Financial Analysis of Zenith Bank 2007

Topics: Bank, Stock market, Banking Pages: 15 (4910 words) Published: June 5, 2008
Table of Contents

Executive Summary3
Introduction and General Company Description4
Company Profile4
Business Structure4
Share holder structure5
The Last Offer6
Board of Directors/Management6
Services/ Company Business7
Score Cards7
Awards & Achievements8
Competitive Advantages8
Strong Reputation8
Impressive Financial Performance9
Market Share9
Awards and Ratings9
Highly Diversified Revenue Base9
Industry/ Sector Analysis: Challenges & Risk Factors10
Challenges of the Nigerian Banking Industry Post-Consolidation10 Perceived Market Risk11
Economic/Industry risk11
SWOT (Strength, Weaknesses, Opportunities and Threats) Analysis12 Strengths & Opportunities12
Weaknesses & Threats12
Financial Analysis12
Performance Overview (2003-2007)12
Gross Revenue and Profit-After-Tax12
Total Assets and Total Deposits13
Asset Quality, Liquidity and Capital Adequacy14
Earnings Performance15
Investment Issues19
Competitors Analysis20
Zenith Bank and the Nigerian Stock Market20
Sell/Buy Conclusion24

Executive Summary

Zenith Bank’s 3rd Public Offering (since inception) opened on Thursday, December 6, 2007. It is one of the foremost Banks returning to the Primary market to source for fresh equity capital as a means of augmenting and sustaining its cutting-edge competitive strategies in information technology and growing demands in real sector financing. The Bank is offering a hybrid Offer of 1.763bn Ordinary Shares of 50k at N38.90k and Rights Issue of 1.655bn Ordinary Shares of 50k at N36.90k. •According to the Bank in its Offer prospectus, the strategic focus of the Offer is the real sector financing via project & infrastructure finance which accounts for 50 per cent of the expected Offer proceeds. The remaining proportion (50 per cent) will be channelled to expand branch network, upgrade ICT and support working capital. •Zenith Bank has been a consistent winner of several classy laurels and awards of distinction locally and offshore in all spheres of performance benchmarks. It has continually been adjudged sound in growing earnings, healthy balance sheet with impeccable assets quality and financial soundness, excellent customer focused strategies and superb corporate social responsibility. • The above are evidenced by the Bank’s steady and first rate record of risk assets quality. This feat has earned the Bank first class ratings from 2 both Nigerian and international rating agencies. It bagged Aaa ratings from both Agusto & Co (Nigeria's foremost rating agency, 1999-2007) and Pharez Composite Rating, AA- (2003-2004) & A(2007) by Fitch Rating, all extolling its second–to-none customer service delivery, excellent financial condition and uncompromising capacity to meet maturing obligations.

Introduction and General Company Description
Company Profile
Zenith Bank Plc was incorporated as a private limited liability company by a group of Nigerians (including the Managing Director/Chief Executive) on 30th May 1990. The Bank received its commercial banking license on 20 June 1990 and commenced operations on 16 July 1990. On 21st April 2004, the shareholders of the Bank approved the subdivision of its shares from N1 to 50 kobo nominal value, conversion of the Bank to a public limited liability company (Plc) and a listing on the exchange via an Initial Public Offer (IPO). Consequently, the Bank became a Plc on 20 May 2004 and undertook an IPO which was 554% subscribed. The entire share capital of the Bank was subsequently listed on the floor of the Nigerian Stock Exchange on 21st October, 2004. Its number of branch offices across Nigeria has grown from 180 to 286 (over 90%) between February 2006 and June 2007. This is expected to grow to 346 in the next 18 months. [1] The Bank has evolved as a pacesetter in the Nigerian financial services sector, crafting radical strategies in products innovation and service...
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