Nigerian Exchange Group's nine-month revenue rose 80% to N27.3 billion, with pre-tax profit climbing 83% to N20.6 billion, already exceeding the full-year 2025 figure. The surge was driven by the central bank's requirement for lenders to raise fresh capital by March, prompting banks including Fidelity, FCMB and Wema to issue trillions of naira in new shares. The capital raises brought retail investors into the market in large numbers, many participating for the first time, and those investors continued trading after the offers closed.
The earnings gains came from two main sources. Listing fees rose 25% to N3.7 billion, but transaction fees more than doubled to N20.7 billion and accounted for three-quarters of revenue. Additionally, NGX owns 43.5% of CSCS, the depository that clears trades on the exchange, and its share of profits from associates rose 70% to N5.7 billion, contributing more than a quarter of pre-tax profit. The elimination of a N700 million finance cost from the previous year provided another boost.
The broader market benefited from the activity. The All-Share Index gained about 60% this year, while market capitalisation climbed above N160 trillion. However, the third quarter painted a less rosy picture. Revenue rose 36%, but operating expenses climbed 63% as staff costs doubled due to bonus accruals tied to the exceptional performance, while general expenses, travel costs and donations also increased. Quarterly net profit fell 7%, and the cost-to-income ratio worsened from 46% to 59%.
The outlook carries significant uncertainty. Listing fees fell 10% in the third quarter despite strong nine-month performance, as bank recapitalisation is now complete and the smaller insurance sector capital raises offer limited follow-on opportunity. Market data and technology income, which are meant to provide recurring revenue during downturns, are flat or shrinking. Treasury income also fell despite growth in the investment portfolio. The business remains heavily exposed to market sentiment, with future momentum dependent on a promised NNPC listing and other large initial public offerings materialising.
The balance sheet remains robust with no debt, N61 billion in equity and sufficient liquid bonds to support generous dividends. At a recent share price of about N165, however, NGX trades at roughly 27 times annualised earnings, a valuation that assumes continued growth from a business whose fortunes depend heavily on a buoyant market.
For investors and companies in Nigeria, the stock exchange's strong earnings mean lower capital-raising costs when markets are active, but the exchange's valuation suggests markets may be pricing in exceptional performance that could prove difficult to sustain without major new listings.