Proshare - Facebook Proshare - Twitter Proshare - Google+ Proshare - Linked In Proshare - RSS Feed

Zenith Bank Reports Q1 2017 Results –Records Strong Revenue Growth

Proshare

Friday, April 28, 2017/ 4:57PM / FBNQuest Research

Event: Zenith Bank reports Q1 2017 results
Implications
: Consensus earnings forecast likely to move up
Positives
: Strong revenue growth, and ahead of our expectations
Negatives:
Loan loss provisions (in particular) and opex growth surprised negatively

Zenith Bank’s Q1 2017 results which have just been released showed strong double-digit growth in PBT (38% y/y) to N44bn and PAT (46% y/y) to N39bn. Both revenue lines contributed to the strong results: funding income grew by 21% y/y to N71bn while non-interest income was up 94% y/y to N30bn.


The strong revenue contributions were material enough to more than offset a sizeable increase in loan loss provisions (+206% y/y) and, to a lesser extent, opex growth of 24% y/y. The growth in non-interest income stood out because Zenith’s trading income recovered from a loss of –N1.9bn in Q1 2016 to a healthy positive result of N7bn in Q1 2017. Fees and commissions were also up strongly by a similar magnitude in naira terms.

Compared with its Q4 2016 results, PBT grew by double-digits too, by 25% q/q and was partly helped by a -25% q/q reduction in loan loss provisions. The PAT improved significantly (by 341% q/q) because the Q4 results had been weighed down by a marked negative result on the other comprehensive income line (-N21bn).

Relative to our forecasts, the results were ahead of expectations. Both revenue lines beat - funding income by 22% and non-interest income by 62%, leading to a positive surprise of 31% on the pre-provisions profit line. Although loan loss provisions were double our forecast and opex also came in 13% higher than we were modelling, the better-than-expected revenues more than compensated, leading to PBT beating our forecast by 49%. PAT was 57% higher than we had modelled because of a positive result on the other comprehensive income line (N1.5bn); we had forecasted zero.

Zenith shares are up 1.3% ytd. Though better than the ASI’s -4.4%, the shares have struggled relative to other tier 1 banks. We expect these results to provide some boost to the shares over the coming weeks. We also expect consensus 2017 PBT estimate of N146bn to move up.

Our estimates are under review. We rate Zenith shares Outperform.


Zenith Bank
Q1 2017 results: actual vs. FBNQuest Research estimates (N millions)

 

Q1 2017

 

Actual

Y/y

Q/q

FBNQuest est.

Actual vs FBNQuest est. (%)

Interest income

118,092

40.3%

19.4%

101,361

16.5%

Interest expense

-47,488

82.5%

-2.1%

-43,326

9.6%

Net interest income

70,604

21.4%

40.2%

58,035

21.7%

Other income

29,644

93.7%

3.1%

18,301

62.0%

Profit before provisions

100,248

36.5%

26.7%

76,336

31.3%

Provisions

-7,886

206.0%

-24.8%

-3,892

102.6%

Operating expenses

-48,162

24.2%

45.2%

-42,759

12.6%

PBT

44,200

37.6%

24.6%

29,685

48.9%

Tax

-6,701

20.8%

13.7%

-4,898

36.8%

-Tax rate

15.2%

 

 

16.5%

n/a

Other comprehensive income

1,466

897.3%

n/a

0

n/a

PAT before min. Interest

38,965

45.8%

339.3%

24,787

57.2%

Minority interest

-39

-20%

8%

-58

-32.8%

PAT after minority interest

38,926

45.9%

340.7%

24,729

57.4%

Related News

1.       ZENITHBANK Declares N37.49bn PAT in Q1 2017 Results, (SP:N14.9k)

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

3.      Zenith Bank Plc to Hold Board Meeting on January 24th, 2017

4.      Zenith Bank Plc Records Slight Strong Q3 2016 Results; Maintains Outperform Rating

5.      ZENITHBANK Declares N100.07bn PAT in Q3 2016 Result, (SP:N14.75k)

6.      Zenith Bank Plc Earnings Update - More Prudence as Bank Adopts New Impairment Model

7.      ZENITHBANK Half-Year Earnings Presentation: The key takeaways

8.     Zenith Bank Plc Earnings Miss as Loan Loss Expense Pressures PAT

9.      Zenith Bank Plc Records Group Capital Adequacy Ratio of 19% in Q2'16

10.  Zenith Bank Reports Q2 2016 Results; Significant FX-Related OCI Gains Boosted PAT

11.   Zenith Bank Plc Records Group Capital Adequacy Ratio of 19% in Q2'16

12.  ZENITHBANK Declares N44.84bn PAT in Q2 16 Result Proposes 25k Interim Dividend SP N15.60k

13.  Zenith Bank Plc Seeks Extension to Submit Half Year Financial statements on August 31 2016

READ MORE:
Related News