The Nigerian Exchange Limited (NGX) opened the trading week on a bearish note, shedding N121 billion in market capitalisation as investors reacted negatively to a new directive from the Central Bank of Nigeria (CBN), which suspended dividend payouts, bonuses, and new foreign investments for banks under regulatory forbearance.
This sweeping directive—announced as part of the CBN’s effort to strengthen the financial sector—sparked panic-selling, especially among retail and institutional investors who traditionally rely on banking stocks for steady returns. The ripple effect led to a significant drop in equity prices across the banking sector, which heavily influences the All-Share Index (ASI).
At the close of trading on Monday, the ASI fell by 170.77 points or 0.15%, closing at 115,258.77 points, down from Friday’s 115,429.54. As a result, market capitalisation dipped from N72.82 trillion to N72.70 trillion.
According to the CBN circular, banks currently operating under regulatory forbearance—particularly those dealing with relaxed Single Obligor Limits and credit exposure provisions—must now pause dividend disbursements, defer director bonuses, and cease offshore investments until they can independently verify compliance with capital adequacy requirements.
The move, while regulatory in nature, was interpreted by many investors as a red flag about the financial health of certain banks. Market analysts believe the sell-offs are a direct consequence of a misinterpretation of the directive as a blanket ban on dividends across the sector.
Olatunde Amolegbe, Managing Director and CEO of Arthur Stevens Asset Management Limited, explained that the panic was a “knee-jerk reaction,” noting that the directive only targets banks still under forbearance. “This provides a low-entry opportunity for discerning investors who can stomach short-term volatility,” he added.
David Adonri, CEO of Highcap Securities, echoed this sentiment, clarifying that the CBN’s move aims to protect the banking system from systemic shocks, especially those tied to foreign currency exposure and capital adequacy concerns.
Despite the day’s losses, the broader market remains resilient. Weekly gains stood at 2.2%, with a four-week return of 5.68% and a year-to-date increase of 11.98%. Monday’s trading volume reached 721.75 million shares across 22,100 deals, though this marked a 23% drop in volume from the prior session. Interestingly, turnover rose 23% to N22.01 billion, indicating increased value in traded assets.
Guinea Insurance led gainers with a 10% rise to N0.77. Other top performers included Ellah Lakes (+9.93% to N4.76), Legend Internet (+9.87% to N7.79), Royal Exchange (+9.68% to N1.02), and Fidson Healthcare (+9.64% to N42.10). NGX Group also surged by 9.09% to N42.00.
On the losing side, Northern Nigeria Flour Mills saw a steep 10% decline to N101.30, followed by C&I Leasing (-9.68% to N4.20), University Press (-9.27% to N4.99), Deap Capital (-8.99% to N0.81), and Access Holdings, which dropped 8.28% to N20.50.
Access Holdings also led trading volume with 92.7 million shares, trailed by UBA (91.4m), Zenith Bank (76.8m), and Fidelity Bank (50m), highlighting the continued dominance of banking equities in market activity.
The Consumer Goods Index was the standout performer, rising 1.98% and pushing its YTD gain to an impressive 45.32%. In contrast, the Oil & Gas Index fell by 0.9%, extending its YTD loss to 13.21%. The Insurance Index dipped by 0.49% but remains marginally up 0.71% weekly. Meanwhile, the Top 30 Index shed 0.14%, though it remains up 11.66% YTD.
Financial services firms like Cowry Assets Management and Cardinalstone Capital Markets attributed Monday’s slump to investor sentiment rattled by the CBN directive. According to Afrinvest Securities, bearish momentum may persist as attention shifts to the CBN Treasury bills auction, where stable yields could divert investment away from equities.
Adonri believes investor confidence will return once clarity around compliance timelines and exemptions is fully established. “Investors depend heavily on dividends, especially from banks. The loss of that assurance, even temporarily, could affect equity appetite,” he warned.
Nonetheless, experts suggest that the market’s reaction may be short-lived if banks can quickly align with the new CBN expectations. Already, major institutions like Zenith Bank and GTCO are said to have made substantial adjustments in anticipation of tighter regulations.
The NGX’s N121 billion loss underscores the fragility of investor confidence in the face of regulatory changes. While the CBN’s directive aims to promote financial stability, market participants await further clarification on which banks are affected and how soon they can regain dividend-paying status. In the meantime, long-term investors may find opportunities in the current dip, provided they navigate the market with informed caution.