Economy
Heritage Bank Liquidation Won’t Affect Banking Stocks—Analysts
By Aduragbemi Omiyale
The revocation of the operating licence of Heritage Bank by the Central Bank of Nigeria (CBN) on Monday, June 3, 2024, did not come as a surprise to many observers but the action took a toll on the stock market, especially the banking index.
The withdrawal of the lender’s licence by the regulator triggered selling pressure in the banking sector on the floor of the Nigerian Exchange (NGX) Limited yesterday, as its index slumped by 0.84 per cent, joining forces with the industrial goods and consumer goods sectors to bring down the market by 0.18 per cent.
This occurred because of the reactionary action of some investors, who felt it was better for them to reduce their exposure to banking equities, fearing that other financial institutions could be affected.
However, analysts at Meristem Research have allayed the fears of investors, emphasising that the CBN’s hammer on Heritage Bank was “aimed at strengthening public confidence in the banking system and… also send a strong message to other banks that they must adhere to regulatory requirements and maintain sound financial performance.”
It was stated in the note obtained by Business Post that Heritage Bank’s underperformance had become a substantial threat to financial stability, and the CBN’s intervention ensures that its assets and liabilities are managed to minimise further financial risks.
It was stated that before the operational licence of the bank was taken away, its operational inefficiency had been a persistent issue, as its cost-to-income ratio was hovering around 99 per cent, indicating that nearly all of its operating income was consumed by costs, which is not healthy for any organisation.
In its conclusion, Meristem Research said, “We do not anticipate that this liquidation will trigger any contagion risk within the banking sector as the bank’s financial challenges and regulatory breaches were specific to its operations and management, and are not reflective of widespread vulnerabilities in the banking system.”
The apex bank, in its circular yesterday, explained that it stopped Heritage Bank from continuing banking operations in Nigeria because of its persistent breaches of Section 12(1) of the Banks and Other Financial Institutions Act (BOFIA) 2020.
There have been reports that before the central bank’s action on Monday, some customers of Heritage Bank had been having difficulties withdrawing their funds, with the company’s Automated Teller Machines (ATMs) unable to dispense cash.
By Adedapo Adesanya
FrieslandCampina Wamco Nigeria led the NASD Over-the-Counter (OTC) Securities Exchange to a 0.03 per cent growth on Friday, June 20.
During the session, the NASD Unlisted Security Index (NSI) went up by 24.15 points to close at 3,320.91 points, in contrast to the previous day’s 3,319.78 points while the market capitalisation added N670 million to finish at N1.944 trillion compared with the N1.943 trillion quoted at the preceding session.
Business Post reports that the share price of FrieslandCampina Wamco Nigeria Plc was up by 34 Kobo yesterday to N69.38 per unit from N69.04 per unit.
In the final trading day of the week, the volume of securities decreased by 14.9 per cent to 223,039 units from the 262,134 units traded a day earlier, but the value of securities soared by 233.2 per cent to N15.2 million from N4.6 million, and the number of deals slumped by 16 per cent to 21 deals from 25 deals.
At the close of transactions, Impresit Bakolori Plc remained the most active stock by volume on a year-to-date basis with 536.9 million units sold for N524.7 million, followed by Air Liquide Plc with 507.2 million units valued at N4.2 billion, and Geo-Fluids Plc with 268.5 million units worth N475.8 million.
Okitipupa Plc was also the most traded stock by value on a year-to-date basis with 153.7 million units valued at N4.9 billion, trailed by Air Liquide Plc with 507.2 million units traded at N4.2 billion, and FrieslandCampina Wamco Nigeria Plc with 40.5 million units sold for N1.7 billion.
By Adedapo Adesanya
The Naira improved its value against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, June 19 amid forex liquidity strain.
During the trading session, the domestic currency gained N2.84 or 0.18 per cent against the greenback in the official market to settle at N1,547.71/$1, in contrast to the N1,550.55/$1 traded in the previous day.
