Banks Should Improve Transparency On dividend Decisions — Shareholders

Some bank shareholders have urged banks to improve transparency and communication with investors, particularly on decisions relating to dividend payments.

The shareholders made the call in separate interviews with the News Agency of Nigeria (NAN) in Abuja on Sunday while reacting to the non-declaration of dividends by some banks for the 2025 financial year.

They said that while investors appreciated profitability, they also valued clear communication on issues affecting their investments.

The National Coordinator of the Pragmatic Shareholders Association of Nigeria, Mrs Bisi Bakare, said banks’ management should clearly explain the reasons for withholding dividends and outline measures being taken to address the challenges.

According to her, the non-declaration of dividends does not necessarily indicate poor performance, as many of the affected banks recorded strong financial results during the year under review.

She said transparency was necessary to keep investors adequately informed and sustain confidence in the banking sector.

Bakare attributed the development to factors such as regulatory directives by the Central Bank of Nigeria, requiring some banks to retain earnings and strengthen capital buffers during and after the ongoing recapitalisation exercise.

She also cited increased provisioning requirements for non-performing loans and legacy exposures, particularly in the oil and gas sector.

According to her, the issue should be viewed as a strategic and regulatory matter rather than an earnings problem.

“Strong capital positions and healthy balance sheets remain fundamental to sustainable dividend payments.

“The development may disappoint income-focused investors who rely on dividends for regular returns.

“It could also exert temporary pressure on the share prices of affected banks, as already reflected in market reactions.

“However, retaining earnings to strengthen capital adequacy and improve asset quality could enhance long-term market stability and investor confidence.

“Stronger banks today could translate into better and more sustainable returns tomorrow,” she said.

Bakare advised shareholders not to base investment decisions solely on dividend payments.

She said investors should also consider factors such as capital adequacy, asset quality, earnings sustainability and long-term growth prospects.

Also speaking, the Secretary-General of the Liberated Shareholders Association of Nigeria, Prince Ridhwan Hamza, said the non-payment of dividends by some banks was linked to regulatory forbearance measures and directives requiring them to provide for delinquent exposures and bad loans.

Hamza said the development might temporarily affect the share prices of the affected institutions and the broader market.
He, however, expressed confidence that improved quarterly earnings and sustained investor confidence would support a recovery in market performance.

He urged investors to view the development as a necessary step toward stronger financial positions and better returns in the future.

“The market remains attractive and dividend opportunities still abound,” he said.
NAN reports that only a few banks declared dividends for the 2025 financial year.