FCMB Reassures Investors Amid CBN Dividend Suspension, Highlights Strong Recovery Plan
June 17, 2025
FCMB Group Plc has moved to reassure shareholders and market stakeholders following the Central Bank of Nigeria’s (CBN) recent directive suspending dividend payments for banks with unresolved forbearance-linked loans or violations of the Single Obligor Limit (SOL). The directive, which came into effect on June 13, has sent ripples across Nigeria’s financial sector, triggering a sharp reassessment of banking stocks and future earnings outlooks.
In a proactive response, FCMB released a statement on Monday highlighting the significant progress it has made in reducing its forbearance exposure and addressing regulatory breaches.
Forbearance Exposure Slashed by Over 60%
According to the statement, FCMB has reduced its forbearance-related loan book from ₦538.8 billion in September 2024 to ₦207.6 billion as of May 31, 2025—a reduction of more than 60%. These loans are tied to three entities and two obligors and are currently classified as Stage 2 under IFRS 9 guidelines. Despite their status, the bank assured investors that it has consistently made provisions for these loans over the past several years.
“The Bank has made provisions for these loans over the last few years, and intensified resolution efforts have led to over 60% reduction in its credit forbearance exposures,” FCMB stated.
The bank added that it expects the loans to exit the forbearance regime in the near term, though a temporary increase in Stage 3 non-performing loans (NPLs) may occur—peaking at around 11.5% of the total loan portfolio before dropping below 10% by the end of the year, aided by loan growth and recoveries.
Addressing the Single Obligor Limit Breach
FCMB also revealed that it has moved to resolve a temporary breach of the CBN’s Single Obligor Limit (SOL) by converting a ₦23.1 billion loan into equity. This move is expected to significantly enhance the bank’s capital base, raising it to approximately ₦267 billion—well above regulatory minimums.
“We have already received CBN approval for the capital verification of the Convertible Loan and are currently processing the other regulatory approvals required,” the bank noted.
This strategy not only addresses the breach but also positions FCMB to meet the CBN’s new capital adequacy thresholds more comfortably.
Dividend Policy Remains Intact
Despite the CBN’s directive on dividend restrictions for banks under regulatory scrutiny, FCMB emphasized that its group-level earnings are sufficiently diversified to mitigate the impact. In 2024, the group disclosed that only 46% of shareholder dividends came from its Nigerian banking subsidiary, with the remaining 54% contributed by non-bank subsidiaries, including asset management, pensions, and fintech operations.
“We expect to have sufficient buffers to maintain our dividend policy for the 2025 financial year and the immediate subsequent years,” FCMB said confidently.
The group’s broader income base, combined with current capital reinforcement efforts, offers a cushion that may help preserve shareholder value during this turbulent regulatory period.
Market Reaction and Industry Context
FCMB’s update comes at a time of increased regulatory oversight in Nigeria’s banking sector. On June 13, the CBN suspended dividends, bonuses, and foreign investments for banks with unresolved forbearance or SOL breaches—affecting multiple tier-I and tier-II institutions.
The market responded swiftly. FCMB’s share price fell 6.57% at the close of trading on June 16, 2025, reflecting investor uncertainty across the sector.
However, FCMB’s transparent disclosures and accelerated recovery plan may offer some reassurance to investors, especially as the market continues to digest the implications of the CBN’s new capital rules and the phase-out of legacy forbearance arrangements.
The Bigger Picture
While challenges remain, FCMB’s decisive actions and clear communication reflect a commitment to stability, compliance, and investor confidence. The group appears poised not only to weather current regulatory headwinds but also to emerge stronger, with a solidified capital base and diversified income streams.
As Nigeria’s financial sector braces for further adjustments, FCMB’s proactive approach may well serve as a model for resilience and regulatory adaptation in the evolving banking landscape.
