Nigerian banks trade at discount to African peers despite 68% surge

Nigerian banks have experienced a significant surge in market value, with the NGX Banking Index up by 67.96% year-to-date as of September 14, 2026, outperforming the broader NGX All-Share Index, which rose by 56.35% over the same period. Despite this 68% rise, several of the country's largest banks continue to trade at a discount compared to their African peers.

Some banks are even trading below their book value, and have relatively low price-to-earnings multiples. This situation persists despite strong share-price gains and earnings growth, leaving investors to apply a substantial valuation discount to several Nigerian banks. Analysts attribute this discount to several factors, including the completion of the Central Bank of Nigeria's recapitalisation exercise, which removed an overhang that weighed on sentiment, as well as attractive dividend yields and stronger earnings.

However, some investors may still question the sustainability of the strong earnings recorded by Nigerian banks in recent years, as evidenced by the narrow narrowing of the valuation gap when investor confidence improves. Only Zenith Bank and FirstHoldCo are currently worth more than N5 trillion, with FirstHoldCo being the only Nigerian bank in the billion-dollar mega-cap (BMC) bracket.