Zenith Bank shares fall after N7.85b interim dividend announcement

Shares in Zenith Bank fell for a second session in a row on Friday after the lender declared a lower than expected interim dividend, despite a sharp rise in first-half earnings.

The top tier Nigerian lender said late on Thursday its pretax profit in the first six months jumped 71 percent to 92.2 billion naira ($264 million) and it declared 0.25 naira interim dividend.

“Some investors sold their holding in the bank after the disappointing dividend,” said Austin Egberi of Fund Matrix & Assets Management.

Traders said investors were expecting a higher payout at the half-year point to continue holding the stock, which had doubled in value by the end of July from its 2017 low hit on March 13.

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The stock fell 1 percent to 23.75 naira on Friday, the lowest since July 26.

“Zenith lost today despite the release of better than expected H1 earnings,” Vetiva Capital analysts said. “We believe that the declines might be attributable to profit taking.”

Stanbic Stockbrokers upgraded its target price to 28.60 naira from 25 naira and forecast the bank’s full-year pretax profit would come in at 184 billion naira, up 18 percent.

Zenith raised $500 million Eurobond in May which could increase its funding costs, Stanbic said.

Dollars have been in short supply in Nigeria since the price of oil, the country’s main source of hard currency, plunged in 2014, triggering a currency crisis, an exodus of foreign investors and the first recession in 25 years. ($1 = 364.90 naira)

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BarometerNG recalled that  Nigerian billionaire financier and founder of Zenith Bank Plc, Mr. Jim Ovia, was to receive N736.5 million as interim dividend for the first half of this year as the board of directors of Zenith Bank announced that it has approved distribution of N7.85 billion to shareholders as interim dividend for the first half of 2017.

Jim Ovia who is chairman of the board, holds the largest individual equity stake of 9.38 per cent in Zenith Bank. No single individual ultimately holds more than 10 per cent equity stake in the bank. Zenith Bank has some 645,754 shareholders, but about 84 per cent of these fall below 10,000 shares range.

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