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Six Banks Meet Cbn’s Dividend Payout Rule (names) by Islie: 6:26am On Feb 20, 2018
Posted By: Collins Nweze



The Central Bank of Nigeria (CBN) circular on dividend payout by commercial banks and discount houses has been analysed based on the performances and balance sheet positions of all lenders.

A report released yesterday by Afrinvest West Africa, an investment and research firm, showed that only six banks – Access Bank, First City Monument Bank (FCMB), Guaranty Trust Bank, United Bank for Africa, Wema Bank and Zenith Bank- met the CBN’s minimum requirement for Capital Adequacy Ration (CAR) and Non-Performing Loans. Hence these banks are excluded from the restrictions on dividend payment.

The firm explained that many lenders will not be able to pay dividends based on their capital reserves as well as the proportion of Non-Performing Loans (NPLs) in a bid to forestall any threats to customer deposits in the system.

On the criteria that require lenders to meet the minimum Capital Adequacy Ratio (CAR) before dividend payout, the research firm said all the banks under its coverage, save for Unity and Union, met the minimum requirement stipulated by the CBN.

“For Unity, the current CAR (as at nine month 2017) is unavailable while Union Bank had a CAR of 13.3 per cent (below CBN requirement of 15 per cent in first half of 2017). We envisage Union’s CAR will improve by fiscal year 2017, adjusting for the capital raise of N50 billion via rights issue in 2017,” it said.

On another requirement that banks and discount houses that have a Composite Risk Rating (CRR) of “High” or a Non-Performing Loan (NPL) ratio of above 10 per cent shall not be allowed to pay dividend, the report said only FBN Holdings has a non-performing loan ratio above 10 per cent which should disqualify the entity from paying dividend.

“However, given the Holding company structure operated by FBN Holdings, analysts believe dividend can be paid from earnings of subsidiaries, other than the bank,” it said.

Further analysis of the report showed that banks and discount houses that meet the minimum capital adequacy ratio 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.

Under this condition, Ecobank Transnational Incorporated (STI) is the only Tier-1 bank restricted to a maximum payout ratio of 30 per cent on the basis of the fact that its NPL ratio stood at 9.6 per cent in nine months of 2016.

Similarly, Diamond Bank, Fidelity Bank, Stanbic IBTC, Sterling and Union Bank are also restricted to a maximum of 30 per cent maximum payout ratio with respective NPL ratio above five per cent but below 10 per cent.

On the provision that banks and discount houses that have capital adequacy ratios 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 save dividend payout ratio of not more than 75 per cent of profit after tax.

Under this condition, ETI is the only Tier-1 bank that is restricted to 75 per cent maximum dividend payout ratio. Stanbic is the only Tier-2 bank eligible to pay up to 75 per cent as dividend payout.

On the provision that there shall be no regulatory restriction on dividend payout for banks and discount houses that meet the minimum CAR, have a CRR of “low” or “moderate” and an NPL ratio of not more than five per cent, the report said it is expected that the Board of such institutions will recommend payouts based on effective risk assessment and economic realities.

On the policy that no bank or discount house shall be allowed to pay dividend out of reserves, the analysis shows that no Nigerian bank breached this provision.

On the requirement that banks shall submit their Board approved dividend payout policy to the CBN before the payment of dividend shall be permitted, analysts believe the CBN will ensure compliance with the set guidelines before approval of dividend payment by the banks.

It said that in light of these new guidelines and based on our analysis of the banks using their nine month 2017 results, most of the banks, especially the Tier-1 banks, such as Access Bank, Guaranty Trust Bank, United Bank for Africa and Zenith Bank, save for FBNH, are not likely to be significantly impacted and are expected to sustain the historical dividend payment trend.

“ETI meets the regulatory requirement for CAR, but has NPL above recommended maximum by the CBN; hence a maximum payout ratio of 30 per cent is placed on the bank. For the banks affected by the restrictions, we opine more attention will be turned towards improving NPL and shoring up capital buffers in order to ensure dividend payment,” it said.

Diamond Bank has sold off its African operations for a consideration of $75.7 million (N27.3 billion) to improve its CAR buffers. Union Bank has concluded a N50 billion rights issue in order to improve its capital base.

