Here’re analysts views on CBN’s suspension of banks dividend, bonuses

Local and foreign analysts are sending in their views on the recent decision of the Central Bank of Nigeria (CBN) which has already started to rattle banking stocks on the Nigerian Bourse. The CBN recently directed banks to temporarily suspend the payment of dividends to shareholders, defer the payment of bonuses to directors and senior management staff.
The CBN in its June 13, 2025 circular titled “Letter to All Banks: Temporary Suspension of Dividend Payments, Bonuses and Investment in Foreign Subsidiaries” also asked them refrain from making investments in foreign subsidiaries or embarking on new offshore ventures.

The CBN justifies these measures as necessary to strengthen capital buffers, enhance balance sheet resilience, and ensure prudent internal capital retention during this transitional period. The suspension will remain in effect until banks fully exit regulatory forbearance and demonstrate compliance with capital adequacy and provisioning standards through independent verification.

“What the CBN said – In view of the need to strengthen capital buffers, enhance resilience and promote prudential internal capital retention during this transitional period, the CBN hereby directs that all banks currently benefiting from credit or SOL (single obligor limits) forbearance shall: Suspend the payment of dividends to shareholders; Defer the payment of bonuses to Directors and Senior Management Staff; and Refrain from making investment in foreign subsidiaries or new offshore ventures,” according to London-based Emerging & Frontier Capital (EFC).

To Emerging & Frontier Capital, “The CBN did not provide the market with a definitive list of the banks this would be applicable to”.

“Focusing on our Tier 1 banks, we believe that only GTCO will be able to pay interim dividends. We understand that Access, FBNH, Stanbic IBTC, UBA and Zenith are all benefiting from credit or SOL (single obligor limits) forbearance and are therefore unlikely to pay any interim dividends.

However, this does not mean that they cannot work on removing these credits and/or SOL forbearances before year-end and pay a final dividend,” EFC said in a note seen by BusinessDay.

“Although we are not fans of these blanket rulings, we believe this will mean one bank will standout – GTCO. All credit to GTCO’s management team, that worked aggressively to remove all credit forbearance last year,” they noted.

EFC further said: “While we have welcomed the CBN’s return to orthodox monetary policy, we think that it needs to clarify what it wants. Does it want the banks to raise the capital or not?”

“The first attempted sabotage of their capital raisings was the windfall tax and now they are at it again with this letter. How will the tier II banks raise capital when they cannot return capital to shareholders? Was this letter really needed, when the CBN was already managing dividend payments, directors’ pay and foreign expansion? Is this an open letter response to Access Holding’s commitment to pay an interim dividend of N1 (versus 45 kobo last year)? This seems highly unnecessary when the CBN could have communicated to them directly and prohibited payments,” EFC said.

Read also: Bank stocks dip after CBN’s directive on dividends, bonuses

Stanbic IBTC analysts in their recent views of a ‘Salesman’ identified potential blind spots in the recent policy by CBN.

“Opaqueness of forbearance details Limited disclosure: The CBN has not disclosed the volume of forbearance granted per bank, making it difficult to assess the severity of financial stress across institutions. Unclear link to SOL: While the policy references SOL, it does not specify the volume of forbearance relating to SOL breaches, leaving stakeholders uncertain about risk exposures. Unclear timeline for compliance: The suspension is temporary, but no specific timeframe is provided for exiting forbearance or restoring compliance,” Stanbic analysts said.

“Vulnerable banks – Some financial institutions have provided voluntary disclosures: GTCO: Stated in its FY24 investor call that it has fully exited all forbearance measures, suggesting it may not be affected. Zenith Bank: Reported that the number of loans under forbearance decreased from 8 to 5 as of Q1 2025, with three already reclassified from Stage II to Stage I. Fidelity Bank: Disclosed that 10percent of its loan book remains under forbearance, with 50percent showing signs of improvement,” they further noted.