By Abiola Odutola

Yinka Coker, an investor in the Nigerian capital market, was shocked when he received his Guaranty Trust Bank, GTBank,  dividend warrant. Part of the surprise is not far from the decision of the financial institution to increase shareholders` returns on investment to over 100 per cent at the end of its 2009 financial year. GT Bank which paid a dividend of 35 kobo in 2008,  posted a bumper returns of 75 kobo dividend and a bonus of one for every four shares held to all its numerous investors. But few hours later, the gloom on Coker`s face can be compared with the dark cloud that precedes rain.

He gazed at his First Bank dividend warrant with dismay. The disappointed investor could not help but murmured: “Oh! My God, I thought First Bank is bigger than GT Bank”. He had just received a dividend of 10 kobo with a bonus of one for every eight of the bank`s shares.  “How can a big bank like that pay such meagre amount?” Coker asked. 

Sarah Omole is another investor who chose to rely more on dividend and bonuses issued by quoted companies. Omole was elated when she received a dividend warrant of 45 kobo each on her shares in Zenith Bank. Like Coker, her expectation was that old generation banks like United Bank for Africa, UBA, and First Bank will pay higher dividend and issue more bonuses based on their share volumes. Despite the economic crunch, the 70-year-old retired civil servant has been fervently investing in the Nigerian capital market, pumping into shares of some of the old generation banks stocks almost

Coker and Omole are only few among investors in the Nigeria capital market whose hope were dashed as they received lower earnings from most of the old generation banks. They were disappointed because they had invested about 70 per cent of their hard-earned money on the `big banks` positioning themselves for greater returns on investment at the end of the financial institutions` year end. “It was a great shock. I was expecting a dividend of at least N1 with a bonus of one for two or four at most,” Coker said. But their expectations may not be an illusion judging by the earnings the financial institutions posted last year. For instance, First Bank, UBA and Zenith Bank paid N1 dividend with bonuses each at the end of 2009 year end.

While the old-generation banks managed to pay dividends of 10 kobo to their numerous investors, their new generation counterparts posted mouth-watering dividends to theirs. For instance, Stanbic IBTC, Skye Bank and FinBank paid 30 kobo, 30 kobo and 10 kobo respectively.

 Similarly, market analysts observe that there is a wealth transfer in the banking sector. Olusegun Owolabi, managing director, Graceville Investment, told the magazine that the market is now taking

 its original shape. He explained that it is obvious that most the banks that earlier declared unimaginable dividends in the capital market can not sustain it now. “If the old generation banks can justify the fantastic results declared few years back which they actu

However, despite the ongoing banking reform exercise, GT Bank, which used to be a `penny stock` compared to the likes of First Bank, UBA, and Union Bank had remarkably grown to become the highest-priced stock leaving the sector`s former leaders. From N10 in December 2009, GTBank shares as at May 7, 2010, had appreciated about 100 per cent to N18.20, pushing all negative factors aside. Aside from GTBank, shareholders of Access Bank and Zenith Bank also have reasons to rejoice. From N5 as at the beginning of trading in 2010, the share price of Access Bank has appreciated to N10.24 by May 05, 2010, while that of Zenith Bank has moved from N13.40  to N19.01 within the same period of study.

Apart from these returns shareholders will make on their investments, another factor that made GTBank, Access Bank and Zenith Bank shares  investors delight on the floor exchange for several weeks is their quality customer care services. According to Elizabeth Olatunji, a 65-year-old trader and customer of GTBank and Access Bank, it has the best customer care department she has ever witnessed for about 30 years of

 banking experience. Contrary to her experience in her former bank, she was impressed as the bank officials in the Ogba and Oba Akran branches, Lagos State, took their time to explain steps needed to be taken before she opened an account with the bank. “They took their time to answer my questions without any complaint,” she narrated. To her surprise, four days later, she received a call from the banks

What shareholders most cherish before the total rebound of the market is dividend and bonus including their sustainability because any sign of it is a welcome development. To Aderemi Oyepeju, chairman, Shareholders Association of Nigeria, Ibadan zone, Oyo State, what all quoted companies should work towards is how to sustain the posted returns. “If the share values cannot increase by 200 per cent for now, quoted companies should compensate us with dividend consistently,” he told the magazine.

Owolabi: Believes the market is taking its original shape

Oyepeju: Tasks companies to sustain posted returns