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.
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.
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