NGX | Banking Sector Update - Impact of ongoing on monetary reform on Nigerian banks

    The banking sector has experienced a material shift in its operating environment since our last publication in January 2024. This shift was due to aggressive policy decisions, which were mostly inspired by efforts to contain the currency crisis and surging inflation, and improve banks' capacity to withstands unexpected changes in key variables. In this report, among other things, we assess potential changes in net earnings and 12-month target prices (TP) of our coverage banks that may be occasioned by the following:

    • The new requirement that the NOP limit of the overall foreign currency (FCY) assets and liabilities of banks should not exceed 20.0% short or 0.0% long of shareholders' funds unimpaired by losses

    • Discontinuation of daily CRR debits and the adoption of a structured weekly statutory debit on the increases in banks' weekly average adjusted deposits

    • Sharp increases in stop rates at auctions and the 400bps increase in monetary policy rate to 22.75%

    • The increase in statutory CRR from 32.5% to 45.0%

    • The adjustment of the asymmetric corridor to +100bps/-700bps from +100bps/-300bps, previously


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    CardinalStone is a full service investment banking firm with a vision to build a world class investment banking firm of African origin; operating out of Lagos, Nigeria. The firm was incorporated in April 2008 and began operations in June 2008. CardinalStone is duly registered with the Securities & Exchange Commission in Nigeria to carry on business as an Issuing House, Fund Manager and Broker/Dealer The Firm's activities are carried out across five business units: Asset Management, Investment Banking, Private Equity, Securities Trading and the Business Support Group.
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