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Renaissance Capital has flagged Zenith Bank, FirstBank, and Access Bank as the most exposed to the Central Bank of Nigeria’s (CBN) new policy suspending dividend and bonus distributions for banks under regulatory forbearance, according to a recent research report issued by the investment firm.
The CBN’s circular, dated June 13 and signed by the Director of Banking Supervision, Olubukola Akinwunmi, directed affected banks to halt dividend payouts, defer bonuses to directors and senior executives, and suspend new investments in foreign subsidiaries or offshore ventures. The policy forms part of broader efforts to preserve capital buffers and support internal capital retention across Nigeria’s banking sector.
According to Renaissance Capital’s analysis, the directive is likely to significantly impact shareholder returns at Zenith Bank, FirstBank, and Access Bank—whose gross loan books reflect the highest levels of exposure to regulatory forbearance at 23%, 14%, and 4%, respectively.
Regulatory forbearance allows banks temporary relief from prudential limits—such as the Single Obligor Limit (SOL) and capital adequacy requirements—particularly in instances of distressed, large-ticket exposures. Renaissance Capital notes that much of the exposure is concentrated in loans to a major oil and gas counterparty, particularly within Nigeria’s upstream and refining segments.
The investment firm projects that the banking subsidiaries of Access Holdings, FBN Holdings, and Zenith Bank may not resume dividend payments until 2028. It added that any interim payouts would likely be limited to income generated by non-banking arms, though these subsidiaries currently contribute minimally to overall group earnings.
“We expect dividend payments henceforth to come primarily from non-banking subsidiaries. However, given that the bulk of group-level earnings stem from core banking operations, these subsidiaries are unlikely to support substantial shareholder returns,” the report stated.
In contrast, GTCO and Stanbic IBTC stand out with no current forbearance exposure. GTCO, in particular, has already written off previous exposures and provisioned adequately, positioning it to maintain consistent dividend payments in the near term.
For other tier-2 banks, Fidelity Bank and FCMB were estimated to have forbearance levels of 10% and 8%, respectively. UBA’s exposure remains relatively contained at between 5% and 6% of its gross loan book. Due to its strong cash flow position and moderate risk profile, Renaissance Capital anticipates that UBA could resume dividend payments by 2026.
Beyond headline provisions, the report highlighted a growing disparity between accounting profits and actual cash flow across several institutions. This divergence, driven largely by unrealised interest on Stage 2 loans and unconverted foreign exchange gains, raises questions about the sustainability of reported earnings.
For instance, Access Corporation reportedly generated ₦3.5 trillion in interest income in 2024, but only ₦1.9 trillion materialised as cash inflow. Zenith Bank earned ₦2.7 trillion, yet received just ₦1.5 trillion in cash—largely due to high forbearance exposure and approximately ₦1.1 trillion in unrealised FX gains.
“Cash profits—not accounting figures—offer a more realistic basis for forecasting dividends,” Renaissance Capital noted, emphasising that dividend distribution is inherently cash-dependent.
The CBN’s directive comes amid an industry-wide recapitalisation push, which mandates banks to meet a minimum capital base of ₦500 billion. Analysts believe that this dual policy thrust—capital reinforcement and dividend restraint—will not only reshape shareholder expectations but also drive a stronger, more resilient banking system over the medium term.
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