Why Some Nigerian Banks May Not Pay Dividend This Year
Apparently worried by the mounting pile of non-performing loans in the books of the nation’s banks, even as the system is still struggling under the weight of the 2009/2011 debacle, the Central Bank of Nigeria (CBN) has set certain yardsticks for banks planning to pay dividend from their profit after tax. According to the letter to all banks, referenced: REF: BSD/DIR/GEN/LAB/11/002, titled “Re: Internal Capital Generation and Dividend Payout Ratio,” the banks are to facilitate sufficient and adequate capital build up in line with their risk appetite. The CBN, in the letter signed by Ahmad Abdullahi, director, Banking Supervision Department, barred with immediate effect, deposit money banks and discount houses from paying dividend from their reserves. Banks and Discount Houses that do not meet the minimum capital adequacy ratio from paying dividend; just as those with “a Composite Risk Rating (CRR) of “High” or a Non-Performing-Loan (NPL) ratio of above 10% shall not be allowed...