in 2021, according to data published on the Nigerian Exchange Limited.
According to NGX data, GTCO led all companies with an 11.54 percent decline from N765 billion in 2021 to N676.9 billion in 2022. The bank’s share price was also reduced from N26 to N23 per share. In the fiscal year 2022, the bank’s worth decreased by 88.3 billion.
Access Bank came in second place with a value depreciation of 7.5%. Its valuation fell from N330.6 billion at the close of trading in 2021 to N305.7 billion in 2022. The price of a share of the bank decreased as well, going from N9.3 to N8.5 kobo.
The United Bank for Africa also had a loss in market value of N13.7 billion from N275 billion in 2021 to N261 billion in the subsequent year of trading. Additionally, the value of one share decreased from N8.05 to N7.6 kobo.
Between 2021 and 2022, Zenith Bank Plc’s market value decreased by 1.6%, from N789 billion to N777 billion. The market share price of the bank decreased by N1.15 per share.
The market value of First Bank Nigeria decreased from N409 billion in 2021 to N407 billion in 2022, a decline of 0.44 percent. The bank’s share price decreased as well, from N11.4 to N10.9 kobo per share.
A capital market analyst, Wole Sam Adeyeye, explained the fall by blaming the lack of foreign investors who often buy banking equities for the heavy regulations in the industry.
He said, “The fall has to do with the foreign investors who have deserted Nigerian stocks. They don’t want to come to the country because of insecurity, the February elections, and forex issues.”
“If they are not ready to come, there may be no significant improvement in the banking stocks,” Adeyeye added.
Also, an economist and capital market analyst, Rotimi Fakayejo, claimed that in 2022, the market’s performance as a whole was comparatively weak.
He stated that the market was benefited by high-cap equities, particularly those in the telecom industry like MTNN, Airtel, Seplat, and Geregu.
Also, David Adonri of High Cap Securities said the fall in share price could be attributed to their stagnant fundamentals in the year ended.
According to him, “Their profits after tax in the three quarters did not change materially. Investors usually reward companies based on their expectations.”
Although the banks’ profitability was consistent, he pointed out that they did not experience substantial growth as other industries had.