Six banks which are Zenith Bank Plc, United Bank for Africa Plc (UBA), Stanbic IBTC Holdings Plc, Ecobank Transnational Incorporated (ETI), FCMB Group Plc and Jaiz bank Plc declared N198.2 billion, and N191.6 billion dividend in 2021 and 2022 respectively.
Meanwhile, Access Corporation, Guaranty Trust Holding Plc, Sterling Financial Holdings Company Plc, Union Bank Plc, Wema Bank Plc, Fidelity Bank Plc, and FBN Holdings are yet to submit 2022 financial statement or declared dividend.
Analysis of the six banks results showed that Zenith Bank leads other financial institutions in profit and dividend pay out to shareholders, followed by UBA in 2022 and 2021.
The challenges in the domestic and global economy, which the six (6) out of thirteen (13) listed banks on the Nigerian Exchange Limited (NGX) declared a total of N389.8 billion as dividend to shareholders between 2022 and 2021 financial year.
The dividend payout is on the back of N1.32 trillion Profit After Tax (N691.97billion in 2022 and N631.41 billion in 2021) financial year.
However, in the year 2021 and 2022 witnessed upheaval globally and it came with significant headwinds across all emerging, among other markets. While, the Russia-Ukraine conflict, rising inflationary pressure, tightening monetary policy stances by major central banks, new waves of COVID-19 outbreaks and related lockdowns, as well as supply chain bottlenecks all took a heavy toll on the global economy in 2022.
Significantly, Zenith Bank between 2021 and 2022 declared a sum of N468.47 billion profit and proposed to shareholders a dividend of N197billion, while UBA declared N227.84 billion profit in two year and proposed a dividend of N71.82 billion.
Zenith Bank Group Profit After Tax had decreased by eight per cent from N244.6 billion to N223.9 billion because of the increase in the group’s effective tax rate from 12.7 per cent in 2021 to 21.3 per cent in 2022. and also an increase because of the effective implementation of the Finance Act.
“This significant increase is a one-off and is not expected to recur in subsequent years, it affected return on equity which reduced from 20.4 per cent to 16.8 per cent,” the bank explained in a statement.
For ETI, the management proposed a final dividend of 0.11 US cents per ordinary share in 2022 and 0.16 US cents in 2021.
While commenting on the pan-African bank performance in 2022, the CEO of Ecobank Group, Jeremy Awori in a statement said, “Ecobank’s strong 2022 performance reflects the strength of our diversified business model, growth momentum and efficiency, and was achieved despite operating in a challenging macroeconomic environment, which also included the difficulties that Ghana’s debt restructuring exercise placed on us.”
Capital market analysts lauded 2022 corporate earnings and dividend payout of Zenith Bank Plc, among others, stating that financial institutions in Nigeria are resilient to overcoming domestic and foreign challenges and declared dividend from their earnings.
The Chief Research Officer, InvestData Consulting Limited, Mr. Omordion Ambrose, while speaking said the 2022 performance of these companies are impressive and their dividend returns are more attractive when compared to yields on money market instruments.
He said, “From the results we have seen so far, Zenith Bank proposed N3.10 final dividend and UBA declared N1.1 dividend payout on the NGX. Some companies’ dividend payout were flat to show how the operating environment was challenging in 2022. Some of these companies over the years have been consistent in dividend payout to shareholders.”
Also speaking from a shareholders’ perspective, Chairman Progressive Shareholders Association (PSAN), Boniface Okezie stated that despite economic hardship, Dangote Cement, among others have reported impressive performance.
According to him, “As we have seen from their performance, there is resilience in the corporate world which means there is hope for our domestic economy. Those in the private world have put more handwork, diligence in growing profit and declared dividend in their move to give back to shareholders. These firms pay heavily for security, and infrastructure which is not their duty.
“Beyond valuation, dividend paying stocks can be a good source of stable income streams. Many investors will want to invest in companies with a history of growing dividend and the likes of Zenith Bank, UBA and Stanbic IBTC Holdings over the years have sustained dividend payout to investors,” he said.
The Managing Director/CEO APT Securities and Funds Limited, Mr. Garba Kurfi commended listed financial institutions for releasing impressive result and accounts for 2022, expressing concerns that the declared dividend by these companies did not reflect in the trajectory of the stock market in Q1 2023.
According to him, “These companies have declared impressive dividend payout to investors but I do not know why the NGX Bank index did not respond to dividend payout in the financial sector.
“Investors on the Exchange were concerned over political unrest, among other factors, and opted to sell some of these banking stocks. We hope these banking stocks will bounce back in the second quarter of 2023 once unaudited first quarter result and accounts are released to investing public.”