Nigeria’s banking sector has entered a new phase of heightened regulatory discipline as only six of the country’s major listed banks succeeded in paying dividends to shareholders for the 2025 financial year, distributing a combined sum of approximately ₦1.27 trillion, while five other profitable lenders were unable to make payouts after falling short of key prudential requirements set by the Central Bank of Nigeria (CBN).
The development provides a striking picture of the changing dynamics within Nigeria’s financial sector, where profitability alone is increasingly insufficient to guarantee shareholder returns. For banks operating under stricter capital, provisioning and risk-management requirements, the ability to distribute earnings is now closely tied to the strength of their balance sheets and compliance with regulatory conditions.
An analysis of the audited financial statements of 11 major banks listed on the Nigerian Exchange showed that Guaranty Trust Holding Company (GTCO), Zenith Bank, Stanbic IBTC Holdings, Ecobank Transnational Incorporated, Wema Bank and FCMB were the lenders that paid dividends during the period under review. The distribution was, however, heavily concentrated among the biggest Tier-1 institutions, with GTCO and Zenith Bank alone accounting for about 81.9 per cent of the total amount paid to shareholders.
GTCO emerged as the largest dividend payer, distributing approximately ₦429.83 billion, equivalent to ₦12.76 per share. Zenith Bank followed closely with a dividend payment of about ₦410.70 billion, representing ₦10 per share. Stanbic IBTC Holdings paid ₦63.61 billion, or ₦4 per share, while Ecobank Transnational Incorporated declared a dividend of $40 million. FCMB also paid shareholders approximately ₦14.97 billion, translating to 35 kobo per share.
The concentration of dividend payments among a relatively small number of lenders underscores the widening importance of capital strength and regulatory compliance in determining shareholder distributions. While several banks continued to record profits, their ability to convert those earnings into dividends was constrained by provisioning requirements, capital considerations and regulatory restrictions.
The situation is particularly significant because the 11 major banks recorded combined profit before tax of about ₦6.4 trillion in 2025, compared with ₦6.7 trillion in 2024, representing a decline of approximately 3.8 per cent. Tier-1 banks accounted for ₦4.15 trillion of the total profit before tax, compared with ₦5.06 trillion a year earlier. Tier-2 banks, however, moved in the opposite direction, recording a substantial increase in combined profit before tax from ₦1.60 trillion in 2024 to ₦2.26 trillion in 2025.
Despite the decline in overall profitability, the banking industry continued to post strong growth in gross earnings. Combined gross earnings increased from ₦23.2 trillion in 2024 to ₦26.4 trillion in 2025. Tier-1 banks generated ₦18.2 trillion, up from ₦16.9 trillion, while Tier-2 institutions increased their gross earnings to ₦9.5 trillion from ₦7.6 trillion.
Access Holdings led the Tier-1 banks in gross earnings, recording ₦5.5 trillion in 2025 compared with ₦4.9 trillion in the preceding year. Zenith Bank followed with ₦4.1 trillion, up from ₦3.8 trillion, while GTCO recorded a modest increase from ₦2.11 trillion to ₦2.15 trillion. First HoldCo also improved its gross earnings from ₦3.2 trillion to ₦3.4 trillion. UBA was one of the exceptions, with gross earnings edging down from ₦3.1 trillion to ₦2.97 trillion.
For investors, the contrast between earnings and dividends highlights an important distinction in the current banking environment. The President of the Chartered Institute of Stockbrokers, Fiona Ahimie, explained that the difference between banks that paid dividends and those that withheld them should not automatically be interpreted as a reflection of profitability.
According to her, dividend decisions were influenced by several factors, including capital strength, regulatory compliance, the quality of earnings and the strategic priorities of individual institutions. Banks that distributed dividends generally possessed adequate capital buffers and strong enough earnings to satisfy regulatory requirements while still retaining sufficient resources to support future expansion.
For banks that withheld dividends, however, capital preservation became a more immediate priority. The ongoing banking-sector recapitalisation programme, increased provisioning for risk assets and regulatory restrictions on distributions all played significant roles in determining whether profits could be passed on to shareholders.
As DDM News reports, the regulatory stance also carries implications beyond the immediate expectations of investors, because the decision to retain earnings could ultimately strengthen banks’ capacity to absorb shocks and finance future growth.
