June 16 (Lagos) - The Central Bank of Nigeria barred some banks from paying dividends and investing in foreign subsidiaries using forex income gains. The CBN used the regulatory forbearance to temporarily suspend dividend payments, defer bonuses for directors, as well as halt investments in foreign subsidiaries or offshore ventures.
Bank stocks sold off this morning on this directive with almost 10% declines in
ACCESSCORP , FIRSTHOLDCO , FIDFLITYBK ,
FCMB & ZENITHNANK while others like
GTCO ,
UBA &
STERLINGNG sold off.
To be fair, Investor knew about this risk well before they bought into these stocks. CBN has been talking about this for a while now. It should not come as a surprise to anyone that CBN warned Banks to not pay dividends from forex related gains. The Banks made windfall profits from forex gains, without doing any Banking business over the past 1 year. It is a good move from CBN to check the banking sector and stop the decline that has generated in the sector as banks make profits from just sitting on forex rather than doing real banking.
This also comes at a time where the market needed something to come off the recent highs that have been recorded even as security situation in the Country has declined significantly with continued sectarian violence and killings in Benue state.
It's a healthy pull back in the sector and in the market that got over extended and was due for a correction. Smart investors that have been waiting on the sidelines will get an opportunity to make their moves.
reporting for easykobo.com on Monday, June 16 2025 from Lagos, Nigeria