Zenith optimistic of oversubscription, eyes N289.4b from new offers

Betting on last year’s impressive performance and previous performance, Zenith Bank Plc is optimistic about exceeding 100 per cent subscription as it rolls out the process of raising N289.4 billion from a combination of rights issues and public offer.

Through the process, the bank will issue new eight billion shares in the ratio 65.4 per cent to 34.6 per cent in favour of the rights issue. This will increase its total issued share to about 40 billion.

But the Group Managing Director, Adaora Umeoji, has dismissed dilution concerns on the ground that much of the additional shares would go to existing shareholders.

Speaking at the Facts Behind the Offer at the Nigerian Exchange Group (NGX) yesterday, the GMD, noted that the bank would conveniently pay over last year’s N4 dividend per share going by its impressive profitability and robust history of stable growth.

“The Bank achieved PBT of N796 billion, making us the most profitable 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 FX revaluation gains; this implies that we can even pay more dividends organically without FX revaluation gains,” Umeoji, who assumed office in June told the investors.

The Federal Government, which is battling its worst fiscal crisis, is looking to impose a 70 per cent tax on the 2023 bank FX gains to support its lean revenues – a move some analysts said would weaken the profitability position of the industry.

But Zenith said it could do without the extraordinary profits and even double what it paid last year as dividends.

With tier-1 capital of N1.9 trillion, shareholders’ funds of N2.3 trillion and market capitalisation of N1.3 trillion, which are the highest in the industry, as well as a non-performing loan of 4.4 per cent and total assets of N20.4 trillion, Zenith is considered the most profitable bank in the country.

The GMD said the fund-raising would strengthen its position and increase its profitability in the coming years.

According to the Umeoji’s presentation, 35 per cent of the fundraising proceeds will be used to fund our expansion across Africa and other key markets and 20 per cent channeled to IT infrastructure while 45 per cent will support working capital.