August Sell-Offs Trigger September Caution, Banks Seen as Market Lifeline

Investor sentiment on the Nigerian Exchange (NGX) is expected to remain cautious in September 2025, following sustained sell-offs that began in August, analysts at CardinalStone have said.

In their latest equity research note titled “Broad-based Gains in Global Equities; NGX ASI Stalls,” the analysts observed that profit-taking in stocks that rallied through early August dragged the market lower, a trend that extended into September.

The NGX closed August marginally positive at 0.31 per cent, despite losing more than 3,500 points in the fourth week alone.

Analysts, however, believe interim dividend declarations and second-quarter results from tier-1 banks could provide a cushion. “If investors respond positively to upcoming bank results, it could stabilise sentiment and support overall performance,” CardinalStone noted.

The NGX Banking Index, which opened 2025 at 1,084.5 points, ended January with a 9.76 per cent gain. After modest movements in February and March, the index closed the first quarter up 6.96 per cent.

Bullish momentum returned in May and June, lifting first-half performance to 18 per cent, while July delivered the strongest monthly gain of 25.8 per cent to 1,610.5 points.

The rally, however, lost steam in mid-August, pulling the index back towards 1,500 points. FUGAZ stocks—First Bank HoldCo, UBA, GTCO, Access Holdings and Zenith—were key drivers of earlier gains, and their Q2 results are now expected to determine market direction.

So far, only First Bank HoldCo has published its half-year earnings. The group reported a pretax profit of N169.6 billion for Q2 2025, down 4.58 per cent from N177.8 billion a year earlier, but bringing H1 pretax profit to N356.1 billion. Interest income surged 61.92 per cent to N812.1 billion in Q2, compared with N501.5 billion in the same period of 2024, driving H1 interest income to N1.4 trillion.

Loans and advances contributed N910.3 billion, investment securities N445.7 billion, while loans to banks accounted for N81.2 billion. Net fee and commission income rose to N74.5 billion, from N58.4 billion in Q2 2024. Foreign exchange losses also narrowed sharply to N6.9 billion, compared with N66.4 billion in the prior year.

With the remaining tier-1 banks yet to announce their results, investors are closely watching the sector for fresh cues that could steady the market in September after weeks of volatility.