Tsunami: Bank stocks fall amidst interest rate hike

Following the recent rate hike by the Central Bank of Nigeria, 10 Nigerian Bank stocks depreciated in value at the close of trading as investors’ craving for fixed income securities widen.

With the hike in MPR by 150 basis points to 13%, analysts believe that the prognosis for the Nigerian stock market will be lukewarm with sideways movement in equities, on a bearish bias outlook.

Investigations by Nairametrics showed that the 10 banks lost about N96.325 billion in a day.

Dr Muda Yusuf, Founder/CEO, Centre for the Promotion of Private Enterprise [CPPE] had said that what the recent rate hike by the Central Bank of Nigeria means for the economy is that the cost of credit to the few beneficiaries of the bank credits will increase which will impact their operating costs, prices of their products and profit margins.

Yusuf while reacting to the May 2022 MPC Communique also noted that investors in the fixed income instruments may also benefit from the hike while there would be some adverse effects on the equities market.

Breakdown of the losses

  • Analysis of the bank stocks that shed weight showed that at the close of trading, FBNH Holdings led the losers in percentage terms with 8.66% or N35.895 billion to close at N378.695 billion in market capitalisation.
  • Jaiz Bank Plc followed with 7.14% or N2.072 billion to close at N26.942 billion, while UBA Plc dropped by 3.77% or N10.259 billion to finish the day’s trading with N261.625 billion. GTCO Plc decreased by 2.61% or N17.658 billion to close at N659.258 billion.
  • Access Holdings Plc was down by 2.51% or N8.886 billion to close at N344.788billion in market capitalisation. ETI depreciated by 2.50% or N5.504 billion in market capitalisation.
  • Zenith Bank followed by 1.67% or N12.588 billion to close at N740.957 billion while UBN dropped by 1.57% or 2.912 billion to close at N182.004 billion and Wema Bank Plc 0.59% or N257 million to close at N43.331 billion.
  • Fidelity Bank trailed with a loss of 0.29% or N289 million to close at N98.224 billion in market capitalisation.

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