The All-Share Index (ASI) has experienced significant pressure throughout November 2025.
A major factor contributing to this decline is the performance of banking stocks.
The ASI was at 144,646 points as of November 19, reflecting a daily decrease of 0.25 percent and a monthly decline of 3.55 percent.
The All-Share Index year-to-date (YTD) return remains positive at 40.53 percent. Market capitalization has fallen from previous highs above N99 trillion to approximately N92 trillion, resulting in over N7 trillion losses for investors this month.
The banking index dipped by 1.22% at the mid-week trading session. It recorded its worst performance since March 2010, with a weekly decline of 7.27 per cent in mid-November, acting as a significant drag on the ASI.
The Nigerian banking industry faces several challenges. Sector asset growth is expected to be limited to 20% per year until the end of 2025, primarily due to rising asset values and anticipated currency stabilization.
Other concerns include a new windfall tax on foreign exchange profits, increasing regulatory costs, a required reserves policy of 50%, and high inflation rates. The World Bank predicts that inflation will decline between 2025 and 2027. Consequently, banks will need to focus their lending on more profitable sectors, such as technology and agriculture, as other sectors become saturated, thereby restricting credit expansion.
Several interconnected factors have contributed to this bearish trend, particularly affecting major banks:
Capital Gains Tax (CGT) Reforms: Proposed changes to triple CGT rates have caused panic among both foreign and domestic investors, leading to significant selloffs. Finance Minister Wale Edun’s intervention on November 15, which promised consultations and possible exemptions for foreign reinvestments, led to a partial rebound but failed to stop the overall downward momentum.
Geopolitical Tensions: Threats from U.S. President Donald Trump regarding military action against Nigeria—due to reports of violence against Christians—have shaken investor sentiment. His proposals for tariffs ranging from 20% to 60% on imports from emerging markets have further accelerated capital outflows, impacting medium- and large-cap banks the hardest.
Profit-Taking and Sector Rotation: Investors have been cashing in on gains amidst signs of an overheated market following a remarkable 59% year-to-date surge earlier in the year. Banking stocks, which account for about 25% of the All-Share Index (ASI), have seen significant profit-taking.
Nigerian banks’ market fundamentals still healthy
According to recent NGX data, Tier-1 banks with large market caps (above N1 trillion each) dominate the top banking stocks by trading volume. These stocks are among the top five most traded stocks on the exchange each day.
The Central Bank of Nigeria (CBN) implemented a recapitalization policy requiring Nigerian banks to raise their capital base by 2026 to promote financial stability and support the nation’s economy.
Consequently, 2025 has been a remarkable year for the Nigerian banking industry.
A recent infusion of N4 trillion into the Nigerian market has significantly improved bank liquidity and investor confidence.
The total asset value of banks listed on the Nigerian Stock Exchange reached N169.5 trillion in 2024, reflecting a considerable increase from N112.39 trillion in 2023. Further growth is expected in the 2025 fiscal year.
The sector’s market capitalization rose from N3.2 trillion in 2020 to N10.5 trillion by mid-2025. This growth can be attributed to several factors, including increased digitization, strong interest income from government securities (which accounted for 4.8 trillion in the first nine months from the top banks), and a stock market where banks executed the largest financial transactions.
Market outlook
GTCO and Zenith outperformed the market, while Access Holdings underperformed due to a 10% decline weekly decline in the early weeks of November
The present market correction has generated more revenue as the forward P/E ratios are locked in at 10-15x while the average market prices are around 25x.
These dividends are denoted at a high of 7-12% in 2025, and thus, the sector is deemed attractive to investors.
There are high returns anticipated to be greater in the top banks, though it may be levelled due to stricter rules in regulatory scopes concerning the banks.
There are expectations to be levelled at an average of around 15x for the UBA and Zenith banks, therefore leading to high projections of around 20-30% for the returns in the coming financial calendars. The profit margins for the Zenith, GT, and UBA remain high, but bid caution for the smaller banks as they are expected to have thinner profit margins and are on higher ratios.
Continued market volatility is expected until the end of this quarter. However, catalysts such as corporate earnings announcements or policy clarifications could provide some stability.
Investors should focus on diversified, fundamentally strong banks like UBA, Stanbic, Zenith and GTCO for long-term investments, while the market has shown resilience with a year-to-date increase of 41%, steering clear of speculative plays.
Monitor announcements from the Nigerian Exchange (NGX) or consult a licensed broker for up-to-date information,
This correction may offer buying opportunities, but caution is advised, considering global economic challenges.
