Investors Return to Position as Banks Douse Forbearance Tensions
The banking index surged as investors returned to take positions after riotous selloffs in reaction to the Central Bank of Nigeria’s (CBN) forbearance directive. Deposit money banks’ market valuation rebounded as press releases were issued to address forbearance loans and Single Obligor Limit (SOL) positions, which helped ease initial market concerns.
Precisely, GTCO (+4.43%) maintained its positive momentum, while ZENITHBANK (+5.32%), UBA (+5.59%), and ACCESSCORP (+4.49%) garnered heightened investor interest, further bolstering the market’s overall performance.
Due to bargain hunting, banking (+3.25%) and insurance (+2.02%) indexes recorded big moves in the local bourse on Wednesday, according to stock analysts. The Nigerian Exchange had experienced massive selloffs across banking names following a regulation that restricted dividend payments from the affected lenders.
All the banks appear to be confident about getting their loan quality cleaner by June 30, while they affirmed their decision to continue to pay dividends to shareholders with hiccups.
The CBN released two circulars in the last six days, with the June 13, 2025 document titled “Temporary Suspension of Dividend Payments, Bonuses, and Investment in Foreign Subsidiaries” and the related follow-on circular released on June 17, 2025, titled “CBN Affirms Strength of Banking Sector, Issues Routine Transitional Guidelines for Select Institutions”.
The first circular noted that the CBN conducted a review of the capital positions and provisioning adequacy of banks currently operating under approved regulatory forbearance regimes, specifically in relation to credit exposures and Single Obligor Limits (SOL).
Following the review, the Apex Bank highlighted the need to strengthen capital buffers, enhance balance resilience, and promote prudent internal capital retention during this transitional period.
Hence, it rolled out fresh directives to banks currently operating under regulatory forbearance related to credit exposures and SOL.
“We assess the second circular as trying to provide reassurance of the strength in the banking sector while emphasizing some measure of time-bound flexibility to the transition that could slightly mitigate concerns”, CardinalStone Securities Limited said. CBN Extends Recapitalisation of BDCs to December
