AccessCorp, ZenithBank, and FirstHoldco Will Not Resume Dividend Payments Before 2028 - Report

• Nigeria's leading banks may halt dividend payments until 2028 due to regulatory pressure from the CBN to rebuild capital buffers and address legacy forbearance risks.
• The CBN's directive, issued on June 13, 2025, also includes a halt on offshore expansion, executive bonuses, and requires banks to make sufficient provisions for forbearance loans.
• While some banks like GTCO and UBA are expected to resume dividends sooner, the suspension could lead to a multi-year dividend drought for several of the country's largest lenders.

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

A recent analysis by Renaissance Capital has shown that Nigeria's leading banks are facing regulatory pressure to rebuild capital buffers to adequately account for legacy forbearance risks.

This may cause Access Holdings Plc, Zenith Bank Plc, and First Bank Holdings to halt dividend payments until 2028.

The report, which was made public on June 16, comes after the Central Bank of Nigeria (CBN) ordered banks to stop expanding offshore, postpone executive bonuses, and suspend dividend payments until they had made sufficient provisions for forbearance loans and addressed violations of single obligor limits. The directive was issued on June 13.

According to Renaissance analysts, several of the biggest lenders in the nation may face a multi-year dividend drought as a result of the decree.

“Our base case is that the banking arms of AccessCorp, ZenithBank, and FirstHoldco will not resume dividend payments before 2028,” the note said. “Most of their near-term cash flows will be directed towards absorbing provisioning costs and recapitalisation.”

Both lenders generated negative cash profits in 2024, mostly as a result of unrealised interest income on Stage 2 loans and foreign exchange revaluation gains, despite reporting substantial accounting profits of N635 billion for Access and N867 billion for Zenith.

Due to difficulties with a single sizable non-performing loan, FirstHoldco's cash position also went negative in the first quarter of 2025.

In contrast, GTCO completely covered its risks earlier and is anticipated to continue paying dividends without interruption, bolstered by N1.2 trillion in positive cash profits in FY24.

Because of its stable liquidity and controlled exposure, UBA is likewise anticipated to resume dividend payouts by 2026.

The research states that Zenith Bank is the most exposed lender, with a total of $3.5 billion in forbearance exposure held by six institutions.

“We estimate regulatory forbearance exposures at $304 million, $887 million, $134 million, $296 million, $282 million, and $1.6 billion for ACCESSCORP, FIRSTHOLDCO, FCMB, FIDELITYBK, UBA, and ZENITHBANK, respectively,” the report shows.

BusinessDay reported that the CBN's decision to raise the Cash Reserve Ratio (CRR) to 50%, which Renaissance estimates cost the banking industry N840 billion in revenue last year alone, is another factor contributing to the dividend suspension.

The capital accumulation may not result in actual credit expansion, economists caution, as only 20% of consumer deposits are still available for lending.

“The 50% CRR regime is proving more detrimental to banks’ profitability and liquidity,” the analysts said in the report.

“From an operational perspective, a CRR reduction would enhance banking sector liquidity, reduce reliance on commercial paper issuance for liquidity management, and improve overall financial system efficiency.”

Two banks meet CBN’s recapitalisation target

Legit.ng reported that two commercial banks have already met and beaten the Central Bank of Nigeria (CBN) March 31, 2026, deadline for the new N500 billion minimum capital base requirement for commercial banks.

The two tier-1 lenders are Zenith Bank and Access Holdings, which exceeded the N500 billion threshold and share premium ceiling set by the apex bank.

This is according to a report by Proshare, which said that Zenith Bank leads with a share capital and share premium of N614.65 billion, followed by Access Bank at N594.90 billion.

Source: Legit.ng