CBN, Others Fine Custodian N419m Amid Compliance Lapses

Custodian Investment Plc incurred N419.13 million in regulatory penalties during the 2025 financial year, a more than twentyfold increase from N19.17 million in 2024, according to its audited financial statements filed with the Nigerian Exchange.
The disclosure, published alongside the group’s 2025 results, shows that the Central Bank of Nigeria accounted for the bulk of the sanctions, underscoring tighter regulatory scrutiny across the financial system.
Of the total fines, about N391 million was imposed by the apex bank. The largest single penalty, N240 million, stemmed from a breach of the intraday liquidity facility on a bond transaction executed in 2025. The facility is designed to provide short-term funding to banks for same-day settlement obligations, with strict repayment timelines.
Additional sanctions from the CBN included N76 million for lapses in customer due diligence and N75 million for failure to implement internal audit corrections tied to a misclassified high-risk client, reflecting compliance gaps in risk management and anti-money laundering controls.
Other regulators also issued smaller penalties during the year. Custodian paid N5 million for non-payment of environmental fees, N1.5 million for the delayed filing of an infrastructure fund with the Securities and Exchange Commission, and N10 million for late submission of returns to the Financial Reporting Council. Further charges included N9.93 million related to anti-money laundering and counter-terrorism financing supervision issues, and N1.7 million for the delayed filing of financial statements with the exchange.
The company said the N240 million penalty linked to the intraday liquidity breach had been fully recovered from the counterparty, Sterling Bank Plc, as the transaction was executed on its behalf. That recovery materially reduced the net financial impact of the sanctions.
Despite the spike in penalties, Custodian delivered robust earnings for the year ended December 31, 2025. Profit before tax rose to N77.35 billion, while net income reached N91.32 billion, supported by higher investment income, fair value gains on financial assets, and growth in interest income.
The penalties accounted for less than 1 percent of pre-tax profit on a reported basis. Adjusted for the recovered amount, the effective cost was even lower, representing a marginal share of both management expenses and overall earnings.
Management expenses for the year stood at N21.1 billion, fully covered by net income, indicating that the fines did not materially erode profitability.
The group’s performance was also bolstered by a turnaround in its insurance service result, which returned to profit in 2025 after a loss in the prior year, highlighting improved underwriting and operational efficiency.
The sharp rise in regulatory penalties nonetheless points to increased enforcement activity and stricter compliance expectations for financial institutions, even as strong earnings continue to cushion the impact on bottom lines.