Investors Swoop on Financial Stocks for Dividend

Investors swooped on financial stocks last week in anticipation of improved 2016 earnings and payment of dividends. As a result of the high investors demand, the top price gainers’ table last week was dominated by financial stocks. Among the top 10 gainers included: Diamond Bank Plc ( 16 per cent); United Capital Plc(15.7 per cent); Continental Reinsurance Plc (13.2 per cent); African Prudential Registrars Plc (9.6 per cent); United Bank for Africa Plc (9.5 per cent); Guaranty Trust Bank Plc (7.3 per cent0 and Fidelity Bank Plc(6.2 per cent).

Already, GTBank Plc, United Capital Plc, African Prudential Registrars Plc and Continental Reinsurance Plc have announced their 2016 audited results and dividends. Market operators said the level of dividend declared by some of the companies has raised investors’ optimism, hence the increased demand for other stocks in the sector.

“The encouraging dividend payment by some of the financial companies has raised expectations among investors who are taking position as more results would be released in the coming days,” a stock dealer said.

The shareholders of United Capital Plc, for instance, approved a dividend of 50 kobo per share at the annual general meeting (AGM) last Friday in Lagos. The dividend is 42 per cent higher than 35 kobo paid the previous year.

United Capital Plc ended the 2016 with gross earnings of N9 billion, showing an increase of 50 per cent from N6 billion posted in 2015. Investment income rose from N3 billion to N4 billion, while fee and commission income grew from N1.612 billion to N1.979 billion.

Despite high inflation in 2016, the management of the company was able to reduce its total expenses by 19 per cent from N3.238 billion to N2.634 billion. Consequently, profit before tax (PBT) grew by 95 per cent from N3.264 billion to N6.366 billion, while PAT soared from N2.57 billion to N6 billion.

Also, shareholders’ funds rose to N14.231 billion, from N10.420 billion, just as total assets improved from N144 billion to N161 billion. Earnings per share jumped from 43 kobo in 2015 to 115 kobo in 2016. Given the impressive performance, the directors of the United Capital have recommended a dividend of 50 kobo per share, which is higher than the 35 kobo paid in 2015.

The Group Chief Executive Officer of United Capital Plc, Mrs. Oluwatoyin Sanni, had at the beginning of 2016, said the company was more committed to achieving its goal of building Africa’s leading investment and financial services group and to work hard to accomplish its strategic objective set out in 2015 and 2016.

“Our priorities include: driving effectiveness and efficiency initiatives to improve productivity whilst optimising costs. Further improving our brand awareness, corporate image and brand value to achieve market-wide recognition and appreciation of our corporate identity,” she had said.