ZENITHBANK First Glance: Q4-17 PAT; Impressive 2017FY Performance

March 12, 2018/Cordros Update

  • Zenith Bank Plc (ZENITH) released its FY 2017 results which showed that Gross earnings was higher by 46.69% during the year at NGN745.19 billion – 55.14% higher than Bloomberg’s polled estimates, and 8.49% higher than our forecast.
  • Interest income (+23.42%) increased to NGN474.63 billion – lagging our estimates marginally by 1.59%.
  • NIR surged by 119.18% to NGN270.56 billion, owing to significant rise in trading income by 456.29%.
  • As a result, total operating income in the year was 45.36% higher at NGN528.55 billion – 178.00% higher than polled expectation.
  • Loan impairment provision surged by 203.64% to NGN98.23 billion – 83.40% higher than our forecast.
  • Operating expenses was 29.99% higher than the previous year at NGN226.86 billion, and 3.50% than our estimate of NGN219.20 billion.
  • PBT and PAT stood at NGN203.46 billion and NGN177.93 billion, 29.80% and 37.24% higher than their respective figures in the previous year, and Bloomberg’s polled forecasts of NGN193.59 billion and NGN159.52 billion.
  • Over Q4-2017, Gross earnings (+41.83% q/q and +67.59% y/y) increased to NGN212.92 billion – its second highest during the year, after Q2-2017’s NGN232.70 billion. This came in higher than our forecast by 27.26%.
  • Interest income also improved by 13.37% q/q and 14.11% y/y to NGN112.84 billion.
  • The significant upticks in trading income (+361.86% q/q and +535.34% y/y) and other income (+277.65% q/q, +207.59% y/y) during the quarter, muted the decline in fee and commission income (-42.52% q/q and -13.72% y/y), to drive growth in the NIR by +97.07% q/q and +251.45% y/y. 
  • Loan impairment provision (+999.33% q/q and +387.74% y/y) surged to NGN51.17 billion during the quarter – 686.74% higher than our estimate of NGN6.51 billion.
  • Total opex was higher by 13.73 q/q and 67.38% y/y in the quarter.
  • PBT and PAT came lower than their respective quarters by 15.67% and 9.68%, but 103.79% and 64.64% higher than their previous year values at NGN50.91 billion and NGN48.70 billion. The PAT and PBT came 4.54% and 22.44% higher than our estimates.
  • Dividend of NGN2.45 (2016: NGN2.02; 2017F:2.15) was proposed, equating to 7.90% yield on today’s price of NGN31.00.