Zenith bank shares down 4.3% as investors shun 25k interim dividend

Three trading sessions after Nigeria’s top tier bank, Zenith Bank plc released its 2017 half year financial results, the bank’s share price have crashed by 4.3 per cent. Daily Times investigations can reveal.

Although the top notch lender declared a 25 kobo interim dividend to reward shareholders after it reported a profit after tax increase of 112 per cent from N35.5bn to N75bn, for the 2017 half year, the share price of the bank fell by N1 or 4.3 per cent in just three days, following the company’s announcement of its released result on Thursday, August 10th, 2017.

Investor’s reaction to the results has remained on a downside, as the stock which last traded on Monday, at N23.5 per share fell from N24.50, as at the preceding Wednesday’s price before the results were released.

Analyzing the reason behind the decline, a stockbroker with Deep Investment Securities, Mr. Adenle, told our capital market correspondent that the issue of Zenith back is not peculiar.

“Sometimes it’s prevalent with most blue chips in recent times, despite their good performance and fundamentals.”
He said the decline in share price of Zenith bank may be as a result of the supply or the volumes that some investors are willing to offload.

The fact that some of them have purchased and warehoused at reasonably low prices may be like N20 or lesser prices and now that it has gotten to like N24 or there about they may feel more comfortable with the margin rather than with a 25k dividend.” He said.

Another factor, Adenle pointed out, was “the fact that a large no of investors usually has gotten a premonition of the pay out of some of these company’s in recent times and so have taken a position before others at lower prices.
By the time the result now comes out they prefer to dump on new buyers since they have made their profit.”

The bank’s half year results show a 77 per cent growth in gross earnings of N380.4 billion. Net interest income improved by 9.4 per cent to N138.96; and profit before tax improved by 71 per cent to N92.2b.

The positive result which was achieved in spite of the recessed and challenging operating environment of high-interest rate and stifling regulatory policies was further complemented by a 4 percent increase in total assets which settled at N4.9 trillion and Shareholders’ funds 2.1 percent growth to close at N719.3b during the half year period under review.

Afolabi Adesola