Tag: Zenith Bank

• N31.4b for interim dividends

Zenith Bank Plc doubled up in the first half to set another record performance, with gross earnings rising to a new high of N2.1 trillion within the six-month period.

Key extracts of the audited report and accounts of Zenith Bank for the half-year ended June 30, 2024 released at the Nigerian Exchange (NGX) at the weekend showed that gross earnings rose by 117 per cent, leapfrogging pre and post tax profits by 108 per cent and 98 per cent respectively.

The half-year results came as existing shareholders and new investors continue to show strong appetite for Zenith Bank’s shares.

Zenith Bank is offering a rights issue of 5.233 billion ordinary shares of 50 kobo each at N36 per share. The shares were pre-allotted to existing shareholders on the basis of one new ordinary share for every six existing ordinary shares held as at the close of business on Wednesday, July 24, 2024.

The bank is also simultaneously offering 2.767 billion ordinary shares of 50 kobo each in a public offer to the general investing public at N36.50 per share. Minimum subscription is 250 shares, meaning that with N9, 125, one can be a co-owner of Nigeria’s leading bank. Application list for the offers, which opened on August 01, 2024, is scheduled to close on September 09, 2024.

With earnings per share increasing significantly from N9.29 recorded in first half 2023 to N18.41 in first half 2024, the board of the bank has declared an interim dividend of N31.4 billion for the six-month period. Shareholders will receive interim dividend per share of N1, a new record for the bank and the entire banking industry.

Gross earnings rose by 117 per cent from N967.3 billion in first half 2023 to N2.1 trillion in first half 2024. The triple-digit growth in the top line also drove growth in the bottom line as the group recorded 108 per cent increase in profit before tax from N350 billion in first half 2023 to N727 billion in first half 2024. Profit after tax also grew by 98 per cent from N292 billion to N578 billion.

Further analysis showed that top-line growth was driven by appreciable increases in both interest income and non-interest incomes. With increased risk assets and effective pricing, interest income attained a new record, crossing the N1 trillion mark from N415.4 billion in first half 2023 to N1.1 trillion in first half 2024, an increase of 177 per cent. Non-interest income also rose by 74 per cent from N515.7 billion to N899.3 billion.

The balance sheet of the bank also expanded significantly as total assets grew by 35 per cent from N20.4 trillion in December 2023 to N27.6 trillion in June 2024. Customer deposits grew by 29 per cent from N15.2 trillion in December 2023 to N19.6 trillion in June 2024. Gross loans improved by 44 per cent from N7.1 trillion in December 2023 to N10.2 trillion in June 2024, driven by loans disbursements to customers and the translation effect of foreign currency denominated loans.

Underlying ratios showed that the group continued to strive for operational efficiency, resulting in only a marginal increase in cost-to-income ratio from 38.5 per cent to 39.4 per cent. The heightened risk environment has fuelled a growth in impairment levels, thus mildly elevating the cost of risk from 8.8 per cent to 9.7 per cent. Cost of funds grew from 2.6 per cent to 4.4 per cent given the high-interest rate environment. This also resulted in growth in interest expense from N153.6 billion in first half 2023 to N434.4 billion in first half 2024.

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Despite this, net interest margin grew by 49 per cent from 5.9 per cent in first half 2023 to 8.8 per cent in first half 2024, underscoring the efficient repricing of interest earning assets and interest accruing liabilities.

The group’s consistent stringent risk acceptance criteria helped ensure that the non-performing loan ratio continued to show only modest growth, increasing from 4.4 per cent in December 2023 to 4.5 per cent in June 2024. Capital adequacy ratio improved from 21.7 per cent in December 2023 to 23 per cent in June 2024. Loan-to-deposit ratio grew by 11 per cent from 46.5 per cent to 51.7 per cent. Liquidity ratio reduced from 71 per cent to 59 per cent in the current period. All prudential ratios are still well above regulatory thresholds.

Zenith Bank noted that its strong brand equity and excellent service quality have positioned it to mine new business opportunities in strategic sectors of the economy, in existing geographies where it has a presence, and in new geographies it is exploring.

