Investors in the Nigerian stock market were expecting the worst with respect to the performance of companies listed on the Nigerian Stock Exchange (NSE). For, the operating environment for these companies in 2014 was simply excruciating: depreciating exchange rate of the Naira was pushing up cost of operation; security challenge was impacting negatively on sales; uncertainty created by 2015 general elections adversely affected business activities; the sharp drop in the price of crude oil drastically reduced government revenue thereby blighting the outlook of the national economy. For the banks especially, it was predicted that their 2014 outing would be woeful because of regulatory headwind and high level of non-performing loans which would result from the inability of oil companies badly hit by falling crude oil prices to service facilities extended to them.
But the investors got it all wrong. Yes, the environment was unbearable, but the companies were able to keep their heads above water. The investors can see it and they must be grinning from molar to molar now as blue chip companies post scintillating financial results for the 2014 reporting year.
First was brewing giant, Nigerian Breweries Plc. It posted hefty financials and a mouth-watering final dividend of N3.50 per share. This did not quite excite investors nor did it let the bull loose in the stock market. However, some discerning investors saw it as a sign of good things to come and, therefore, began to take position. The performance of Nestle Nigeria Plc made the silver lining in the sky shine a little brighter. The food giant has proposed to pay final dividend of N17.50.
But the unbelievable fantastic financial results of Guaranty Trust Bank Plc and Zenith Bank Plc which were released to the market last Thursday took the stock market by storm, awakening the sleeping bull and gingering it into action. By the next trading day (last Friday), the bull had completely taken charge in the market, pushing up market indices to amazing highs.
For most investors, the only thing to look out for in the financial result of any company is the dividend declared. Guaranty 
Trust Bank and Zenith Bank did not disappoint them. Zenith Bank re-enacted its 2013 dividend payout of N1.75 while GTBank moved a notch higher from N1.45 final dividend payout in 2013 to N1.50. Having paid interim dividend of 25kobo in the year under review, its total dividend payout for the year stands at N1.75, thereby standing shoulder to shoulder with Zenith Bank’s. The two banks also posted very high profits contrary to analysts’ projections which had rather indicated a decline in their profits and the profits of other banks especially due to regulatory headwind. Zenith Bank posted after profit of nearly N100 billion (N99.46 billion exactly), while GTBank reported N98.69 billion.
Expectedly, investors who want immediate cash swooped in on the stocks of the two banks last Friday because the banks will be paying the dividend they declared this month. While Zenith will pay on March 27, GTBank will pay on March 31. With this, the prices of their stocks soared, each gaining the maximum points allowed in a trading day. The impressive outing of GTBank and Zenith Bank was also interpreted by investors to mean that other banks will most likely pay mouth-watering dividend as well. On account of this, there was heavy trading in their shares resulting in price appreciation. A number of them gained the maximum points. However, a few of the banks still received cold shoulder from investors. The managements of the banks whose share price failed to move up last Friday must be asking themselves some relevant questions by now.
With the development in the market last Friday, analysts at APT Securities and Funds Limited (Member of the Nigerian Stock Exchange) said there will be further upswings of equities especially those with good corporate action history amidst increasing tendencies for early profit booking by investors this week. “On the balance of factors we expect the ASI outlook to remain bullish in the next trading week on investors’ expectation of stable corporate actions’’, the analysts said.
