Zenith Bank posts N209bn profit in 2019

By Omobayo Azeez

Nigeria’s commercial institution, Zenith Bank Plc, has reported a 7.9 per cent increase in its profit after tax (PAT) to N209 billion from N193 billion in 2018.

The profit before tax (PBT) of the financial institution also surged by 5 per cent from to hit N243 billion in 2019 from N232 billion in the previous year.

According to analysts at CSL Stockbrokers, the bank’s full year reports were generally in line with expectations, noting that as expected, the performance was supported by strong non-interest income growth, just as interest income declined during the period.

However, due to the stronger expansion in NII, the bank recorded good growth in profitability.

Its interest income declined by 5.6 per cent year-on-year to N491.27 billion, depressed by weaker income from loans to customers which slid downward byn14.7 per cent, to N232.95 billion.

business A.M observed, however that income from investment securities grew over the corresponding period of the prior year by 8 per cent to N155.72 billion.

Meanwhile, in a corporate disclosure at the Nigerian Stock Exchange (NSE) on Friday, Zenith announced a proposed final dividend of N2.50 per share, which translates to a dividend yield of 12.9 per cent, based on the closing price of N19.40 on Thursday, February 20.

Operating expenses (Opex) growth was muted, as the bank continued to focus on cost management in the face of weak income growth.

Opex grew marginally by 2.8 per cent in 2019 to N231.83 billion, with the most pressure exerted by personnel expenses that spike by 13.6 per cent in the year under review to N77.86 billion, and constituted 33.6 per cent of Opex.

Consequent on the muted Opex growth relative to operating income growth, cost-to-income ratio (ex-LLE) settled lower at 48.8 per cent relative to 49.3 per cent in the prior year.

“The bank’s performance remains in line with expectation. The improved growth in interest income quarter-on-quarter is in line with our prognosis, however, we expect pressure on interest expense in 2020, due to the implementation of the higher CRR (although the DCRR may ameliorate this somewhat). We are reviewing our estimates,” CSL analysts have speculated.