No Cause For Alarm Over Dividend Pause As Banking Sector Outlook Remains Positive – Analysts

Capital market analysts said there is no need to panic over some banks’ inability to pay dividends for the 2025 financial year, attributing it to the end of the Central Bank’s forbearance window on non-performing loans.

Nigeria’s largest banks delivered a mixed but ultimately reassuring set of financial results in 2025, with balance sheet expansion and revenue growth offset by a sharp, policy-driven hit to profitability.

According to the 2025 audited financial statement for the period ended December 31, 2025 tier one lenders’ gross earnings rose broadly, with the total amount collectively rising by 7.69 percent to N18.2 trillion from N16.9 trillion in the same period of 2024.

This growth was led by Access Holdings to N5.52 trillion in 2025 from N4.87 trillion reported in 2024, followed by Zenith Bank rising to N4.07 trillion from N3.82 trillion, First HoldCo with N3.21 trillion from N3.37 trillion, UBA with N2.97 trillion from N3.1 trillion, and Guaranty Trust Holding Company (GTCO) saw its gross revenue rise to N2.11 trillion in 2025 from N2.15 trillion in 2024, confirming that core banking activity remains strong despite macro pressures.

More importantly, balance sheets strengthened significantly. Access HoldCo’s total assets surged to N51.5 trillion from N41.4 trillion, while UBA and Zenith crossed N33.7 trillion and N31.4 trillion, respectively. Shareholders’ funds also expanded across all banks, reflecting the post recapitalisation exercise, which has boosted capital buffers and improved loss-absorption capacity.

Also, Nigerian banks raised a total of N4.65 trillion in fresh capital over a two-year recapitalisation drive, with 33 lenders meeting revised minimum requirements set by the Central Bank of Nigeria (CBN).

The governor of Central Bank of Nigeria (CBN), Olayemi Cardoso said, the exercise has strengthened the industry’s capacity to absorb shocks and support economic growth.

Speaking, the vice president of Highcap Securities Limited, David Adnori, addressed concerns regarding some banks’ inability to pay dividends for the last financial year, stating that there is no need for alarm.

He explained that this situation arose due to a forbearance period, where banks were granted relief during a challenging economic period following the global financial downturn.

He further elaborated that the Central Bank had previously extended support to banks by allowing them to postpone full provisions for bad loans, particularly those associated with petroleum companies. Now that this waiver period has concluded, banks are required to resume full provisioning for doubtful loans.

Adnori emphasized that “this is a temporary issue. Many banks have strong fundamentals and have also undertaken recapitalisation, ensuring they have substantial funds at their disposal. The rationale behind the Central Bank of Nigeria’s (CBN) directive to resume full provisioning was to safeguard the newly raised capital and prevent it from diminishing unnecessarily.”

He added that “the CBN is conducting international scrutiny of banks’ audited accounts to confirm their stability and ensure that they effectively manage their cash resources. Overall, while the current situation may seem challenging, the long-term outlook for these banks remains positive.”

Also, the MD/CEO of Globalview Capital Limited, Aruna Kebira stated that during the pandemic, the central bank implemented forbearance measures for non-performing loans, encouraging banks to exit this arrangement by June 2025.

“While several banks claimed they had successfully navigated out of forbearance, many have not fully exited. Consequently, the federal government intervened to ensure compliance, prompting banks to write off significant amounts from their balance sheets. This situation has understandably raised concerns within the market,” he said.

According to him, it is crucial to note that the central bank may be applying rigorous assessments to banks, with the possibility that those who do not meet their criteria may be restricted from distributing dividends, even if their financial results appear positive.

He added that “the overall outlook for the banking sector remains positive, especially following the recent adjustments to capital requirements and with continued progress and adaptation in response to regulations, the banking sector is well-positioned for growth.”