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 Daily
Independent Online.
* Monday, July 05, 2004.
Zenith Bank, at Initial Public Offer, dazzles
investors with credentials
By Mojeed Jamiu
Finance Editor,
Lagos
The investors’ forum of Zenith Bank Plc last week,
which incidentally was the eve of the opening of the bank’s Initial
Public Offer (IPO), eventually turned out to be an open endorsement of
its shares by those who really matter in the nation’s financial and
economic systems.
Early signals from the market show that
investors from all walks of life have expressed their support for the
bank’s offer, which is the biggest IPO by any company in the history of
the Nigerian Stock Exchange (NSE) with an ultimate value of over N15
billion.
The first salvo on the overwhelming
achievements of the Jim Ovia-led bank was fired by the chairman of the
occasion and doyen of the accounting profession in the country, Mr.
Akintola Williams, who disclosed in his opening remarks that “Zenith Bank
has proved to be a bank for today and a bank for the future, having
modernised the business of banking in the country.”
According to him, the robust balance sheet
of the bank and how it has responded to the electronic transfer of
information and cash in the most modern, rapid and safe manner is a
confirmation of the its responsiveness and position as a world-class
financial institution.
The accounting tsar noted that the rating
agencies (Agusto, Fitch and Pharez, amongst others) could not have been
wrong in their judgments that proclaim Zenith Bank as the best among its
peers.
The Chairman of Dangote Group, Alhaji
Aliko Dangote, who was a special guest of honour at the event, urged
Nigerians to massively invest in the bank’s stock, as it is the “best
buy” in the industry as at today. He said although he is not in the habit
of buying banks’ stocks, but he would ensure he buys as much of Zenith
Bank’s shares as possible.
According to him, “I am a very happy
customer of the bank. They have never disappointed us for the past 10
years we have been doing business with them. I have also looked at the
targets set and I know the targets are very conservative. I am sure that
the bank would beat those targets. The IPO is even cheap at its current
price. I know there would be lots of returns on the investment, and so I
will appeal to you all to massively invest in it.”
Also, the former managing director and
chief executive of First Bank of Nigeria Plc., Chief Wole Adeosun,
disclosed in his brief comments on the occasion that one should look
critically at the bank’s balance sheet to really understand its level of
success.
“To understand Zenith Bank’s success, look
at the balance sheet and I can tell you that whatever I have, I am going to put it in this bank. I
must also add that Jim has become a successful banker and businessman by
being shrewd with other people’s money,” he said.
Legal luminary, Chief Richard Akinjide,
who compared the bank to those in the advanced world, said the quality of
service rendered by the bank to its teeming customers is as good as any
other bank in the world. While describing the offer price as being too
cheap, he said the bank has succeeded in building a formidable reputation
of outright success for itself both in Nigeria and also in the global
financial world.
His words: “Zenith Bank is a big success.
We thank the management for giving us the opportunity to be part of their
family. While urging all of you to buy and be part of history, I assure
you that I am going to take a substantial part of the shares.”
Akinjide stressed that the bank’s success
case enhances the reputation of Nigeria positively in the global
financial market.
The doyen of the stockbrokers in the
country, Mr. Tola Mobolurin, in a critical assessment of the developments
in Zenith, noted that the entry of the bank’s shares into the market is
already causing a stampede, as investors are apprehensive of the fact
that it might not go round.
“At a Profit/Earnings Ratio (PE) of seven,
a generous dividend forecast that will surpass the industry average, I
think we have a money doubler in (Jim) Ovia and we are already seeing a
situation where people are dropping other stocks to be able to pick up
Zenith’s shares, “ Mobolurin said.
Besides being the third most profitable
bank in the country, the Central Bank of Nigeria (CBN) had, in 2002,
formally confirmed the bank as the fourth largest in the industry after
First Bank, Union Bank and the United Bank for Africa (UBA).
The apex bank in its annual report also
revealed that Zenith Bank emerged the most liquid among the new
generation banks, as it recorded a liquidity ratio of 80.3 per cent
against the regulator’s requirement of 40 per cent.
The bank’s Chief Executive, Mr. Jim Ovia,
while laying bare the bank’s score-card before the investors, described
the offer as a national cake, which the bank has decided should be shared
among Nigerians.
