Custodian Investment Plc’s latest audited accounts show a sharp spike in regulatory penalties in the 2025 financial year, a development that throws fresh light on compliance risks within Nigeria’s financial services sector, even as the group delivered a robust earnings performance.
According to the company’s audited financial statements filed with the Nigerian Exchange, total penalties paid to the Central Bank of Nigeria and other regulators rose to N419.13 million in 2025, from just N19.17 million in 2024, representing an increase of more than 2,000 per cent year-on-year.
The steep rise was driven overwhelmingly by sanctions from the CBN, which accounted for roughly N391 million, underscoring how regulatory scrutiny has intensified across financial institutions amid tighter oversight of liquidity management, anti-money laundering controls, and governance processes.
Register for Tekedia Mini-MBA edition 20 (June 8 – Sept 5, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab.
At the center of the sanctions was a N240 million fine for a breach of the intraday liquidity facility (ILF) linked to a CBN bond trade. This is a significant infraction because the ILF window is a critical short-term settlement mechanism that financial institutions rely on to complete same-day transactions and manage liquidity gaps. Breaches in this area are typically viewed seriously by regulators because they touch directly on systemic settlement risk and market confidence.
Custodian disclosed, however, that this particular penalty arose from transactions conducted on behalf of Sterling Bank Plc, and has since been fully recovered from the counterparty, materially reducing the effective financial burden on the group.
That recovery is a crucial nuance in interpreting the numbers. While the headline figure of N419.13 million appears substantial, the actual earnings impact is considerably lower once the reimbursed ILF fine is stripped out.
Beyond the ILF issue, the accounts also point to broader compliance concerns. The group paid N76 million for breaches related to Customer Due Diligence regulations, alongside N75 million for failure to implement internal audit remediation on a misclassified high-risk customer. These two sanctions are particularly notable because they speak to governance, risk controls, and AML/CFT processes, areas where regulators have been increasingly uncompromising.
Additional penalties included:
- N9.93 million for AML/CFT risk-based supervision issues
- N10 million for late filing of FRCN returns
- N1.7 million for the delayed submission of financial statements to the NGX
- N1.5 million for the delayed SEC filing on an infrastructure fund
- N5 million for environmental fee non-payment to NESREA
Together, these infractions suggest that the issue goes beyond a single isolated breach and points instead to compliance lapses across multiple reporting and control functions. This raises the more important investors’ question of whether these sanctions materially weaken the earnings story.
On that score, the numbers remain resilient. Custodian posted pretax profit of about N75.97 billion to N77.35 billion, depending on line-item classification, while net income remained strong at roughly N65.83 billion to N91.32 billion on a group basis, supported by robust insurance revenue growth, investment gains, and stronger non-insurance earnings.
That means the reported fines account for well below 1 per cent of pretax earnings, and even less after adjusting for the N240 million recovery. In other words, this is more of a compliance and governance story than an earnings impairment story.
The company’s core business performance remained strong, with total revenue climbing to N222.56 billion in 2025 from N164.16 billion in 2024, while operating income surged to N65.44 billion from N36.70 billion. A major driver was the rebound in the insurance service result, which moved from a loss position in the previous year to profitability, alongside strong fair value gains and improved investment income.
From a market perspective, the incident also reflects a broader trend. Nigeria’s regulators, especially the CBN and anti-money laundering supervisors, have intensified enforcement actions across the banking and financial services landscape as part of efforts to strengthen risk controls and restore confidence in the sector.
The immediate financial hit is manageable for the Custodian. However, the bigger issue is reputational and operational: repeated compliance penalties, particularly those tied to due diligence and internal audit controls, may raise questions among investors about the strength of internal risk management systems.
Still, given the scale of earnings and the recovery of the largest single fine, the sanctions are unlikely to materially alter the group’s dividend capacity or medium-term profitability outlook. What they do underline is that even strong earnings performers are not insulated from the cost of regulatory lapses when there is tougher oversight.