Due to stricter Central Bank of Nigeria (CBN) prudential standards, five profitable lenders were barred from distributing earnings for the 2025 financial year, leaving only six major listed banks to deliver a combined N1.27 trillion in dividends to shareholders.
According to research by Financial Vanguard, the lenders that satisfied the apex bank's capital and eligibility criteria to issue payouts were Guaranty Trust Holding Company (GTCO), Zenith Bank, Stanbic IBTC, Ecobank Transnational Incorporated (ETI), Wema Bank, and FCMB.
The development highlights the growing influence of regulatory capital requirements on dividend decisions in Nigeria’s banking sector, with profitability alone no longer sufficient to guarantee shareholder payouts.
The five banks that did not declare dividends recorded profits during the year but were constrained by factors including capital retention requirements, provisioning for non-performing loans (NPLs), regulatory forbearance and other prudential considerations.
GTCO, Zenith account for bulk of payouts
Among the banks that paid dividends, GTCO recorded the largest payout at N429.830 billion, representing N12.76 per share. Zenith Bank followed with N410.698 billion, or N10.00 per share.
Stanbic IBTC paid N63.607 billion, equivalent to N4.00 per share, while ETI declared a $40 million dividend, representing 0.16 cent per share. FCMB paid N14.969 billion, or 35 kobo per share.
The Tier-1 banks, particularly GTCO and Zenith Bank, accounted for the bulk of the dividends distributed, representing about 81.9 per cent of the total payout.
The disparity between earnings and dividend payments reflects the banking sector’s ongoing adjustment to stricter capital requirements, as lenders seek to strengthen their balance sheets while meeting the expectations of shareholders.
Banks’ profit falls despite stronger earnings
The 11 major banks listed on the Nigerian Exchange recorded combined Profit Before Tax (PBT) of N6.4 trillion in 2025, compared with N6.7 trillion in 2024, representing a decline of 3.8 per cent.
The decline was driven largely by the performance of Tier-1 banks, whose combined PBT fell to N4.15 trillion in 2025 from N5.06 trillion in the previous year.
In contrast, Tier-2 banks recorded stronger profitability, with their combined PBT rising to N2.262 trillion from N1.602 trillion in 2024.
Despite the decline in aggregate profit, the banks recorded significant growth in gross earnings. Combined gross earnings increased to N26.4 trillion in 2025 from N23.2 trillion in 2024.
Tier-1 banks accounted for N18.2 trillion of the 2025 figure, up from N16.9 trillion in 2024, while Tier-2 banks increased their gross earnings to N9.5 trillion from N7.6 trillion.
Access Holdings led the growth among the Tier-1 banks, with gross earnings rising to N5.5 trillion from N4.9 trillion. Zenith Bank followed with N4.1 trillion, compared with N3.8 trillion in 2024.
GTCO’s gross revenue increased marginally to N2.15 trillion from N2.11 trillion, while First HoldCo recorded N3.4 trillion, up from N3.2 trillion. UBA, however, recorded a slight decline in gross earnings to N2.97 trillion from N3.1 trillion.
‘Profitability alone did not determine dividends’
Explaining why some profitable banks were unable to reward shareholders, Fiona Ahimie, President of the Chartered Institute of Stockbrokers (CIS), said differences in capital strength, regulatory compliance, earnings quality and strategic priorities were central to the divergent dividend decisions.
“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, rather than profitability alone.
“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.
“Others, despite reporting profits, opted not to pay dividends because preserving capital became a higher priority.
“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.”
Non-payment may pressure share prices
On the implications for investors, Ahimie said the immediate impact would be a divergence in shareholder returns, particularly for investors who depend heavily on dividend income.
“The immediate implication 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.
“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 added that the decision was not necessarily an indication 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.
“In many cases, it reflects a conservative capital management strategy designed to improve resilience and enhance the bank’s capacity to support lending, digital investments and business expansion.
“Stronger capital positions ultimately translate into greater confidence in the banking system.”
Looking ahead, Ahimie expressed optimism about the sector, saying the outlook remained constructive as banks continued to adjust to the new regulatory environment.
“As most banks already met the recapitalisation and other regulatory requirements, dividend payments are expected to become more stable and predictable. So they are likely to maintain relatively consistent distributions due to their stronger earnings capacity and capital positions.”
‘CBN stopped the dividends’
David Adonri of Highcap Securities Limited attributed the suspension of dividends by some banks to the CBN’s assessment of their financial strength and capital position.
“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.
“That was a stringent move by CBN to safeguard the interest of depositors notwithstanding the expectation of investors.
“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.
“Some of the banks were faced with the need for funds to redeem their pending foreign debt obligations which would have been hampered if they dissipated their cash on dividends.”
Adonri said the regulatory intervention should encourage shareholders to pay closer attention to the financial management of banks.
“With this kind of stern regulatory action by CBN, shareholders will be forced to scrutinise the management of their banks to forestall any future threat to their dividend income.
“Banking is a delicate business. It requires stringent monitoring from regulators and shareholders to prevent abuses and failure. The action of CBN in stopping payment of dividends by some banks should boost depositors’ and investors’ confidence in the industry.”
‘It was a regulatory push-back’
Investment banker and Chartered Stockbroker, Tajudeen Olayinka, described the situation as a deliberate regulatory intervention aimed at preventing banks from weakening their balance sheets through dividend payments.
“The inability of some Nigerian banks to pay dividends from their 2025 accounts arose from deliberate regulatory pushback.
“Many of the affected banks had huge final write-off from regulatory forbearance which could impact their balance sheets if they were allowed to pay dividends.
“It was CBN that refused to approve payment of dividends by these banks, by invoking its regulatory power over the banks.”
Olayinka, however, said the regulatory stance could have positive implications for the industry in the long run.
“The industry has bright future. Most of the banks affected actually proposed to pay dividends, in spite of the need to end 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-off they were compelled to make.
“Some of the banks were also exposed to a huge syndicated loan default from Nestoil which they have now fully provided for. I must say that the current regulatory stance imposes discipline and prudence on Nigerian banks, which is positive for the industry and key stakeholders.”
Why CBN stopped some banks
Mallam Kasimu Kurfi also linked the dividend restrictions to impairment challenges and regulatory limits on banks’ exposures.
“The governor of the Central Bank of Nigeria has said that those banks that did not pay dividend were not able to clean their impairments and were denied to pay dividends.”
He further explained that one of the Tier-1 banks was affected by its exposure to a foreign banking subsidiary.
“One of the tier-1 banks was stopped by CBN from paying dividend because of its exposure to its foreign bank subsidiary, which was about 20% of shareholders’ funds, over the 10% limit which the CBN set in the prudential guideline.
“The banks needs to either increase their shareholders’ funds or sell some of their holdings to align with the maximum limit of 10% shareholders’ funds before they can be allowed to pay dividends to shareholders.”
The 2025 dividend season therefore reflects a banking sector caught between two competing priorities: rewarding shareholders and preserving sufficient capital to absorb risks, meet regulatory requirements and support future growth. While the N1.27 trillion payout demonstrates the sector’s continued capacity to generate returns, the banks that withheld dividends show that strong profits do not automatically translate into distributable earnings under the CBN’s tighter prudential regime.