“In furtherance of its expansion plans, the Group has received regulatory approval for the establishment of a third-country branch in Paris, France, which, when fully operational, will enhance its product offerings in international markets.

“The Group will continue to invest in enhancing its digital banking capabilities and is expediting the completion of its technology infrastructure upgrade. Its track-record of successful capital raises puts it on a solid footing to meet the new minimum capital requirements for commercial banks with international authorisation, well ahead of the deadline set by the CBN.

“The Group remains undoubtedly on track for a record year in its financial performance and will continue to deliver maximum value to its shareholders, while ensuring a strong corporate governance culture,” Zenith Bank stated.

Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards including being recognised as the Number One Bank in Nigeria by Tier-1 Capital for the15th consecutive year in the 2024 Top 1000 World Banks Ranking, published by The Banker Magazine. The bank was also awarded the Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards for 2020 and 2022; and Most Sustainable Bank, Nigeria in the International Banker 2024 Banking Awards.

Further recognitions include Best Bank in Nigeria for three consecutive years from 2020 to 2022 and in 2024 in the Global Finance World’s Best Banks Awards, and Best Commercial Bank, Nigeria for four consecutive years from 2021 to 2024 in the World Finance Banking Awards. Additionally, Zenith Bank has been acknowledged as the Best Corporate Governance Bank, Nigeria, in the World Finance Corporate Governance Awards for three consecutive years from 2022 to 2024, and ‘Best in Corporate Governance’ Financial Services’ Africa for four consecutive years from 2020 to 2023 by the Ethical Boardroom.

The bank’s commitment to excellence saw it being named the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands for 2020 and 2021, and Retail Bank of the Year for three consecutive years from 2020 to 2022 at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards. The bank also received the accolades of Most Sustainable Bank, Nigeria, in the International Banker 2023 Banking Awards, Best Commercial Bank, Nigeria and Best Innovation in Retail Banking, Nigeria, in the International Banker 2022 Banking Awards. Zenith Bank was named Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.

Group Managing Director, Zenith Bank Plc, Dr Adaora Umeoji, has said the ongoing capital raising exercise by the bank would lead to exponential growth in operations and returns to all stakeholders.

At a ‘Facts behind the Offer’ interactive session at the Nigerian Exchange (NGX) yesterday in Lagos, Umeoji outlined Zenith Bank’s pedigree as Nigeria’s most profitable and highest dividend-paying bank, noting that the additional capital would scale up the performance of the bank.

Zenith Bank is raising N290 billion through a combined rights and public offer. The bank is offering a rights issue of 5.23 billion ordinary shares of 50 kobo each at N36 per share on the basis of one new share for every six shares held. It is also offering 2.77 billion ordinary shares of 50 kobo each at N36.50 per share to the general investing public through a public offer. The hybrid offer which opened on August 1 and would close on September 9, 2024.

Umeoji described Zenith Bank as a futuristic financial institution that values the loyalty of its existing shareholders.

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She assured investors of an enhanced dividend payment noting that Zenith Bank remains the highest dividend payment bank in the industry with a dividend payment of N4 per share in 2023 financial year.

She also assured the investing community that the bank would not dilute its shareholding structure after the recapitalisation exercise.

“We are very conscious of not diluting our existing shareholding structure, which is why we are offering 65 per cent to our existing shareholders and 35 per cent to the public. We are very confident that after the ongoing recapitalisation exercise, the bank will experience exponential growth, and shareholders will get greater value for their investment,”  Umeoji said.

She explained that the bank was undertaking the offers to increase its capital base in line with the new minimum capital requirement of the Central Bank of Nigeria (CBN) and to pursue its strategic objectives including financing its strategic business developments and expansion into other geographic markets.

Umeoji said that the bank is looking to solidify its presence in key global financial hubs while supporting its clients’ international operations and investments.

She added that the new capital would also enable the bank to conclude the overhaul of its information technology infrastructure and provide additional working capital to support its expanding operations and enable the bank to take maximum advantage of emerging opportunities.

