Banks face possible dividend drought as COVID-19 bites

There are strong indications that some banks may resort to paying lesser or no dividends at all in 2020 due to the economic fallouts from the Coronavirus pandemic, which has triggered a recession in Nigeria.

It would be recalled that the Nigeria’s tier-1 banks were responsible for 94.6 per cent and 89.3 per cent of the total dividend payouts by NSE-listed banks between 2018 and 2019, respectively, however, there are indications 2020 will be a hard nut to crack for the banks when it comes to dividend payment.

Investigations revealed that between 2018 and 2019, Zenith Bank paid out N86.3 billion and N87.9 billion as dividends, while Guaranty Trust Bank which paid out N79.4 billion and N81 billion respectively.

UBA paid out N29 billion worth of dividends in both 2018 and 2019, while Access Bank paid N18.8 billion and N23.1 billion in 2018 and 2019, respectively. On the other hand, FBN Holdings Plc (which is the parent company of First Bank of Nigeria Ltd), paid out N10 billion in 2018 and N10.7 billion in 2019.

But with the negative macroeconomic factors occasioned by the COVID-19 pandemic, banks investors are likely to get lesser dividends or none at all in 2020 as the banks adjust their costs to cope with the impact.

An assessment report recently released by ratings agency, Augusto & Co’s on Nigerian banks noted that COVID-19 has weakened the asset quality of the banks.

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