Zenith Bank Plc, Nigeria’s largest bank by profit, has presented a unique investment opportunity through its ongoing hybrid rights and public offers, providing both existing shareholders and new investors the chance to acquire shares at highly attractive prices.
This strategic move is set to provide immediate return of around 32% for those who take advantage of the offer.
The Offer Details
Zenith Bank is offering a rights issue of 5.233 billion ordinary shares of 50 kobo each at N36 per share. These shares have been pre-allotted to existing shareholders on the basis of one new share for every six shares held as of July 24, 2024.
Alongside this, the bank is simultaneously offering 2.767 billion ordinary shares of 50 kobo each to the general public at N36.50 per share.
The minimum subscription is 250 shares, making it accessible for a wide range of investors.
The application period, which opened on August 01, 2024, is set to close on September 09, 2024.
A Discounted Opportunity
A review of Zenith Bank’s trading history shows that its shares have recently traded as high as N47.35 per share. This ongoing offer represents a discount of about 32%, providing a lucrative entry point for investors.
With earnings per share of N21.55 in 2023, the offers carry an earnings yield of approximately 60%, a value that is significantly attractive among peer institutions and competing offers in the market.
This implies that beyond the bank’s industry-leading dividend payouts, investors are poised for significant value creation and long-term returns.
Impressive Financial Performance
Zenith Bank’s recent financial performance revealed the potential of this investment.
The bank recorded a pre-tax profit of N796 billion and a profit after tax of N677 billion in 2023, largely driven by aggressive business expansion and increased brand adoption both domestically and internationally.
Accordingly, gross earnings surged from N946 billion in 2022 to N2.13 trillion in 2023, making Zenith one of only three Nigerian banks to surpass the N2 trillion milestone in gross earnings.
The momentum continued into the first quarter of 2024, with gross earnings jumping 189% to N781 billion, and profit before tax tripling to N320 billion.
Net profit soared by 291% to N258 billion, with earnings per share rising from N2.10 to N8.22.
Analysts believe that Zenith Bank is on track to surpass its 2023 performance, potentially achieving over a trillion naira in net profit this year. Such robust fundamentals are expected to trigger a rally in the stock, possibly setting new all-time highs in the coming months.
Technological Edge
In addition to its financial strength, Zenith Bank has been at the forefront of digital innovation in Nigeria’s banking sector.
Recently, the bank was awarded the title of “Best Bank for Digital Solutions in Nigeria,” reflecting its robust growth across digital channels.
The number of digitally active customers surged to 13.5 million, about 28% increase year-on-year.
This digital adoption drove a 14% growth in electronic transaction volumes to 1,953 million transactions, and a 22% increase in fees on electronic income.
Zenith Bank has continually enhanced its retail digital offering, making significant improvements to its mobile banking app to drive customer adoption and enhance the user experience.
The latest upgrade, currently in its pilot phase, includes features such as cardless withdrawals, wearables integration, loyalty programs, and more, all receiving positive feedback from users.
Also, the bank introduced innovative solutions like ATM biometric transfer functionality, which enhances security and ease of access for customers.
In the payments space, Zenith Bank launched Z-Mandate, a service that enables direct-debit mandates to be passed to customer accounts by merchants.
The Globalpay app, a mobile version of the bank’s payment gateway, was also released for testing, further solidifying Zenith Bank’s leadership in digital banking.
Pan-African Presence and Growth
Founded in May 1990, Zenith Bank has grown to be a true Pan-African financial services provider, with operations spanning Nigeria and across Anglophone West African nations.
Over the past 34 years, the bank has expanded from a modest capital base of N29.560 million to a financial holding company boasting a market capitalization of N1.130 trillion. This remarkable growth is a testament to the bank’s strategic vision and robust operational execution.
Despite the challenges faced in the global and Nigerian economies, Zenith Bank has consistently delivered value to its shareholders. In 2023, the bank’s share price saw a year-to-date gain of 61%.
Since its listing on the Nigerian Stock Exchange on October 21, 2004, Zenith Bank has not only successfully navigated economic challenges but has also consistently declared dividends, reinforcing its reputation as a reliable and profitable investment.
Industry Recognition and Expansion
Zenith Bank’s excellence has been recognized with several prestigious awards, including being named the Best Commercial Bank in Nigeria for the fourth consecutive year by the World Finance Banking Awards.
The bank has also been lauded for its corporate governance practices, further solidifying its reputation as a leading financial institution.
Established in 1990 by Jim Ovia, Zenith Bank has grown into one of Africa’s foremost financial institutions, with a strong presence in key international markets including the UK, Ghana, Sierra Leone, The Gambia, and a representative office in China.
The bank’s commitment to innovation and customer-centric services has made it a pioneer in digital banking in Nigeria, consistently deploying cutting-edge technology to meet customer needs.
A Strategic Investment
For investors, Zenith Bank’s ongoing share sales represent a strategic investment opportunity.
The discounted share price, coupled with the bank’s strong financial performance, technological innovation, and industry leadership, positions Zenith Bank as a compelling choice for both existing shareholders looking to increase their stakes and new investors seeking to enter the market.
As Zenith Bank continues to expand and innovate, the potential for significant returns makes this offer one that should not be overlooked.
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