Zenith Bank

[Apache]

You guys should understnad that Banks are not a charity organisation. I am not saying that i support them not lending to SMEs but i also know that if i give them my funds for them to give me a good return and they come back to tell me that they couldn't do that because they gave the SME's loans and a lot have developed into bad loans bla bla bla, i will tell them to tell that to the birds and give me back my money.
as investors, i think we should be more concerned with getting good value for our money.
I would love to see the SMEs come alive but i would also love to see good returns on my investment

[c kenneths]

@Olusolakemmy, its true that these additional issues add to the outstanding no. of shares Zenith bank has, but have you also considered that those capital given out by investors in exchange for the shares are also money the bank uses for increased profitability?

[SpecNomics]

Following Thursdays' setback for both stocks, how did they cope on Friday trading!

FBN closed lower at N44, falling by 52kobo. It sold for has low as N43. Could this be the new support price! I suggest this because the day low, N43, is lower than the day close suggesting the stock must have rallied back a good 100kobo, after it hit the low. This is why I suggest a new support, it would seem some folks out there are bullish at N43.

FBN Support: N43 (up from N37.40 01092007)
FBN Resistance: N47.50 - N48

ZB moved sideways in friday trading closing 7kobo higher at N49. This move seems like consolidation of gains from recent upward movement. But looking at prices much closer, one notes that it sold for as low as N47.12 during friday trading, then it rallied from this low to close 188kobo higher at N49. Just like with FBN, some investors were quite keen to enter at the day low.

ZB Support: N47 (from N40 on 30082007)
ZB Resistance: N51

The rise in the support prices of both shares suggest that line of least resistance is upwards, but I'll hold buying more stock till they break their respective resistances and sell if they break their support prices.

[mcjdr]

I am so green as long as stocks are concerned but I bought Access,my first buy.Can someone please analyse for me?
D'Jones

[c kenneths]

@mcjdr, what type of analysis do you need, all things you will ever need, all questions you will need to ask may have been answered by some heavyweights in this forum.

So read on and am sure you will find beutiful analysis here.

Welcome to the forum sha.

[Soweto]

Originally Posted by olusolakemmy

i have problem with the banks raising funds annualy, particularly zenith, infact news has it that zenith is planning for the third one N250b, what r they doing????????????????
some banks need to raise their share capital no doubt, but not the likes of zenith, greed is their major problem, sterling,unity etc need to raise capital but not senith.
However, i do not think its enough to cause their downfall, if they follow their plans to the letter, they might not have problem.
really, i will love to read the prospectus of the upcoming zenith offer to know what they plan doing wih the money they intend to raise.
the banks are getting bigger at the expense of other organisations, their loans condition and interest are unbearable, yet they still come to us to raise money from us, people that live outside the country should tell us if that is how mega banks raise funds in europe, america etc

We may have reasons to oppose POs but there is actually nothing we can do. I have no problems with any bank coming to the market. Their POs are always oversubscribe despite the opposition. I remember when UBA came out at 34, pe0ple were saying nobody will buy it, will be undersubscribe. What happened?
Most banks abroad passed thru these stages.

[Soweto]

Originally Posted by olusolakemmy

selling public offer anually only increasesnumber of shares, dilute n reduces the return on your investment, apart from the capital appreciation which entirely depend on market trends and sentiment, too many shares dilute returns to the investor.
The huge profit they declared, after paying investors,they should turn the rest into capital, that way the company is well positioned,stronger, even capital appreciation will be higher than it is now.
I mentioned that i want them to bring out the prospectus, then we come here to analysed what they intendto do with the funds.

The huge profit may not be enough for their project. Remember, Nigerian banks are yet to compete with the others Banks abroad. some of the basic infrastructres are not working propery in nija. Our past wicked military leaders destroyed the economy. Now these banks cannot wait for them again,they have to solve some of the problems by themselves. Incase we dont know, nigeria is ranked one of the costliest place to do business in the world, high risk but good returns..

