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In a manner that has stunned industry observers, Nib
International Bank (NIB) has pulled out all the
stops, registering a successful sale of 80,000
shares within half a day, even with a 40pc premium
over the original share price offered to the public.
In the absence of an organised secondary market for
trading shares in Ethiopia, it is a tricky affair to
determine the value of the shares of financial
institutions offered to the public. Nonetheless, NIB
was the second bank to offer a another round of
shares to the public after having been in operation
for years, on January 4, 2012, worth 40 million Br.
United Bank began the culture of auctioning shares
to the public in November 2010. It auctioned 153,753
of subscribed but not paid-up shares, earning a 60pc
premium a share with a par value of 100 Br.
Many of the banks have seen generous years in the
last half decade. NIB has been one of the
lucratively profitable banks operating in the
country, although it has not always passed on as
much profit to shareholders. However, it paid
shareholders dividends averaging 38pc of the par
value in the last two years, significantly up from
the 12pc of a decade ago.
NIB started operations in October 1999, with a
paid-up capital of 27.6 million Br. It registered a
246.4 million Br profit after tax, during 2010/11, a
30pc increase from the previous fiscal year.
Its reduction in provisioning doubtful loans and
advances by half from 33.2 million Br contributed to
an increase in profits by 7.3pc. Its control of
expenses, which grew by 12pc from 271.3 million Br
in the previous year, helped it reward shareholders
with a little lower than the average industry
return. The average earnings per share (EPS) for the
industry was 40.7pc, last year.
Although one of the largest among the private banks,
shareholders decided, during its recent general
assembly to increase NIB’s paid-up capital to one
billion Birr, from the 734 million Br it had up
until last year. The Bank floated shares in order to
raise the additional 266 million Br.
Although increasing the paid-up capital would give
declined earnings for shareholders in the short run,
the long-term effect would make the bank resilient
to shocks in the market, said Abdulmena Mohammed,
accounts manager for Portobello Group Ltd, a
London-based holding company with subsidiaries in
property investments and developments.
The recently auctioned shares at NIB were part of
the 200,000 shares to be sold and approved by
shareholders during their 10th extraordinary meeting
held in 2008. Shares worth 160 million Br were sold
to 2,834 shareholders of the Bank in 2008/09.
It was the leftover shares that were offered to the
public two weeks ago.
“What surprised me most was that all of the shares
offered were not only sold in half a day, but all
were paid in cash,” said a businessman who bought
shares worth 40,000 Br. “They were not even willing
to accept cheques because it takes about eight days
to clear cheques while there were many willing to
pay in cash.”
This was not the first time for NIB’s shares to
attract high demand from the public. The auctioning
of 173 shares in August 2010 had involved a court
order.
The Federal High Court ruled NIB shares owned by Mam
Trading Plc to be auctioned in order to service
debts the company owes to the state-owned Commercial
Bank of Ethiopia (CBE).
Among the hundreds who rushed to buy NIB’s shares,
the highest bid, at 200,000 Br, was made by Meseret
Tadesse, 131pc more than their initial worth at an
auction held on August 4, 2011. Each of the shares
had received 650 Br, 150 Br more than the par value
set at the establishment of the bank. |
