Nigeria's Zenith Bank To Pay dividends, Gives Share Bonuses

PHOTO: MANAGING DIRECTOR OF ZENITH BANK PLC, MR. JIM OVIA.

Nigeria's Zenith Bank posted a sharp drop in pre-tax profit on Monday due to exceptional provisions but announced a higher-than-expected dividend and a share bonus, sending its stock higher.

Pre-tax profit for the 15 months to December 2009 fell 37 percent to 35.1 billion naira ($265 million) after the bank made an exceptional increase in provisions of 40 billion naira for lower asset values.

But the bank said its total loans and advances rose 53 percent to 698 billion naira while gross earnings rose 31 percent to 277 billion naira. It proposed a 45 kobo dividend and a bonus issue of one share for every four held.

"We remain vigilant on asset quality and pride ourselves on our risk management infrastructure as we do on our continued drive to reduce costs and our resilient capital position," Chief Executive Jim Ovia said in a statement.

Shares in Zenith Bank, which said its capital adequacy ratio stood at 29 percent, rose close to the maximum 5 percent, helping lift the Nigerian all-share index around 2 percent to an eight-month high.

Brokers welcomed the dividend payment.

"We had assumed that Zenith would reduce its payout ratio given the challenges the sector has been facing," CSL Stockbrokers said in a research note.

Zenith said its corporate and retail banking division had increased market share with 53 percent loan growth to multinationals and leading Nigerian corporate clients helping push up its gross earnings.

Higher yields from its investment and trading in government bonds had also boosted revenues.

But the bank said its investment management and stockbroking arm had fallen to a pre-tax loss of 4 billion naira, although its client base did not reduce.

"We have set a target to grow our gross earnings back to 2008 levels by continuing to reduce our overall cost of funds," said Deputy Managing Director Godwin Emefiele, who is due to take over from Ovia as chief executive in August.