₦airaland Forum

Nigerian banks dominate the NGX with N16.28 trillion in market cap, strong dividends, and heavy daily trading, making them attractive for both income and growth investors.

• Investors should focus on profitability, dividend consistency, efficiency (ROE), and key risk metrics like Non-Performing Loan (NPL) ratio and Capital Adequacy Ratio (CAR). Valuation ratios such as P/E and P/B must be compared with sector averages to spot undervalued or overpriced stocks

• Tier-1 banks (FUGAZ) offer stability and reliable dividends, while Tier-2 banks provide higher risk-reward opportunities for investors willing to tolerate more volatility.

The banking sector is often described as the heartbeat of every economy because it provides the backbone for financial intermediation connecting people who have money with those who need it.

In Nigeria, banks are regulated by the Central Bank of Nigeria (CBN) through the Banking and Other Financial Institutions Act (BOFIA). Listed banks also fall under the oversight of the Securities and Exchange Commission (SEC); while trading and disclosure are supervised by the Nigerian Exchange Group (NGX).

A major turning point came in 2004 when the former CBN Governor Charles Soludo raised the minimum capital requirement from N2 billion to N25 billion, forcing a wave of mergers that left stronger, more capitalized institutions.

Two decades later, in 2024, the CBN raised the bar again, with new minimum capital thresholds ranging between N250 billion and N500 billion. This moves underscores just how central banks remain to Nigeria’s financial system and capital markets.

For investors, banks are attractive because of their profitability, dividend payouts, and market liquidity. The sector routinely pays hundreds of billions of naira in dividends and accounts for trillions in market capitalization on the NGX.

In this article, we explain how to approach investing in Nigerian bank stocks.

Banks listed on the NGX

Currently, about 13 banks are listed on the Nigerian Exchange. Like individuals, these banks are not all equal.

• Tier 1 banks (FUGAZ): FirstBank Holdco, UBA, GTCO, Access Holdings, and Zenith Bank. These are Nigeria’s largest and most influential banks.

• Tier 2 banks: Fidelity Bank, FCMB, Stanbic IBTC, Ecobank Transnational Incorporated (parent of Ecobank Nigeria), Wema Bank, Sterling Holdings, Jaiz Bank, and Unity Bank.

Note: Jaiz is the only non-interest (Islamic) bank among the listed players. Some banks operate internationally, some are local, and a few are regional.

For this article, we focus strictly on the publicly listed banks.

Size and market strength

As of December 2024, Nigerian listed banks collectively controlled assets worth about N169.48 trillion, up from N112.39 trillion in 2023.

Assets matter because they reflect the scale of deposits (liabilities) and loans (assets) that drive bank earnings.

From a market perspective, by July 2025, banks had a combined market capitalization of N16.28 trillion, roughly N6 trillion higher than year-end 2024.

Banking stocks are also among the most liquid on the NGX consistently ranking in the top five traded stocks. For investors, this liquidity makes it easier to buy and sell shares quickly.

Unsurprisingly, the FUGAZ banks dominate on key indicators like total assets, gross earnings, and customer deposits.

Access Holdings leads in total customer deposits, while Zenith commands the largest retail deposit base, an edge that provides access to cheaper funding.

Smaller banks can still be rewarding, but investors must weigh the risks more carefully.

How banks make money

Nigerian banks earn income from multiple streams:

1. Net interest income: The difference between interest charged on loans and interest paid on deposits.

2. Fees and commissions: Charges on transactions, payments, loan syndications, advisory services, and other activities.

3. Trading and investment income: Revenue from FX trading, hedging, financial instrument trading, and market revaluations. (In 2024, many banks booked exceptional profits from foreign exchange revaluation.)

4. Non-banking subsidiaries: Many banks now operate holding structures that allow them to diversify into pensions, asset management, and other financial services.

Risks and capital adequacy

When buying bank stocks, investors must consider risk. The biggest is credit risk borrowers defaulting on loans. This is measured by the Non-Performing Loan (NPL) ratio.

To safeguard the system, the CBN enforces prudential ratios such as:

• NPL Ratio: The share of loans not being repaid. Lower is better.

• Capital Adequacy Ratio (CAR): A measure of a bank’s ability to absorb potential losses without harming shareholders’ funds. Higher is safer.

Key Takeaway – For investors, banks with lower NPLs and higher CARs signal stronger resilience.

Profitability and dividends

Profitability is at the core of why investors buy bank stocks. Profits drive dividend payments, which remain a key attraction in the Nigerian market.

• In 2024, Zenith Bank reported the highest profit after tax but not the highest dividend per share.

• GTCO paid the highest dividend per share at N8.03.

• Over a five-year horizon, Zenith paid the highest cumulative dividend, rewarding shareholders with over N2.4 trillion.

