Zenith Bank pays shareholders N109.9 billion in final dividend for FY 2023

Zenith Bank has paid N109.9 billion in final dividend for the financial year (FY) 2023, representing a payment of N3.50 per ordinary share.

The figure marks a 21% increase from N91 billion paid in final dividend for FY 2022. 

Combined with an interim dividend of N0.50 per ordinary share paid for half-year (H1) 2023, the group’s total dividend for FY 2023 amounts to N4.00 per ordinary share, resulting in a total dividends payout of N125.6 billion. This marks a whopping 25% increase from the N100.47 billion total dividend payout reported in FY 2022.  

Zenith’s best-ever profit year  

Recall that in FY2023, Zenith Bank reported its “best-ever” profit, as the group posted a net income of N676.9 billion, marking a 202% increase from the N223.9 billion recorded in 2022. In 2023, the group’s gross earnings hit N2.13 trillion, which is also the highest gross earnings recorded in its history.  

Despite recording a 25% increase in total dividend payout, Zenith Bank’s dividend payout ratio for FY 2023 nosedived to 18.6%, from 44.9% for FY 2022. Group’s retained earnings climbed to N1.18 trillion, increasing by 89% from N625 billion as of FY2022.  

Recapitalization efforts  

As part of its recapitalization efforts, Zenith Bank seeks to double its share capital by creating an additional 31,396,493,787 ordinary shares, thus taking the group’s total existing shares to 62,792,987,574 ordinary shares.  

During its Annual General Meeting held on May 8, 2024, shareholders gave their nod to the rights issue program. For now, it is unknown at what price the group will issue the additional shares.  

The bank needs to increase its paid-up capital by N229.3 billion to reach the N500 billion minimum capital requirement.  

Its share price has declined by 24% in five to six weeks, falling from N44.5 on March 28 when the recapitalization exercise was announced to N33.8 as of May 8.  

Retained earnings may be for future dividend payout  

In a recent report by EY, it was asserted that the exclusion of retained earnings from the paid-up capital of banks could cause them to increase their dividend payout in the coming years.  

According to the report, the exclusion will “strengthen the financial position of shareholders to enable them take advantage of options such as right issues or placement that the banks may want to pursue as their preferred way to raise the additional capital.”  

Hence, it can be hypothesized that Zenith Bank’s reduction of its dividend payout ratio for 2023 and accumulation of more retained earnings is targeted at future dividend payout to its shareholders.