Six Nigerian Banks Pay N1.27tn in Dividends Despite Huge Profits

Only six of Nigeria’s largest listed banks paid dividends totaling N1.27 trillion to shareholders for the 2025 financial year, while five other profitable lenders were unable to make distributions after failing to meet the Central Bank of Nigeria’s (CBN) prudential requirements.

Findings showed that Guaranty Trust Holding Company Plc (GTCO), Zenith Bank Plc, Stanbic IBTC Holdings Plc, Ecobank Transnational Incorporated (ETI), Wema Bank Plc and FCMB Plc were among the banks that met the regulatory requirements for dividend payments.

The other five banks, despite reporting substantial profits, did not pay dividends as CBN’s capital-retention requirements, rising non-performing loans (NPLs), loan-loss provisions and other prudential guidelines constrained their ability to distribute earnings to shareholders.

Six banks account for N1.27tn payout

The six banks that paid dividends collectively distributed about N1.27 trillion to shareholders.

GTCO led the group with a dividend payout of N429.83 billion, equivalent to N12.76 per share, followed by Zenith Bank with N410.70 billion, or N10 per share.

Stanbic IBTC paid N63.61 billion, representing N4 per share, while ETI paid $40 million, equivalent to about 0.16 cents per share. FCMB paid N14.97 billion, or 35 kobo per share.

The Tier-1 banks, particularly GTCO and Zenith Bank, accounted for the bulk of the dividend distribution, representing approximately 81.9 per cent of the total payout.

Profit declines despite stronger revenue

The dividend disparity occurred against the backdrop of a modest decline in the banking sector’s aggregate profitability.

According to the banks’ audited financial statements for the year ended December 31, 2025, the 11 major listed banks recorded a combined profit before tax (PBT) of N6.4 trillion, compared with N6.7 trillion in 2024, representing a decline of 3.8 per cent.

Tier-1 banks recorded combined PBT of N4.15 trillion in 2025, down from N5.06 trillion in 2024. In contrast, Tier-2 banks increased their combined PBT to N2.26 trillion from N1.60 trillion during the same period.

Despite the decline in profitability, the banks recorded significant growth in gross earnings.

Combined gross earnings rose to N26.4 trillion in 2025 from N23.2 trillion in 2024.

Tier-1 banks accounted for N18.2 trillion of the 2025 figure, compared with N16.9 trillion a year earlier, while Tier-2 banks recorded N9.5 trillion, up from N7.6 trillion.

Among the Tier-1 banks, Access Holdings recorded gross earnings of N5.5 trillion, up from N4.9 trillion in 2024. Zenith Bank followed with N4.1 trillion, compared with N3.8 trillion a year earlier.

GTCO’s gross revenue increased marginally to N2.15 trillion from N2.11 trillion, while First HoldCo’s earnings rose to N3.4 trillion from N3.2 trillion. UBA, however, recorded a slight decline, with gross earnings falling to N2.97 trillion from N3.1 trillion.

Regulatory compliance, not profitability alone, determined dividends

Explaining why some banks were unable to pay dividends despite reporting strong profits, Fiona Ahimie, President of the Chartered Institute of Stockbrokers (CIS), said dividend decisions were driven by factors beyond profitability.

According to her, differences in capital strength, regulatory compliance, earnings quality and strategic priorities were central to the divergence in dividend payments among Nigerian banks.

“Some banks declared dividends because they maintained strong capital adequacy ratios, delivered robust earnings and were able to satisfy regulatory requirements while retaining sufficient capital to support future growth,” she said.

Others, she noted, prioritised capital preservation despite recording profits.

“This was influenced by the banking sector’s recapitalisation, the need to strengthen balance sheets, higher risk asset provisioning and, in some cases, regulatory restrictions on dividend distribution where prudential requirements were not fully met,” she added.

Dividend suspension may affect investor sentiment

Ahimie said the immediate consequence of dividend suspension would be a divergence in investment returns, particularly for shareholders who depend on dividends as a source of income.

“Income-focused investors who rely on dividend payments may shift their preference towards banks with stronger capital positions and consistent payout records,” she said.

She added that banks that suspended dividends could face short-term pressure on their share prices as investors reassessed their valuations and income expectations.

However, she noted that retaining earnings could ultimately benefit shareholders if the funds were deployed effectively to strengthen capital and support future growth.

“For banks that suspended dividends, there could be short-term pressure on their share prices as investors reassess valuation and income expectations.

“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,” she said.

Customers unlikely to feel immediate impact

According to Ahimie, the decision by some banks not to pay dividends should not necessarily be interpreted as a sign of financial weakness.

“For customers, the impact is relatively limited in the near term. A bank’s decision not to pay dividends does not necessarily indicate financial distress,” she said.

