Thursday October 18, 2018 / 11:16 AM / NSE with additional comments from FBNQuest
Zenith Bank released its Q3 2018 results this morning. See results below and initial view
FBNQuest – Initial Reaction
Implications: Q3 2018 PBT came in flat y/y. When annualised Zenith’s 9M 2018 PBT of N167.3bn puts it on track to meet (or beat) management’s 2018E PBT guidance of N210bn. Given the lack of surprises in the results, we expect to see a subdued reaction from the market.
Positives: Funding income grew 19% y/y (though as expected). PAT also grew by 21% y/y to N68.1bn and came in well ahead of our forecast, thanks to a tax credit of N2.5bn and a positive result of N5.8bn in other comprehensive income (OCI) vs. N2.3bn in Q3 2017. When annualised, Zenith’s 9M 2018 PAT puts it on track to deliver an ROAE of 25.2%, higher than 2018E guidance of 23.4%.
Negatives: Non-interest income declined by 18% y/y mainly due to derivative losses of -N20.7bn over the 9M 2018 period (compared with gains of +N28.8bn for 9M 2017) and a -49% y/y reduction in current account maintenance fee to N14.7bn for 9M 2018.
Year-to-date, Zenith bank shares have performed broadly in line with the index. The shares have shed -13.4% compared with the -15.2% return on the NSE ASI.
Rating: We rate Zenith Outperform. Our estimates are under review.
Zenith Bank Q3 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)
Source: NSE; FBNQuest Capital Research Estimates
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