The Wonder of Bank Dividends

The Wonder of Bank Dividends

Nigeria’s listed banks are beset with liquidity challenges as the Central Bank of Nigeria (CBN) continues to enforce its cash reserve requirement (CRR) regime, while some face capital challenges in the shape of Basel III. Yet the sector’s shares appear resilient. The answer? Dividends.


Last week, the exchange rate at the Investors and Exporters Window (I&E Window) weakened by 0.16% to N416.67/US$1. Elsewhere, the foreign exchange (FX) reserves of the Central Bank of Nigeria (CBN) recorded a slight increase, rising by 0.07% to US$39.87bn, the highest level since 9 February. We maintain our view that the CBN’s position is strong as the level of FX reserves remains high in the long-term context. Hence, it seems likely that stability will be maintained in the I&E and NAFEX rates in the medium term

Bonds & T-bills

Last week, trading in the Federal Government of Nigeria (FGN) bond secondary market was bullish driven by a significant increase in system liquidity from federal allocation inflows and OMO maturities. As a result, the average benchmark yield for bonds declined by 50bps to close at 10.61%. Notably, the yield on the 3-year (-68bps to 7.52%), 7-year (-88bps to 10.30%) and 10-year (-153bps to 10.72%) bonds tightened. In line with its revised FGN Bond issuance calendar for Q1 2022, the Debt Management Office (DMO) is expected to offer between N140-N160bn (US$336.00m – US$384.00m) worth of bills across the January 2026 and January 2042 bonds on 21 March 2022. Nevertheless, we expect a rise in bond yields over the medium term owing to an expected increase in domestic borrowing by the FGN.

Activity in the Treasury Bill (T-Bill) secondary market was similarly bullish as the average benchmark yield for T-bills fell by 18bps to 3.41%. Consequently, the yield on the 342-day Tbill fell by 110bps to close at 3.97%. At the T-bills auction this week, the DMO is expected to roll over N94.00bn (US$225.60m) worth of maturities. Elsewhere, the average yield for OMO bills fell by 129bps to 3.31%; the yield on the 214-day OMO bill closed flat at 4.18%. At the OMO auction, the Central Bank of Nigeria (CBN) allotted N30.00bn worth of bills to investors, maintaining stop rates across the three tenors as with prior auctions


Last week, the price of Brent gained 20.61%, the highest weekly gain since the week ending 1 May 2020, to close at US$118.11/bbl. Consequently, Brent is up 51.85% […]

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