Takeaway: Look for consistency. A high one-off dividend is nice, but sustainable payouts signal long-term reliability.

Efficiency matters

Beyond profit size, check how efficiently banks use their capital. Return on Equity (ROE) is a useful metric here.

• In 2024, Wema Bank posted a higher ROE than some Tier-1 banks, showing efficiency even at a smaller scale.

• Return on Asset also shows how well they are sweating their assets.

• Another key efficiency factor is what is called the Cost to Income ratio which shows how much banks spend relative to their income.

• GTCO has for years had the least cost to income ratio at around 45%. Some banks have as high as 70%. Cost to income ratio.

Valuation: Knowing if it’s cheap or expensive

Before deciding which bank stock to buy, investors must look at valuation. Key ratios include:

• Price-to-Earnings (P/E) Ratio: How much investors are paying for every N1 of earnings.

• Price-to-Book (P/B) Ratio: Compares share price to net assets per share.

• Price-to-Sales (P/S) Ratio: Compares share price to revenue.

Takeaway – Always compare a bank’s ratios to the sector average.

• If P/E is higher → investors are paying a premium (possibly justified by strong growth prospects).

• If P/E is lower → stock may be undervalued relative to peers.

Where and how to buy

Investors can buy bank stocks directly from the NGX through licensed stockbrokers or via online/mobile trading apps. On the NGX indices:

• Premium Board: UBA, Zenith, and FirstBank Holdco.

• Main Board: GTCO and most other listed banks.

Final thoughts

The banking sector remains one of the most profitable and liquid on the NGX. Its consistent dividend history makes it attractive to income investors, while its growth and scale appeal to long-term investors.

Still, risks abound. Banks are tightly regulated by the CBN, and policy changes whether in FX, interest rates, or capital rules can swing profits sharply.

Bottom line: For dividend stability, Tier-1 banks are the safest bets. For higher risk-reward potential, smaller Tier-2 banks like Fidelity, Wema, or Sterling may appeal but they require more scrutiny.

For our stock picks subscribe to our exclusive website FTM.ng. Here you can see the bank stocks we have recommended and why.

Source: https://nairametrics.com/2025/08/20/how-to-buy-the-best-bank-stocks-in-nigeria/

the best stock is to japa from this country ...because the economy is not yet stable.. the economy controls the stocks...I bought stock of intercontinental bank around 2003 ...now the bank is gone...I don't know how to go about retrieving it.... but am even considering buying stocks from Acess bank....for that bank to still be doing well after the death of its CEO is refreshing

Nice one. I'm thinking of investing in the banking sector before the year runs out.

Great things

19 more characters to get too NL rules

Banks won't tell us they make alot of money off dormant accounts. People who died and their moneys can't be claimed. People drop everyday.

Redstorm:
Nice one. I'm thinking of investing in the banking sector before the year runs out.

Thinking bawo
A lot could have changed before then. You can open a trading account now, fund with the little you have now and keep topping up later.

It's already close to the last quarter of the year btw

N.B: This is not an endorsement of banking stocks or investment advice to buy them. There are other sectors that may even be more rewarding than banking stocks. Consult your Stockbroker for expert advice. There are other money making ideas though.

Unless you are a big player, or can have insider tips, all these book metrics hardly matter. I believed all these about 20 years ago and invested. Then the banks began their abracadabra merger and acquisition. Na so 10 shares go turn to 3 shares, 2000 shares turn to 350 shares. I don't think even Newton, Gauss or Euler could have worked out the equation they used.

Na story e take end.

Nigerian Banks future lies in the hand of CBN which is the hand of FGN wish is controlled by Politicians

use the money play Bet9ja and thank me later

sonus:
Banks won't tell us they make alot of money off dormant accounts. People who died and their moneys can't be claimed. People drop everyday.

True, My brother!
I and my wife were just discussing about my neighbour who died yesterday morning. Sad incident really!
Obviously, she had lots of savings that she wasn't disclosing to anyone!

[quote author=wizdooarchy3 post=136543727]Nigerian Banks future lies in the hand of CBN which is the hand of FGN wish is controlled by Politicians

use the money play Bet9ja and thank me later [Hahaha Hahaha guy u be confirmed werey ...carry the money play bet naija just make me to dey laugh 😂 in this hot Afternoon

Kingpele:
the best stock is to japa from this country ...because the economy is not yet stable.. the economy controls the stocks...I bought stock of intercontinental bank around 2003 ...now the bank is gone...I don't know how to go about retrieving it.... but am even considering buying stocks from Acess bank....for that bank to still be doing well after the death of its CEO is refreshing

Buying stocks in nigeria is a very non-economical move.


Shout-out to all Chess comrades on NL.

