The Central Bank of Nigeria’s (CBN) decision to arm-twist banks on lending may have cost banking stocks a bearish blow. First, it was N116.2 billion and then shivers as investors wondered what just ensued.
By the close of business on Tuesday the losses had parred to N76.5 billion. Guaranty Trust Bank (GTB) was seeing red as investors dumped the stocks in early trading before it rallied back.
Last week, the Nigerian Banking Index closed the week losing 5.44%. The banking index is down 13.04% year to date and is one of the worse performing indexes this year. One of the major reasons for the poor performance is in part due to the uncertainty facing the economy following the national elections and the delay in President Buhari appointing his cabinet.
However, last week’s fall is now being blamed on the CBN’s latest policy forcing banks to lend.
Several investment newsletters tracked by Nairametrics attribute GTB’s near sell-off today to foreign investors. Foreign investors have instructed their local fund managers to slash their portfolio holding in large-cap Nigerian banks especially GTB and Zenith Banks.
Why rush to sell? Another report claims investors are reacting to the uncertainty trailing last week’s decision by the CBN to force banks to lend 60% of their customer deposits by September 2019.
Banks are also about to release their half-year annual reports. With the likes of GTB and Zenith Bank currently being audited the outcome of the results may not meet the expectations of investors.
Ironically fundamentals for most emerging markets appear strong but foreign investors are still wary about the political landscape across the world.
