Zenith Bank to raise N100bn, increases share capital to N40bn

Zenith Bank has disclosed its intention to seek its shareholders’ approval next month to raise 100 billion naira ($318 million) via a combination of share or bond sale and global depository receipts.

The lender also said it would seek approval to increase its share capital to 40 billion naira from 20 billion naira at the shareholders’ meeting on March 22.

Zenith Bank on Monday reported a 2016 pretax profit of 156.75 billion naira, up from 125.62 billion a year earlier.

Earnings from interest and similar incomes remained strong rising 11 percent to N385 billion but making up 76 percent of the bank’s total income, an indication that the bank still makes most of its money from giving out loans and advances. Sustaining income from its core operations is key because fees and commission income remained almost flat in the period.

Also despite rising inflation in the country, Zenith Bank was able to keep personal and operating expenses flat, a good strategy in a contracting economy where businesses must do all they can to extract higher value from all inputs. So by keeping core business earnings up and expenses flat, Zenith Bank announced a profit before tax of N157 billion, 25 percent higher than the profit before tax of N126 billion made in the same period of 2015.

Final profit after tax stood at N130 billion in 2016, 23 percent higher than the profit made in 2015. With earnings per share of 412 kobo, Zenith Bank is recommending a final cash dividend of   177 kobo after initially paying an interim dividend of 25 kobo earlier in the year, bringing the bank’s total dividend per share in 2016 to 202 kobo.

Payment date has been fixed for 23 March, the same day that the bank will be holding its annual general meeting. Zenith Bank’s shares has a strong 40.5 percent upside recommendation from FBNQuest based on its closing price of N14.7 on Friday, 24 February.

Analysts at FBNQuest has a price target of N20.7 on the stock, based on their investment note of 27 February just before Zenith Bank released its full year results.