The Nigerian banking industry is one of the most lucrative business sectors in the economy, playing a pivotal role in driving growth and development in Nigeria’s economic landscape.
Besides supporting economic activities through the provision of essential financial services, the banking sector is known for offering value to its shareholders through regular dividend payments.
Over the last five years, nine prominent Nigerian banks quoted on the Nigerian Exchange (NGX) have collectively declared an astounding N1.75 trillion in dividends to their shareholders, from a total net profit of N6.8 trillion, representing an average dividend payout ratio of 26%.
This indicates how profitable the banking sector has been in recent years, boasting a cumulative net asset value of N11.1 trillion as of the end of December 2023, representing 5.1% of Nigeria’s nominal GDP (N229.9 trillion – 2023 estimate).
Meanwhile, the 25.5% average dividend payout ratio by the banks implies that, on average, 74.5% of the net profit was reinvested into the business and recorded as retained earnings.
The relatively low dividend payout ratio, however, may be attributed to the huge profits declared in 2023 following the devaluation of the naira, which increased the naira value of balance sheet items for most banks’ long positions, coupled with the CBN’s regulations around spending FX revaluation gains on dividend payments.
Nairalytics presents a ranking of publicly listed commercial banks in Nigeria based on their gross dividend payout and dividend payout ratio between 2019 and 2023. The banks have been ranked based on their cumulative dividend payout ratio over the last five years.
The dividend payout ratio is a critical indicator of how much a company returns to its shareholders in the form of dividends relative to its net income, calculated by dividing the dividends declared by the net income and multiplying by 100.
This ratio helps investors understand how much money a company returns to its shareholders versus how much it retains to reinvest in the business. A higher dividend payout ratio may indicate that a company is returning a significant portion of its profits to shareholders, while a lower ratio might suggest that the company is reinvesting more of its earnings into future growth.
It is often used by investors seeking steady returns in the form of dividends to assess if they should be investing in a particular company’s stock.
Below are the Nigerian banks that have declared the most dividends in the last five years. Our ranking is based on banks that have paid at least N50 billion combined in the last five years.
Dividend Payout Ratio: 33.1%
Dividends Paid: N435.5 billion
PAT: N1.3 trillion
Guaranty Trust Holding Company (GTCO) ranks second in dividend payments over the past five years, disbursing a total of N443 billion, which represents a dividend payout ratio of 33.1%, second only to Stanbic IBTC Group.
GTCO is known as a consistent dividend-paying stock and one of the first pioneers of paying dividends twice, half-yearly and annually. It declared a dividend per share of N2.8, N2.7, and N3 respectively. In 2022, it increased its dividend yet again to N3.1 and then to N3.2 in 2023.
We estimate the bank’s 5-year compound annual growth rate (CAGR) at 3.4%. The growth rate indicates moderate but stable growth in dividend payments, suggesting that while dividend increases have been steady, they have not been particularly aggressive.
However, in absolute terms, dividend payouts have risen from just N82.4 billion to N91.2 billion per our estimates.
