Banking selloff wipes N306bn off NGX investors' wealth

Nigeria’s banking stocks have emerged as the overwhelming favourite among investment analysts for the third quarter of 2026 as the Nigerian Exchange (NGX) sustains one of its strongest rallies in recent years, with investors’ wealth approaching N160 trillion and year-to-date returns nearing 60 per cent.

The consensus among leading investment houses suggests that the banking sector will remain the primary driver of market performance, supported by resilient earnings, stronger capital positions following recapitalisation, attractive valuations and robust dividend prospects, while industrial goods, telecommunications and selected consumer stocks are expected to provide additional momentum.

The bullish outlook comes after the NGX All-Share Index (ASI) climbed 47.43 per cent in the first half of the year, rising from 155,613.03 points at the beginning of 2026 to 229,419.18 points by June 30 after touching a record 250,385.70 points in May. Market capitalisation also expanded from N99.38 trillion to N147.22 trillion over the same period before advancing further to about N159.89 trillion by July 23.

Research reports from Meristem Securities, Blue Marina Research, Cowry Asset Management, Arthur Steven Asset Management, Vetiva Research and Cordros Capital reveal remarkable alignment in sector preferences despite differences in individual stock recommendations.

Meristem Securities identified Zenith Bank, Ecobank Transnational Incorporated (ETI), United Bank for Africa (UBA), Fidelity Bank, MTN Nigeria, AIICO Insurance and NASCON Allied Industries as key buy recommendations, arguing that valuations remain attractive ahead of the second-quarter earnings season.

Blue Marina Research similarly expects banking stocks to spearhead the market’s next rally, highlighting Zenith Bank, UBA, Access Holdings and ETI alongside MTN Nigeria and Dangote Cement as its preferred investment picks.

Cowry Asset Management also maintained a positive outlook on banking, consumer goods and industrial stocks, noting that June’s market pullback created attractive entry opportunities for long-term investors.

Arthur Steven Asset Management projected further upside for banks, ETI, MTN Nigeria, AIICO and industrial companies, while Vetiva Research retained overweight positions on GTCO, Zenith Bank, FCMB, Nigerian Breweries and Nestlé Nigeria.

Cordros Capital advised investors to accumulate fundamentally strong stocks ahead of half-year earnings releases but cautioned that elevated Treasury bill and bond yields could continue to compete with equities for investment flows.

Independent market experts also reinforced the optimistic outlook.

Head of Research at GTI Capital Limited, Mr Abiodun Ogunniyi, identified banking, industrial goods and telecommunications as the sectors most likely to outperform during the quarter, while expecting consumer goods to benefit from moderating inflation.

He, however, expressed caution over the oil and gas sector, noting that its impressive year-to-date performance had been driven largely by Aradel Holdings and Seplat, making the rally highly concentrated.

“My major concern is that the sterling performance of the NGX Oil and Gas Index year-to-date has been driven mainly by upstream players. It has been a highly concentrated rally,” Ogunniyi said.

He added that although stronger crude oil prices could support improved earnings in the second half of the year, renewed investor interest in the sector may only gather significant momentum towards the fourth quarter.

Founder of Okwudili Ijezie & Co., Chief Blakey Ijezie, described banking as the principal engine of the Nigerian Exchange in the third quarter, citing resilient earnings, attractive valuations, improved capitalisation and consistent dividend potential.

“I expect the banking sector to lead the Q3 rally, with industrial goods providing strong secondary support,” he said.

According to Ijezie, Access Holdings, GTCO, Zenith Bank, UBA, FirstHoldCo and Fidelity Bank remain among the strongest investment opportunities, with Access Holdings particularly standing out after reporting more than N1 trillion in pre-tax profit while still trading below its intrinsic value.

He added that Dangote Cement, BUA Cement and Lafarge Africa should benefit from continued infrastructure spending, while insurance companies could attract renewed investor interest as regulatory reforms improve sector profitability.

Analysts noted that banking stocks continue to dominate recommendations because of the successful recapitalisation programme, which has strengthened balance sheets, enhanced earnings visibility and positioned lenders for sustainable dividend growth.

Industrial goods companies remain attractive due to Nigeria’s infrastructure development agenda, while MTN Nigeria continues to enjoy strong support from analysts because of its resilient cash generation and dominant market position.

Although elevated fixed-income yields remain the principal risk to equities, the broad consensus is that strong corporate earnings and improving macroeconomic stability should continue to support positive investor sentiment through the third quarter.

With the earnings season approaching and investor confidence strengthening, analysts believe banking stocks are likely to remain the market’s biggest wealth creators as the NGX pursues fresh record highs before the end of the quarter.