Despite the harsh operating environment in the country, seven listed financial institutions on the Nigerian Exchange Limited (NGX), paid investors a total sum of N801.3 billion as dividend between 2018 and 2020, data obtained by THISDAY at the NGX has revealed.
Analysis of the NGX data revealed that the seven banks in 2020 paid N278.84 billion as dividend, while N271.81billion and N250.64billion was paid as dividend between 2019 and 2018, respectively.
Despite domestic and foreign macroeconomic challenges, these financial giants over the years have sustained dividend payout to shareholders coupled with growth in profit.
The National Bureau of Statistics (NBS) had disclosed that financial Institutions under Financial and Insurance sector grew by 13.34per cent in full year 2020 from 2.4per cent in 2019 and 1.41per cent in 2018.
Out of the N801.3billion dividend declared by these seven financial institutions, Zenith Bank contributed 32.7 per cent, while GTCO contributed 30.4 per cent.
Others financial institutions under consideration are Access Bank Plc, United Bank for Africa (UBA) Plc, FBN Holdings, Fidelity Bank Plc and Stanbic IBTC Holdings.
Further analysis revealed that five out of the seven financial institutions have maintained a policy of paying interim and final dividend, a key factor that has sustained investors’ confidence in the domestic capital market.
Specifically, Zenith Bank and GTCO declared N262.16billion and N243.57billion as dividend respectively in the last three years.
Zenith Bank between 2019 and 2020 financial year paid investors N87.91billion and N86.34billion in 2018 as dividend respectively.
On its part, GTCO last year paid N83.1billion as total dividend while in the previous year, N81.01billion was paid as total and interim dividend.
Closing following them is Stanbic IBTC Holdings, which declared N101.3billion in the period under review while United Bank for Africa declared N81.05billion as dividend between 2018 and 2020.
During the period, Access Bank declared N58.6billion as dividend while FBN Holdings dividend amounted to N39.13billion.
In addition, Fidelity Bank declared N15.35billion as dividend between 2020 and 2018.
A review of the data showed that Zenith Bank leads in the banking sector as the management maintained robust payout in the three years under review.
Guaranty Trust Holdco came second in terms of dividend to investors amid growing profit and other fundamentals.
Commenting, analysts told THISDAY that the dividend payout by these banks is on the heels of Central Bank of Nigeria (CBN) policies to strengthen the financial sector, stressing that the sector role is the nation’s economy is remarkable.
Analyst at PAC Holdings, Mr. Wole Adeyeye said the financial sector has benefited heavily from the nation’s economy, stressing that technology oriented services have impacted on profit that translates into profit and dividend to investors.
He said: “The financial sector has benefited from non-interest income and interest income revenue. Financial institutions fees and commission has also increased following different online paying channels. COVID-19 lockdown impacted on robust dividend last year as a lot of banking activities was online. These banks that pay dividend have actually grown over the years. The economy growth has actually favoured the banking sector in terms of technology advancement.
“Meanwhile, investors now have confidence investing in the banking sector because they believed interim and final dividend will be paid. The likes of GTCO and Zenith Bank yield on dividend payout last year was 10 per cent. The sector is growing tremendously and investors are always expecting returns.”
According to the MD/CEO Enterprise Stockbrokers Plc, Mr. Rotimi Fakayejo, Zenith Bank, GTCO, among others are into financial service delivery that cut-across sectors.
He said the sustained dividend payout by these financial institutions highlight effective policies implementation by their board of management and how the nation’s economy has grown over the years.
“These banks have sustained themselves amid the economy situation in Nigeria. Zenith Bank, among others that pay dividend on NGX are service-oriented companies and they don’t depend on raw materials to manufactured any products. All other sectors depend on the banks to operate and it is responsible to their growth and dividend payout every year, ”he said.
On his part, Arise TV Analyst, Mr. Chika Mbonu; said the dividend payout by these financial institutions is helping the liquidity of their stocks and creating room for high demand on the NGX.
According him: “When investors know these banks are to pay dividend by half year and full year, it attract them to buy their shares. It is expected to boost their liquidity and drive economy formation in a long term.”
Speaking from shareholder’s perspective, the National Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu said the dividend payout by Zenith Bank, others give investors confidence to retain their stocks and invest more on NGX.
He said: “If the dividend is attractive, it encourages investors to buy more -we call that capitalism! If these banks have not sustained dividend payment in the last three, it means the sector has no hope. Investors are meant to enjoy capital appreciation and dividend payout. It is always delight these companies are paying dividend to shareholders. t is a huge advantage when investors invest in companies that pay dividend.”
Reacting also, the Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie commended these financial institutors on dividend payment to investors, stressing that the likes of Zenith Bank, GTCO, among others have put mechanism in place to sustain dividend payout.
According to him: “These banks through the CBN policies have put down a solid foundation and it is expected to make them maintain dividend payout to investors. Even Access Bank and Fidelity Bank are not left out as they continue to grow in key fundamentals. As long as the business continued to boom despite the economy challenges, we shareholders expected them to continue to pay interim and final dividend every year.”