Shareholders of Zenith Bank have voiced deep frustration over the rising penalties imposed on commercial banks by the Central Bank of Nigeria (CBN) and other regulatory authorities. According to a 9am News report, investors argue that these fines and levies indirectly erode shareholder returns, negatively affecting their dividends.
Zenith Bank recently declared a dividend of N4.00 per share, bringing its total dividends payout for the 2024 financial year to N5.00 per share amounting to a combined value of N195.67 billion.
Banks have faced escalating penalties for failing to adhere to provisions of the Banks and Other Financial Institutions Act 2020 and CBN circulars. Zenith Bank alone incurred N15.422 billion in penalties in 2024, a sharp rise from the N21 million paid in 2023. Infractions included lapses in anti-money laundering (AML) reviews, foreign exchange violations, and other compliance failures.
Other notable penalties include:
- Access Bank Group: N1.21 billion (up from N38 million in 2023)
- GT Bank: N1.6 billion (up from N73 million in 2023)
- UBA: N400 million (up from N110 million in 2023)
- Sterling Bank: N61 million (up from N21 million in 2023)
In addition, the government collected N1.2 trillion in taxes from just nine Nigerian banks in 2024, marking a 111.4% increase compared to the previous year. While dividends to shareholders rose to N951.4 billion an 87% increase shareholders remain concerned that the rising penalties and taxes are cutting into potential gains.
The Finance (Amendment) Act 2023 introduced a windfall tax levy targeting profits from foreign exchange transactions, adding another layer of financial burden. Zenith Bank, GTCO, and UBA collectively incurred N172.3 billion in windfall tax liabilities:
- Zenith Bank: N63.3 billion
- GTCO: N51.2 billion
- UBA: N57.9 billion
Why Banks Are Penalized
The CBN enforces penalties to strengthen regulatory compliance and maintain system stability. The most common infractions include:
- AML/CTF Violations: Failure to flag suspicious transactions poses security risks.
- Cash Reserve Requirement (CRR) Breaches: Banks must maintain a portion of deposits with the CBN.
- Foreign Exchange Violations: Irregularities in FX dealings attract heavy sanctions.
- General Compliance Failures: Issues like lapses in cybersecurity, customer protection, and reporting standards.
Several shareholders expressed anger over the growing financial strain:
- Otunba Muktar: “The penalties are too high. The CBN should issue warnings before imposing fines.”
- Dr. Farouk Umar: “Taxes and penalties are becoming unbearable; they weigh down both businesses and shareholders.”
- Okezie Boniface: “These fines drag institutions down. Without the N15 billion penalty, our dividend would have been higher than N5 per share.”
Zenith Bank’s CEO, Adaora Umeoji, acknowledged the challenges, saying at the 2025 AGM: “We are implementing measures to strengthen compliance and avoid future penalties to protect shareholder value.”
Financial expert Abiodun Adedotun emphasized that banks must tighten compliance to avoid penalties: “The CBN is focused on sanitizing the system. Banks must sit up to avoid fines that ultimately hurt shareholders.”
Stakeholders continue to call for a balanced regulatory approach one that enforces discipline without stifling growth in Nigeria’s banking sector.
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