[Soweto]

Originally Posted by olusolakemmy

if you suppot their fund raisin activities, they should have direct impact on member of the public, dont you think so?????????????
No SME structure in zenith, they dont have business with common men but the big ones like ZENON.
my issues is this, you raise money from the common men, loan part of it to rich and make huge profit, use some to give out morgage facilities at high interest rate to the rich who rent those house oput to the poor at a very high rate , inshort the common ones dont feel the impact of the banks.
The interest rate is still high in all banks, No true business development except their own business, if this trend continues, the bank will get fatter at your expenses.
you will be getting your 70K div and 1for4 yearly, while they will be making trillions!!!!!!!!!!!!!!!!
in china, all banks are private yet the interest rate is 6%, no hidding charges, the conditions are not life threatening, thats why the gross domestic products in china surpass that of USA.
funds are available to pople to do business, technologies are encourage, and development is at the speed of light.

Robert kiyosaki encourage investment somuch that he recommend it to anyone that want to breakaway from the rat race, but he never place it above or before owning your own business!!

I will agree with the issue of banks high interest rate. it is just 2much.They are reaping peaple off.

[olusolakemmy]

yes no matter the opposition, they will have their offer oversubscribe, thats because the teaching of investment is now becoming more pronounce than ever, and so many people are ready to invest.

I tell you more than half of people that buy shares dont understand the concept and theories of investment all they know is that they are advised to invest in their future.

Am surprise that a nigerian will say how can they give out loan at 5% interest, USA, UK EVEN SA banks top the list of best banks in the world, have u found out how much their interest rate are in those countries? the maximum that i know of is 7%, so PUMPIN thinks they have to give you loan at 21% interest rate before investors can have return on investment, that thinking goes to show that we are the architect of our bad economy, we are happy to complain but we luv to praise the goverment policies of the developed countries.

so the function of the banks is to take from the poor, borrow the rich, and give fragment back to the poor in the name of div n bonus?

[Taipan]

Originally Posted by Soweto

I will agree with the issue of banks high interest rate. it is just 2much.They are reaping peaple off.

Twas John Jurisch (McDonald's lawman) who said "Everybody's basically got some thievery in them" and may I add that many of us are hypocrites as well.
We keep on screaming about the banks yet everyday, their stock prices keep on skyrocketing - I haven't done any serious analysis, but i believe most banking stocks have at least doubled this year.
Now this implies two things: that lot's of people - you and I - are still grabbing up their shares as fast as possible despite our complaints which in turn makes us shareholders and party to those decisions - which we're complaing of - and excessive profits - of those 'high' interest rates and lack of funding of SMEs.
The skyrocketing stocks simply means that we the public approve of the banks management and it's decisions and that we're happy about the profits they're making. In the US for example, negative public sentiment about a company - as in the case of WalMart and Microsoft at times - always immediately results in a serious price decline of their shares which is why those company's spend so much on public relations and try to maintain high ethical standards.
If we hate the banks practices so much, let's put our money where our mouth is, and sell of their shares. Let's stop benefitting from their bumper harvests and then they'll get the point fast.
As for me, I think I like those bumper harvests! I think it's time to go get me some shares!

[balaliyu]

Well...I have another view...the increased patronage by Nigerians has led to a somewhat deluge of funds in the bank's coffers... They are desperately looking for avenues to create assets - so that they can keep paying us those miserly dividends.

But there is a positive side...interest rates are no longer 21% in Nigeria. If you had to pay that , you were blindly fleeced!!! It now ranges from 13 to 15%....and most times all they need is an evidence of good employment. I know that is still too high...but if you look closer...this is the counter to a vicious cycle... the more money they have...the more thay have to reach out to the masses..now we've got asset finance available in a day, plus highly priced (13-15%) mortgages....its a positive start no doubt

I stand to be corrected....

Cheers...B

[pumping]

Originally Posted by olusolakemmy

yes no matter the opposition, they will have their offer oversubscribe, thats because the teaching of investment is now becoming more pronounce than ever, and so many people are ready to invest.

I tell you more than half of people that buy shares dont understand the concept and theories of investment all they know is that they are advised to invest in their future.

