Connect with us
SSN
Advertisement
IZIKJON
Advertisement
forex
Advertisement
Stanbic IBTC
Advertisement
Binance
Advertisement
Esetech
Advertisement
Patricia
Advertisement
Fidelity ads
Advertisement
app

Business News

Why shareholders of Nigerian banks should expect lesser dividend payouts in 2020

“Some companies (banks) have already begun to slash their CAPEX and will most likely cut dividend payouts in 2020.”

Published

on

Dividend

Between 2018 and 2019, quoted Nigerian banks paid out a total of N538.1 billion as dividends to their shareholders. In 2019 alone, the total dividends paid by these banks stood at N277.9 billion, according to checks by Nairametrics Research.

Interestingly, even though the banking index of the Nigerian Stock Exchange has been one of the most-liquid and best-performing indexes so far in 2020, there are strong indications that many bank shareholders will receive lesser or no dividends in 2020. This is because of the recent economic challenges occasioned by the Coronavirus pandemic.

See the listed banks

There are thirteen commercial banks that are listed on the Nigerian Stock Exchange. These are all familiar names, including the tier-1 banks – FBN Holdings Plc, United Bank for Africa Plc, Guaranty Trust Bank Plc, Access Bank Plc, and Zenith Bank Plc. Others are Ecobank Transnational Incorporated, Fidelity Bank Plc, Stanbic IBTC Holding Plc, Union Bank of Nigeria Plc, Sterling Bank Plc, FCMB Group Plc, Wema Bank Plc, and Jaiz Bank Plc.

(READ THIS: Nigeria gets $3.4 billion disbursement from IMF, interest rate 1%)

Let’s compare the stats

A brief comparison of the total dividends paid by the banks in 2018 and 2019 showed that Zenith Bank doled out the highest amounts of N86.3 billion and N87.9 billion. This is followed by Guaranty Trust Bank which paid out N79.4 billion worth of dividends in 2018, and then N81 billion in 2019.

UBA paid out N29 billion worth of dividends in both 2018 and 2019, while Access Bank paid N18.8 billion and N23.1 billion in 2018 and 2019, respectively. On the other hand, FBN Holdings Plc (which is the parent company of First Bank of Nigeria Ltd), paid out N10 billion in 2018 and N10.7 billion in 2019.

Based on the foregoing, we can see a clear pattern whereby the top banks were the ones paying out the highest dividends. Coincidentally, these tier-1 banks reported the biggest profits during the periods under review. A closer analysis also proved what most investors should already know, and that is the fact that the more profitable a company is, the bigger the dividends its shareholders are entitled. For instance, Zenith Bank and Guaranty Trust Bank (respectively) reported the highest and second-highest profits in 2018 and 2019.

 

Deal book 300 x 250

How much dividend the rest of the banks paid

Note that Nigeria’s tier-1 banks were responsible for 94.6% and 89.3% of the total dividend payouts by NSE-listed banks between 2018 and 2019, respectively. The dividend payouts by the other banks can be seen below.

Possible dividend draught in 2020

As earlier mentioned, there are strong indications that some banks may resort to paying lesser or no dividends at all in 2020. This is due to the economic fallouts from the Coronavirus pandemic, which has triggered a recession in Nigeria. There are also other macroeconomic factors that might be responsible for this, as we shall see shortly.

Recall that Nairametrics recently reported about Augusto & Co’s latest assessment on Nigerian banks, which basically noted that COVID-19 has weakened the asset quality of the banks. According to the ratings agency, Nigerian banks are significantly exposed to several sectors, including the oil and gas sector, manufacturing, real estate, public sector, construction, and general commerce.

A related report by Augusto & Co also noted that Nigerian banks’ earnings and profitability are expected to decline drastically in 2020. In specific terms, banks’ earnings from their core business are projected to decline in the short term due to an expected rise in impairment charges and lower yields on their loan books. More so, the contractionary monetary policy stance, exacerbated by discretionary Cash Reserve Requirement (CRR) debits by the CBN, is expected to affect banks’ overall performance this year.

(READ FURTHER: Analysis: A better way to price Guinness shares)

Binance

Agreed, the Q1 2020 results so far released by the banks show generally positive performances. However, it must be noted that earnings reports were for the first three months of the year, shortly before the Coronavirus hit Nigeria hard. Subsequent quarterly results are projected to reflect the adverse effect of the pandemic in the form of lesser earnings/profitability. And as you may well know, companies find it difficult to pay dividends when their profits are low.

Cutting down on expenses in order to survive

Earlier this week, Nairametrics quoted Lanre Buluro of Chapel Hill Denham as saying that “…some companies (banks) have already begun to slash their CAPEX and will most likely cut dividend payouts in 2020.”

Jaiz bank ads

 

Nigerian Banks,Impact of coronavirus pandemic on asset quality of Nigerian banks

Coronation ads

Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

2 Comments

2 Comments

  1. Adeola Tosin Adeoti

    May 6, 2020 at 2:06 pm

    Of course, these are hard times for everyone, including the banks, so shareholders should be ready for a downtime.

  2. Helen Olajide

    September 13, 2020 at 2:20 pm

    Wondering why Union banks dividend are not paid for several years now. The last we got was a bonus share of 200unit per 1000 shares in 2008.
    Just wondering if the bank is not making it why not merge with other bank. Shareholders want dividend the reason for investment in the 1st place.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Coronavirus

COVID-19 Update in Nigeria

On the 7th of March 2021, 269 new confirmed cases and 5 deaths were recorded in Nigeria

Published

on

Covid 19 update symptops

The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 158,506 confirmed cases.

