Dividend payout of N2.80 excites Zenith Bank’s shareholders as it grows 2018 profit to N232bn

The share price of Zenith Bank Plc, on Tuesday, gained N1.35 each or 5.83 per cent to close at N25.35 each, in apparent investore’ approval of the 2018 audited result for the year ended December 31, 2018, presented by the board.

The bank also emerged as one of the most sought after during the day’s trading, after investors took position, scooping 37,342,076 units worth N925,541,144.50 in 691 deals.

The bank therefore became the first in its sector to presented its audited financials for the year ended December 31, 2018 to the Nigerian Stock Exchange (NSE), a major highlight of which was the N231.685bn profit before tax. The PBT growth represented N32.295bn or 16.2% over the N199.319bn reported in the corresponding full year of 2017.

A major highlight of the results was that management significantly reduced impairment loss on financial and non-financial instruments by N79.855bn or 81.3% from N98.227bn to N18.372bn.

Gross earnings for the period stood at N630.344bn despite tightness of the operating environment just as management successfully constrained the interest and similar expenses from N216.637bn to N144.458bn. Net interest income therefore stood at N295.594bn, as against prior year’s N257.991bn.

Net interest income after impairment loss on financial and non-financial instruments stood at N277.222bn, as against N159.764bn in 2017.

Operating expenses dropped to N137.897bn from N144893bn, even as personnel expenses rose to N68.556bn from N64.459bn.

Profit after tax for the period improved by N19.633bn or 11.29% from N173.791bn in 2017 to N193.424bn, representing earnings per share of N6.15,up from N5.53 each reported in the corresponding period of 2017. The directors have proposed a final dividend of N2.50, which brings total payout to N2.80 considering the 30 kobo interim dividend distributed at half year.

Total Assets for the period under review increased by N360.457bn or 6.44% from N5.595tr in 2017 full year to N6.955tr, with customer loans and advance of N1.823tr, as against the previous N2.1tr.

Total liabilities climbed to N5.139tr from N4.783tr, representing aN356.822bn or 7.5%, following the jump in customer deposits from N3.437tr to N3.69tr; following which shareholders’ funds climbed to N815.751bn from N812.116bn.

Shareholders will meet on March 18, 2019 for the Annual General Meeting (AGM) to review the report and consider the proposed dividend.

This record profit before tax (PBT) was achieved through the Group’s optimisation of its cost of funds, cost-to-income ratio and cost of risk, ensuring that earnings per share strengthened by 11% to ₦6.15.

Despite the challenging macro-environment, the Group mitigated the knock-on effects through growth of its net interest income and operating income by 15% and 8% respectively as it was able to ensure improved cost efficiencies across the business. This focus on cost efficiencies is yielding tangible benefits as the Group recorded its lowest ever cost-to-income ratio at 49.3% from 52.8% in 2017.

The bank’s balance sheet remains shockproof as loan to deposit ratio, liquidity ratio and capital adequacy ratio were 44.2%, 72.0% and 25.0% respectively and all above the regulatory threshold.

The bank’s risk-centric approach also ensured that cost of risk reduced significantly by 79% from 4.3% in the prior year to 0.9% in 2018.  This was reflected through the drop-off in impairment charges by 81% (₦80 billion) compared to 2017, re-affirming the Group’s enhanced asset quality. In the same breadth, coverage ratio increased by 34.2% from 143.4% to 192.4% over the same period, reflecting a prudent disposition to credit risk management. Cost of funds also moved in the positive direction, declining by 41% from 5.2% in 2017 to 3.1% for the year, supported by a 33% decrease in interest expense (₦72 billion) over the same period, demonstrating a robust treasury and liquidity management.

The Group’s efforts to deepen its roots in the retail segment have started yielding benefits.  This has resulted in a remarkable increase in the volume of transactions across various electronic platforms as well as significant customer acquisitions. This growth in transactions on its digital channels continues to support its retail push as fees from e-products increased by 44% over 2017 with retail deposit balances also growing by 25%.

Consistent with this superlative performance and in recognition of its track record of excellent performance, the bank was recently ranked as the Most Valuable Banking Brand in Nigeria in 2018 by The Banker Magazine. In similar fashion, Zenith Bank was recognized as the Best Corporate Governance Bank in Nigeria by The World Finance for the sixth time just as Ethical Boardroom, a Europe based Boardroom watchdog reaffirmed this recognition by naming the bank as the Best Bank in Corporate Governance in 2018.Recognition has also come the way of the bank as it was recently named as the Best Institution in Sustainability Reporting in Africa 2018 (SERAS Awards) and the Bank of the Year 2018 (BusinessDay).