Top Nigerian Banks Paying Dividends In The Past Five Years

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Nigerian Banks Paying Dividends

Nigerian Banks Paying Dividends

The banking sector is a key engine of Nigeria’s economic growth and development, making it one of the country’s most valued commercial regions. Banking contributes to economic activity by dispersing dividends, and this blog post points out Nigerian Banks paying dividends to stockholders and other essential financial services.

The Statistics

On average, nine of Nigeria’s largest banks listed on the NGX paid out 26% of their net profits—N1.75 trillion—to shareholders. This was from a total net profit of N6.8 trillion.

The banking sector’s cumulative net asset value of N11.1 trillion as of December 2023, representing 5.1% of Nigeria’s nominal GDP (N229.9 trillion – 2023 projection), shows its recent profitability.

For banks, the 25.5% average dividend payout ratio means 74.5% of net profit was reinvested and recorded as retained earnings.

However, the huge profits declared in 2023 after the naira devaluation increased the naira value of balance sheet items for most banks’ long positions, and the CBN’s regulations on spending FX revaluation gains on dividend payments may explain the relatively low dividend payout ratio.

Nairalytics ranks Nigerian publicly listed commercial banks by gross dividend distribution and dividend payout ratio from 2019 to 2023. The banks were rated by their five-year dividend payout ratio.

Dividing the dividends distributed by the net income and multiplied by 100 gives a company’s dividend payout ratio, which shows how much it pays its shareholders.

This ratio shows investors how much a corporation returns to shareholders versus reinvests. A larger dividend payout ratio may indicate that a company is returning a large amount of its income to shareholders, while a lower ratio may indicate that it is reinvesting more in growth.

Investors wanting stable dividend returns use it to decide whether to buy a company’s stock.

Nigerian banks paying dividends in the last five years are listed below. Banks that paid at least N50 billion in the last five years are ranked:

7. Fidelity Bank

Fidelity Bank

As the commercial bank prepares for its enormous capital-raising campaigns, it seems that its long-suffering position in comparison to the big five will soon come to an end.

Over the past five years, the bank has raked in a total of N224.3 billion in profit, with N61.4 billion going toward dividend payments.

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With a dividend payout ratio of 27%, Fidelity is our #4 dividend stock. In 2019, N0.98, N0.22, and N0.35 were the dividends per share declared by the bank for 2020 and 2021, respectively. Dividends per share increased to N0.5 in 2022 and N0.8 in 2023, indicating a significant improvement over the previous two years.

Fidelity Bank’s dividend per share outpaced its competitors with an impressive compounded yearly growth rate of 44%. It would not be shocking if the bank distributed N1 in dividends to shareholders at the conclusion of the current fiscal year.

6. FBN Holdings

FBN Holdings

Dividend Payout Ratio: 10% 

Dividends Paid: N74.6 billion 

PAT: N745.5 billion

FBN Holdings, the oldest bank in Nigeria, has likely handed out more dividends than any other Exchange firm. But when we rank the top five banks that have paid dividends in the past five years, it comes in at number six.

From a total after-tax profit of N745.5 billion, FBN Holdings has distributed N74.6 billion as dividends over the past five years, as per our statistics.

This indicates the lowest dividend payment ratio among FUGAZ banks, at 10%. Dividends per share for 2019, 2020, and 2021 were N0.38, N0.45, and N0.35, respectively, announced by the bank. After rising to N0.5 in 2022, the dividend fell to N0.40 the following year.

That means FBN Holdings’ dividend per share growth rate is a meager 1%. With a new board of directors and management team in place, the company should be able to compete with its competitors for dividends and earnings.

5. Stanbic IBTC

5. Stanbic IBTC

Dividend Payout Ratio: 48.6% 

Dividends Paid: N212.1 billion 

PAT: N442.5 billion

With a total of almost N212.1 billion in dividends announced over the past five years, Stanbic IBTC ranked sixth in total dividend payments throughout the review period. Particularly noteworthy is the fact that the bank has the highest dividend payout ratio at 48.6%, suggesting that shareholders receive a considerable return of profits.

Stanbic IBTC distributed N3 and N4 dividends per share in 2019 and 2020, correspondingly. The amounts paid per share were N3 in 2021 and N3.5 in 2022. The bank distributed N3.7 dividends per share in 2023.

Our calculations indicate that the bank’s dividend per share growth over the past five years has been a meager 5%.

The high payout ratio and consistent dividend growth at Stanbic IBTC demonstrate the importance the company places on returning capital to its shareholders. As of June 20th, the bank was trading at an average of N53.5, making it the most valued in the industry. This could be because of this. The stock is trading at 4.65 times earnings.

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The high dividend payout ratio of Stanbic IBTC as a proportion of profits each year is clearly a selling point for investors.

