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.
Fidelity Bank
The commercial bank has been in the shadows of the big five for some years now, but it appears this is about to change as the bank gears up for its massive capital-raising efforts.
The bank has reported a combined profit of N224.3 billion in the last five years, out of which it has paid a dividend of N61.4 billion.
In terms of dividend payout ratio, Fidelity ranks 4th on our list at 27%. The bank declared a dividend per share of N0.98, N0.22, and N0.35 in 2019, 2020, and 2021 respectively. However, the last two years have seen a remarkable improvement, with dividend per share rising to N0.5 and N0.8 per share in 2022 and 2023 respectively.
Fidelity Bank’s dividend per share delivered an astonishing compounded annual growth rate of 44%, the best in the sector. We won’t be surprised if the bank pays N1 dividend per share at the end of this financial year.
FBN Holdings
Dividend Payout Ratio: 10%
Dividends Paid: N74.6 billion
PAT: N745.5 billion
Nigeria’s oldest financial institution, FBN Holdings, has probably paid more dividends than any other company on the Exchange. However, it comes in at 6th place in our ranking of highest-paying dividend banks in the last five years.
According to our records, FBN Holdings has declared N74.6 billion in dividends in the last five years out of a total profit after tax of N745.5 billion.
This is indicative of a 10% dividend payout ratio, the smallest of the FUGAZ banks. The bank declared a dividend per share of N0.38, N0.45, and N0.35 in 2019, 2020, and 2021 respectively. Its dividend increased to N0.5 in 2022 before dropping again to N0.40 in 2023.
FBN Holdings has thus returned a dividend per share growth rate of just 1%. The company now has new management and a new board, and it is expected that it will compete with its peers in terms of profits and dividend payments.
Stanbic IBTC
Dividend Payout Ratio: 48.6%
Dividends Paid: N212.1 billion
PAT: N442.5 billion
Stanbic IBTC ranks fifth in total dividend payments during the review period, having declared an estimated N212.1 billion in dividends in the last five years. Notably, the bank has the highest dividend payout ratio at 48.6%, indicating a substantial return of profits to shareholders.
In 2019 and 2020, Stanbic IBTC paid a dividend of N3 and N4 per share respectively. In 2021 and 2022, they paid N3 and N3.5 per share. In 2023, the bank declared a dividend of N3.7 per share.
Based on our estimates, the bank’s compounded annual dividend per share growth has been just 5% over the last half-decade.
Stanbic IBTC’s high payout ratio and solid growth in dividend payments reflect its strong focus on shareholder returns. This perhaps explains why the bank is also the most priced in the sector, trading at an average of N53.5 as of June 20th. It also trades at a price-to-earnings multiple of 4.65x.
Investors seem to love how much dividends Stanbic IBTC pays annually as a percentage of profits.
Access Holdings
Dividend Payout Ratio: 19%
Dividends Paid: N215 billion
PAT: N1.12 trillion
Access Holdings is Nigeria’s largest bank by total assets. The bank has reported a total profit after tax of about N1.12 trillion in the last five years.
Out of these profits, it has declared an estimated N215 billion in dividends over the same period, equating to a 5-year average payout ratio of just 19%.
According to our data, the bank declared a dividend of N0.65, N0.8, and N1 in 2019, 2020, and 2021 respectively. It also declared a total dividend of N1.50 in 2022 and increased it to N2.10 in 2023. The bank’s dividend per share rose by an estimated 35% on a compounded annual growth basis. This is the highest we have seen amongst the major banks. However, this is also because Access Holdings has typically paid a lower dividend per share compared to its peers.
Nevertheless, Access Holdings’ dividend payout ratio of 19% is not the lowest of the FUGAZ banks but could be better considering the size of their profits. Perhaps this could also be why it is the least valued of the Tier One banks.
UBA
Dividend Payout Ratio: 20.1%
Dividends Paid: N219.5 billion
PAT: N1.1 trillion
United Bank for Africa (UBA) ranks third in absolute dividend payments over the past five years, having disbursed N219.56 billion out of a combined profit after tax of N1.1 trillion.
This represents a dividend payout ratio of 20.1%, slightly higher than Access Bank in terms of peer group comparisons. However, the dividend per share growth has risen by about 29% on a compounded annual basis. The bank declared a dividend per share of N1, N0.52, and N1 in 2019, 2020, and 2021 respectively, a period marked by lower dividends. In 2022 and 2023, dividends grew to N1.1 and N2.8 per share respectively.
GTCO
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.
Zenith Bank
Dividend Payout Ratio: 31.9%
Dividends Paid: N505 billion
PAT: N1.58 trillion
Zenith Bank has led the way in dividend payments over the past five years, disbursing a total of N505.48 billion from its five-year profit of N1.6 trillion. This amount accounts for 31.9% of the cumulative dividend payments made by the banks during this period.
Over the past five years, Zenith Bank has maintained a steady dividend payout, offering both interim and final dividends. The bank paid a dividend per share of N2.8, N3, and N3.10 in 2019, 2020, and 2021 respectively. It increased to N3.2 in 2022 and an industry-high N4 per share in 2023.
Its steady stream of dividend payments delivers a compounded annual growth rate of 9% in the last five years. This consistent dividend policy and growth rate suggest strong financial stability and commitment to returning value to shareholders.
This story was edited by Idika Aja
Note: This analysis is based on dividends declared, derived by the dividend per share of the banks multiplied by the average outstanding shares in the year the dividend was paid. The result might differ from the actual dividend declared by the banks based on several accounting factors. The actual dividend paid is also different from the dividend declared. Profits used in our analysis include all the profits made by the bank, including that of its minority shareholders.