An international research firm, SBG Securities Limited of South Africa, says about nine commercial banks in Nigeria will be able to pay dividends this year despite the new policy adjustment issued by the Central Bank of Nigeria recently.
The banks are Guaranty Trust Bank Plc, United Bank for Africa Plc, Zenith Bank Plc, Access Bank Plc, Stanbic IBTC Plc, Fidelity Bank Plc, First City Monument Bank Plc, First Bank of Nigeria Limited and Ecobank.
The CBN, in a circular recently, amended banks’ internal capital generation and dividend payout ratio.
The new circular introduced some conditions for banks to be allowed to pay dividend, which are the Composite Risk Rating of the bank, non-performing loans ratio and capital adequacy ratio
According to the CBN circular, no bank is allowed to pay dividend out of reserves, while those that do not meet the minimum CAR are also disallowed from doing so.
Also, banks that have a CRR of “High” or a NPL ratio of above 10 per cent are also not allowed to pay dividend
Banks that meet the minimum CAR but have a CRR of “Above Average” or an NPL ratio of more than five per cent but less than 10 per cent shall have dividend payout ratio of not more than 30 per cent.
Banks that have CAR of at least three per cent above the minimum requirement, CRR of “Low” and NPL ratio of more than five per cent but less than 10 per cent shall have dividend pay-out ratio of not more than 75 per cent of profit after tax
Based on this, analysts from SBG Securities held that Zenith, GTB, UBA, Access, Stanbic IBTC, Fidelity and FCMB were not affected by the policy based on their nine months 2017 unaudited results.
The firm said, “Going by the results released in September2017, most of the banks not restricted from paying dividend have either exceeded or are close to their 2016 full-year profit level.
“Fidelity Bank with a profit before tax of N16.2bn in September 2017 has done 147 per cent of its 2016 full year profit, and Sterling Bank with its N6.6bn profit before tax as at September 2017 has done 131 per cent of its 2016 full year profit.
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