Home / Business and Economy / Zenith Bank posts 65% boost in Profit Before Tax ….Proposes N1.77 final dividend
Zenith Bank MD, Mr. Peter Amangbo

Zenith Bank posts 65% boost in Profit Before Tax ….Proposes N1.77 final dividend

Zenith Bank MD, Mr. Peter Amangbo

Zenith Bank’s audited financial statement for the period ended December 31st 2016 released by the Nigerian Stock Exchange (NSE) Monday has elicited mixed market reactions, even as investors strive to buy into N1.77 dividend proposed.

Investment analysts have hailed certain aspects of  the results and picked holes in other aspects.  On the positive sides of the result, is the fact that profit before Tax(PBT) rose by 65 per cent y/y better than expected and final dividend of N1.77, reflecting  12 per cent yield, based on traded price last Friday.

Meanwhile, the bank will at its forth coming Annual General meeting, make proposal of final dividend of N1.77 per share, higher than the N1.55 paid in the preceding year 2015.

However, the negative aspect of the result manifested in the  Other comprehensive income (OCI) which recorded loss of –N21billion, which weighed heavily on the bank’s profit after tax in the last quarter.

According to the result, PBT of N35bn grew strongly, by 65 per cent y/y. However, due to a significant other comprehensive loss of –N21billionn, Profit after tax (PAT) dropped to N8.8bn, a -61 per cent drop, compared with 2015 PAT.

The bank’s funding income fell -20 per cent y/y to N50.4billion, the effect of this was hedged by remarkable rise in non-interest income by 575 per cent y/y, to N28.8billion. This also served as boost to profit before provisions which grew 17 per cent y/y to N79billion.

Zenith Bank’s loan loss provisions for the 2016 financial year also increased markedly, by 76 per cent in 2016 ( y/y) to N10billion, the strength of the growth in profit before provisions as well as operating expenses (OPEX) dropping by -17 per cent ( y/y ) further reduced the impact of increased loan loss provisioning.

Sequentially, both PBT and PAT declined, by -39% q/q and -89% q/q respectively. While the PAT decline was driven by the OCI loss, PBT fell because of double-digit q/q declines in both revenue lines. Non-interest income showed the greater decline (-53% q/q) because fx-related gains had propped up the Q3 results. Net interest income fell -20% q/q.

Top Investment analysts, FBNQuest and InvestmentOne have in their post release of result analysis described it as results that would elicit mixed reactions.

FBNQuest noted “although PBT was impressive, beating our forecast by 44 per cent, PAT missed by 47 per cent because of the OCI loss”

Total assets of the Group stood at N4.7 trillion as against N4 trillion in December 2015, while shareholders’ funds grew to N139.4 billion from N105.5 billion.

The company’s shares increased N0.07 on Monday, following the release of the results, to close at N14.80 per share.

The experts described as encouraging, the loan loss provisions, given the concerns around asset quality for the sector in general. the capital market analysts however lauded the bank’s None Performing Loan (NPL) ratio of 3 per cent, as at December 31st  2016, which ranked better that its forecast of 3.5 per cent, however, slightly worse y/y  2.2 per cent recorded n 2015 financial year,

The result showed that the bank’s  Net interest income of N50.4billion, declined by -19.8 per cent  in the last quarter (q/q) as well as decline by  -20.3 per cent for the 2016 financial year, compared to 2015 ( y/y).

Zenith bank’s group total assets stood at N4.7 trillion as against N4 trillion in December 2015, while shareholders’ funds grew to N139.4 billion from N105.5 billion.

 

 

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