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Zenith Bank Shareholders Approve Dividend Payout of N87.9bn

Stock & Analyst Updates	1279 VIEWS
Stock & Analyst Updates
1279 VIEWS

Tuesday, March 17, 2020 09:00AM / Zenith Bank Plc / Header Image Credit: Zenith Bank Plc

Shareholders of Zenith Bank Plc, on Monday, at the 29th Annual General Meeting of the Bank held at the Shehu Musa Yaradua Centre, Abuja unanimously approved the proposed final dividend of N2.50 per share, bringing the total dividend payment for the 2019 financial year to N2.80 per share with a total value of N87.9 billion. This followed the recent release of the Bank's audited financial results for the 2019 financial year.

According to the audited financial results for the 2019 financial year, Zenith Bank recorded a profit after tax (PAT) of N208.8 billion, an increase of 8% from the N193 billion recorded in the previous year, thus achieving the feat as the first Nigerian Bank to cross the N200 billion mark.

The Group also recorded a growth in gross earnings of 5% rising to N662.3 billion from N630.3 billion reported in the previous year. The gross earnings growth was driven by a 29% rise in non-interest income from N179.9 billion in 2018 to N231.1 billion in 2019 (an indication of a leap in foreign exchange income). Fees on electronic products continue to grow significantly with a 108% Year on Year (Y-o-Y) growth from N20.4 billion in 2018 to N42.5 billion in the current year (suggesting higher incomes pulled in from its payment platforms and automated teller machines). The rise reflects growth in digital retail activities.

Profit before tax increased by 5% growing from N232 billion to N243 billion in the current year, arising from topline growth and continued focus on cost optimization strategies. Cost-to-income ratio moderated from 49.3% to 48.8% (see table 1 below).

Table 1 Snapshot of Zenith Banks Performance 2017-2019

ZENITH BANK PLC
	FY 2019	FY 2018	FY 2017
Gross Earnings	662,251	630,344	745,189
Profit/Loss Before Tax	243,294	231,685	199,319
Taxation	(34,451)	(38,261)	(25,528)
Profit/Loss After Tax	208,843	193,424	173,791
Dividends (N)	2.50	2.50	2.45
Cost to Income Ratio (%)	48.8	49.3	52.8
Net Assets	941,886	815,751	812,116

Source: Zenith Bank Financials, Proshare Research

The drive for cheaper retail deposits coupled with the low-interest yield environment helped reduce the cost of funding from 3.1% to 3.0%. However, this also affected net interest margin, which reduced from 8.9% to 8.2% in the current year due to re-pricing of interest-bearing assets. Although returns on equity and assets held steady year-on-year (Y-o-Y) at 23.8% and 3.4% respectively, the Group still delivered an improved Earnings per Share (EPS) which grew 8% from N6.15 to N6.65 in the current year. The payouts over the last three years has remained flat at roughly N2.50, but on a recent decline in the bank's share price dividend yield was recently 20.8% or 8.6% higher than the national inflation rate of 12.20% (see the bank's dividend history below).

Zenith Bank Dividend History on Proshare MARKETS

Proshare Nigeria Pvt. Ltd.

The Group increased its share of the market as it secured increased customer deposits across the corporate and retail markets as deposits grew by 15% to close at N4.26 trillion. Total assets also increased by 7% from N5.96 trillion to N6.35 trillion. The Group created new viable risk assets as gross loans grew by 22% from N2.016 trillion to N2.462 trillion. This was executed prudently at a low cost of risk of 1.1% and a significant reduction in the non-performing loan ratio from 4.98% to 4.30%. Prudential ratios such as liquidity and capital adequacy ratios also remained above regulatory thresholds at 57.3% and 22.0% respectively.