Zenith, FCMB to exit CBN forbearance in race to bolster investor confidence

Zenith Bank Plc and FCMB Group Plc have announced that both lenders will fully exit the Central Bank of Nigeria (CBN)’s regulatory forbearance framework by the end of June 2025 as part of their efforts to strengthen capital efficiency and sustain investor confidence.

This follows the Central Bank of Nigeria (CBN) directive on June 13, which instructed banks to pause dividends, defer executive bonuses, and halt offshore expansion until they’ve adequately provisioned for forbearance loans and resolved breaches of single obligor limits.

In separate disclosures following the CBN’s recent circular on enhanced prudential guidelines (Reference No.. BSD/DIR/CON/LAB/018/008), the two banks outlined their progress and timelines for full compliance with the apex bank’s directives on Single Obligor Limit (SOL) and credit exposure provisions.

Zenith Bank confirmed it has surpassed the new N500 billion minimum capital requirement and that its current SOL forbearance exposure pertains to a single obligor.

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The bank stated it is confident of bringing this exposure within regulatory limits by June 30, 2025. For other credit exposures covered under the forbearance regime, Zenith Bank clarified that these relate to only two customers, with significant provisions already made and full provisioning expected to be completed by the same date.

Similarly, FCMB disclosed that its Nigerian banking subsidiary has reduced its forbearance-linked exposures from N538.8 billion in September 2024 to N207.6 billion by May 31, 2025, covering loans to three entities and two obligors, all classified as Stage 2. The bank anticipates a temporary spike in Stage 3 loans to 11.5 per cent of the loan book after the forbearance exit, expected to decline below 1 per cent by year-end as its loan portfolio grows.

FCMB said, “It has one obligor under SOL forbearance, currently classified as a Stage 1 loan, which it plans to regularise by September 30, 2025. This will be achieved through the conversion of a N23.1 billion convertible loan to equity and an audited nine (9) months projected retained earnings.”

It added that the group has already received CBN approval for the capital verification of the convertible loan, and we are currently processing the other regulatory approvals required. We intend to conclude this process, including downstreaming the capital proceeds to the bank, by the end of July 2025. This would effectively take the share capital and share premium of N267 billion.

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“Capital adequacy will remain above the regulatory minimum of 15 percent for international banks post-forbearance, reinforced with the addition of the converted equity by July 2025 and the planned audit of nine (9) months of retained earnings,” it said.

Both banks emphasised their strong capital buffers and continued ability to support shareholder returns. FCMB noted, “Our Nigerian banking subsidiary contributed 46 percent of the 2024 dividend paid to shareholders (the balance coming from other non-bank subsidiaries). Barring any unforeseen circumstances, the group expects to have sufficient buffers to maintain its dividend policy for the financial year 2025 and the immediate subsequent years,” it said.