Dividend outlook for Tier-one Banks

Investors in Nigerian Banks will be wondering what to expect as dividend payouts as 2016 enters the final month of December.

Financial services companies often seek to distribute as much excess capital as possible to shareholders in the form of dividends.

When we looked at the 2015 results of the top five Nigerian banks, we saw that they had dividend payout ratios (dividend as percentage of net income) ranging from 35 to 52 per cent.

Meanwhile net incomes of the banks are on a higher run rate as at third quarter (Q3), 2016 than last year.

Guaranty Trust Bank (GTB), net income as at Q3, 2016 of N119 billion is 20.6 percent higher than its full year 2016 net income of N99.4 billion, FBNH net income of N42.6 billion as at Q3, 2016 is already 182 percent of its FY 2015 net income, while Zenith Bank is running at 94.7 percent of FY 2015 net income as at Q3.

UBA and Access are also at 79.4 percent and 86.7 percent of FY 2015 net income as at Q3, 2016.

This means investors could see higher dividends if the baseline payouts from last year are maintained and no significant deterioration in profits occur in the fourth quarter.

FBNH group intends to pay FY’16 dividend from the profit of its other subsidiaries and has guided towards paying no less than the amount paid in FY’15 of 15 kobo.

UBA has declared an interim dividend of 20 kobo per share; Zenith bank an interim dividend of 25 kobo per share, Access Bank declared an interim dividend of 25 kobo per share and GTB 25 kobo.

 

PATRICK ATUANYA & BALA AUGIE