2014-10-17 | BSD/DIR/GEN/LAB/07/033

Internal Capital Generation and Dividend Payout Ratio

In a letter addressed to banks and discount houses, the Nigerian Central Bank's Director of Banking Supervision, Tokunbo Martins, outlines new directives for maintaining dividend payout ratios. Dividends will not be allowed for institutions that fail to meet minimum capital adequacy ratios or have high risk ratings with non-performing loans above 10%. Institutions meeting these criteria but still taking on moderate risk should not exceed a 30% dividend payout ratio. Banks can now submit their approved dividend payout policies prior to payment, and must base all ratios on financial year averages. These directives aim to build adequate capital buffers for institutions in line with their risk profiles.

Nigeria

Central Bank of Nigeria

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