Zenith Plc excites shareholders, earns N4.80 on share

Zenith Plc  strong performance excites the market as the group  announces its unaudited results for the nine months ended 30 September 2019 today.

Its  profit before tax hits N176.183 billion, having added N64.5 billion to the bottom line in the third quarter of the year.

This represents a 5.3% increase when compare to N167.37 billion the group made in the comparable period in 2018.

On comparison, the grop performance in the third quarter of 2019 blew past some analysts estimates.

Its funding cost closed the period at 2.9% , just as its annualised return on average equity settled at 23.7%.

Zenith Plc also achieved loans to deposits ratio of 69% as against 65% benchmark set by the Central Bank of Nigeria.

Thus, cost of risk shoot up, albeit marginally while net margin moved slowly to 30.7% from 30.4% in the comparable period.

However, the Nigerian stock market however failed to reward its shareholders as share price declined marginally from N17.25 to N17 on Wednesday.

Its market capitalisation pitched at N533.74 billion after stock market trading session on Wednesday, on shares outstanding of 31,396,493,78.

While capital adequacy ratio settled at 23.8%, the numbers shows that the financial service group earned N4.80 on its outstanding shares in the period, as against N4.58k in the comparable period in 2018.

On assets side, Zenith group is few bucks away from N6 trillion balance sheet size, having expanded by 6.43% in the last one year.

Meanwhile, the group total assets carrying value at the financial year end was N5.955 trillion.

The result shows that Zenith group non-performing loans ratio closed the period at 4.95%,compare to 4.98% at the beginning of the year.

However, MarketForces review of the numbers shows that Zenith impairment charge on credit losses through the income statement jerked up from N14.338 billion at the end of 9 months of financial year 2018 to N18.259 billion a ayear after.

In the third quarter of 2019, Zenith booked N4.524 billion as provision against credit losses.

Equity analysts told MarketForces that the 9-month results meet their estimates, and it is largely in line with the group guideline.

On the book sides, assets quality waned, increased loans book raised the group exposure. Net loans and advances to customers surged to N2.043 trillion in 9 months results from N1.824 trillion in the comparable period in 2018.

In the period, group raised shareholders fund by 6.88% to N871.9 billion. At the beginning of the year, the holding’s equity was valued at 815.751 billion. This was driven by combination of uptick recorded in retain earnings and other reserves.

Zenith Plc.’s gross earnings increased by 3.5% from N474.61 billion to N491.268 billion at the end of 9 months in financial year 2019.

On year on year comparison, the group recorded about 14% decline in net interest income.

Its net income position from interest yielding assets slipped to N214.6274 billion compare to N228.518 billion at the end of 9-month period in 2018.

MarketForces observes that non-interest related income beat analysts expectations. Net fees and commission came in strong, from N62 billion to N73.847 billion.

Read: https://dmarketforces.com/bear-market-zenith-gtb-are-two-stocks-to-watch-fsdh/

It was noted that operating expenses exclusing personal cost nosedived from N109.93 billion to N102.682 billion.

However, personnel expenses surged to N57.065 billion from N51.687 billion in the prior period in 2018.

At the end of the period, its operating income however pitched at N310.2 billion compare to N314.7 billion that was declared at the end of 9-month in 2018.

At the group level, customers deposits hit N3.951 trillion, which represents a 7.07% increase from N3.69 trillion record level at the beginning of the year.

The management said: “We have continued to deploy capital to creating viable risk assets with gross loans and advances growing by 9% from N2.02 trillion as at December 2018 to N2.2 trillion as at the third quarter of 2019 across both the retail and corporate segments.

It also stated that management focus remains the search for bankable lending opportunities to ensure the attainment of the minimum regulatory loan-to-deposit ratio (LDR) of 65% by December 31, 2019 without compromising.

“Our robust risk management framework has ensured that non-performing loans (NPL) ratio declined from 4.98% in December 2018 to 4.95% in the current period.

“Our commitment to maintaining a shock-proof balance sheet remains with liquidity and capital adequacy ratios at 63.8% and 23.8% respectively, both above regulatory thresholds.

“In this final quarter of the year, we will sustain our competitiveness and share of market in the corporate segment and build upon our digital foundations to reinforce our retail banking initiatives, the management said.