The Central Bank of Nigeria (CBN) has directed some banks to pause dividend payments. This move targets banks that are currently under regulatory forbearance. The policy also stops these banks from paying bonuses to directors or investing in foreign ventures.

In a circular dated June 13, 2025, the CBN said the aim is to help banks keep more of their capital. This step is part of a bigger plan to strengthen the financial system and support recapitalisation efforts.

Regulatory forbearance means a bank is allowed to avoid breaking certain financial rules. These banks often have large loans that are at risk. By giving them temporary relief, the CBN helps them stay within required limits like the capital adequacy ratio.

A report by Renaissance Capital shows that Zenith Bank, FirstBank, and Access Bank are the most affected. They have 23%, 14%, and 4% of their total loans tied up in risky areas. These loans are mostly linked to oil and gas companies.

Because of this, these banks may not be able to pay dividends again until 2028. They might try to issue dividends through their non-banking arms. However, those units do not earn enough to make a big impact.

GTCO and Stanbic IBTC, on the other hand, are not affected by this new rule. GTCO has already cleared its troubled loans and is expected to continue regular dividend payments. UBA also has low exposure and could resume payouts by 2026.

The report also highlights a gap between what some banks report as profit and what they actually receive in cash. For example, Access Bank made N3.5 trillion in interest income last year but got only N1.9 trillion in cash. Zenith Bank showed a similar pattern.

The CBN wants banks to focus on building strong balance sheets instead of paying out money they haven’t truly earned. This change also comes as banks work to meet the new N500 billion capital requirement.

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