Proposed Dividend Boosts Zenith Bank Share Price

By Festus Okoromadu

The shares of Zenith Bank Plc today on the Nigerian Stock Exchange (NSE) enjoyed good patronage by investors as the bank traded more volume than any other stock.  The stock also gained N1.24 per share on the gainer’s list.

A total of 58,201,996 Ordinary Shares of 50kobo each of the bank valued at N1, 333,115,890.04 was exchanged at the close of trading at N22.89 per share. In volume term, trading on the bank’s shares represented 17.63 per cent.

Furthermore, the stock contributed about 27.87 per cent to total market capitalization at the close of trading today as the stock’s capitalization increased by about N1.33billion compared to about N4.78billion gain recorded by the market.  The implication of this is that for every N100 spent by investors on stocks in the market today, about N27.86 was devoted to the purchase of Zenith Bank’s stock.

The renewed effort by investors to invest in the shares of Zenith Bank may not be unconnected with the bank’s recent pronouncement on reward to shareholders. The bank’s board of directors while presenting her audited accounts for the year ended December 31, 2012 had proposed to distribute a dividend of N1.60 per share to shareholders whose names appears in the bank’s register by the close of business on Monday, April 15, 2013.

The decision to pay N1.60 per share when compared with N0.95 per share distributed in the corresponding period of 2011 represents N0.65 or 68.42 per cent increase. Furthermore, the stock is ahead of its peers in terms of reward for the 2012 financial year for now as the likes of Guaranty Trust Bank Plc and Access Bank Plc are proposing to distribute a dividend of N1.00 and N0.60 respectively for the similar period.

Meanwhile, Zenith Bank’s audited account for the year ended December 31, 2012 recorded a growth of 25.9 per cent in gross earnings as it rose from N243.948 billion to N307.082 billion. Net interest income appreciated by 22.2 per cent from N128.286 billion to N156.757 billion while operating expenses rose minimally by 2.9 per cent from N116.228 billion to N119.619 billion. This implies that the bank’s management must have employed prudent cost management strategies which have paid off in increasing reward to shareholders. This further explained the reduction in loan expenses from N16.514 billion in 2011 to N9.099 billion in 2012, even in the face of 10.7 per cent increase in loans and advances during the comparing period. The bank’s loan and advances portfolio rose from N893.834 billion in 2011 to N989.814 billion in 2012.

During the 2012 financial year Zenith Bank grew her deposits by 16.5 per cent from N1.655 trillion to N1.929 trillion. Similarly, Cash and balances with the Central Bank of Nigeria (CBN) increased by 22.2 per cent from N968.446 billion to N1.184 trillion, while total and net assets increased by 11.9 and 17.4 per cent respectively.