Banking Sector in Nigeria: Regulatory Forbearance Exits Amid Tightening Capital Controls

Strategic Insights -

The Central Bank of Nigeria (CBN) directive to halt dividend payments, bonuses, and new foreign investments for banks under regulatory forbearance has sent shockwaves through the banking sector, causing a dip in the stock market. However, two major banks, Zenith Bank and FCMB, have responded decisively to investor concerns by outlining their roadmaps to full compliance and affirming their ability to maintain dividend payouts in 2025.

Key Takeaways:

  • Zenith Bank has disclosed that its exposure under the CBN's forbearance framework is limited to one obligor under the Single Obligor Limit (SOL) and two additional customers with non-performing loans, with full provisioning to be completed by June 30, 2025.
  • The bank has surpassed the new CBN recapitalization requirement of N500 billion, putting it ahead of many peers in building stronger capital buffers.
  • FCMB Group has disclosed that its Nigerian banking subsidiary holds loans under CBN forbearance totaling N207.6 billion as at May 31, 2025, a significant drop from N538.8 billion in September 2024.
  • FCMB has made provisions for these loans over several years and has achieved a more than 60 per cent reduction in its total exposure.
  • The Group has one additional obligor under the Single Obligor Limit (SOL), which is finalizing a N23.1 billion convertible loan-to-equity transaction to address this.
  • FCMB remains committed to sustaining dividend payments, with its Nigerian banking subsidiary contributing 46 per cent of the 2024 dividend payout.
  • Both banks' swift response to the CBN directive is aimed at maintaining market confidence amid regulatory tightening.

Statistics:

  • Zenith Bank's exposure under the CBN's forbearance framework: 1 obligor under Sole Obligor Limit (SOL) and 2 additional customers with non-performing loans.
  • FCMB Group's loans under CBN forbearance: N207.6 billion as at May 31, 2025, a drop from N538.8 billion in September 2024.
  • FCMB Group's reduction in total exposure: over 60 per cent.
  • FCMB Group's 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.
  • FCMB's N23.1 billion convertible loan-to-equity transaction: expected to increase share capital and share premium to approximately N267 billion.
  • CBN's recapitalization deadline: 2026.

Sources:

  • "Zenith Bank". Nigeria Stock Exchange. May 31, 2025.
  • "FCMB Group". Nigerian Exchange Limited. May 31, 2025.
  • "FSL Securities". Nigeria Stock Exchange. May 31, 2025.