Access, Zenith Lead Dividend Payouts Amid New Capital Rules: EY


Nigerian banks are gearing up for robust dividend payouts in the coming years, leveraging a significant portion of their retained earnings, as indicated by a report from Ernst and Young Global Limited (EY), a renowned tax and advisory services firm. With the recent recapitalization initiative by the Central Bank of Nigeria (CBN), which excludes retained earnings from minimum capital requirements, banks in Nigeria are mandated to secure a minimum of N4 trillion to sustain operations.

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EY highlights that dividend distributions will fortify shareholders’ financial positions, facilitating their participation in potential capital-raising endeavors such as right issues or placements, in alignment with banks’ strategic objectives. However, these dividend payouts must adhere to the regulatory guidelines set forth by the CBN.

Dividend payments serve as a crucial mechanism for banks to distribute profits to shareholders, signaling financial stability and attracting investors seeking consistent returns. Notably, leading financial institutions like Access Bank and Zenith Bank have demonstrated this trend, with Access Bank declaring a final dividend of N1.80 in 2023, marking an increase from N1.30 in the previous year, while Zenith Bank raised its final dividend to N3.5 from N2.9 in 2022.

Despite positive financial reports from banks, concerns persist regarding dividend yields falling short of market expectations, leading to mixed sentiments among investors. Olaolu Boboye, lead economist at CardinalStone, underscores the importance of upcoming quarterly reports in potentially reigniting investor enthusiasm.

The recent announcement by the CBN on revised capital thresholds mandates Nigerian banks to maintain minimum share capital requirements, with the objective of fortifying the industry’s resilience amidst economic challenges. This initiative is projected to inject trillions into the economy, aligning with national aspirations to achieve a $1 trillion economy by 2026.

While some banks have commenced raising funds through rights issues, mergers and acquisitions (M&A) activities may not witness the same fervor as seen during previous recapitalization exercises. EY suggests that M&A activities may predominantly involve smaller banks struggling to meet capital requirements independently, highlighting potential consolidation trends within the industry.

Godwin Okafor, The Naija247news
Godwin Okafor, The Naija247news
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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