Ahimie noted that income-focused investors would likely feel the immediate impact of dividend suspensions, particularly those who rely on regular payouts as a major component of their investment returns. Such investors may increasingly favour banks with stronger capital positions and established records of consistent dividend payments. Banks that suspended dividends could also face short-term pressure on their share prices as investors reassess their valuations and future income prospects.
However, she stressed that retaining profits could ultimately prove beneficial to shareholders if the funds were deployed effectively. Stronger retained earnings can provide banks with additional capital to expand lending, invest in digital infrastructure, absorb potential losses and improve their overall resilience. A stronger capital position could, in turn, reinforce confidence in the banking sector and provide a stronger foundation for sustainable growth.
Investment analyst and Highcap Securities Limited executive David Adonri offered another perspective, explaining that the CBN’s decision to prevent some banks from paying dividends was primarily intended to protect depositors and preserve financial stability. He said the regulator had reviewed the financial positions of affected institutions and determined that their conditions did not justify the release of significant amounts of capital to shareholders.
Adonri pointed to the expiration of regulatory forbearance previously granted to some banks in relation to doubtful loans. Once the relief expired, affected institutions were required to make full provisions for impaired assets, reducing the amount of retained profit available for dividend distribution.
He further noted that some lenders needed to preserve funds to meet outstanding foreign debt obligations. Distributing substantial amounts of cash while facing such obligations, he suggested, could place additional pressure on their financial positions.
Investment banker and chartered stockbroker Tajudeen Olayinka similarly described the restrictions as a regulatory push designed to promote greater prudence across the banking industry. According to him, some lenders had been confronted with substantial write-offs following the expiration of regulatory forbearance, making dividend payments potentially imprudent despite the profits reported in their financial statements.
Olayinka explained that certain affected banks had initially proposed paying dividends even while significant provisioning requirements remained outstanding. The issue, therefore, was not necessarily that the banks lacked profits, but that the CBN was concerned about the wisdom of distributing those profits when substantial provisions and write-offs still needed to be absorbed.
He also referenced the exposure of some banks to the syndicated loan default involving Nestoil, noting that affected institutions had subsequently made full provisions for their exposures. In his view, the regulator’s approach could ultimately strengthen discipline within the industry by ensuring that banks do not prioritise shareholder distributions at the expense of financial resilience.
Financial analyst Mallam Kasimu Kurfi also attributed the dividend restrictions to unresolved loan impairment issues. He said the CBN governor had made it clear that banks that failed to adequately address impairment challenges would not be permitted to distribute dividends.
Kurfi further disclosed that one Tier-1 bank had faced restrictions because of its exposure to a foreign banking subsidiary. He said the exposure was approximately 20 per cent of the bank’s shareholders’ funds, exceeding the 10 per cent threshold allowed under CBN prudential guidelines. To return to compliance, the affected institution would either have to increase its shareholders’ funds or reduce its exposure to the subsidiary.
The broader message emerging from the 2025 financial year is that Nigeria’s banks are now operating in an environment where regulatory compliance, capital adequacy and asset quality carry as much weight as headline profitability. A bank may report billions or even trillions of naira in profit and still be unable to reward shareholders if its capital position, loan provisions, risk exposures or other prudential indicators fall outside regulatory expectations.
For shareholders, the development may initially appear disappointing, particularly where dividend expectations had already been built into investment decisions. Yet for depositors and the wider financial system, the restrictions could provide an additional layer of protection by ensuring that banks retain sufficient resources to absorb losses and meet their obligations.
DDM News understands that the evolving regulatory environment is likely to make capital management an increasingly central issue for Nigerian banks as the recapitalisation programme progresses. Institutions that successfully strengthen their balance sheets, resolve impairment concerns and satisfy prudential requirements are expected to enjoy greater flexibility in determining future dividend policies.
The outlook for the sector therefore remains cautiously positive. While the ₦1.27 trillion distributed by the six dividend-paying banks demonstrates that shareholder returns remain an important feature of Nigeria’s banking industry, the inability of five profitable lenders to make distributions illustrates the regulator’s determination to place financial stability ahead of immediate payouts.
Ultimately, the 2025 dividend season has reinforced a fundamental principle of banking: profits can be distributed only when a lender has first demonstrated that it possesses the financial strength to withstand risks, protect depositors and support future operations. As Nigerian banks navigate recapitalisation, rising provisioning demands and tighter prudential oversight, the institutions with the strongest balance sheets and most disciplined risk-management structures may be the ones best positioned to deliver both stability and sustainable returns to shareholders in the years ahead.