On the 7th of March 2021, 269 new confirmed cases and 5 deaths were recorded in Nigeria.

To date, 158,506 cases have been confirmed, 137,875 cases have been discharged and 1,969 deaths have been recorded in 36 states and the Federal Capital Territory.

A total of 1.54 million tests have been carried out as of March 7th, 2021 compared to 1.49 million tests a day earlier.

COVID-19 Case Updates- 7th March 2021,

  • Total Number of Cases – 158,506
  • Total Number Discharged – 137,890
  • Total Deaths – 1,969
  • Total Tests Carried out – 1,544,008

According to the NCDC, the 269 new cases are reported from 19 states- Enugu (78), Bauchi (37), Rivers (22), Imo (18), Ogun (16), FCT (15), Akwa Ibom (13), Kaduna (13), Kebbi (11), Kwara (9), Edo(7), Ekiti (6), Borno (5), Yobe(5), Kano (4) Nasarawa (3), Osun (3), Anambra (2) and Plateau (2).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 56,444, followed by Abuja (19,350), Plateau (8,944), Kaduna (8,658),  Oyo (6,766), Rivers (6,680), Edo (4,670), Ogun (4,437), Kano (3,844), Ondo (3,066), Kwara (2,962), Delta (2,582), Osun (2,457), Nasarawa (2,251), Enugu (2,156), Katsina (2,060), Gombe (2,010), Ebonyi (1,951), Anambra (1,813), Akwa Ibom (1,610), and Abia (1,588).

Imo State has recorded 1,569 cases, Borno (1,308), Bauchi (1,274), Benue (1,188), Adamawa (942), Niger (919), Taraba (863), Ekiti (834), Bayelsa (779), Sokoto (769), Jigawa (496), Kebbi (412), Cross River (334), Yobe (293), Zamfara (222), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

The movement restriction, which was extended by another two weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

Governor Babajide Sanwo-Olu of Lagos State announced the closed down of the Eti-Osa Isolation Centre, with effect from Friday, 31st July 2020. He also mentioned that the Agidingbi Isolation Centre would also be closed and the patients relocated to a large capacity centre.

Due to the increased number of covid-19 cases in Nigeria, the Nigerian government ordered the reopening of Isolation and treatment centres in the country on Thursday, 10th December 2020.

Binance

On 26th January 2021, the Federal Government announced the extension of the guidelines of phase 3 of the eased lockdown by one month following the rising cases of the coronavirus disease in the country and the expiration of phase 3 of the eased lockdown.

On 28th February 2021, the federal government confirmed that the first tranche of Covid-19 vaccines will arrive in Nigeria on Tuesday, March 2nd, 2021.

Jaiz bank ads

On Tuesday, 2nd March 2021, the National Primary health Care Development Agency announced the arrival of the expected COVX Astrazeneca/Oxford covid-19 vaccines.

On Saturday, 6th March 2021, President Muhammadu Buhari and his vice, Yemi Osinbajo received vaccination against the covid-19 as the State House in Abuja.

READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

Coronation ads

 

 

app

 

Continue Reading

Spotlight Stories

Twitter CEO auctions his first-ever tweet on Twitter, bidding at $2.5 million

Jack Dorsey is auctioning his first-ever tweet on a website that sells tweets as non-fungible tokens.

Published

on

Square buys $50 million worth of Bitcoins, Twitter warns political figures to abstain from fake, misleading statements, Has Twitter's Jack Dorsey changed the popular narrative attached to Nigerians?, Twitter forecasts future drop in revenue after milestone record in 2019 Q4 , Twitter founder, Jack Dorsey invest N2.3 million in Nigerian startup, DevCareer , Some Verified accounts may not be able to tweet, as Twitter freezes password reset to address cyberattack

Twitter CEO, Jack Dorsey is auctioning his first-ever tweet on Twitter “just setting up my twttr” on a website that sells tweets as non-fungible tokens (NFTs).

The tweet was listed for sale on ‘Valuables by Cent’ – a tweets marketplace that was launched three months ago. The tweet was first made in March 2006

The tweet received offers as high as $88,888.88 within minutes of Jack tweeting a link to the listing on” Valuables by Cent” on Friday.

Currently, bidding has reached $2.5 million (€2.1 million) indicating the potential in selling virtual objects that have been authenticated through blockchain technology.

The highest bid for the tweet — $2.5 million — came from Bridge Oracle CEO Sina Estavi. It topped cryptocurrency pioneer, Justin Sun’s $2 million bid.

The final buyer of the tweet will receive a certificate, digitally signed and verified by Jack Dorsey, as well as the metadata of the original tweet. The data will include information such as the time the tweet was posted and its text contents. Most of this information, however, is already publicly available.

According to Valuables by Cent’s terms, 95% of a tweet’s sale will go to the original creator while the remainder will go to the website.

What you should know

  • NFTs is a unique digital certificate that states who owns a photo, video, or other forms of online media.
  • Dorsey’s 15-year-old tweet is one of the most famous tweets ever on the platform.
  • Bidding had reached $2.5 million (€2.1 million) on Saturday, indicating the potential in selling virtual objects that have been authenticated through blockchain technology.
  • More people are currently bidding their tweets on the platform.

Continue Reading



Advertisement





Nairametrics | Company Earnings

Access our Live Feed portal for the latest company earnings as they drop.