Increase of 8 billion or more issued shares will not affect dividend payout but more dividend to shareholders—-Zenith Bank

Zenith Bank is promising an increased dividend payout to its shareholders despite the addition of over 8 billion shares through its ongoing combined offer.

In a response to questions asked during the “Facts Behind the Offer”, Dr. Henry Oroh, an Executive Director with the bank noted that the increase in the number of issued shares would not affect its dividend payout.

He noted, “In 2023, our dividend payout was less than N130 billion, and that was about 25% of our profit after tax. What it means is that we could have paid N8 per share and still would not shake.”

He further noted, “We will not do any share buyback, every year, we’ll continue to pay more and more dividends.”

Zenith Bank’s dividend history
Since 2019, Zenith Bank’s total dividend payouts have appreciated by 43%, moving from N2.80 for FY 2019 to N4.00 for FY 2023. For those five years, the bank distributed a total dividend of N505.5 billion, marking the highest dividend payout for any Nigerian bank.

With 8 billion shares on offer right now, Zenith Bank’s total outstanding shares is set to increase to 39.4 billion, which is likely to lead to a decline in the dividends to be paid to shareholders.

However, with a 291% year-on-year growth in its profit after tax in the first quarter of 2024, Zenith Bank is on track to break its yearly earnings record yet again in 2024. This feat would mean more returns to its shareholders, not just in dividend payout but also in dividend per share.

The bank is gearing for an oversubscription
Indications from the NGX as well as the bank’s shareholders are that the bank is preparing for a potential oversubscription.

Speaking during the presentation, the Group CEO of the NGX Group, Temi Popoola hinted at the successful reception Zenith Bank’s offer is having on the NGX Invest platform.

He noted, “Last week, we had a particular day where we had running into couple billions of Naira worth of transactions just through digital channels.”

Some shareholders also hinted at intentions to claim up their rights issue.

A Zenith Bank shareholder at the presentation, Sam Ndasa noted, “I’m adding my voice to those who say this issue will be oversubscribed, because you have done it before. I don’t see why you will not do it again.”

Another shareholder, Bisi Bakare noted to the Group MD, “In the case of an oversubscription, we want you to absorb everything,”

In response to questions about oversubscription, the bank’s Group Managing Director, Dame Adaora Umeoji noted,

“We are regulated, and SEC would be the body to determine what happens in the case of oversubscription. Left to us, we would take everything, but it depends on SEC’s regulations.”

For all of Zenith Bank’s capital raising efforts, the bank has always had oversubscription, starting from its initial public offering in 2004.

In 2004, Zenith Bank carried out the largest ever initial public offering in Nigerian capitals market history, and the offer was oversubscribed by 524%. Then in 2006, it carried out its second public offer, recording another oversubscription.

In 2007, Zenith Bank carried out a combined offer of a rights issue and a public offer, and the offer recorded an oversubscription of 496%.