”Furthermore, given the premium Nigerian investors place on dividend paying stocks, we believe banks will strive to improve on dividend payment. Nevertheless, we do not rule out the possibility of some kneejerk sell-off reactions by investors especially in stocks that are affected by the dividend payment restrictions. Hence, we advise that investors tread cautiously, especially ahead of the release of full year earnings,” the analysts said.



http://thenationonlineng.net/six-banks-meet-cbns-dividend-payout-rule/

3 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by DWJOBScom(m): 6:37am On Feb 20, 2018
That's good from CBN before these Directors and crude managements will send these firms to the grave.

Not surprise at UBA, ZENITH, FCMB and GTB as they have their owners actively involved in management unlike the other banks

2 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by kokozain(m): 6:46am On Feb 20, 2018
To me wema bank spring a surprise. But I am sure the rest as the capability to do so.

7 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by Nutase: 6:58am On Feb 20, 2018
lipsrsealed
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by obicentlis: 10:50am On Feb 20, 2018
They only living banks.
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by Alao046(m): 10:50am On Feb 20, 2018
I thought I-PIGS said they have closed gtb bank, that they have withdrawn 90% of the banks stock and shares.

5 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by misterchris(m): 10:51am On Feb 20, 2018
First Bank no carry first for this one o.

9 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by Biggiestep(m): 10:52am On Feb 20, 2018
banks money is whose own?
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by Meritocracy: 10:52am On Feb 20, 2018
I know GTBank must be there. The bank doesn't joke with policy,

9 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by collinsJn(m): 10:52am On Feb 20, 2018
Good Move
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by misterchris(m): 10:53am On Feb 20, 2018
I thought Ndigbo boycotted GTB? What are they still doing up there?

1 Like

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by Victorakats(m): 10:54am On Feb 20, 2018
I've always had a trust for Access Bank! Though not perfect, but they've proven to be focused and professional in their business delivery.

9 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by jashar(f): 10:54am On Feb 20, 2018
whew!!! cheesy
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by mozland12(m): 10:55am On Feb 20, 2018
Interesting
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by demsid(m): 10:55am On Feb 20, 2018
They try, upon all our oga no go increase our salary or give bonus

1 Like

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by datola: 10:56am On Feb 20, 2018
Meritocracy:
I know GTBank must be there. The bank doesn't joke with policy,

Correct!
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by maxiuc(m): 11:00am On Feb 20, 2018
Skye bank

Where are they

3 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by Kelklein(m): 11:00am On Feb 20, 2018
First Bank with all their noise couldn't even make this list...

Mschwwww

5 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by Nobody: 11:00am On Feb 20, 2018
I know Diamond bank won't be there.

If it is to deduct arbitrary charges,they will be the number one.

4 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by anyebedgreat: 11:02am On Feb 20, 2018
Op for just list the bank nau.
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by smokedfish: 11:06am On Feb 20, 2018
grin
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by alphaconde(m): 11:07am On Feb 20, 2018
UBA africa's global bank

the unsung bank of the decade

wise men bank with uba

1 Like

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by buffalowings4: 11:09am On Feb 20, 2018
Eewo
Why only Ecobank come get comma

1 Like

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by jazinogold(m): 11:12am On Feb 20, 2018
grin

WEMA BANK....the small but mighty bank. The bank that launched the first digital bank in a Africa...ALAT cheesy cheesy

WEMA BANK will always live up to expectation cheesy

3 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by kabrud: 11:14am On Feb 20, 2018
First Bank is not on the list, please is my N1268.20 safe?

4 Likes

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by sucre: 11:15am On Feb 20, 2018
Ha, make I go remove my small money from Fidelity Bank and put in Wema o. Before new story pop up.

4 Likes 1 Share

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by nonut: 11:17am On Feb 20, 2018
Alao046:
I thought I-PIGS said they have closed uba bank, that they have withdrawn 90% of the banks stock and shares.
misterchris:
I thought Ndigbo boycotted GTB? What are they still doing up there?

3 Likes 1 Share

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by hokafor(m): 11:18am On Feb 20, 2018
I hope my little change is safe, because I didn't see my bank here.

1 Like

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by dadebayo1(m): 11:19am On Feb 20, 2018
Bank wahalla... I hope panic will not set in?
Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by FarahAideed: 11:20am On Feb 20, 2018
Go UBA !!!!!!!

1 Like

Re: Six Banks Meet Cbn’s Dividend Payout Rule (names) by Edge1(m): 11:21am On Feb 20, 2018
misterchris:
I thought Ndigbo boycotted GTB? What are they still doing up there?


Must you be a tribal bigot?

2 Likes

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