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Published On: Fri, Oct 19th, 2018

Zenith Bank pre-tax profit up 10% to N167.3bn

Peter Amangbo, GMD/CEO, Zenith Bank

Zenith Bank Plc recorded a Profit Before Tax (PBT) of N167 billion in nine months ended September 30, 2018, an increase of 9.7 per cent over N152.55 billion reported in nine months ended September 30, 2017.

The group unaudited result and accounts to The Nigerian Stock Exchange (NSE) on Thursday disclosed that profit after tax also rose by 11.6per cent to N144.2 billion in nine months ended September 30, 2018 from N129.24 billion reported in nine months ended September 30,2017.

Notably, the group gross earnings dropped by 10.7 per cent to N474.6 billion in nine months 2018 from N531.3 billion reported in prior nine months unaudited results.

Amidst a challenging operating environment, the Group optimised its bottom line through efficient treasury and liquidity management which resulted in a 31 per cent decline in interest expense to N110.5 billion in nine months of 2018 over the N160.3billion prior period.

Also, interest income dropped by 6.3 per cent to N339.06 billion from N361.8 billion reported in nine months of ended September 30, 2018.

Consequently, the group Net interest income rose by 13.4 per cent to N228.5 billion from N201.49 billion reported in nine months ended September 30, 2018.

The group enhanced asset quality as impairment charges fell significantly by 69.5 per cent to N14.3 billion from N47.05 billion in nine months of 2018.

During the nine months to September 2018, fees and commission income was N69.97billion compared to N71.02billion in September 2017, showing a 1.5 per cent decline.

However, the group total operating expenses rose by six per cent to N182.42 billion as against N171.36 billion reported in nine months of 2017, driven by 50 per cent and 41.4 per cent increase amortisation of intangible assets and Depreciation of property and equipment respectively. 

Total deposits as at September 2018 was N5.6 trillion representing a marginally increase 0.4 per cent from December 2017 financial year figure of N5.59.

Loans and advances to customers dropped by 13.1 per cent to N1.8 trillion as at September 30, 2018 from N2.1 trillion reported in 2017 while Customers’ deposits dropped by 4.7 per cent to N3.28 trillion from N3.4 trillion reported in 2017.

The group in a statement had explained that, “As the operating environment continues to stabilise across the economic indices of inflation, a foreign exchange market, and healthy foreign reserves, management’s outlook is positive going into the second half of the year.

“The Group continues to deploy strategies aimed at increasing its retail segment markets share while consolidating on its leadership in the corporate segment.”

Analysts at Cordros Capital said the total impairment charges in the quarter was relatively flat, as it dipped 0.79 per cent year-on-year (y/y).

“Together with a nine per cent decline in gross customer loans, annualized cost of risk for the period printed at 0.93per cent (vs. 2.8 per cent in Q3-17), according to our estimates. It is also worth stating that gross loans dipped further by two per cent, compared to H1-18, amidst continued paydown by obligors.

“The cost to income (CTI) ratio for the quarter inched up 200 basis points y/y to 45per cent, but was much lower than the 53per cent (-900 basis points) recorded in H1-18, amidst a seven per cent y/y increase and 22per cent q/q decrease in Q3-18 opex.

“It is worth stating that the bank recorded a tax credit of N2.5 billion in Q3-18, owing to deferred tax asset recognition in tax expenses during the period. Further clarification on the item will be obtained upon our meeting with management. Nonetheless, the tax credit gave the boost to the bank’s earnings, as pre-tax profit was down 0.7per cent y/y in the quarter.”

 

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