He said the bank has benefited so
generously from the society and that through the offer, it has decided to
say thank you to all those who have had confidence and faith in both the
management and board of the bank.
While advising Nigerians to withdraw their
savings so as to have enough for the offer, he assured that there would
be bumper harvest for all those who toe the line of wisdom by so
investing.
He said: “The IPO really is to allow
Nigerians, who have been supporting us over the years share part of the
successes of Zenith. We are sure that the IPO will be grossly
over-subscribed, because, over the years, our results have been highly
impressive. While congratulating our prospective investors, I will like
to assure them of the highest returns on their investment and equity in
the industry.”
The Deputy Managing Director of the bank,
Mr. Godwin Emefiele, while sharing the success story of the bank, said
“the management of Zenith Bank has assured that investors will live to
remember for good, the day they decided to invest in Zenith Bank’s
shares, which they can pass on from generation to generation.”
While expressing gratitude to the
distinguished and prominent Nigerians present at the event, he disclosed
that with the IPO of the bank, a new dawn will be set in the Nigerian
capital market with the offer of 800 million Zenith’s shares to the
public.
In five years, from 1999 to 2003, the bank
recorded impressive performance on many fronts. Total assets plus
contingent liabilities grew by 311 per cent from N37.28 billion to
N153.44 billion. Gross earnings increased from N7.07 billion to N17.84
billion, representing 152 per cent growth. Other indicators like pre-tax
profit also grew by 255 per cent from N1.52 billion to N5.44 billion
while shareholders’ funds increased from N3.42 billion to N12.65 billion,
representing 269 per cent growth.
The bank has also consistently maintained
a triple A (Aaa) rating for six consecutive years since 1999, as adjudged
by Augusto & Co, a reputable consulting firm and rating agency. The
bank maintained very good asset quality, achieving the lowest
non-performing loans to total loans ratio of 1.4 per cent as at 2003-year
end, compared to the industry average of about 18 per cent.
The rating agency categorised the bank as
“a financial institution of impeccable financial condition and
overwhelming capacity to meet obligations as and when they fall due.”
Although Zenith Bank, through the
Investment Banking and Trust Company Limited (IBTC) and FBN (Merchant
Bankers) Limited, is offering 800 million ordinary shares of 50 kobo at
N10.90 each, the bank has secured approval that would enable it allot more
shares up to its authorised share capital in the event of an anticipated
over-subscription.
Zenith was incorporated as a private
limited liability company on May 30, 1990 and was granted a banking
licence in June 1990. It, however, began operations on July 16 of the
same year.
The bank has remained a local
international bank that is everywhere, a fact which the Chairman of AP
Plc. Mr. Peter Okocha, attested to while advising prospective investors
to take a good advantage of the Zenith Bank offer.
With 81 branches and cash centres
online-real-time across the country, coupled with a very robust balance
sheet and sound management led by Ovia, investors and other stakeholders
are in for a real good time with the bank’s shares.
Zenith Bank is offering its shares with
the proviso that should the offer be over-subscribed, the directors may
issue additional shares to the public up to the authorised share capital
of the bank. The board and management of Zenith International Bank
Limited had, last month, approved the IPO of the bank for listing on the
floor of the NSE.
The bank has maintained very good asset
quality, achieving the lowest non-performing loans to total loans ratio
of 1.4 per cent as at 2003 year end, compared to the industry average of
about 18 per cent.
The rating agency categorised the bank as
“…a financial institution of impeccable financial condition and
overwhelming capacity to meet obligations as and when they fall due.”
A financial institution with Aaa rating is presumed to
have an impeccable financial condition and overwhelming capacity to meet
obligations in a timely manner.
The strength of Zenith International Bank,
which commenced banking business in the country on July 16, 1990, just a
year after it was licenced, according to Agusto, was a reflection of the
bank’s sound financial condition, which is complemented by its industry
position, as the fourth-largest bank in Nigeria on the basis of total
assets and core capital.
According to Agusto, a consulting firm and
highly recognised rating agency in the financial sector in the country,
“the rating is supported by very good asset quality, good and sustainable
corporate earnings, strong capital, good liquidity and good market share.
The bank has increased its branch network strategically and supported it
with good quality of service, leading to an appreciable improvement in
its market share of low cost deposits.”
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