Individuals
Businesses
Company
Intelligence
News
African Capital Markets
EnglishEnglish
share on twittershare on linkedinshare on facebookshare to whatsapp
share on mail
share on instagram

Nigerian banks declare huge dividends despite hike in capital base

Nigerian banks declare huge dividend payouts amid recapitalization
BREAKING NEWSApril 30, 2024 at 1:08 PM UTC

TLDR

  • Nigerian banks distribute N379 billion in dividends, marking a 31.3% increase from the previous year.
  • Total dividends reach N465.3 billion for 2024 when interim dividends are considered.
  • Banks expected to undergo substantial capital raises despite ongoing distributions to shareholders.

Despite the Central Bank of Nigeria's (CBN) push for substantial capital raises, Nigerian banks are not hesitating to distribute capital to their shareholders. Six major banks, following the publication of their 2023 audited accounts, are poised to distribute a combined N379 billion ($275 million) in dividends.

That marks a significant increase from the N289.1 billion declared as final dividends the previous year (+31.3%). When interim dividends are factored in, the total climbs to N465.3 billion for 2024. As the CBN's recapitalization deadline looms, these banks are projected to require around N4.2 trillion in fresh capital over the next two years.

But rather than conserving capital by reducing dividends, these institutions are moving forward with rewarding their shareholders. Plans for substantial capital raise through rights issues are anticipated following these substantial dividend payouts.

Key Takeaways

One significant factor driving banks to continue paying dividends despite impending capital requirements is the CBN's decision to exclude retained earnings from its calculation of share capital. Retained earnings represent the portion of net profits that are not distributed as dividends but reinvested in the business. With this exclusion, banks have little motivation to accumulate retained earnings. Moreover, under these circumstances, paying dividends serves a strategic purpose. It allows banks to return capital to shareholders, who may then reinvest this capital back into the banks as fresh equity. Banks may have considered paying even higher dividends than the current average dividend payout ratio of 14.15% for the six banks reviewed, given these dynamics and the potential benefits of returning capital to shareholders.

Banking
Recapitalization
CBN
Central Bank
Nigeria
Capital Requirements
Finance
Stocks
Dividends

Think someone else should see this?

share on twittershare on linkedinshare on facebookshare to whatsapp
share on mail
share on instagram
Stay informed with our newsletters read by 25,000+ professionals worldwide
Newsletter companiesNewsletter companiesNewsletter companiesNewsletter companiesNewsletter companiesNewsletter companies

Next Frontier

Stay up to date on major news and events in African markets. Delivered weekly.

Pulse54

UDeep-dives into what’s old and new in Africa’s investment landscape. Delivered twice monthly.

Events

Sign up to stay informed about our regular webinars, product launches, and exhibitions.

+25k investors have already subscribed

To invest in this opportunity and other opportunities across Africa

Download the daba finance app on your mobile through
appstore iconappstore icon
Phone Image

Take action.

Download app

Start investing in Africa’s best opportunities, including stocks, bonds, startups, venture funds, and more.

Partner with us

Unlock exciting business opportunities and growth potential.

Join Daba

Become a part of our vibrant community and enjoy exclusive benefits.

Contact us

Reach out to us for inquiries, support, or collaboration.
For Investor
StrategiesPortfolio ManagementAfrican Capital MarketsNews
Daba Pro Intelligence
For Capital Seekers
For StartupsFor Fund ManagersFor Private CompaniesFor Lenders
For Partners
Commercial BanksBroker DealersAsset ManagersInvestment BanksInvestment Advisors and ConsultantsLenders and Microfinance
Company
About UsMarket UpdatesEventsBlog and PodcastNewsletterCase StudiesAffiliate ProgramInvesting GlossaryOfficial ContactsTrust, Compliance and SecurityFrequently Asked Questions

Terms & ConditionsPrivacy Policy
EnglishEnglish

Owned by Daba Markets Inc. By using this site, you accept our Terms and Conditions and Privacy Policy. © 2024 All rights reserved. 2025 All rights reserved