“Zenith Bank has a track record of efficient capital utilization: 35 per cent of the proceeds realized from this combined offering would be used to fund our expansion strategy increasing our footprint in Africa and other parts of the world; 20 per cent will be used to enhance our IT infrastructure and digital capabilities; while the balance of 45 per cent will be deployed as working capital to support the real sector of the economy with a focus on the retail and SME segments,” Umeoji said.

She pointed out that a significant milestone in its expansion plan is the upcoming establishment of a branch in Paris, France, saying that this new branch would be a critical bridge for enhancing business prospects within the West African Economic and Monetary Union (UEOMA) and Economic and Monetary Community of Central Africa (CEMAC) regions.

She explained that the bank will leverage on the Paris branch to consolidate most of its businesses in the Francophone African countries, starting from Cameroon and Côte d’Ivoire.

Capital market stakeholders expressed supports for the bank’s offers, noting that Zenith Bank has demonstrated commitment to investors’ value.

Chairman, Nigerian Exchange (NGX), Mr Ahonsi Unuigbe, said Zenith Bank has consistently demonstrated its relevance in the financial services landscape in the country.

“The bank has positioned its business for sustainable long-term growth. With over 30 years in existence, founded in January 1990 and listed on our exchange in 2004. The bank has continuously expanded its operations, both within and beyond,” Unuigbe said.

Chief Executive Officer, Nigerian Exchange (NGX),  Mr Jude Chiemeka, commended Zenith  Bank’s transparency and performance since inception.

He reiterated NGX’s commitment to supporting the bank in its capital market endeavours.

He said that companies listed on the Premium Board of the NGX have the highest level of corporate governance.

Chiemeka said that Premium Board companies speak to the integrity of the market, which Zenith Bank is among.

Doyen of Stockbrokers, Alhaji Rasheed Yusuf, highlighted the bank’s consistent dividend payments and robust financial performance, making it an attractive investment.

Yusuf said that Zenith Bank had maintained an impressive performance urging investors to participate actively in the combined offer.

Existing shareholders and new investors in the Zenith Bank’s hybrid rights issue and public offer will be locking in 32 per cent outright gains in potential immediate returns, the bank announced yesterday.

Zenith Bank Plc, in a significant move to meet the Central Bank of Nigeria’s (CBN) new minimum capital requirement of N500 billion, is offering its ongoing hybrid rights and public offers at the bank’s lowest price range.

In a report, the bank said the Hybrid Rights Issue and Public Offer was aimed at raising approximately N290 billion. The fund  will not only enable the bank to meet the CBN’s requirement but also provide additional working capital to support its expanding operations and investments in information technology infrastructure.

Currently, Zenith Bank’s issued and fully paid share capital stands at N15.698 billion, complemented by a share premium of N255.047 billion. To meet the CBN’s new stipulation, the bank requires an additional N229.225 billion.

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Despite its robust historical performance, the CBN’s new capital requirement has necessitated this substantial capital raise. According to Group Managing Director/CEO of Zenith Bank, Dame Adaora Umeoji, the capital infusion will help meet regulatory requirements and enhance the bank’s information technology infrastructure.

The hybrid offer includes a Rights Issue of 5.233 billion ordinary shares priced at N36 per share for existing shareholders, alongside a Public Offer of 2.767 billion ordinary shares available to the public at N36.50 each.

The offer commenced on August 1, 2024, and is set to close on September 9, 2024. These figures suggest that Zenith Bank’s shares are not only undervalued but also present a promising opportunity for capital appreciation.

Engaging in the bank’s upcoming capital-raising offer could yield significant capital gains for investors who recognise the potential upside. Zenith Bank’s strong financial performance adds to its appeal as an investment opportunity. The bank has consistently demonstrated resilience, with impressive profitability metrics and a solid track record.

Over the past five years, Zenith Bank’s share price has grown by approximately 57 per cent, establishing itself as one of the most capitalised banks on the Nigerian Exchange Group (NGX) with a market capitalisation of N1.130 trillion.

In 2023, the bank emerged as the most profitable listed bank on the NGX, reporting a pre-tax profit of N795.962 billion. Notably, in the first quarter of 2024, Zenith Bank achieved about 40 per cent of its total pre-tax profit for 2023, indicating a strong trajectory.

