Mid-day trading on the Nigerian Exchange (NGX) is reflecting a cautious mood. This is as the release of relatively underwhelming half-year earnings from key banks is weighing heavily on sentiment, dragging the broader market into negative territory.
As of 12:30 PM WAT on September 19, the NGX All-Share Index had shed 0.37 percent to trade at 141,743.18 points, the lowest level in a week. The declines followed a wave of investor reaction to the financial results of some of the country’s largest banks.
On September 8, two of the exchange’s largest banks, United Bank for Africa (UBA) and Zenith Bank, published their audited half-year reports. However, both banks posted results and dividend decisions that fell short of investor expectations, sparking a selloff.
Zenith Bank, for instance, reported an 8 percent year-on-year drop in net income, with profit after tax coming in at N531.8 billion. This translated into an earnings per share of N12.95. It marked a steep 30 percent decline from N18.41 per share recorded in the first half of 2024. The group tried to reassure shareholders by raising its interim dividend to N1.25 per share, representing a payout of N51.3 billion. This was up 63 percent year-on-year from the N31.4 billion distributed for H1 2024. Yet, despite this gesture, market reaction was muted. Investors appeared unconvinced, with Zenith’s stock falling 2.88 percent to close at N64.10 per share. This left the stock trading at a price-to-earnings multiple of 4.95x, slightly above its five-year average.
The impact was more severe for UBA, which faced an investor backlash despite posting a 6 percent year-on-year increase in net income. The bank’s decision to slash its interim dividend by a staggering 85 percent overshadowed its earnings growth. It sparked a heavy selloff that began as soon as trading opened at 9:30 AM.
UBA’s stock plunged 8.51 percent by mid-day, with trading volumes exceeding N2.75 billion, reflecting the intensity of the market’s reaction.
This bearish sentiment quickly spilt over into other major lenders yet to release their results. Access Holdings slipped 4.63 percent by mid-day, while Guaranty Trust Holding Company (GTCO) was down 1.8 percent. Market watchers noted that the pressure on banking stocks was dragging the overall index lower. This underscored how closely tied the performance of the broader exchange is to the fortunes of the financial sector.