In many cases, she explained, retaining profits represents a conservative capital-management strategy aimed at improving resilience and strengthening the bank’s capacity to support lending, digital investments and business expansion.

“Stronger capital positions ultimately translate into greater confidence in the banking system,” she added.

Looking ahead, Ahimie said the outlook for the Nigerian banking sector remained positive, noting that most banks had made significant progress toward meeting recapitalisation and other regulatory requirements.

“As most banks already met the recapitalisation and other regulatory requirements, dividend payments are expected to become more stable and predictable,” she said.

She added that banks were likely to maintain relatively consistent dividend distributions as their earnings capacity and capital positions strengthened.

CBN intervention aimed at protecting depositors

David Adonri of Highcap Securities Limited attributed the inability of some banks to pay dividends directly to regulatory intervention by the CBN.

He said the apex bank, after reviewing the affected banks’ financial statements, determined that they were not sufficiently strong to distribute dividends.

“Several banks did not pay dividends for the financial year ended December 31, 2025, because after reviewing their financial accounts, CBN was not convinced that they were strong enough to pay dividends,” Adonri said.

He described the decision as a stringent regulatory measure designed to protect depositors, despite shareholders’ expectations for returns.

According to him, the expiration of regulatory forbearance on partial provisioning for doubtful credits meant that some banks had to recognise additional provisions, leaving them with insufficient retained earnings to support dividend payments.

“CBN stopped the banks affected from paying dividends because when the forbearance given banks in respect of partial provisioning for doubtful credits lapsed, the banks did not have sufficient retained profits after application of full provisioning,” he said.

Adonri also pointed to the need for some banks to raise funds to meet outstanding foreign debt obligations, which could have been compromised if significant cash resources had been distributed as dividends.

He said the regulatory action should encourage shareholders to scrutinise the financial management of their banks more closely in order to minimise future risks to dividend income.

“Banking is a delicate business. It requires stringent monitoring from regulators and shareholders to prevent abuses and failure,” he said.

He added that the CBN’s decision to restrict dividend payments by some banks could strengthen depositor and investor confidence in the sector.

### Regulatory pushback imposed discipline

Investment banker and chartered stockbroker Tajudeen Olayinka described the situation as a deliberate regulatory intervention aimed at strengthening the banking industry.

“The inability of some Nigerian banks to pay dividends from their 2025 accounts arose from deliberate regulatory pushback,” he said.

According to Olayinka, several affected banks had significant final write-offs arising from the expiration of regulatory forbearance, which could have weakened their balance sheets had they been permitted to distribute dividends.

“It was CBN that refused to approve payment of dividends by these banks, by invoking its regulatory power over the banks,” he said.

Olayinka, however, said the affected banks generally had positive long-term prospects.

He noted that some of the banks had initially proposed dividend payments despite the need to recognise additional provisions and end regulatory forbearance.

“So, it wasn’t that they didn’t have enough; CBN just felt it might appear excessively imprudent if the affected banks were allowed to pay dividends alongside huge provisions and write-offs they were compelled to make,” he said.

He also cited the exposure of some banks to the default of syndicated loans involving Nestoil, which had required substantial provisioning.

According to him, the CBN’s current regulatory stance is imposing greater discipline and prudence on Nigerian banks, which could prove beneficial to the industry and its key stakeholders over the long term.

Capital adequacy remains critical

Mallam Kasimu Kurfi also linked the dividend restrictions to the CBN’s concerns over banks’ ability to absorb impairments and maintain adequate capital.

He said the CBN Governor had indicated that banks that did not pay dividends had failed to sufficiently clean up their impairments and were therefore not approved to distribute dividends.

Kurfi also disclosed that one Tier-1 bank was restricted from paying dividends because of its exposure to a foreign banking subsidiary.

According to him, the exposure was equivalent to about 20 per cent of shareholders’ funds, exceeding the 10 per cent limit stipulated under the CBN’s prudential guidelines.

He said the affected bank would have to either increase its shareholders’ funds or reduce its holdings in the subsidiary to bring the exposure within the regulatory limit before it could resume dividend payments.

Outlook

The 2025 dividend season highlights a significant shift in Nigeria’s banking industry: **profitability alone is no longer sufficient to guarantee dividend payments.**

Capital adequacy, asset quality, provisioning, regulatory compliance and the ability of banks to withstand future risks are increasingly determining how much of their earnings can be distributed to shareholders.

While dividend restrictions may disappoint income-focused investors in the short term, analysts believe that stronger capital buffers and tighter regulatory oversight could improve the resilience of the banking sector and create a stronger foundation for sustainable growth and future shareholder returns.