High shareholders optimism awaits banks’ 2018 dividend payout

On the heels of economy instability, investors on the Nigerian stock market are anxiously awaiting leading banks dividend payout for financial year ended December 31, 2018.

Amid struggling Gross Domestic Product (GDP) in half year of 2018, decline yield on Treasury Bills and liquidity crunch, these leading banks reported improved earnings, coupled with interim dividend payout in half year results of 2018.

The likes of Guaranty Trust Bank Plc (GTBank) and Zenith Bank Plc declared interim dividend of 30k per share respectively, while the management of Access Bank Plc and United Bank for Africa (UBA) proposed an interim dividend of N0.25 and N0.20 per share for the period under review respectively.

Capital market analysts who spoke with our correspondent said that Tier-1 banks are always competing on dividend payout to shareholders despite challenging business environment, stressing that shareholders are always on alert every financial year ended December 31.

GTBank had paid a final dividend of 240k per unit of ordinary share held by shareholders in addition to interim dividend of 30k per unit of ordinary share bringing total dividend for 2017 financial year to N2.70 per unit of ordinary share.

Zenith Bank’s proposed a dividend of N55.57 billion (N2.45 kobo per share) as against N48.66 billion (N1.77 kobo per share) in 2016 and interim dividend paid in 2017 and 2016 was at N7.85 billion respectively.

For UBA, shareholders were paid N0.65 kobo for every ordinary share of 50 kobo in 2017 as against N0.55 kobo that was paid in 2016.

GTBank in a statement to NSE said the lender’s board and directors are expected to meet on January 30, 2019 to consider its audited financial statement for year ended December 31, 2018 and issues relating to full year dividend.

The statement signed by the company secretary, Mr. Erhi Obebeduo noted that the audited accounts would be forwarded to Central Bank of Nigeria (CBN) for approval prior to the release of the results on the floor of the NSE.

Speaking with Business247News Online, professor of finance at Nasarawa State University, Prof. Uche Uwaleke said, Tier-1 banks have constant dividend payout policy over improved earnings.

According to him, the dividend policy of these Tier-1 banks is active dividend policy as opposed to residual dividend policy.

“Banks like GTBank, Zenith Bank, UBA and Access Bank have maintained consistent dividend payout to shareholders in the last five years. Access Bank in 2017 financial year paid interim dividend of N0.25 kobo and later paid final dividend of N2.00. A total dividend paid by Access Bank was N2.50- that was one of the key points the bank used in the merger with Diamond Bank.

“Their dividend policy is driven by their competitors.  GTBank is looking at what Zenith Bank is paying dividend. We expect that with 2018 financial year, these banks should pay dividend to shareholders.”

He noted that the dividend payout to shareholders would impact on these banks share price going forward.

Speaking further he said, shareholders should be expecting improved dividend or they maintained the same amount paid to shareholders last year.

“I expected Access Bank to pay dividend higher to what was paid in 2017. At worst, the lender will maintain N0.25 kobo dividend payout to shareholders in 2017.

“Banks with low Non-Performing Loan Ratio in the Tier-1 region are also expected to pay dividend. However, banks with NPL ratio above 10 per cent as guided by CBN are not expected to pay dividend to shareholders. That was why, a bank like Diamond bank was unable to pay dividend for sometimes.”

He noted that Tier-1 banks might struggle to improve on their performance in 2018 and the major concern is the plummet of leading banks share prices.

“The share price of Zenith bank and GTBank are trading below their intrinsic values on the Exchange. Going into this year, I see their share price appreciating but it will be based on the outcome of 2019 election.

“Once there is violence towards the election or after the election, this predication may not come true. The investors will run away from stocks despite their devaluation. Their true value will not be seen until after the election. Everybody is watching to see the outcome of the election.

The Managing Director, Cowry Assets Management Limited, Mr. Johnson Chukwu, said the big banks are expected to pay good dividend to shareholders.

According to him “they will pay good returns, at least match last year return payout ratio. You will recall that the big banks actually did well in the half year results matched with interim dividend despite the difficulties in the nation’s economy.

“The economy was sluggish in 2018 and the best we could achieve was 1.91 per cent growth in GDP. The real sector of the economy was also sluggish which is tight to companies that provide funding to the economy.

“I want to believe that the likes of GTBank, Zenith Bank, Access Bank and UBA will pay shareholders reasonable dividend.

A shareholder, who does not want his name in print said, shareholders are  anxiously expecting banks earnings and improved dividend for 2018 financial year.

He maintained that, leading few banks might report improved dividend payout over impressive profit stressing that companies in the other sector might struggle.