[NIGERIA] : Zenith Bank declares N177.93bn profit for 2017, proposes N2.45k final dividend

Zenith Bank Plc, yesterday, became the first money deposit bank to publish its 2017 results which shows After Tax (PAT) hit N177.93 billion from the N129 billion declared in 2016 Audited Results, representing a growth of 37.2 per cent. The bank’s revenue also spiked from N507bn in 2016 to N745bn in 2017, representing 46.6 per cent
The bank also released its fourth quarter 2017 results which indicate that both PBT and PAT grew by 27 per cent year on year (y/y) and 24 per cent y/y to N51bn and N54bn respectively.
Although provision for loan losses and opex spiked by 388 per cent y/y and 95 per cent y/y respectively, the growth in pre-prevision profits completely offset the negative trends on both lines.
Moving up the P&L, although both revenue lines contributed to pre-provision profit growth, non-interest income which was up by a 251 per cent y/y was the major driver.
Experts at the FBN Quest are of the opinion that the remarkable performance of the non-interest income line was mainly due to a 934 per cent y/y increase income from derivatives (fx swaps most likely) and a 242 per cent y/y growth in trading income in 2017.
Funding income grew by 12 per cent y/y. Sequentially, PBT and PAT declined by 16 per cent q/q and 4 per cent q/q respectively. On a full year basis, PBT and PAT grew by 30 per cent y/y and 8 per cent y/y respectively.
“The management of Zenith has proposed a final dividend of N2.45 per share which is higher than our N1.77 forecast and implies a yield of 7.9 per cent.” the experts added.
They said despite the marked rise in provisions, “We expect the broad positives in the results to be paid some attention, mainly the better-than expected non-interest income line. In addition, a N35bn specific impairment taken on a gross loan portfolio of N95bn for the communications category appears sufficient to us as far as Zenith’s 9mobile exposure is concerned. Going forward, the key themes for the banks in 2018 will be the implementation of IFRS 9 and the potential implications for cost-of-risk and CAR.”
They said following the tightening of yields on government securities, it would like to see banks guiding to stronger loan growth for 2018 to compensate