By NKIRUKA NNOROM
Shareholders of Resort Savings & Loans Plc may have to wait a little longer to reap the return on their investments in the bank as the Managing Director/CEO, Abimbola Olayinka, has said that the company will likely not pay dividend in the nearest future.
Olayinka spoke at the bank’s Facts behind Figure’ on the Nigerian Stock Exchange, NSE, while reacting to complaints by stockbrokers that the company has not paid dividend since 2009 when it was listed.
He noted that the decision not to pay dividend was regulatory induced, saying that the Central Bank of Nigeria, CBN, would not approve such payment unless the bank had enough capital accumulation.
In his words, “It is regulatory induced because as a mortgage institution, you cannot pay dividend unless you build up adequate reserve. Moreover, the Central Bank of Nigeria will not give you the approval because there is no capital accumulation.”
“Mortgage business is a long-term business, not a short term business; it takes long period to build up. But it is not all loss, because effectively, there will be capital appreciation even if there is no dividend,” he added.
While speaking on the N3.39 billion hybrid offer currently being undertaken by the bank, the Resort Savings boss explained that with the completion of the offer, the bank would be positioned to offer superior services to its customers.
He stated that the proceeds from the offer were majorly for the purpose of creating mortgage based assets and improving attendant returns to shareholders.
He said, “To run a mortgage bank, you need to have deep pocket; so, we believe that with the completion of the offer, we will be well positioned to grow our mortgage business and consequently increase returns.”
Offering further explanation, the CEO, NSE, Mr. Oscar Onyema, said that Resort Savings & Loans falls into the category of growth companies, saying that, usually, growth companies are required to plough back their profit into their businesses, while dividends are expected in future when such companies were stabilised.
He commended the bank for its compliance with corporate governance structure and urged other companies to emulate the good examples of Resort Savings.
Onyema added that the NSE was ready to support any listed company that aspires to greatness.
Highlights of the company’s financials showed an increase in the net profit position from a loss of N1.1 billion in 2011 to a profit position of N3.5 billion in 2012. Earnings before interest and tax, EBIT, grew from a loss of N1.1 billion to a profit of N3.34 billion.
Shareholders fund also grew from N2.9 billion in 2011 to N6.2 billion. The bank currently has over N1 billion disbursement from the Federal Mortgage bank of Nigeria, FMBN, and is presently processing facility in excess of N5 billion with the FMBN.