Daily Independent (Lagos)
Emele Onu
1 December 2008
As shareholders of Zenith Bank Plc meet during the week for the next Annual General Meeting (AGM), their faces will most likely radiate joy for the enhanced shareholder value that came their way in the past year.
On historical trend, Zenith Bank holds prospects likewise on a going forward basis.
It is the opinion of many analysts that the bearish tendency ravaging the stock market at present has further increased the capacity of Zenith Bank to deliver short, medium to long term benefits to its shareholders.
That line of thinking is premised on the fundamentals of the bank as released recently and covering the past 15 months period - to September 30, 2008.
The opinion is also premised on the general thinking that the stock market will rebound first quarter of next year or thereabout.
Currently trading at about N29 per share, on the floor of the Nigerian Stock Exchange (NSE), it is strictly analysts' opinion that investors that enter the equity at the prevailing price will gain significantly in the future, by way of capital appreciation except where the bears fervently refuse to give way, which can hardly be the case.
Capital and Assets
By the audited 15 months financial statement to September 2008, Total Assets of the bank rose to N1.79 trillion from N972. 8 billion in the past year and representing a growth by 818 billion or 84 percent.
Owners' Equity stood at N346 billion, which was a positive variance by N230 billion or 198 percent from N116 billion recorded in the books for June 2007.
It records Equity/ Total Assets ratio of 1.93/10, better than the 1.19/10 it was in the previous year.
On capacity, outlay of assets plus continents, Zenith Bank is one of the biggest deposit money financial institutions in the country. That pushes the bank, by portfolio analysis, into market leadership in corporate banking, trade finance and some other core banking operational areas.
Earnings and Liquidity
The bank has good earnings and track records that put its shares steadily on the bid on the floor of the Exchange. The lofty performance trend is most likely to continue. It is the opinion of analysts that the stock will continue to enjoy the confidence of investors, on the account of the past and recurrent upbeat performance. The numbers that represent the score card of the financial institution over the past 15 months raise the hope that more are in the offing, by way of returns to shareholders.
The reports to September 30, 2008 showed Gross Earnings of N208.3 billion as against N94.9 billion during the 12 months ended June 30, 2007. Profit after tax stood at N52 billion compared with N18.8 billion in June 2007.
On a further breakdown, turnover made over a doubling, increasing by 119.5 percent over the preceding year's figure. The Net of N52 billion, showed a positive variance of N33.2 billion or close to two folds increase (177 percent), over the 2007 figure. Zenith Bank for the past year posted a pre-tax profit growth by 118.6 percent in the review period to N56.12 billion from N26.68 billion recorded in 2007.
Relating the topline figures to the bottomline, Zenith Bank presented an impressive result as Net Profit Margin (NPM) rose to 2.5/10 in September 2008 as against 1.98/10 in June 2007.
The foregoing means that for every N10 the bank garnered as sales in 2008, it converted N2.20 to profit, an improved earnings capacity when compared to the N1.93 that was converted on every N10 revenue base in the 2007 financial year.
Zenith Bank has manifested higher efficient operations and earnings capacity, which analysts' expect will mean more revenue for the bank and returns to the shareholders in the years ahead.
The bank's last audited financial statement is appreciated more by the fact that notwithstanding the dilution in the numbers of shares outstanding in its name, been the result of the past public offer, earnings per share (eps) was on the upbeat. The bank grew eps by 165 percent to N2.78, from the N1.05 it declared in the 2007 financial year.
From the exciting eps, the directors recommended a dividend of N1.70 per share to be distributed to shareholders that their names appeared in the register as at November 24, 2008. Payment date for the cash dividends, as announced, is December 5, this year Zenith Bank pulled off return on assets (ROA) of 3.1 percent and return on owners' equity of 15.1 percent, which by industry standards are outstanding. The other selling point for the stock is the strong liquidity position as amply demonstrated in the past year.
However, the management of Zenith Bank is challenged to ensure that the bank's lofty performances are sustained.
That is what will guarantee sustainable earnings and returns to the shareholders and above all ensure lasting investors' confidence for the stock.
Listed on the Nigerian Stock Exchange on October 21, 2004 at N10.90 per share, Zenith Bank is a stock that enjoys high level of market confidence. As long as management sustains present performance trend, it is the opinion of analysts that the equity will continue to unlock enhanced value for its shareholders. The prospect of the stock in the future is high.
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