Zenith Bank Plc has sustained growth trend in its banking operations since its entry into the nation’s capital market. It maintains a solid foundation and strong corporate governance culture. In this report AMAKA IFEAKANDU looks at the bank’s track record that distinguishes it from its peers in the banking industry.
Zenith Bank has continued to record growth trend in the last 20 years of its entry into the nation’s capital market.
Zenith Bank early growth trend
The bank’s first initial public offer in 2004 was massively oversubscribed by 524 per cent while the public offering in 2006 was equally oversubscribed.
The success of the previous offering gave the bank more opportunity to engage in combined offer in 2007 which was highly oversubscribed by 496 per cent.
As a result of these successes, the bank was able to raise $1billion Eurobond in two tranches, which was successfully redeemed in 2022.
Growth stability
One of the most interesting things about Zenith Bank during these period of capital raising is that its original colour, Red, did not change, logo did not change, culture of the bank did not change, the bank remained undiluted and it grew exponentially emerging the strongest among its peers. This is because of the bank’s solid foundation and strong corporate governance culture.
Reasons why Zenith Offer will be successful
Speaking in Lagos at the Nigerian Exchange during the bank’s facts behind the offer, the Group Managing Director/Chief Executive Officer of Zenith Bank Plc, Dr Adaora Umeoji, expressed optimism that the bank will experience exponential growth and shareholders will get greater value for their investment after the ongoing recapitalization exercise.
She urged the investing public to invest in its ongoing N290 billion hybrid offer for global growth.
Zenith Bank is offering approximately 5.23 billion units of shares of 50k each at N36 per share to its existing shareholders through rights issue of one new share for every six held.
The bank is also offering 2.77 billion ordinary shares of 50k each at N36.50 per share to the public through a public offer.
The offer 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.
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.
Umeoji also assured the investing community that the bank would not dilute its shareholding structure after the recapitalisation exercise.
She said that the bank would remain responsive to the yearnings of prospective investors who want to be part of the Zenith success story.
“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,” she said.
Commenting on the offer proceeds, she said the bank had a track record of efficient capital utilisation.
She said the Bank was undertaking the offer to increase its capital base in line with the new minimum capital requirement and to pursue its strategic objectives including financing its strategic business developments and expansion into other geographic markets.
Umeoji explained that 35 per cent of the proceeds realised from this combined offering would be used to fund expansion strategy to increase its footprint in Africa and other parts of the world.
She added that 20 per cent of the proceeds would be used to enhance its information technology infrastructure and digital capabilities.
“The balance of 45 per cent would be deployed as working capital to support the real sector of the economy with a focus on the retail and SME segments,” she said.
Umeoji said the bank had engaged some of the best transaction partners such as Stanbic IBTC Capital, Quantum Zenith, Cardinal Stone, Chapel Hill Denham and Coronation Capital, among others to ensure the success of the offer.
She said the investors can purchase the shares through the NGX invest platform, Zenith Bank digital platforms and by visiting any of its branches across the country.
“Our historical and current financial performance as well as our prospects provide a compelling reason why you should invest in Zenith Bank,” adding that the bank’s Tier-1 capital stood at N1.9 trillion, the highest in the Nigerian banking industry as at December 31, 2023.
She noted that the bank’s shareholders’ funds stood at N2.3 trillion, the highest in the industry.
“We recorded a market capitalisation of N1.3 trillion also the highest.
“The bank achieved profit before tax of N796 billion, making us the most profitable bank in Nigeria.
The highest dividend paying bank in Nigeria
“We paid a dividend of N4 Naira per share, making us the highest dividend paying bank in Nigeria.
“This trend has been sustained in the past five years. It would also interest you to note that our dividend payout was 25 per cent of our organic profit without foreign exchange revaluation gains.
“This implies that we have the capacity to even pay more dividend organically without Forex revaluation gains,” she said.
In terms of retail business, she said that retail drive and financial inclusion strategy have resulted in significant increase in our customer base. We grew from 5 million to 33 million customers in the past five (5) years.
“We will continue to drive this growth using our robust digital platforms.
“The bank’s revenue from retail business has recorded significant increases over the years.
“In addition, Zenith Bank will leverage on digital banking channels, ATMs and POS services, as well as agency agency banking relationships to drive the retail and SME segments of our business.
Regulators/Operator views on Zenith Bank
The Chairman of NGX, Mr Ahonsi Unuigbe, stated that “with a capital base of N1.8 trillion as of December 2023, Zenith Bank has consistently demonstrated its relevance in the financial services landscape in our 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,” he said.
Also speaking, the Chief Executive Officer of NGX, Mr Jude Chiemeka, commended Zenith Bank’s transparency and performance since inception.
Chiemeka 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.
The 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.
Ensuring that investors reap the fruits of their investment
The bank’s culture of ensuring that investors reap the fruits of their Investment has not only encouraged the existing shareholders to take up their rights, the dividend payment system open doors for more people to invest in the bank. Available report showed that the bank has sustained dividend payment in the past five years and the dividend payout was 25 per cent of its organic profit without forex revaluation gains.
This implies that the bank has the capacity to even pay more dividend organically without Forex revaluation gains.”