Lagos traded higher for a third consecutive session on Tuesday as investors digested a raft of better-than-expected earnings from the banking sector, with analysts pointing to improving net interest margins and a friendlier regulatory backdrop heading into the second half of the year.

The numbers behind the move

The move caps a volatile quarter in which policy uncertainty, currency pressure and a global repricing of risk assets pushed local equities to their widest discount against emerging-market peers in nearly a decade. Fund managers say the gap is now too large to ignore.

The gap between price and fundamentals is now too large to ignore — someone will arbitrage it.

Beneath the headline numbers, the story is one of consolidation. Smaller lenders are being squeezed by rising compliance costs and capital requirements, while the tier-one banks use scale — and increasingly, technology — to defend their margins.

What happens next depends less on the market than on policy. Officials have signalled that rate decisions will remain data-dependent, but the data itself is sending mixed signals: headline inflation is cooling, core prices remain sticky, and wage growth has barely moved.

For retail investors, the practical question is allocation. Advisers consulted for this story recommended staying diversified, resisting the urge to time entries, and treating any single-quarter result — good or bad — with a measure of suspicion.