FCMB assures shareholders of dividend amid CBN directive
FCMB assures shareholders of dividend amid CBN directive
FCMB Group Plc has assured its shareholders of dividend payouts in 2025 and the immediate years despite new regulatory measures from the Central Bank of Nigeria impacting banks with credit exposures under forbearance.
This was disclosed in a statement signed by the company secretary, Funmi Adedibu, on Monday.
In a circular signed by its Director of Banking Supervision, Olubukola Akinwunmi, on Friday, the CBN directed banks operating under regulatory forbearance to suspend dividend payments, defer bonuses for executives, and halt investments in foreign subsidiaries or offshore ventures.
The CBN said the move, which was part of its ongoing efforts to strengthen the resilience and stability of the Nigerian banking sector, has reviewed the capital positions and provisioning adequacy of banks currently operating under approved regulatory forbearance regimes, specifically with credit exposures and Single Obligor Limits.
According to the statement, FCMB Group said its Nigerian banking subsidiary contributed 46 per cent, with the rest coming from non-banking subsidiaries, and on that basis believed that it could sustain shareholder returns.
“Our Nigerian Banking Subsidiary contributed 46 per cent of the 2024 dividend paid to shareholders (the balance coming from other non-bank subsidiaries). Barring any unforeseen circumstances, the Group expects sufficient buffers to maintain its dividend policy for 2025 and the immediate subsequent years,” the bank assured in a statement.
Shedding more light on its forbearance exposure, FCMB Group stated, “FCMB Group’s Nigerian Banking Subsidiary currently has loans under CBN forbearance (credit exposures to three entities and two obligors) amounting to N207.6bn as of 31 May 2025 (down from N538.8bn as of September 30th, 2024). These are currently classified as Stage 2 loans.
“The bank has made provisions for these loans over the last few years, and intensified resolution efforts have led to over a 60 per cent reduction in its credit forbearance exposures. Once these loans exit the CBN forbearance regime, we anticipate that this would lead to an initial spike in Stage 3 loans to -11.5 per cent of the total loan book, which would decline below 10 per cent by the end of the financial year, based on anticipated loan book growth.
“The bank has one additional obligor (classified as a Stage 1 loan since drawdown to date) on the CBN forbearance for Single Obligor Limit (SOL). This Obligor will be brought within the SOL limit by September 30, 2025, following the conversion to equity of a recently concluded N23.1 bn convertible loan and audited nine-month projected retained earnings.”
The group added that it has already received CBN approval for the capital verification of the convertible loan and is currently processing the other regulatory approvals required.
“We intend to conclude this process, including down streaming the capital proceeds to the bank by the end of July 2025. This would effectively take the share capital and share premium of the bank to -N267bn. “Capital adequacy will remain above the regulatory minimum of 15 per cent for international banks post-forbearance, reinforced with the addition of the converted equity by July 2025 and the planned audit of nine months’ retained earnings,” the statement added.
Meanwhile, Investment Bank Renaissance Capital Africa estimated that FCMB Group has forbearance exposures of eight per cent of its gross loan book.
In absolute terms, Renaissance Capital said, the group’s regulatory forbearance exposures were at $134m, the lowest of the six banks that it profiled.