Access Holdings,UBA and Zenith Bank are good for long term.

Their future is bright.

For short term, Jaiz close at 10% wondering what triggered that.... Anyways...I would advise those working, even if you earn 20k invest 4k every month... Otedola no graduate for university ooh, he's chairman for First Holdco... Make Una no loose guard

Even, with this, none of the Nigerian banks is among the 10 richest bank in Africa according to the Bloomberg survey. In fact, all the first tier FUGAZ combined is not up to the richest bank in Africa. But gradually, Nigerian banks will get there.

hmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm

hmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm2

hmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm3

Don't follow the crowd ooh.

If u don't know how the stock market work,pls dodge this one.

E go burn ur hands like hot beans and plantain dey burn tongue.

Invest in portfolios with less risk such as treasury bill,fixed income and commercial papers.

I did this gtco shares with 50k and they gave me 7k after how many months sef maybe 5 month, abeg which kind rubbish be that..

I want my money back abeg..

/

Reputable brokers and Transparency are the biggest challenges.

/

The 700k i spent on First Bank IPO @33 naira per share in 2007 is worth next to nothing today. The land I bought few month earlier has appreciated more than 1000% so far.
My biggest investment regret.
Edit:

Hamachi:
I completely disagree. Stock investment is the fastest way to get rich.

It's not about what you think, it's actually my own personal experience.
What led me to Nairaland in 2005 was my curiosity about stock and shares.
I had huge portfolio from Banks, Oil and Gas(JA Paul etc), Insurance and so many undervalued stocks. At the end I got burnt so badly that I forgot my CNCS number (whatever it's called). You can read about the stock market crash of 2009 upwards.
While stock market might be a good investment option, for your sanity, you must diversify your investments.
From experience, genuine land will give you ROI that stocks will struggle to give you at the long run.
Fyi, Nigerian stock market is very volatile and till today insider trading is still rife.
Goodluck anyways.

wizdooarchy3:
Nigerian Banks future lies in the hand of CBN which is the hand of FGN wish is controlled by Politicians

use the money play Bet9ja and thank me later

CBN and their governors. What Sanusi did to my stock Portfolio because of personal vandeta it's only heavens that will judge him.

Oga shift abeg, all na scam

I don't know why you moderators come up with this 40 words characters even when I don't feel like writing long epistle

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Kingpele:
the best stock is to japa from this country ...because the economy is not yet stable.. the economy controls the stocks...I bought stock of intercontinental bank around 2003 ...now the bank is gone...I don't know how to go about retrieving it.... but am even considering buying stocks from Acess bank....for that bank to still be doing well after the death of its CEO is refreshing

Redstorm:
Nice one. I'm thinking of investing in the banking sector before the year runs out.

Start now as delay they say is dangerous. I am a testimony that stocks is the best investment options.

Dancebreaker:
Unless you are a big player, or can have insider tips, all these book metrics hardly matter. I believed all these about 20 years ago and invested. Then the banks began their abracadabra merger and acquisition. Na so 10 shares go turn to 3 shares, 2000 shares turn to 350 shares. I don't think even Newton, Gauss or Euler could have worked out the equation they used.

Na story e take end.

Kindly read on Stick split and what happened when companies merge. Knowledge they say is power.

Raxxye:
True, My brother!
I and my wife were just discussing about my neighbour who died yesterday morning. Sad incident really!
Obviously, she had lots of savings that she wasn't disclosing to anyone!

The importance of Will as most of us are not ready to have such discussion yet.

Nostalemate:
Buying stocks in nigeria is a very non-economical move.


Shout-out to all Chess comrades on NL.

You mind sharing the economical move as I would really want to learn from you.

Paulscholari:
I did this gtco shares with 50k and they gave me 7k after how many months sef maybe 5 month, abeg which kind rubbish be that..

I want my money back abeg..

Sell your shares if you desire you money back. You are yet to get your final dividend.

SatoshiX:
The 700k i spent on First Bank IPO @33 naira per share in 2007 is worth next to nothing today. The land I bought few month earlier has appreciated more than 1000% so far.
My biggest investment regret.

I completely disagree. Stock investment is the fastest way to get rich.

IamHonourable1:
Oga shift abeg, all na scam

I don't know why you moderators come up with this 40 words characters even when I don't feel like writing long epistle

Nothing is scam. You don't just understand how it works or probably looking for short cuts.

Kingpele:
the best stock is to japa from this country ...because the economy is not yet stable.. the economy controls the stocks...I bought stock of intercontinental bank around 2003 ...now the bank is gone...I don't know how to go about retrieving it.... but am even considering buying stocks from Acess bank....for that bank to still be doing well after the death of its CEO is refreshing

I also buy intercontinental bank then and it did well. They are the new access holdings