Listed Nigerian banks have declared N86.7 billion in interim dividend payouts for shareholders in the first half (H1) of 2024, BusinessDay analysis has shown.
According to Nigeria Exchange Group (NGX), the lenders which include Guaranty Trust Holding Company Plc (GTCO), Stanbic IBTC Holding Plc and Zenith Bank are to share N86.7 billion as interim dividend for half year ended June 2024, an increase of 74 percent from N49.85 billion declared in half year ended June 2023.
Stanbic IBTC led with the highest interim dividend of N2.00 per share in H1 2024, up from N1.50 in H1 2023. The total payout reached N25.91 billion, a 33 percent increase compared to N19.44 billion in the same period of 2023.
Zenith Bank and GTCO are both paying N1 each to shareholders, thereby bringing their payout value to N31.4 billion and N29.43 billion, respectively.
During the period, their combined after-tax profit rose to N1.6 trillion, from N664 billion reported in the corresponding period of 2023.
A breakdown revealed that GTCO leads other banks as most the profitable, when its profit hit N905.6 billion in H1 2024, representing about 223 percent increase from N280.48 billion reported in H1 2023.
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In the period under review, Zenith Bank declared N578 billion profit, an increase of 98 percent from N291.73billion in H1 2023, while Stanbic IBTC Holdings announced N116.36 billion profit in H1 2024, a growth of 71 percent from N67.92 billion reported in H1 2023.
According to a report by Ernst and Young Global Limited (EY), a leading tax and advisory services firm, Nigerian banks are likely to embark on aggressive dividend payouts in the next couple of years as they put a huge pile of their retained earnings to use.
EY noted that by paying out dividends, the financial position of shareholders will be strengthened, noting that dividend payouts must however follow the due process stipulated by the Central Bank of Nigeria (CBN).
“With the exclusion of retained earnings as a source of capital, we expect aggressive dividend payouts by banks over the next few years,” EY said.
Banks engage in dividend payouts as a way to distribute profits to shareholders. It’s a sign of financial health and can attract investors seeking regular income.
Additionally, consistent dividend payouts can enhance a bank’s reputation and increase shareholder loyalty.
The apex bank, on 28th March 2024, announced a new set of capital thresholds for Nigerian banks, requiring international, national, and regional banks to maintain minimum share capital of N500 billion, N200 billion, and N50 billion, respectively.
The recapitalisation of these banks will bring about N4 trillion into an economy whose target is to hit $1 trillion by 2026.
With the latest recapitalisation exercise by the CBN and the subsequent exclusion of retained earnings from minimum capital, banks in Nigeria need at least N4 trillion to remain in business.
