Zenith Bank’s shareholders set for N2.80k dividend on N756bn earnings

BY: CHARLES ABUEDE

Shareholders of Zenith Bank, the pioneer status symbol of Nigeria’s well regarded ‘new generation’ banks, are getting set to approve a final dividend payout of N2.80 per share, following boosts to the bank’s earnings from trading income, net fees and commission that helped to push the earnings of the Nigerian lender to N756.56 billion in its full year 2021 financial results.

The gross earnings posted represents a 9.9 percent year on year rise from N696.5 billion posted in 2020, details of the financials show.

Also up is the company’s net profit, which rose by 6.1 percent year on year to N244.6 billion in 2021.

The 9.9 percent growth in earnings was largely driven by a 37.6 percent year on year spurt in trading income, supported by a 31 percent year on year jump in the net fee and commission income, which was partially offset by a 25.9 percent fall in other income in FY21.

According to an explainer by the bank, the net interest income grew due to solid management of the treasury portfolio that increased efficiency, resulting in a drop in interest expense by 11.8 percent from N121.1 billion in FY20 to N106.8 billion in the current year.

The lender noted that it remains very committed and focused on its drive to increase retail deposits for the past three years, adding that combined with the strategic rebalancing of its funding base, this helped reduce the cost of funds by 28 percent to 1.5 percent from 2.1 percent year on year.

In addition, the bank said it continues to make significant progress in its retail banking drive, evidenced by remarkable growth in transaction volumes and value across its digital platforms and strong growth in customer acquisitions.

Those acquisitions saw the group’s total deposits grow by 21 percent to close at N6.5 trillion from N5.3 trillion at the end of 2020, with a substantial contribution from retail deposits.

The bank’s total assets also increased by 11 percent to N9.5 trillion in the current period, mainly driven by growth in customer deposits.

In the full year filing to the Nigerian Exchange, the bank also reported that its interest and similar income rose by 1.6 percent year on year to N427.6 billion, enhanced by an 11.8 percent year on year drop in interest and similar expense.

The rise in interest income was primarily driven by 16.5 percent growth in interest income from loans and advances on the back of an increase in gross loans of 20 percent year on year, partially offset by a 74.4 percent drop in income from placement with banks and discount houses to N6.8 billion and an 82.6 percent decline in income from promissory notes.

The bank’s earnings from treasury bills were also down 24.9 percent year on year to N40.4 billion in FY21, just as the group’s enhanced efficiency helped reduce interest expense by 11.8 percent year on year to N106.8 billion 2021.

Resultantly, the net interest income rose seven percent year on year to N320.8 billion in 2021, up from N299.7 billion in FY20, while the impairment charge for the period was up 51.6 percent year on year basis. After impairment, the net interest income marginally increased by 0.3 percent year on year to N260.9 billion in FY21.

The full year financial statement also shows that Zenith Bank’s profit before tax was up 9.6 percent year on year to N280.4 billion, while its after-tax profit of N244.6 billion compared favourably to N230.6 billion in the prior year.

There was also a 22.8 percent year on year jump in non-interest income to N309 billion in 2021, the top lender reported. Its personnel expenses marginally grew by 0.5 percent year on year to N79.9 billion in FY21, but the operating expenses increased 22.1 percent year on year.

Irrespective of these, the group earnings per share grew from N7.34 in 2020 to N7.78 in 2021.

Meanwhile, on a quarter on quarter performance, there was a 1.7 percent year on year growth to N246.9 billion in Zenith Bank’s gross earnings in the last quarter of 2021. Non-interest revenue spurted 48.6 percent year on year in the fourth quarter of 2021 to N116.3 billion, while the net interest income grew by 15.5 percent year on year, partially offset by the increase in the interest and similar expenses by 18.9 percent to N32.7 billion in the fourth quarter.

Furthermore, operating expenses rose 33.7 percent year on year to N43.6 billion. The strong performance trickled down as the profit jumped 17.8 percent to N84 billion in Q4 from N71.3 billion in the same quarter of 2020.

A proposal of N2.80 per share as final dividend is being presented, subject to appropriate withholding tax, to shareholders for approval. The final dividend will become payable to all shareholders registered in the company’s books.

Thus, the bank’s earnings per share (EPS) stood at 2.67 per share in the fourth quarter compared to N2.27 per share in the prior-year period.