4. Access Holdings

4. Access Holdings

Dividend Payout Ratio: 19% 

Dividends Paid: N215 billion 

PAT: N1.12 trillion

The biggest bank in Nigeria in terms of total assets is Access Holdings. Over the past five years, the bank has recorded a net profit of almost N1.12 trillion.

Its dividend payout ratio for the past five years has been a meager 19%, with an estimated N215 billion distributed to shareholders.

From what we can see, in 2019, the bank announced a dividend of N0.65, in 2020 it was N0.8, and in 2021 it was N1. Its total dividend for 2022 was N1.50 and for 2023 it was N2.10. The dividend per share of the bank increased by around 35% when measured on a basis of compounded yearly growth. Among the big banks, this is the highest we’ve ever seen. This is due, in part, to the fact that, relative to its competitors, Access Holdings has historically distributed a smaller dividend per share.

On the other hand, when taking into account the magnitude of their profits, Access Holdings’ dividend payout ratio of 19% is not the worst among the FUGAZ banks. One possible explanation for its low valuation among Tier One banks is this.

3. UBA

3. UBA

Dividend Payout Ratio: 20.1% 

Dividends Paid: N219.5 billion 

PAT: N1.1 trillion

With a total of N219.56 billion distributed from a combined profit after taxes of N1.1 trillion over the last five years, United Bank for Africa (UBA) is ranked third in absolute dividend payments.

This amounts to a dividend payout ratio of 20.1%, which is marginally greater than Access Bank when compared to its comparable group. But every year on a compounded basis, the dividend per share has increased by over 29 percent. During a time when dividends were relatively low, the bank announced N1, N0.52, and N1 per share in 2019, 2020, and 2021, respectively. Dividends increased to N2.8 per share in 2023 and N1.1 per share in 2022.

2. GTCO

2. GTCO

Dividend Payout Ratio: 33.1% 

Dividends Paid: N435.5 billion 

PAT: N1.3 trillion

In terms of dividend payments during the last five years, GTCO is second only to Zenith Bank with a total of N443 billion, or 33.1% of the company’s equity.

An early adopter of quarterly, semiannual, and annual dividend payments, GTCO has built a reputation as a reliable dividend payer. Each share was announced to have a dividend of N2.8, N2.7, and N3 each. There was a further dividend rise in 2022, to N3.1, and another in 2023, to N3.2.

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Our projections for the bank’s growth over the next five years indicate a CAGR of 3.4%. Given that dividend increases have been constant but not overly aggressive, the growth rate points to a steady but moderate increase in dividend payments.

The total amount of dividends paid out has increased from an estimated N82.4 billion to an estimated N91.2 billion.

1. Zenith Bank

1. Zenith Bank

Dividend Payout Ratio: 31.9% 

Dividends Paid: N505 billion

PAT: N1.58 trillion 

From its five-year earnings of N1.6 trillion, Zenith Bank distributed a total of N505.48 billion as dividends, making it the leading bank in this regard. The banks paid out a total of 31.9% of their dividends at that time in this amount.

The dividend payout from Zenith Bank has been consistent over the last five years, with both interim and final dividends being offered. In 2019, 2020, and 2021, the dividend per share that the bank paid out was N2.8, N3, and N3.10, correspondingly. By 2023, it had risen to an all-time high of N4 per share, up from N3.2 in 2022.

Over the past five years, its dividend payments have contributed to a 9% compound yearly growth rate. This pace of growth and continuous dividend policy demonstrate a strong dedication to returning value to shareholders and solid financial stability.

Important Note: The bank’s dividend per share multiplied by the average number of outstanding shares in the year the dividend was paid provides the basis for this study of declared dividends. Several accounting considerations can cause the outcome to differ from the banks’ actual dividend declarations. Also, the dividend announced and the dividend paid are not the same thing. All of the bank’s profits, including those of its minority owners, are considered in our analysis.

Frequently Asked Questions on Nigerian Banks Paying Dividends

Q: What is the primary metric used in this analysis?

A: The primary metric used is dividend per share (DPS), calculated by dividing total dividends paid by the average number of outstanding shares.

Q: Why is the focus on declared dividends rather than actual payments?

A: The analysis focuses on declared dividends to provide a consistent basis for comparison across different banks. Actual dividend payments can be influenced by factors like shareholder registrations and processing times.

Q: How does the analysis account for minority shareholders’ profits?

A: The analysis considers the total profits of the bank, including those attributable to minority shareholders, to provide a comprehensive view of dividend payout ratios.

Q: Are there potential limitations to using dividend per share as a sole metric?

A: Yes, dividend per share is just one metric. Other factors like earnings per share, dividend payout ratio, and debt-to-equity ratio should be considered for a comprehensive analysis of a bank’s financial health and dividend attractiveness.

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