A recent analysis by Renaissance Capital has sparked concern throughout Nigeria’s financial sector, revealing that several top-tier banks are grappling with the long-term effects of regulatory forbearance—a policy that could delay dividend payments until 2028.

Regulatory forbearance, as enforced by the Central Bank of Nigeria (CBN), permits banks to restructure troubled loans without recognizing them as non-performing. While intended to provide relief and maintain systemic stability, this policy has inadvertently masked the true scale of risk and created a growing backlog of distressed assets—now reportedly amounting to trillions of naira.

According to the report, major Nigerian banks with high exposure to these forbearance arrangements may be unable to meet the regulatory conditions necessary for dividend distribution in the coming years. For investors, this signals an extended period without returns, while for the banks, it places increased pressure on balance sheets and capital adequacy ratios.

The implications of this looming dividend freeze are far-reaching. Nigeria’s banking sector has been a cornerstone of the economy, underpinning growth and attracting investor confidence. However, as the cost of non-performing loans rises and liquidity becomes constrained, concerns about sustainability, credit quality, and profitability are escalating.

Despite previous resilience and regional expansion, Nigerian banks now face an uphill battle balancing regulatory compliance with shareholder expectations. The Renaissance Capital findings suggest a reassessment of risk frameworks and more conservative investor outlooks may be necessary, especially as forbearance policies remain in force.

This development adds a new layer of uncertainty to an already volatile economic climate. The Nigerian economy, which heavily depends on banking infrastructure to support commerce and investment, may face reduced capital inflows and shaken market sentiment if dividend suspensions materialize on a broad scale.

Market participants and stakeholders are urged to closely monitor these developments and adjust their strategies accordingly. As regulatory pressure mounts, the banking sector may enter a period of recalibration—one where transparency, asset quality, and compliance become critical determinants of institutional survival and investor trust.