Tuesday, February 19, 2019 12:20PM / NSE
Q4 2018 PBT of N64bn up 38% y/y. Zenith’s FY 2018 PBT of N231.7bn, up 16% y/y, beat consensus estimate of N217.4bn. The bank also proposed a final dividend of N2.50 (vs. our N2.48 estimate) which implies a very attractive dividend yield of c.10%. As such, we expect a positive reaction by the market to these numbers.
Funding income grew 19% y/y (though as expected). Opex and provisions declined y/y by -17% and -92% respectively (both surprised positively). On a full year basis, funding income growth was also strong, up 15% y/y to N295.6bn. The growth on this line was driven by a double-digit y/y decline in funding expenses as a result of a reduction in relatively more expensive time deposits. Zenith’s FY 2018 PAT also implies an ROAE of 24.5%, which is slightly higher than its 2018E guidance of 23.4%.
Non-interest income declined by 32% y/y mainly due to derivative losses of –N16.8bn (compared with gains of +N68.7bn for FY 2017).
Year-to-date, Zenith bank shares have gained +8.2% outperforming the NSE ASI by around 6%
We rate Zenith Outperform. Our estimates are under review.
Zenith Bank Q4 2018 results: actual vs. FBNQuest Capital Research estimates (N millions)
Source: NSE; FBNQuest Capital Research Estimates
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