CBN’s Dividend Pause Policy: What banks are saying in plain language

Last Friday, Nigeria’s central bank dropped a bombshell on the banking sector: no more dividends, bonuses, or new foreign investments for banks still carrying risky loans hidden under a special arrangement called forbearance. The announcement rattled the stock market, with banking shares falling sharply.

As investors panicked, some banks started issuing statements from Monday, but most used complicated financial jargon, leaving many Nigerians confused.

What exactly are these banks saying—and what does it mean for your money or investment? Let’s break it down:

First, two key terms at the heart of this story:

CBN’s Forbearance:

Forbearance is a special permission banks got from the CBN during COVID-19. It allowed them to delay classifying certain risky loans as “bad,” giving them breathing room. Now, the CBN says that period is over. Those loans must now be shown for what they are, even if it makes the banks look weaker for a while.

Single Obligor Limit (SOL):

This is a rule that stops banks from lending too much to just one customer or business group. During COVID, this rule was relaxed. Now, banks must fix it by reducing those loans or converting them into ownership (equity).

Here’s what some of the banks are telling the market:

First City Monument Bank (FCMB)

How much is involved?

The bank has ₦207.6 billion worth of loans currently under CBN forbearance. Remember forbearance? The amount is down from ₦538.8 billion in September 2024. These loans are currently “Stage 2”, meaning they’re at risk but not officially “bad loans” yet.

What happens next?

When the forbearance period ends, these loans may officially turn into “bad loans” (Stage 3) temporarily, causing FCMB’s bad loan ratio to rise to about 11.5% of its total loans (loan book). FCMB expects that number to fall below 10% before the end of 2025 as it gives out new, healthy loans (in its language – as it grows its loan book).

One big issue — Single Obligor Limit (SOL)

FCMB also lent too much to one big customer, breaching CBN rules.

How will they fix it? The bank says it is converting a ₦23.1 billion loan into ownership shares in that borrower’s company. Once done, that loan won’t count fully as debt. FCMB expects to complete this by July 2025, increasing its capital base to ₦267 billion. The CBN has already approved this plan, it says.

Impact on dividends?

FCMB says 46% of its 2024 dividend came from its banking business. Unless something drastic happens, they expect to keep paying dividends.

Zenith Bank

Zenith said it is working to resolve all CBN-related loan issues by June 2025. Although it didn’t give as much detail as FCMB, the bank said it has successfully raised and surpassed the N500 billion new regulatory capital for banks of its size. It said its exposure under SOL forbearance related to a single obligor.

The forbearance granted on other facilities relates to two customers. It said it has made provisions to cover this and will has taken steps to make full provisions by June 30. It remains confident about continuing dividend payments.

Fidelity Bank

Fidelity says it has already raised ₦273 billion through a recent share sale to the public. It plans to raise another N200 billion to meet the new CBN requirement of ₦500 billion in capital for banks with international operations.

Fidelity admitted that it has loaned too much to two borrowers, breaching the Single Obligor Limit (SOL). But it’s confident that by the first half of 2025 (June), it will fix this, either by reducing the loans or using other financial strategies to bring them within the allowed limits.

Apart from the SOL breach, Fidelity also has loans to four customers that fall under the CBN’s special COVID-era forbearance window. The lender has already set aside large amounts of money (provisions) to cover potential losses from these loans. It also said it is working hard to either fully provide for these or get the loans performing again by June 30, 2025.

Access Bank

Access Bank says it already met the CBN’s new ₦500 billion capital requirement. It says it is already compliant with the Single Obligor Limit (SOL) – meaning it hasn’t lent more than allowed to any single customer or group.

While Access Bank didn’t provide details on how many loans are involved, it admitted that it does have some loans under the regulatory forbearance window. The bank said it will fully comply with CBN’s instructions on this by June 30, 2025.

Bottom Line for Investors

1. Not all banks are affected – but some major ones are.
2. Banks that resolve their risky loans faster will likely return to regular dividend payments
3. Big names don’t always mean strong financial health.
4. Don’t panic – but don’t assume every banking stock will perform well in the short term.

Pluboard will continue to break down complex financial stories like this in simple terms to help you make smarter decisions with your money.