Friday, October 23, 2015 06:45PM / InvestmentOne Research
Q3 2015 result highlights
· Mixed net interest income performance: -30% q/q; +8.9% y/y
· Strong impact of FX-related gains
· Improvement in impairment charges: down 50% q/q
· Mixed PBT: -18.9% q/q; +10% y/y
Zenith Bank plc released its Q3 2015 results which came in lower than what we had modelled. Contrary to the trend seen from its peers, net interest income of c.N48.8bn was c.30% weaker q/q.
While non-interest income of c.27.3bn grew by c.29% q/q, we highlight that this was largely driven by FX-related gains of c.N4.8bn. On a positive note, both loan impairment charges of c.N2.5bn and OPEX of c.41.6bn saw a q/q decline of c.50% and 11.3% respectively.
Nonetheless, this was not enough to offset the impact of the weakness seen above the P&L statement. As such Q3 2015 pre-tax profit of c.N31.8bn was c.19% weaker q/q.
Year-on-year, the results were stronger. A combination of c.8.9% y/y rise in net interest income and c.16.3% y/y increase in non-interest income was enough to deliver the strong 10% y/y growth in PBT despite the 30.5% y/y spike in loan impairment charges as well as the 12% rise in operating expenses.
Overall, the results showed a sequential decline in core income, improvement in asset quality, and the positive impact from FX-related gains in other income.
Our models are under review. We rate Zenith Bank shares BUY.