Zenith Bank has put on hold its earlier announced plans to raise N100 billion through a combination of bonds and share sales due to current economic situation in the country that has resulted in a weak capital markets.
The bank had expected market conditions to improve when it announced plans to seek approval for the funds last month, said Zenith’s head of investor relations Michael Anyimah, but the bank board and shareholders cancelled them due to the weak economy.
Nigeria economy is in its first recession in 25 years, brought on by low oil prices which have slashed government revenues and crippled dollar supplies in the country, making life difficult for businesses.
“The request for shareholders’ approval to raise fresh capital has been withdrawn,” Anyimah said, adding that the bank had strong buffers to support its operation.
Shares in Zenith, which has shed 6.4 percent this year on the Lagos stock exchange, climbed 0.07 percent to N13.82 each. They gained 5 percent last year.
Capital market regulators have been trying to revive their IPO market which dried up almost 10 years ago following a crisis in the economy. The Securities and Exchange Commission has proposed to cut listing fees to attract issuers.
However, the main stock index is down 5.1 percent this year after it shed 6.2 percent in 2016. In dollar terms, stocks lost 40 percent last year as the naira fell by a third in the official market against the dollar due to central bank currency reforms.
Zenith has posted a pretax profit of N156.75 billion for 2016, up from N125.62 billion a year earlier.
