By Financial Correspondent
The Nigerian banking sector is poised for a final surge in capital market activities as financial institutions race to satisfy the Central Bank of Nigeria’s (CBN) March 2026 recapitalisation deadline.
In its recently published Year in Review and 2026 Outlook, analysts at Coronation Asset Management projected that the final quarter leading to the expiration of the deadline would see a flurry of “final calls” on capital-raising programmes. According to the report released on Tuesday, while sixteen banks have already met the new capital thresholds, the remaining players are expected to follow suit in the coming weeks.
The report identifies the industry-wide recapitalisation drive as the “defining theme” of the outgone year. This movement, coupled with the exit from the CBN’s forbearance scheme, has fundamentally reshaped the sector’s landscape.
“The industry-wide recapitalisation drive has spurred a series of capital market activities,” the analysts noted. Although investor sentiment remained mixed, causing the banking sector to underperform relative to the broader market, the firm maintains that the outlook is anchored by the strengthening of capital bases and an expected “normalisation” of earnings towards core banking activities in 2026.
Major Tier-1 and Tier-2 institutions, including GTCO, Zenith, UBA, Stanbic IBTC, Jaiz, and Access Holdings, have already concluded their respective programmes through rights issues, public offers, and private placements. Meanwhile, others such as FCMB, FBN Holdings, Fidelity, and Sterling have secured CBN approval for multiple offers that are either currently active or in the pipeline.
Resilience Amidst Headwinds
Despite the rigorous regulatory environment, the sector remained broadly resilient through 2025, supported by balance sheet expansion and robust liquidity. However, “headline profitability” softened compared to the record-breaking earnings of previous years. Pre-tax profits rose by a modest 5.2 per cent year-on-year, a deceleration attributed to several factors:
- High Funding Costs: Elevated interest rates and persistent inflationary pressures.
- Regulatory Changes: The withdrawal of forbearance and the imposition of a windfall tax on foreign exchange gains.
- Rising Impairments: A notable increase in loan-loss provisions, particularly within manufacturing and trade-related exposures where borrowers struggled with tighter foreign exchange access.
Conversely, the oil and gas upstream segment demonstrated resilience, bolstered by favourable crude prices. However, the downstream and power sectors faced challenges in loan recovery due to rising receivables and delayed tariff adjustments.
Market Performance and Investor Sentiment
The NGX Banking Index advanced by over 30 per cent year-to-date; however, this was eclipsed by the broader NGX All-Share Index, which climbed by over 50 per cent. This disparity reflects a divergent investor sentiment across different tiers:
- Large Caps: Zenith Bank (+39.6%), GTCO (+55.1%), and ETI (+30.4%) posted solid gains. Access Holdings, however, lagged with a 12.8 per cent decline, attributed to delays in earnings publications and dividend uncertainty.
- Mid-tier Momentum: Wema Bank emerged as a standout performer with a 104.4 per cent gain, followed by Stanbic IBTC at 82.3 per cent and Sterling Financial Holdings at 31.3 per cent.
Looking Ahead to 2026
As the market moves into the new year, Coronation Asset Management anticipates a shift in the monetary environment. Expected policy rate cuts are predicted to stimulate lending, while disciplined credit management and improved asset yields should underpin a recovery in interest income.
“We believe the sector is well-positioned to become a major driver of growth in 2026 as macroeconomic stability gradually returns,” the report concluded. With capital buffers strengthened and the “regulatory cleanup” largely complete, the analysts suggest that Nigerian banks are now better equipped to scale lending and deliver “durable value creation” over the medium term.
