CBN Directive Triggers Sharp Drop in Banking Stocks
Banking stocks on the Nigerian Exchange (NGX) fell sharply by 3.98% after the Central Bank of Nigeria (CBN) issued a directive halting dividend payments , bonuses , and offshore investments for banks under regulatory forbearance.
Investor confidence was shaken as concerns grew over how this will affect earnings and capital strength in the sector.
The broader market also felt the ripple effect, with the benchmark index dropping 0.15% to close at 115,258.77 points , while total market capitalisation lost ₦108 billion , closing at ₦72.68 trillion .
CBN Orders Banks to Hold Back Dividends and Bonuses
On June 13, 2025 , the CBN issued a circular ordering affected banks to:
- Suspend dividend payments to shareholders
- Defer bonuses for directors and senior staff
- Avoid investing in foreign subsidiaries or new offshore ventures
This move aims to improve capital buffers and ensure compliance with prudential standards, especially for banks still recovering from past financial strains.
Analysts Warn Some Banks Are More Vulnerable
According to Stanbic IBTC , banks with high foreign exchange loans , large Stage II loan portfolios , and heavy exposure to sectors like oil & gas and power are most at risk.
However, strong Non-Performing Loan (NPL) coverage ratios may help cushion some of the pressure.
“This shows that banks have made enough provisions to manage risks,” analysts noted.
They added that ongoing capital-raising efforts could support shareholder funds and help banks meet regulatory requirements.
Banks like First Holdco, FCMB Group, Fidelity Bank, and UBA are seen as more vulnerable under the new rules.
Meanwhile, GTCO and Zenith Bank are viewed more favorably by investors for their stronger fundamentals.
Mixed Reactions From Analysts and Investors
Emerging & Frontier Capital expressed concern about mixed signals from the CBN.
“Does the CBN want banks to raise capital or not? First came the windfall tax, now this.”
David Adenori, Vice President at Highcap Securities, said the directive affected market performance during yesterday’s trading session.
He explained that the temporary easing of forbearance rules had helped struggling banks manage non-performing loans.
Now that relief is ending, banks must return to full compliance with financial regulations.
Still, he said recent improvements in loan recovery and FX debt management suggest stability is intact.
“Banks are meeting obligations. There’s no sign of default yet.”
He urged patience as banks prepare to communicate directly with investors to ease concerns and rebuild trust.
Call to Action: Share Your Thoughts!
What do you think about the CBN’s latest move? Is it good for long-term banking health or hurting investor confidence?
💬 Leave a comment below and join the discussion on Nigeria’s evolving financial regulation landscape.
📢 Don’t forget to share this article to spread awareness about the impact of CBN policies on the economy.
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