Shareholders dump banks shares over CBN’s dividend payout policy

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…Unity Bank, Stanbic IBTC emerge best performing bank

By Kayode Tokede

Shareholders in February dumped banks shares over Central Bank of Nigeria (CBN) new internal capital generation and dividend payout ratio policy that went viral last month.

Part of CBN’s directive includes “any Deposit Money Bank (DMB) or Discount House (DH) that does not meet the minimum capital adequacy ratio shall not be allowed to pay dividend.”

The regulation aimed was to build the statutory reserves of banks, in view of the dynamism, rapid changes and emerging risks.

The profit-taking leads to Nigerian Stock Exchange (NSE) Banking Index dropping by 1.8 per cent or 10.6 basis points in February to 575.56 basis points from 586.16 basis points the market opened for trading.

According to our corresponding findings, five out of 16 listed banks on The Exchange recorded price appreciation by percentage, while 11 others share prices depreciated in February.

Unity Bank Plc and Stanbic IBTC Holdings Plc thus emerged as best performing banks shares on the NSE in February while the share price of United Bank For Africa Plc remained flat.

The share price of Unity Bank gained     17.11 per cent or N0.26 to close February at N1.78 from N1.52, while share price of Stanbic IBTC Holdings added 3.26 per cent or N1.50 to close at         N47.50 from N46.00 it opened for trading in February.

The share price of United Bank for Africa remained flat at N12.70.

Top gainers were Zenith International Bank Plc that appreciated       by 2.90 per cent or N0.90 from N31.00 to N31.90 and Ecobank Transnational Incorporated    that gained 1.75 per cent or N0.35 to close February at N20.35.

Access Bank’s share price added 0.39 per cent or N0.05 from N12.95 to N13.00 per share.

Top banks losers in February include Skye Bank Plc that lost 34.01 per cent or N0.50 to close at N0.97 from N1.47 and Wema Bank Plc’s share price that depreciated by 32.65 per cent or N0.48 from         N1.47 to N0.99 per share.

The share price of Diamond Bank Plc dip by 26.10 per cent or N0.83 to N2.35; Fidelity Bank Plc’s share price dive by 18.31 per cent or N0.67 to close at N2.99 from N3.66; Union Bank Nig. Plc, dropped by 17.72 per cent or N1.40 to N6.50 and FBN Holdings Plc‘s share price dropped by 17.20 per cent or N2.40 from N13.95   to N11.55.

FCMB Group Plc, 17.32 per cent or N0.53 to N2.53 from N3.06 and Sterling Bank Plc’s share price depreciated by 13.81 per cent or N0.29 to N1.18 per share.

Other losers are Jaiz Bank Plc that dropped 13.08 per cent or N0.14 to close at N0.93 from N1.07 and Guaranty Trust Bank Plc that recorded 0.31 per cent or N0.15 in share price to N49.00 as against N49.15 it closed for trading in February.

Afrinvest West Africa, an investment and research firm, showed that only six banks – Access Bank, FCMB, Guaranty Trust Bank, United Bank for Africa, Wema Bank and Zenith Bank- met the CBN’s minimum requirement for Capital Adequacy Ratio (CAR) and Non-Performing Loans. Hence these banks are excluded from the restrictions on dividend payment.

The firm explained that many lenders will not be able to pay dividends based on their capital reserves as well as the proportion of Non-Performing Loans (NPLs) in a bid to forestall any threats to customer deposits in the system.

On the criteria that require lenders to meet the minimum Capital Adequacy Ratio (CAR) before dividend payout, the research firm said all the banks under its coverage, save for Unity and Union, met the minimum requirement stipulated by the CBN.

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