Zenith Bank: Positioning Investors for Better Tomorrow with Public Offering

Donatus Eleko

As the Nigerian economy continues to teeters, experts are urging investors to consider investing in shares as a promising avenue for wealth creation.

With the financial sector playing a pivotal role in driving the growth of the Nigerian economy, investing in bank’s can offer substantial returns. Banks are the lifeblood of any economy, providing essential financial services to individuals and businesses. As the economy expands, so does the demand for banking services, leading to increased profitability for the financial institutions.

In Nigeria, Zenith Bank Plc is one institution that has a history of consistent dividend payouts, providing investors with regular income streams. These dividends can be reinvested to compound returns over time. The bank has emerged as a leading financial institution, providing investors with an unparalleled platform to be part of the bank by investing in its ongoing public offering.

Zenith Bank recently announced its ongoing hybrid rights and public offers as it seeks to raise about N290 billion. The move would enable the bank meet the Central Bank of Nigeria’s (CBN) new minimum capital requirement of N500 billion.

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.

Today, Zenith Bank is the highest dividend-paying bank in Nigeria, a trend it has sustained over the past five years.  Also, its shares are selling at a massive discount considering that it recently got to N46 per share.

Speaking at the signing ceremony for the offerings, the Group Managing Director/CEO of Zenith Bank Plc, Dr. Adaora Umeoji, OON, said: “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.

“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. Over the years, we have consistently rewarded our esteemed shareholders.

“Specifically, in the last five years, we have maintained the record as the highest dividend-paying Bank in Nigeria. In 2023, we 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 channelled towards expanding banking operations across Africa and internationally, investing in technology infrastructure, and supporting working capital on an ongoing basis. 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.

Zenith Bank was established in May 1990 and commenced operations in July of the same year as a commercial bank. 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 highly successful Initial Public Offering (IPO). In 2013, the bank listed $850 million worth of its shares at $6.80 each on the London Stock Exchange (LSE). Headquartered in Lagos, Nigeria, Zenith Bank Plc has more than 400 branches and business offices in prime commercial centres across all states of the federation and the Federal Capital Territory (FCT).

Founded by founded by Jim Ovia, CFR, the bank has since grown to become one of the leading financial institutions in Africa. The underlying philosophy is for the bank to remain a customer-centric institution with a clear understanding of its market and environment.

Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards. These latest accolades follow several recognitions, including being recognised as the Number One Bank in Nigeria by Tier-1 Capital for the 14th consecutive year in the 2023 Top 1000 World Banks Ranking, published by The Banker Magazine; 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, among several others.

In its audited results for the year ended December 31, 2023, Zenith Bank achieved a remarkable triple-digit growth of 125 per cent in gross earnings, from N945.6 billion reported in 2022 to N2.132 trillion in 2023. The impressive growth in gross earnings resulted in a year-on-year increase of 180 per cent in profit before tax (PBT), from N284.7 billion in 2022 to N796 billion in 2023, while profit after tax (PAT) also recorded triple-digit growth of 202 per cent, from N223.9 billion to N676.9 billion for the period ended December 31, 2023.

The increase in gross earnings was primarily due to growth in interest and non-interest income. Specifically, its interest income increased by 112 per cent, from N540 billion in 2022 to N1.1 trillion in 2023, while non-interest income grew by 141 per cent, from N381 billion to N918.9 billion in the same period. The rise in interest income was attributed to the growth in the size of risk assets and their effective repricing, alongside the increase in yield of other interest-bearing instruments over the year. Growth in non-interest income was driven by significant trading gains and an increase in gains from the revaluation of foreign currencies.

Zenith Bank’s cost of funds also grew from 1.9 per cent in 2022 to three per cent in 2023 due to the high interest rate environment, while interest expense increased by 135 per cent, from N173.5 billion in 2022 to N408.5 billion in 2023. Notwithstanding the 32 per cent growth in operating expenses in 2023, the Group’s cost-to-income ratio improved significantly from 54.4 per cent in 2022 to 36.1 per cent in 2023 due to improved top-line performance. Return on Average Equity (ROAE) increased by 118 per cent, from 16.8 per cent in 2022 to 36.6 per cent in 2023, underpinned by improved gross earnings, as the Group sought to deliver better shareholder returns. Return on Average Assets (ROAA) also grew by 95 per cent, from 2.1 per cent to 4.1 per cent in the same period.

With a comprehensive range of investment products and services, coupled with expert guidance, Zenith Bank empowers individuals to achieve their financial goals. The bank offers a diverse portfolio of investment options tailored to meet the varying risk appetites and financial objectives of its customers.

The bank boasts a team of seasoned investment professionals who possess in-depth market knowledge and expertise. These experts provide personalised financial advice, helping investors make informed decisions and navigate market volatility.

Zenith Bank recently emerged as the Best Commercial Bank, Nigeria in the World Finance Banking Awards 2024, retaining the award for a fourth consecutive year. The bank was also named as Best Corporate Governance, Nigeria for the third year running in the World Finance Corporate Governance Awards 2024.

To Umeoji, the awards highlighted the bank’s steadfast dedication to excellence, adherence to global best practices and its persistent effort to deliver superior value to all stakeholders through innovative products and services.

“Receiving these awards consecutively for multiple years signifies the commitment of our staff, the loyalty of our customers, and the support of our shareholders. We remain devoted to setting industry benchmarks and driving excellence across all aspects of our operations,” she added.

Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards, with these latest accolades coming on the heels of several recognitions including being recognised as the Number One Bank in Nigeria by Tier-1 Capital for the 14th consecutive year in the 2023 Top 1000 World Banks Ranking, published by The Banker Magazine.

Therefore, with its impressive track record, investing in Zenith Bank’s shares offers lucrative investment opportunity as it would help investors diversify their investment portfolios, reduce overall risk and offers a balance. Finally, by investing in Zenith Bank’s shares, investors can position themselves to capitalise on the potential and build long-term wealth.