The Association of Securities Dealing Houses of Nigeria (ASHON) has voiced its concern over the Central Bank of Nigeria’s (CBN) recent directive suspending dividend payments by banks, which comes as part of its stricter stance on regulatory forbearance.

In a statement signed by its Chairman, Sam Onukwe, on June 17, 2025, ASHON described the directive’s timing as inappropriate, given efforts by banks to meet the CBN’s capital requirements.

It cautioned that the policy might hinder ongoing capital-raising efforts, especially for banks working to meet regulatory targets, by weakening investor interest.

According to the association, the circular has rattled investor confidence, sparking sell-offs in banking stocks on the Nigerian Exchange.

ASHON noted that the banking sector has been a major driver of market activity and positive momentum of the All-Share Index, warning that the directive could further dampen sentiment if not reviewed.

However, in a bid to calm market nerves, ASHON offered reassurance to investors:

“The CBN directive to temporarily suspend dividend payments by banks should not cause undue panic. Our banks remain fundamentally strong and hold significant growth potential,” the statement read.

In its Friday circular, the CBN directed banks under regulatory forbearance—whether for credit exposures or Single Obligor breaches—to suspend dividends, defer executive bonuses, and halt new offshore investments.

The directive had an immediate impact, with banking stocks declining sharply at the start of Monday’s trading session.

The banking sector opened the week on a shaky note, as bearish sentiment hit hard on Monday, June 16, following the CBN’s directive suspending dividend payments. Major bank stocks dropped over 5% in pre-market trading, reflecting investors’ concerns.

Although the sector recovered some ground later in the day as sentiment began to ease, most banking stocks still closed in the red, with the banking index falling by 3.98%.

By Tuesday, June 17, the sell-off had slowed. The banking index dipped just 0.20%, with four FUGAZ stocks recording modest losses, suggesting that market panic was beginning to settle.

This optimism likely follows reassurances from major banks, which issued statements outlining the steps they are taking to navigate the policy and preserve investor value.

The NGX Banking Index has gained over 10% year-to-date in 2025, as it aims to extend a yearly winning streak that began in 2020.

It continued to strengthen into early June, hitting a recent high of 1,218.2 on Friday, June 13.

Despite the pullback, the index remains in positive territory for the year.