Currently, Zenith Bank’s stock trades at a price-to-earnings (P/E) ratio of 1.30x—significantly lower than the banking sector average of 2.2x—suggesting it may be undervalued compared to its peers. Additionally, its price-to-book (P/B) ratio stands at 0.4, while its price-to-sales (P/S) ratio is 0.44, indicating a considerable discount relative to its book value and annual sales.

Financially, Zenith Bank reported a pre-tax profit of N795.962 billion in 2023, with a solid net interest income of N736.182 billion for the same year. However, concerns linger regarding its loan portfolio; loans and advances surged by 63 per cent to N6.6 trillion, accompanied by a cost of risk increase of 128 per cent to 7.3 per cent.

Zenith Bank Plc is offering its ongoing hybrid rights and public offers at the bank’s lowest price range, locking in about 32 per cent gain in potential immediate return for existing shareholders and new investors. Nigeria’s largest bank by profit, Zenith Bank is offering a rights issue of 5.233 billion ordinary shares of 50 kobo each at N36 per share. The shares were pre-allotted to existing shareholders on the basis of one new ordinary share for every six existing ordinary shares held as at the close of business on Wednesday, July 24, 2024.

For investors, Zenith Bank’s Hybrid Rights Issue and Public Offer represent an enticing opportunity to acquire shares at competitive prices. With strong historical performance and favourable valuation metrics, investors seeking stability and potential growth may find this offer particularly appealing.

A review of the trading history of Zenith Bank at the stock market indicated that the bank’s shares had recently traded as high as N47.35 per share, a price range that market pundits believe is a fair price for the stock. This recent price range implies a discount of about 32% locked into the ongoing hybrid rights and public offers.

With earnings per share of N21.55 for the 2023 business year, Zenith Bank’s offers carry an earnings yield of about 60 per cent, the most attractive value addition among peers and competing offers. This simply means that beyond its industry-leading dividend payout, investors in Zenith Bank have significant value creation in the investment that can sustain above-average, long-term returns.

At the latest audit, Zenith Bank led the banking industry with a pre-tax profit of N796 billion and profit after tax of N677 billion in 2023. The bottom-line performance was driven by aggressive business expansion and brand adoption across domestic and foreign markets. The bank’s gross earnings crossed two milestones from N946 billion in 2022 to N2.13 trillion in 2023. There are only three Nigerian banks with N2 trillion gross earnings.

First quarter results for 2024 already indicated that the bank could surpass the 2023 performance in the current year. Gross earnings jumped by 189 per cent from N270 billion in the first quarter of 2023 to N781 billion in the first quarter of 2024. Profit before tax tripled by 267.8 per cent to N320 billion in March 2024 as against N87 billion recorded in March 2023. After taxes, net profit leapt by 291 per cent from N66 billion to N258 billion. Earnings per share rose simultaneously from N2.10 to N8.22.

Analysts believe Zenith Bank has entered a new phase of phenomenal growth. Annualised, the first quarter 2024 performance indicates that the bank’s net profit could surpass a trillion, with potential earnings per share that almost covers the cost of buying into the ongoing offers. Such fundamental performance usually triggers a rally for a stock, underscoring the belief by investment experts that the bank could set a new all-time high within the next few months.

Zenith Bank has been adjudged the Best Commercial Bank in Nigeria for the fourth consecutive year by the prestigious World Finance Banking Awards. It has also been honoured for the past three years as the Best Corporate Governance in Nigeria. These awards were revalidated in the Summer 2024 issue of World Finance Magazine, which provides comprehensive coverage and analysis of the financial industry, international business, and the global economy. The awards recognised the bank’s financial performance, customer service, sustainability initiatives, and corporate governance practices.

Established by Jim Ovia, in May 1990, Zenith Bank began operations in July 1990. The bank became a public limited company on June 17, 2004, and was listed on the Nigerian Stock Exchange (NSE) on October 21, 2004, following a successful initial public offering (IPO). In 2013, the bank listed $850 million worth of shares at $6.80 each on the London Stock Exchange (LSE). The bank has grown into one of Africa’s leading financial institutions.

