Access Bank Plc, which is in the last stage of finalising its merger with Diamond Bank Plc, has proposed to pay shareholders N0.25 per share for the year ended December 31, 2018, and this may turn out to be the least dividend per share among the nation’s tier 1 banks payable in the 2019 dividend season. The five tier 1 banks are Guaranty Trust Bank (GTB), United Bank for Africa (UBA), Zenith Bank, First Bank of Nigeria Limited and Access Bank Plc.
Only First Bank of Nigeria Limited is yet to announce its audited financial statement through FBN Holdings Plc but analysts are optimistic it will outperform its earnings forecasts.
Zenith Bank had earlier proposed to pay shareholders N2.50 per share which amounted to N78.5 billion just as GTB proposed to pay N2.45 per share which translated to N72.1 billion. Last Friday, the United Bank for Africa (UBA) proposed to pay N0.65 per share and that amounted to N22.2 billion.
Meanwhile, at N0.25 per share as final dividend, Access Bank will be paying shareholders N7.23 billion as dividend, which turns out to be the least among the four tier 1 banks that have made their corporate actions known to the investing public, thus bringing the total dividend paid in 2018 to N0.50, having paid N0.25 per share at half as interim dividend.
The reduction in Access Bank’s corporate actions may not be unconnected with its merger with Diamond Bank. The bank announced last Friday it had received the final approval from the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) to consummate its merger with Diamond Bank.
“Access Bank Plc is pleased to announce that the Bank has received the final approval of both the Central Bank of Nigeria and the Securities and Exchange Commission to the proposed Scheme of Merger (‘the Scheme’) between the Bank and Diamond Bank Plc. The Scheme is subject to judicial sanction of the Federal High Court. We will provide further update to the market upon receipt of the court sanction of the Scheme”, the statement read.
With the latest corporate actions coming from both Access Bank and UBA, the total proposed dividends for the 2019 dividend season have risen to N529.6 billion. From the proposed dividends, banks, including Stanbic IBTC, will be paying shareholders on due dates N195.4 billion, and this amounted to 37 percent of the total proposed dividends year to date.
“Acquisition may have played a role in the amount of dividend Access Bank is proposing to investors. An Acquisition requires huge amount of cash expenses alongside the fact that the bank also proposed cash payment for the shares bought from Diamond Bank’s shareholders. Hence, the bank will need to work towards having good liquidity standing in order to fund the merger and post-merger requirements’, said Chinonye Nnewuihe , senior analyst with Meristem Securities.
In spite of more listed firms announcing handsome rewards for shareholders, the nation’s equity market remained unresponsive as the All Share Index (ASI) last week retreated into the negative territory. ASI closed at 31,142.72 points last week Friday, March 15, 2019 which translated to -0.92 percent returns year to date when compared with 31, 430.50 points on the last trading day of 2018. The market capitalisation closed at N11.6 trillion last week Friday compared with N11.91 trillion on the last on March 8 2019 translating to a loss of N291.5 billion in a week.
Analysts have attributed different factors as responsible for the neutral posture of investors to mouth-watering corporate actions from listed firms.
“Whilst the political risk overhang has largely abated, I think investors are looking forward to announcement on CBN leadership and policy direction. The market is clearly undervalued, particularly the large –cap banks trading at historic low valuations. Hopefully, as the fog clears, both local investors and foreign portfolio investors will return to equities.
“More so, expectation of further moderation in yields on fixed income securities reinforces the positive outlook for equities, as fund managers should allocate more money to equities, a development which should trigger deserved upward re-rating of value stocks on the Nigerian Stock Exchange(NSE)”, said Abiola Rasak, head, investor’s relation, the United Bank for Africa.
For the financial year ended December 31, 2018, Access Bank made N528.7 billion as revenue compared with N459.1 billion made in similar period in 2017. Net interest income after impairment charges stood at N158.9 billion in 2018 well above N129 billion made in comparable period in 2017. Profit before tax for the current period was N103.2 billion as against N78.2 billion in the previous period. Profit for the year was N95 billion in contrast to N60 billion in the previous period.
Furthermore, the United Bank for Africa (UBA) realised N205.6 billion as net interest income for the period ended December 31, 2018 compared with N207.6 billion in 2017. Profit before tax stood at N106.8 billion, representing 2.44 percent increase over N104.2 billion made in similar period in 2017. UBA made N78.6 billion as profit for the period, a marginal increase over N77.5 billion made in comparable period in 2017. The bank expended N1.05 billion on different CSR projects in the course of the year. Notable among such projects were the financial inclusion and public enlightenment project which gulped N400 million; Akwa Ibom State Government Security Project, N177.3 million; Ambrose Ali University , Edo State, N93.7 million and Taraba State Government Security Project, N84 million.
TELIAT SULE
