By Chinwendu Obienyi
Amid the Central Bank of Nigeria’s (CBN) directive halting dividend payments, bonuses and new foreign investments for banks under regulatory forbearance, the affected financial institutions, on Wednesday, unveiled detailed plans to exit the forbearance regime and strengthen their capital positions.
The regulatory shake-up, which aims to bolster capital adequacy ratios and reinforce financial stability, sent ripples through the banking sector.
This has caused the stock market to dip, as investors have been selling off their banking stocks to lock in profits for two straight days.
However, both Zenith bank and FCMB have sought to calm investor nerves, outlining roadmaps to full compliance and affirming their ability to maintain dividend payouts in 2025.
Responding decisively to investor concerns, the bank in a notice issued by its Company Secretary, Michael Otu, disclosed that its exposure under the CBN’s forbearance framework was limited to just one obligor under the Single Obligor Limit (SOL) and two additional customers with non-performing loans.
The bank emphasized that full provisioning for these exposures will be completed by June 30, 2025, aligning with the CBN’s forbearance exit timeline. “We expect to have exited all CBN forbearance arrangements by the end of the first half of 2025,” the statement said.
Zenith Bank added that it has already surpassed the new CBN recapitalization requirement of N500 billion, putting it ahead of many peers in the race to build stronger capital buffers. The bank expressed confidence that it will satisfy all conditions necessary to resume dividend payments in 2025.
In a detailed statement to the Nigerian Exchange Limited (NGX) and the investing community, FCMB Group disclosed that its Nigerian banking subsidiary currently holds loans under CBN forbearance totaling N207.6 billion as at May 31, 2025, a significant drop from N538.8 billion in September 2024.
These loans, tied to three entities and two obligors, are currently classified as Stage 2 under the IFRS 9 credit risk framework.
The Group emphasized that it has made provisions for these loans over several years and has achieved a more than 60 per cent reduction in its total exposure. FCMB noted that once these loans exit the forbearance framework, there will be an initial spike in Stage 3 (non-performing) loans, projected to rise to 11.5 per cent of the loan book, before falling below 10 per cent by year-end, driven by anticipated loan growth.
FCMB also revealed that it has one additional obligor under the Single Obligor Limit (SOL), which has been a Stage 1 loan since inception. To address this, the Group is finalizing a N23.1 billion convertible loan-to-equity transaction, approved by the CBN for capital verification. Full regulatory approvals are expected to be secured by July 2025, with plans to downstream the capital to its Nigerian bank.
“This transaction will increase the Bank’s share capital and share premium to approximately N267 billion. Our capital adequacy will remain above the 15 per cent regulatory threshold for international banks post-forbearance”, the group said.
Despite these adjustments, FCMB reassured shareholders that it remains committed to sustaining dividend payments. Its Nigerian banking subsidiary contributed 46 per cent of the 2024 dividend payout, with the rest coming from non-bank subsidiaries.
Reacting to the development, financial analysts note that both banks’ swift response to the CBN directive is aimed at maintaining market confidence amid regulatory tightening.
Head, Research at FSL Securities, Victor Chiazor, said, “What we are seeing is a rebalancing of risk and capital. Banks with credible capital plans like Zenith and FCMB are showing that regulatory compliance doesn’t have to mean dividend sacrifice.
As the CBN moves to enforce stricter capital controls ahead of its 2026 recapitalization deadline, other tier-1 and tier-2 lenders are expected to follow suit in clarifying their forbearance exposures and recapitalization plans.”
For now, investors and analysts will be watching closely to ensure that promises of compliance are met with actual delivery and that Nigeria’s banking sector remains stable in the face of tightening regulations and global economic headwinds.
Leave a comment