This Is The New CBN Directive That Will Determine Whether A Nigerian Bank Will Pay Dividends

The Central Bank has released a a new set of guidelines affecting the dividend policies of Nigerian banks and deposit money banks. The policies give directives that banks must now follow before they issue dividends. Here are they

1. Any Deposit Money Bank (DMB) or Discount House (DH) that does not meet the minimum capital adequacy ratio shall not be allowed to pay dividends

2. DMB’s and DH’s that have Composite Risk Rating (CRR) of “High” or non performing loans (NPL) above 10% shall not be allowed to pay dividends.

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3. DMB’s and DH’s that meet the minimum Capital Adequacy Ratio but have a CRR of “Above average” on an NPL of more than 5% but less than 10% shall have dividend pay-out ratio of not more than 30%

4. There shall be no restriction on dividend payout for DMB’s and DH’s that meet the minimum capital adequacy ratio, have a CRR of “low” or “moderate” and an NPL ratio of not more than 5%. However, it is expected that the board of such institutions will recommend payouts based on effective risk assessment and economic realities.

5. No DMB or DH shall be expected to pay dividends out of reserves

6. Banks shall submit their board approved dividend payout policy to the CBN before the payment of dividend shall be permitted.

Get the full press release here