CBN dividend restrictions puts UBA, Access, First HoldCo on edge

Nigeria’s major banking groups, United Bank for Africa, Access Holdings and First HoldCo, are facing mounting pressure from the Central Bank of Nigeria’s dividend restrictions, which have limited shareholder returns and heightened uncertainty over future payouts.

The restrictions, aimed at strengthening banks’ capital positions and ensuring adequate recognition of bad loans, have forced affected institutions to retain earnings rather than distribute them to shareholders.

The development has raised concerns among investors who depend on dividends for regular income, while placing greater emphasis on banks’ capital adequacy, asset quality and regulatory compliance.

According to financial reports, UBA recorded a 47.3 per cent decline in profit before tax to N423.4bn in 2025, following substantial loan-loss provisions and losses on derivatives. Its total dividend for the year fell to 25 kobo per share, compared with N5 paid in 2024.

The decline represents a significant reduction in returns to shareholders and comes amid continuing uncertainty over the bank’s ability to resume regular dividend payments.

Access Holdings, however, recorded a 16.2 per cent increase in profit before tax to approximately N1.01tn in 2025, but shareholders were unable to receive the proposed final dividend for the year amid regulatory constraints.

The development highlights the distinction between profitability and the ability to distribute earnings, as banks must satisfy applicable regulatory requirements before paying dividends.

First HoldCo also faced pressure from loan-loss provisions, which contributed to a 70.6 per cent decline in profit before tax to N234.3bn in 2025. The group’s provisions for impaired loans stood at approximately N748bn. Its financial performance improved in the first half of 2026, with profit after tax reaching approximately N526.1bn. However, the recovery in earnings does not automatically guarantee a resumption of dividend payments, which remains subject to regulatory approval.

Recall that the CBN introduced restrictions on dividend payments for selected banks operating under regulatory forbearance arrangements in June 2025. The measures also included restrictions on executive bonuses and requirements to strengthen capital positions.

Regulatory forbearance had allowed certain banks to restructure troubled loans without immediately recognising the full extent of potential losses. The regulator subsequently required affected institutions to address outstanding issues and improve their financial positions.

The restrictions are intended to protect depositors, preserve financial stability and ensure banks maintain sufficient capital to absorb losses.

However, prolonged uncertainty over dividend payments could weaken investor confidence in affected banking stocks, particularly among shareholders who prioritise regular income.

The restrictions may also influence banks’ lending decisions as they seek to strengthen their balance sheets.

Although retained earnings can improve capital buffers, they do not automatically translate into increased lending to businesses, which also depends on credit risks and economic conditions.

Analysts say the ability of the affected banking groups to resume dividend payments will depend on their compliance with regulatory requirements, the quality of their loan portfolios and their capacity to maintain adequate capital.

The development underscores the challenge facing the banking sector in balancing shareholder expectations with the need to maintain financial resilience amid ongoing economic pressures.

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