In the same vein, the Nigerian Naira gained N2.76 against the Pound Sterling at NAFEM yesterday to quote at N2,081..36/£1 versus Thursday’s closing price of N2,084.12/£1 and closed flat against the Euro to finish at N1,799.35/€1.
Also, in the parallel market, the Naira appreciated against the Dollar on Friday by N5 to sell for N1,580/$1 compared with the N1,585/$1 it was exchanged a day earlier.
This week, the Naira performed well due to continued investor confidence and market optimism boosted by better non-oil exports over the last few months and offshore FX inflows, which eased forex pressure.
In the week, the National Bureau of Statistics (NBS) said Nigeria’s headline inflation rate eased further to 22.97 per cent in May 2025 from the 23.71 per cent recorded in April 2025.
In addition, the Central Bank of Nigeria (CBN) signalled that the health of the country’s banking system was okay amid fears of dividend pause for banks facing possible distress.
Meanwhile, the cryptocurrency market turned bearish on Friday following escalating geopolitical tensions — triggered by Israel launching airstrikes on Iran last Thursday — caused cryptos to drop.
The tensions have only been mounting since, with US President Donald Trump calling for Iran’s “unconditional surrender” and threatening Iran’s supreme leader, Ayatollah Ali Khamenei.
Ethereum (ETH) lost 3.8 per cent to sell at $2,424.38, Solana (SOL) fell by 3.5 per cent to close at $140.31, Dogecoin (DOGE) slumped by 2.8 per cent to $0.1630, and Cardano (ADA) declined by 1.3 per cent to trade at $0.5836.
Further, Bitcoin (BTC) tumbled by 1.1 per cent to close at $103,555.63, Ripple (XRP) went down by 0.6 per cent to $2.12, Litecoin (LTC) shrank by 0.6 per cent to $83.97, and Binance Coin (BNB) slid by 0.3 per cent to $643.28, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
By Adedapo Adesanya
The oil market closed lower on Friday after the United States imposed new Iran-related sanctions, marking a diplomatic approach that raised the possibility of a negotiated agreement, with Brent losing $1.84 or 2.33 per cent to trade at $77.01 per barrel and the US West Texas Intermediate (WTI) crude declining by 21 cents or 0.28 per cent to quote at $74.93 per barrel.
The administration of President Donald Trump issued fresh Iran-related sanctions, including on two entities based in Hong Kong, and counter-terrorism-related sanctions a day after he said it could take two weeks to decide the involvement of his country in the Israel-Iran conflict.
According to a notice, an escalation of the conflict in such a way that Israel attacks export infrastructure or Iran disrupts shipping through the strait could lead to oil at being traded at $100 a barrel.
In the last weeks, Israel bombed nuclear targets in Iran, while Iran, which is the third-largest producer under the Organisation of the Petroleum Exporting Countries (OPEC), fired missiles and drones at Israel as neither side showed any sign of backing down.
As the conflict entered a second week, there was no indication that either side was looking to stand down, and that kept traders on edge.
Although oil exports so far have not been disrupted and there is no shortage of supply, traders will continue to watch possible threats to close the Strait of Hormuz, a vital route for Middle East oil exports.
Each day, about 18 to 21 million barrels of oil and petroleum products move through the strait, roughly one-fifth of the world’s oil supply.
Market analysts warned that an escalation of the conflict in such a way that Israel attacks export infrastructure or Iran disrupts shipping through the strait could lead to oil selling at $100 – $130 a barrel.
Elsewhere, the European Union has abandoned its proposal to lower the price cap on Russian oil to $45, to stop it from funding its three year aggression against Ukraine.
According to energy services firm, Baker Hughes, US energy firms this week cut the number of oil and natural gas rigs operating for an eighth week in a row for the first time since September 2023. The oil and gas rig count, an early indicator of future output, fell by one to 554 in the week to June 20, the lowest since November 2021.
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