Banking sector stocks staged a rebound on Thursday, driven by investor confidence that lower benchmark rates will boost profitability in the coming quarters.
Market analysts noted that the recent policy shift by the Central Bank has eased borrowing costs, potentially increasing loan uptake and widening banks’ margins. The development triggered a rally across several Tier-1 and mid-tier lenders, lifting overall market sentiment.
According to traders, investors are betting that improved credit demand and reduced funding pressure will strengthen banks’ earnings outlook, despite earlier concerns over rising non-performing loans.
“Lower rates mean cheaper access to funds, and that usually translates into stronger balance sheets for banks in the medium term,” a Lagos-based market analyst said.
The rebound marks a turnaround from the cautious trading pattern that had dominated the sector in recent weeks, as investors now anticipate stronger quarterly results.
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