OALP Finance and Capital Markets Wrap-up 2023 and 2024 Outlook

The banking and capital markets segments of the financial services sector witnessed significant changes in 2023 with a number of participants in both segments adopting new strategies to remain afloat given the harsh economic realities. Despite the raging macroeconomic and regulatory headwinds that have constrained performance in the Nigerian banking industry in the last three (3) years, Nigerian banks have remained resilient. This is consistent with the report by Fitch released early in the year that Nigerian banks have sufficient capital and liquidity buffers to withstand prevailing macroeconomic challenges, providing headroom at their current rating levels. The collaborations between FinTech companies, domestic and international DIs, amongst other partnerships, as well as the transition to the financial holding company structure and upscale of banking licence by some players, have contributed to the stability of the Nigerian banking industry.

Concerning the Nigerian capital market, despite initial concerns at the start of the year that uncertain economic policies could disrupt activities within the market, the Nigerian capital market fared relatively well in 2023 as we note that the equities market outperformed most of its peers in the West African market. Investors generally had a positive reaction to the bold key policy changes by the government which caused the market to rally positively with the total capitalisation of the NGX crossing the 40 trillion mark. We also noted that issuers within the market have begun to explore the use of other capital instruments which were previously under-utilized, such as CP and CIS, in their capital-raising ventures, with total CP issuances valued at NGN1 trillion having been listed on the FMDQ as at October 2023.

This wrap-up and forward report (the Report) highlights the significant events of 2023 in the Banking and Capital Markets sub-sectors of the Nigerian financial services industry and indicates what is expected in these sub-sectors in 2024.


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