UBA chief explains dividend pause as CBN rule forces ₦331bn hit

United Bank for Africa has explained why it did not declare a final dividend for the 2025 financial year, breaking a long record of shareholder payouts.

Group CEO Oliver Alawuba said the decision was driven primarily by regulatory changes that forced the bank to recognise large loan losses, rather than any weakness in its core business.

“You will recall that UBA had a long history of dividend payment,” Alawuba said in an interview with Arise TV. “In 2023, we paid about 11% dividend yield. In 2024, it was around 10%. Even in 2025 half-year, we paid 25 kobo. The expectation was a final dividend—but that didn’t happen.”

The turning point came from a directive by the Central Bank of Nigeria requiring banks to exit regulatory forbearance on restructured loans. Compliance meant UBA had to reclassify some of those exposures in line with prudential guidelines, effectively recognising higher credit risk.

“As we exited the forbearance window, we had to classify some accounts and make provisions of about ₦331 billion,” Alawuba said.

That move pushed the bank’s non-performing loan ratio above levels typically considered compatible with dividend distribution, effectively shutting the door on a final 2025 payout.

The impact of that decision is also reflected in the bank’s recent financial performance. While UBA continues to post strong top-line numbers, with gross earnings running at about ₦3 trillion annually and sustained income growth across its pan-African operations, profitability has come under pressure from elevated risk costs.

In the first quarter of 2026, profit declined year-on-year, weighed down by a sharp rise in impairment charges as the bank absorbed the fallout from loan reclassifications tied to the regulatory exit.

At the same time, broader measures of earnings were hit by currency-related losses, underscoring the strain on capital and reserves that ultimately determines dividend capacity.

The bank, however, insists the shock is temporary. Alawuba described the provisioning as a one-off balance sheet reset rather than a structural weakness, noting that the bank has already begun recovery efforts on affected loans, with early signs of repayment.

“Once these customers pay back, the NPL will moderate and we’ll be in a position to pay dividend,” he said.

Despite the dividend pause, UBA maintains that its fundamentals remain intact. The bank’s shareholders’ funds stand at about ₦4.3 trillion, with a capital adequacy ratio of 23.2%, providing a buffer well above regulatory requirements.

Deposits have continued to grow, rising to ₦27.2 trillion, supported by operations spanning 24 African countries, a diversification that management says helps stabilise earnings.