ZENITHBANK Declares N129.6bn PAT in 2016 Audited Results; Proposes N1.77k Final Dividend,(SP:N14.73)

Proshare

Monday, February 27, 2017 12:05 AM/ NSE



Commenting on the results, the management of the Zenith Bank Group stated: “The performance for the year ended December 31, 2016 re-affirms Zenith’s industry leadership and consistency in providing superior financial returns. This is demonstrated by the 25% and 23% growth in Profit Before Tax (PBT) and Profit After Tax (PAT) respectively despite the continuously challenging macro-economic backdrop. The N157 billion PBT and N130 billion PAT reported in the current year resulted in an impressive return on average equity of 20% compared to 18% in the prior year.

The Group reported gross revenues of N507.9 billion representing an increase of 17.4% over the same period in 2015. Furthermore, the results for the year  shows an increase of 10.4% and 45.9% (Y-o-Y) in interest income and non-interest income respectively. The impressive growth of non-interest income is primarily attributable to the bank's electronic products delivery, retail drive and derivatives income. The increased focus on retail drive resulted in a 46% Y-o-Y growth in savings deposits. 

The cost control initiatives embarked by the Group continue to yield positive results with an 8% reduction in cost to income ratio to close at 53% for the year ended December, 31 2016. While the year-end 2016 inflation rate was18.55%, the Group was able to keep its absolute operating expenses relatively flat moving by 4% from N167.9 billion to N174.5 billion Interest expense, however, increased by 16.8% (Y-o-Y) mainly due to a 92% increase in cost of borrowed funds which was is largely driven by the movements in the exchange rate.  

The loans and advances of the Group grew by 16% Y-o-Y to close at N2.3 trillion as at 31 December, 2016; mainly due to the devaluation of the Naira. The Group reported a Non Performing Loss (NPL) ratio of 3.02% as at December 2016 compared to 2.18% in 2015 with a coverage ratio of 100%, which are attestations of the quality of the Group’s loan book. Liquidity ratio and Capital Adequacy Ratio (CAR) came in at 60% and 23%, which are higher than the regulatory requirements of 30% and 15% respectively. 

In spite of a competitive and challenging operating environment, management’s outlook is very positive barring any unpleasant shock. Furthermore, the Group will continue its focus on cost control  and emerging opportunities in the growth and economic recovery agenda of  the Federal Government.

The bank proposed a final dividend of N1.77, implying a yield of 12% using Friday’s close. This is better than the N1.55 of last year.  We expect the dividend and the strong PBT result to provide support for the shares. However, the OCI loss is likely to put a dampener on the rally.
 
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