There are strong indications that foreign investors are returning to the Nigerian market, following the stability in banking stocks.

Last year’s worst- performing stock market in the country is rebounding as the world’s lowest valuations and projections for record bank profits lure Citigroup Inc., Exotix Ltd. and Insparo Asset Management.

Analysts predict profits at First Bank of Nigeria Plc, Guaranty Trust Bank Plc and Stanbic IBTC Bank Plc will climb an average 43 percent, according to data compiled by Bloomberg Foreign.

Investors are returning to Africa’s biggest oil producer after Central Bank of Nigeria (CBN) governor, Mallam Lamido Sanusi, pledged to rid banks of bad loans, oil prices doubled and crude output climbed on an amnesty agreement with rebels in the Niger Delta.

Shares are moving up even as President Umaru Yar’Adua’s two-month absence causes a power vacuum .