Zenith Bank Plc will be raising N290 billion through a combination of a rights issue and public offer. The bank broke the news yesterday during its rights issue/public offer signing ceremony held in Lagos.

The capital raising exercise complies with the revised minimum capital requirements for commercial banks set by the Central Bank of Nigeria (CBN).

This move marks a significant milestone in the bank’s previously announced capital-raising programme meant to boost its capital base and growth trajectory across its banking and non-banking subsidiaries.

The rights issue offers 5,232,748,964 ordinary shares of 50 Kobo each at N36.00 per share, while the offer for subscription presents 2,767,251,036 ordinary shares of 50 Kobo each at N36.50 per share.

The rights Issue affords existing shareholders the opportunity to purchase additional shares in proportion to their current holdings and is being offered on the basis of one new ordinary share for every six existing ordinary shares held as of Wednesday, July 24, 2024. Conversely, the public offer for subscription is open to the general public and aims to attract new investors.

Speaking at the signing ceremony, the Group Managing Director/CEO of Zenith Bank Plc, Dame Adaora Umeoji, expressed enthusiasm about the rights issue and public offer.

She said: “Today, we signed  the transaction documents with respect to Zenith Bank’s N290 billion rights issue and public offer. This is slightly above the N230 billion required for us to meet the CBN’s minimum recapitalisation requirement. We are extremely pleased with the level of enthusiasm we have already seen from our existing shareholders for the Rights Issue. Beyond existing shareholders, incorporating a public offer is crucial to ensure that our customers, who are not yet shareholders, can have the opportunity to join in the ownership of this premium brand.”

Umeoji explained that in terms of Tier-1 Capital, Zenith Bank has been adjudged by The Banker, Financial Times to be number one in Nigeria and the only Nigerian Bank in the top 600 banks globally. Also, over the years, we have consistently rewarded our esteemed shareholders. Specifically, in the last five years, the bank had maintained the record as the highest dividend-paying Bank in Nigeria. In 2023, the bank set a record as the only Nigerian Bank to pay a dividend of N4 per share.”

She added that the proceeds from the capital raise will be channeled towards expanding banking operations across Africa and internationally, investing in technology infrastructure, and supporting working capital on an ongoing basis.

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She expressed optimism that given Zenith Bank’s track record of profitability and consistency in creating wealth for shareholders, the capital raise will be a resounding success. She assured prospective investors that Zenith Bank will maintain its leadership in dividend payout in the years ahead and encouraged them to invest in value and invest in Zenith Bank.

She also expressed her profound gratitude to the Founder and Chairman, Jim Ovia, whose vision over 34 years ago laid the foundation for a reputable, dominant, globally recognised financial institution known for innovation, superior performance, and the creation of premium value for all stakeholders.

The Chief Executive of Stanbic IBTC Capital Limited, Oladele Sotubo, commended the management of Zenith Bank for their commitment to the transaction, which provides an opportunity for existing shareholders to consolidate their position and welcomes new investors to join the journey towards the future of Zenith Bank.

He also expressed gratitude for the opportunity for Stanbic IBTC Capital Limited to lead and guide the execution of the transactions. Speaking further, he said, “A combined offer that is both a Rights Issue and a Public Offer confirms Zenith Bank’s position as a pacesetter and a role model, which will undoubtedly spur more transactions in the capital market.”

The lead issuing house for the Rights Issue and Public Offer is Stanbic IBTC Capital Limited, with joint issuing houses including Quantum Zenith Capital & Investments Limited, CardinalStone Partners Limited, Meristem Capital Limited, Chapel Hill Denham Advisory Limited, Coronation Merchant Bank Limited and Vetiva Advisory Services Limited. The Offer will open on Thursday, August 1, 2024, and close on Monday, September 9, 2024.

Zenith Bank has provided a robust suite of platforms for the Rights Issue and Public Offer. Applications can be made through any of Zenith Bank’s electronic channels: Zenith Bank Internet Banking, Zenith Bank Mobile Application, Zenith Bank Corporate Internet Banking, Zenith Bank Branches nationwide and NGX Invest platform.