The Peak of the Pack

The Zenith Bank Plc result of its public offer in February showing N53.63 billion clearly puts the bank ahead of others

By Udo Onyeka

Jim Ovia, MD, Zenith Bank Plc

WHEN Zenith Bank Plc rolled out its shares to the public in February, to raise additional N50.7 billion, financial experts where divided in their opinion concerning the bank's decision. Many were of the view that it was too soon for a bank to return to the Nigeria Stock Exchange (NSE) barely two years after it went public through an Initial Public Offering (IPO), in July 2004 that raised N48 billion.

Not only that, they equally argued that since the first phase of the on-going restructuring in the banking industry had just ended, that reduced the numbers of banks operating in the country from 89 to 25, it would be proper for the bank to settle down and plan how to face with post-consolidation challenges.

However, inspite of the fears expressed by some analysts, the Jim Ovie led-management of the bank was not deterred, as they had made their plans and were following it religiously. Their eyes were right on the top rung of the ladder in the industry.

The result of the public offer has been fully verified by the Central Bank of Nigeria (CBN), and the Securities and Exchange Commission (SEC), showing N53.63 billion, the largest in the history of the Nigerian capital market, a 105.78 per cent subscription that brought in 218,268 new shareholders into the bank.

Notedly, some notable stockbrokers and financial analysts, predicted bumper harvest for the Zenith offer.

For instance, the doyen of Nigerian stockbrokers, Reverend Olu Odejimi, who is also the Managing Director of Clearview Securities said stockbrokers supported the offer because the bank to him, had lived up to and even surpassed investors' expectation.

"We supported Zenith Bank during the first issue and we have decided to support it in this issue because the management has been tested, they are transparent and competent to deliver what they promised. Besides, Zenith Bank has also brought dynamism into the market.

"Immediately there was market hear say that Zenith Bank is returning to the market, all (investors) were asking for was, when will the offer open? I make bold to say that at the end of this offer, Zenith Bank will be at the zenith of Nigeria's banking industry" he predicted.

The view of Odejimi, was re-echoed by the Managing Director, Future View Securities, Elizabeth Ebi, who said that the offer would be over-subscribed.

"The final results of Zenith Bank speak for itself. The management is good, the staff are wonderful. Already, huge amount of the offer has been pre alloted. The foreign market are also gearing up to make sure they are part of this issue. So I am confident that the offer would be over subscribed" she declared.

Also president, Nigeria Shareholder's Solidarity Association (NSSA), Ashiwaju Akintunde Asalu, predicted a massive patronage for the Zenith offer, he described Zenith offer as "a good stock any day."

"I have recommended Zenith Bank's offer to my association, because it is good to buy. Most stocks above N20 don't even give the kind returns zenith gives. I can close my eyes and sign a blank cheque to buy Zenith Bank's shares" he said.

Whether the timing for the offer was right or wrong, The Source , investigations revealed that investors were overwhelmed by the records and achievement of the management of the bank.

For instance, Zenith Bank is the only bank, in the country that has an all time low of two per cent non performing loan.

This was not, however, the first time the bank is making history. In 2004 Zenith broke ground as its Initial Public Offer (IPO) recorded a huge success. The offer brought in the sum of N48.5 billion, the biggest ever to be raised on the Nigerian stock market at that time. The offer was 554 per cent subscribed. It pooled a total of 288,780 shareholders representing the largest number of shareholders of any company in Nigeria.

Based on the over subscription then the SEC and CBN forced the bank to refund about N27 billion of the amount raised in the IPO in accordance with the Investment and Security Act of 1999.

The Source found out that between 2004 when the bank was listed in the capital market and now, the equity of the bank has risen from N10.90 per share to N20.61.

Zenith Bank's report in the year ended, September 30, 2005 showed that the bank grew in all its financial performance by an average of 70 per cent . Pre- tax profit grew by 84 per cent, from N1.64 billion in the corresponding period of 2004 to three billion naria, gross earnings jumped by 56 per cent, from N7.9 billion to N12 billion, while at the same time profit after tax moved by 85 per cent, from N1.32 billion to N2.44 billion.

The Source gathered that for seven consecutive year, up to June 2005, Zenith Bank maintained its position as an institution with the lowest ratio of non performing loans to total loans in the Nigerian financial services industry. Its ratio remained less than two per cent, compared with industry average of 18 per cent, thus making bold its superior risk management culture.

Also in keeping with its pledge to consistently utilise technology in delivering quality banking services, Zenith Bank has continued with the development of its cutting edge ICT infrastructure as a key tool in its services.

To make sure that its services to its customers are not interrupted, the bank deployed over 100 Automated Teller Machines (ATM) across the country.

Notedly based on the performance of the bank and its impressive growth pattern, recognitions from both local and international organisations have continued to come the way of the bank.

For instance since 1999 to date the bank has maintained its "tripple A" rating in the rating analysis conducted by Agusto and Company Limited.

In the same vein, since 2000 to date, the bank has also been rated "tripple A" in the credit risk rating analysis undertaken by Pharez.

For five years, Fitch's rating has given Zenith Bank AA - (long term) and Fit (short term) and indicated that the ratings given, reflects its strong domestic franchise, good asset quality and sound earning records.

Zenith has also expanded its franchise beyond Nigerian borders with a full fledge subsidiary, operating in Ghana, as Zenith Bank of Ghana.

Recently Jim Ovia, the Managing Director/Chief Executive Officer of the bank, entered into a partnership agreement with JP Morgan Chase, a leading global investment bank, on managing the foreign reserves of the country. And last week, Financial Times report, mentioned Zenith Bank as one of the top banks in Africa and in the world. In this class was eight other Nigerian banks in the group of the first 1000 banks in the world.

Now that the result of the offer is out, raking in N53.63 billion and bringing shareholders fund of the bank to N92.1 billion, analysts say that the sky is the limit for Zenith Bank, especially if it fulfils its promise to invest the proceeds of the offer on branch expansion, information and communications technology and beefing up working capital.