UBA Says 2025 Dividend Pause Is Temporary as Bank Moves to Recover Bad Loans and Restore Payout in 2026

United Bank for Africa (UBA) has assured shareholders that its decision to suspend dividend payments for the 2025 financial year is temporary, with management signalling that the bank is already positioning for a stronger recovery cycle in 2026 through aggressive loan recoveries, balance sheet clean-up, and a return to regulatory compliance.

The reassurance came from Oliver Alawuba, Group Managing Director and Chief Executive Officer of UBA, who said the bank’s dividend interruption was not the result of weak profitability or deteriorating core operations, but a direct consequence of regulatory adjustments tied to the Central Bank of Nigeria’s prudential rules.

According to Alawuba, UBA remains fundamentally strong, but its ability to declare a dividend for 2025 was temporarily affected after the bank took the strategic decision to exit the Central Bank’s forbearance regime and fully align its loan book with updated prudential standards.

UBA has long been regarded as one of Nigeria’s most reliable dividend-paying banks, with a strong track record of shareholder returns and dividend yields that have, at times, climbed into double-digit territory. That consistency has made the bank one of the more attractive income plays in Nigeria’s banking sector, particularly among institutional investors and long-term shareholders seeking stable cash returns.

Alawuba said UBA sustained dividend payments consistently from 2023 through the first half of 2025, maintaining its reputation for dependable shareholder distributions. The interruption, he explained, should be seen as a temporary pause caused by prudential compliance rather than a break in the bank’s long term capital return philosophy.

The issue stems from the Central Bank of Nigeria’s decision to allow lenders a regulatory window to exit the forbearance regime, a temporary framework that had permitted banks to manage certain stressed credit exposures with softer prudential treatment.

UBA was among the banks that chose to exit that regime within the window provided by the regulator, a move that required the bank to reclassify certain loan exposures in line with standard prudential guidelines.

That reclassification had a direct impact on the bank’s financial reporting.

Once the affected exposures were reassessed under stricter regulatory standards, UBA was required to make impairment provisions of approximately N331 billion. The charge significantly increased the bank’s non-performing loan ratio and pushed it above the regulatory threshold required for dividend declaration.

Under current banking rules, lenders whose non-performing loan ratios rise above prudential limits are restricted from making capital distributions, including dividend payments, until those ratios return to compliant levels.

For UBA, this meant that despite maintaining operational strength and continued earnings generation, the bank became temporarily ineligible to declare a dividend for the 2025 financial year.- Alawuba made clear that the suspension is not a signal of distress.

Rather, it reflects a deliberate management decision to absorb the cost of compliance now, clean up the balance sheet early, and position the bank for stronger capital quality and more sustainable shareholder returns in the next financial cycle.

From a boardroom perspective, the bank has chosen prudential discipline over short-term market comfort.

Instead of preserving dividend optics at the expense of regulatory quality, UBA has taken the more conservative route by recognising impaired exposures upfront, strengthening the integrity of its balance sheet, and preserving the long-term credibility of future payouts.

That approach may disappoint income-focused investors in the short term, but it also reduces the risk of deferred asset quality shocks and places the bank in a stronger position to resume distributions once regulatory conditions normalise.

The immediate focus for management is now clear: recover bad loans, improve asset quality, and restore dividend eligibility in 2026.

Alawuba signalled that UBA is preparing a more forceful recovery strategy aimed at major obligors whose stressed exposures contributed to the provisioning spike.

“We’re going after defaulters,” he said, underscoring what is expected to become one of the bank’s most important strategic priorities over the next financial year.

That recovery campaign is expected to include intensified loan recovery efforts, firmer enforcement of collateral rights, legal recovery actions against delinquent obligors, and the restructuring of viable stressed assets where recovery remains commercially practical.

The objective is straightforward: reduce impaired exposures, restore the non-performing loan ratio below the prudential ceiling, and requalify the bank for dividend payments in 2026.