Nigerian Exchange ,NGX, All-Share Index declined during the intraday trading session as investors exited positions in bank stocks yesterday in reaction to the Central Bank’s ,CBN, decision to end the forbearance regime.
The stock market trading direction appears to have switched to bear mode, with a bucket of sell orders already executed by brokers ahead of the inflation data release.
Banks have been posting strong earnings amidst pressure on asset quality, with some of these loans unlikely to bear fruit but ringfenced by forbearance granted in the post-COVID-19 era. Apart from banking names that are bleeding profusely due to profit-taking activities by the sell-side actors, Oando and Dangote Sugar Refinery are running south.
At midday, the NGX All Share Index witnessed a bearish trend, Alpha Morgan Capital Limited told investors in an emailed note, reflecting a loss of -0.13%. Stockbrokers reported that this decline was largely driven by sell-offs in some mid- to high-capitalized stocks.
OANDO is on the top loser chart, down by 8.70% during the intraday trading session. The stock was trailed by negative price movement that has plunged the market value of FIRSTHOLDCO down by 7.80%.
Investors are also in a selling mood, as a huge volume of FCMB shares offloaded causes the tier-2 bank’s share price to drop by -7.58%. There is an apparent weak buying sentiment for FIDELITYBK, which has lost 6.49% of its market value. ZENITHBANK is down by 5.98%, and ACCESSCORP has lost 5.15%.
Other decliners include UBA (-4.70%), JAIZBANK (-4.02%), STERLINGNG (-3.29%), WEMABANK (-0.72%), GTCO (-0.70%), and DANGSUGAR (-0.24%), among others.
On June 13, 2025, the Central Bank of Nigeria ,CBN, issued a circular directing banks currently under regulatory forbearance, particularly with respect to credit exposures and Single Obligor Limits ,SOL, to immediately suspend dividend payments to shareholders.
Banks are also expected to defer bonuses to directors and senior management and halt new offshore investments or expansion into foreign subsidiaries. The directive, signed by Olubukola A. Akinwunmi, Director of Banking Supervision, aims to reinforce the resilience of Nigeria’s banking sector by improving capital buffers and strengthening balance sheets.
These restrictions will remain in place until the affected banks fully exit the forbearance regime and demonstrate compliance with capital adequacy and provisioning standards validated through independent assessments. “The suspension of dividends may negatively affect investor sentiment, particularly among dividend-focused shareholders”, CSL Stockbrokers said in a commentary note yesterday.
Additionally, banks could face increased provisioning requirements, higher reported NPL ratios since loans, even when fully provided for, can only be written off after a one-year holding period and downward pressure on capital adequacy ratios and earnings, analysts explained.
“The ability and timeline for exiting the forbearance regime will largely depend on the size of each bank’s exposure, as well as the strength of their profitability and existing capital buffers”, the firm said.
