Just 6 Nigerian Banks Paid N1.27tn Dividends Despite Huge Profits

Just 6 Nigerian Banks Paid N1.27tn Dividends Despite Huge Profits

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The Central Bank of Nigeria (CBN) has stopped five Nigerian banks from paying dividends to their shareholders despite their strong profits. The affected banks were unable to meet the CBN's prudential requirements, which include maintaining a strong capital adequacy ratio and managing non-performing loans. The five banks that were barred from paying dividends were Access Holdings, First HoldCo, UBA, Unity Bank, and Sterling Bank. On the other hand, the six banks that passed the test and paid out a combined N1.27 trillion in dividends were GTCO, Zenith Bank, Stanbic IBTC, Ecobank Transnational Incorporated, Wema Bank, and FCMB.

The dividends paid by GTCO, the parent company of Guaranty Trust Bank, amounted to N429.830 billion at a share price of N12.76. Zenith Bank paid out N410.698 billion at N10.00 per share, while Stanbic IBTC paid N63.607 billion at N4.00 per share. Ecobank Transnational Incorporated paid $40m at 0.16 cents per share, while FCMB paid N14.969 billion at 35kobo per share.

The CBN's decision to bar these five banks from paying dividends is primarily due to their inability to meet the apex bank's prudential requirements. According to Fiona Ahimie, President of the Chartered Institute of Stockbrokers, the divergence in dividend payments among Nigerian banks this year was primarily driven by differences in capital strength, regulatory compliance, earnings quality, and strategic priorities.

In the 2025 financial year, the 11 big banks listed on the Exchange posted a combined Profit Before Tax (PBT) of N6.4 trillion against N6.7 trillion in the same period the previous year. This represents a decline of 3.8%. The Tier-1 banks recorded a PBT of N4.15 trillion in 2025 against N5.06 trillion recorded in 2024, while Tier-2 banks posted a PBT of N2.262 trillion against N1.602 trillion in 2024.

And while it may seem counterintuitive, Ahimie says that a bank's decision not to pay dividends does not necessarily indicate financial distress. In many cases, it reflects a conservative capital management strategy designed to improve resilience and enhance shareholder value in the long run.

Analysts say that the immediate implication of the non-payment of dividends to investors is a divergence in returns. Income-focused investors who rely on dividend payments may shift their preference towards banks with stronger capital positions and consistent payout records.

So, what does this mean for the banks' customers? Ahimie says that the impact is relatively limited in the near term. A bank's decision not to pay dividends does not necessarily indicate financial distress. However, if retained earnings are deployed effectively to strengthen capital and support future earnings growth, the decision could ultimately create greater long-term shareholder value.