Shareholders’ expectation of robust dividend payout by listed companies may be shrinking as the boards and managements of Access Bank Plc, Zenith Bank Plc, others are set to meet this week to decide on 2016 financial report and dividend payout.
The board and management of Zenith Bank are expected to meet on Tuesday, January 24, 2017 while Access Bank’s meeting is scheduled for Thursday, January 26, 2017.
Other banks scheduled to meet and recommend dividends for shareholders are Guaranty Trust Bank Plc (GTBank) and United Bank for Africa Plc.
Despite the macro economic challenges in the financial industry and turbulent foreign exchange crisis, the above banks had paid an interim dividend in the half year of 2016.
For the interim half year reports, GTBank, Zenith Bank and Access Bank proposed N0.25 dividend respectively while UBA’s shareholders are to benefit N0.20 per share interim dividend.
According to analysts, Zenith Bank Plc was expected to have paid 648,725 shareholders N7.85 billion interim dividend while GTBank paid 336,080 shareholders N7.4 billion.
UBA Plc might have paid N7.3 billion to 76,806 shareholders while 818,664 shareholders of Access Bank Plc were meant to receive a total dividend of N7.2 billion on September 19, 2016.
Speaking on dividends, President, Progressive Shareholders Association of Nigeria (PSAN), Mr Boniface Okezie, in a chat with Nigerian Tribune, said shareholders should not be expecting increase in dividend payout on the heels of challenging business environment.
According to him, “Shareholders should not expect anything from bankers other than dividend and banks like Zenith Bank, Guaranty Trust Bank must pay dividend, no matter the terrain they operated.
“I believe barring all unforeseen circumstances, they are still going to pay dividends. The dividend might not be what was paid in 2015. Some of these banks may cut down this year as against what they paid last year.
“Shareholders would understand and take into reality the reflections of the economy, because these banks operated in an economy that was not favourable. If the economy had performed well, the companies in it will also do well.
“Whatever that comes their way, shareholders should applaud the banks and encourage them to do more. The economy has affected key sectors. Consumers’ purchasing power has dropped since inflation rate has increased. People are not saving in the banks these days. It is when you eat and have leftover that you remember to save in the bank.
“All the real sector players that borrowed from the banks to do their businesses are not even paying up and these are depositors’ funds. Oil companies, power sector companies are not paying back, so where are banks going to get the dividend to pay shareholders? These are the challenges banks are facing.
“Therefore, any bank that pays dividend should be appreciated and encouraged. As for me, I believe most of the banks will not pay dividends because fingers are not equal. But for those that will still pay, that means they have done well to make sure they are relevant to the system. Most of them are working except Skye Bank.
“It is when the real sector adds money to assets they borrow that they will come to banks to pay their loans. When loans are not performing, it will reflect on dividend payment,” he explained.
Also the chairman, Proactive Shareholders Association, Mr Taiwo Oderinde, noted that, “Everybody knows that there is recession in the economy of the country. Notwithstanding, if you look at the price of stocks in the banking sector, we have seen slight increase. Not that we are expecting much from banks, but we are hoping that they pay us dividends.
“If you look at the indices, you will see that some banks were able to pay up dividend last year and we are still expectant. We believe that some will be able to pay dividend but we are not too expectant that they will pay more than what they paid last year looking at the economy.
“In the first quarter, banking stocks would appreciate, however slightly, just has been seen recently. There’s going to be slight movement because this time, investors do not have much money to play around. The market is in bearish state, so movement might be very little based on the performance of these indices.”
In 2016, the stock market ended the year in bad shape as fortunes nose-dived in equities’ secondary market while primary markets went blank. Though year-to-date (YtD) returns had begun to reverse its adverse numbers in the last month of the year from the year’s peak of -11.9 per cent, it still closed in the negative territory of -6.1 per cent with investors losing over N600 billion.
Market capitalisation closed the year at N9.25 trillion as against N9.85 trillion 2016 opening figure. Nigerian Stock Exchange All Share Index also declined 6.2 per cent to close at 26,874.62 as against 2016 opening figure of 28,642.25. Financial sector was not left out of the lull as it dominated the list of the 38 under-performing stocks with 27 stocks.
However, analysts believe a rise in the banking stock in reaction to the forthcoming meeting of banks board of directors. According to the Managing Director and Chief Executive Officer of APT Securities and Funds Limited, Mallam Garba Kurfi, “Naturally, when board meetings are being held, there are high hopes. And definitely when they meet, whether they like it or not, some information will be leaked to the market and you’ll see the options of the market.
“We expect most of the stocks to go much higher in the course of the information. Prices are likely to go higher thus, we are expecting January will close ending positive by All Share Index.
“Generally, it will cut across all sectors. If the market is moving, all sector will be affected and they will benefit from that,” he said.
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