Am surprise that a nigerian will say how can they give out loan at 5% interest, USA, UK EVEN SA banks top the list of best banks in the world, have u found out how much their interest rate are in those countries? the maximum that i know of is 7%, so PUMPIN thinks they have to give you loan at 21% interest rate before investors can have return on investment, that thinking goes to show that we are the architect of our bad economy, we are happy to complain but we luv to praise the goverment policies of the developed countries.

so the function of the banks is to take from the poor, borrow the rich, and give fragment back to the poor in the name of div n bonus?

5% interest loans will come some day in Nigeria and I support your passion for it. However, today in Nigeria, a bank that gives a loan at 5% will only make a loss.

Without looking at other figures we know that the interest rate must be higher than the inflation rate and the CBN rates. Our inflation rate is currently around 8-9% as I believe so for now 5% cannot work.

Enjoy.

Pumping.

[Ahaah]

Originally Posted by balaliyu

Well...I have another view...the increased patronage by Nigerians has led to a somewhat deluge of funds in the bank's coffers... They are desperately looking for avenues to create assets - so that they can keep paying us those miserly dividends.

But there is a positive side...interest rates are no longer 21% in Nigeria. If you had to pay that , you were blindly fleeced!!! It now ranges from 13 to 15%....and most times all they need is an evidence of good employment. I know that is still too high...but if you look closer...this is the counter to a vicious cycle... the more money they have...the more thay have to reach out to the masses..now we've got asset finance available in a day, plus highly priced (13-15%) mortgages....its a positive start no doubt

I stand to be corrected....

Cheers...B

Where in Nigeria can borrowers other than the Nigerian Breweries, UACs, Flour Mills, etc borrow from at between 13% and 15% per annum? Which specific bank are you talking about?

[panasharp]

Originally Posted by balaliyu

Well...I have another view...the increased patronage by Nigerians has led to a somewhat deluge of funds in the bank's coffers... They are desperately looking for avenues to create assets - so that they can keep paying us those miserly dividends.

But there is a positive side...interest rates are no longer 21% in Nigeria. If you had to pay that , you were blindly fleeced!!! It now ranges from 13 to 15%....and most times all they need is an evidence of good employment. I know that is still too high...but if you look closer...this is the counter to a vicious cycle... the more money they have...the more thay have to reach out to the masses..now we've got asset finance available in a day, plus highly priced (13-15%) mortgages....its a positive start no doubt

I stand to be corrected....

Cheers...B

Nice write-up Balaliyu.

The banks are raising funds in the capital market because it is cheaper than for them to borrow. This as mentioned by others has allowed the interest rates on bank loans to come down from the high 20s to mid teens. The more funds the banks have, the more funds they will be willing to make available to the general public in terms of different loan products. Also, knowing how costly it is to do business in Nigeria, the banks need huge capital base to support their expansion.

My gripe with the banks, especially those that I have a stake in is that the incessant public offers portrays a management that is incapable of forecasting. Otherwise, the managements should be able to foresee their future capital requirements. In addition, the earning per share is greatly diluted especially for shareholders that do not buy into the public offers. However, it has to be said that many Nigerians are still not aware of the capital market opportunities as such the number of shareholders really do not increase with each public offer.

[panasharp]

Originally Posted by Soweto

I meant the company in question may not love to borrow from these institutions you have just mentioned bc of certain reason, I agreed with you that they have got alternatives llike bonds etc. But what is the risk versus returns and why do youthink most companies prefer to raise bulk of their financial needs thru equities.
You forgot to mention that if the company goes bankrupt, the money you invested is gone.

Your point is right on the money.

Taipan, Mikey Dees CFO that you quoted was talking about the capital market in the US and maybe Western Europe where you have to deal with zillion of accounting rules and regulations, exposure to investor lawsuits (i.e. a litigious society like the US), and have you heard of SOX?

In a country like Nigeria where interest rate hovers around 15%, the cost of borrowing from institutions is high in comparison to the capital market where there is no guaranteed return. True the banks can turn to issuing bonds or sourcing funds from oversees, but those investors are taking a huge risk as such would most likely build that into the ROI.

In Nigeria of today, capital market is the cheapest way to raise funds.