Zenith Bank Plc, on Monday became the second interim dividend-paying stock to present its financials for the half-year ended June 30, 2019, highlights of which included the flat growth in earnings and profit, even as non-performing loans climbed marginally up, as a sign of the constrained liquidity in the country, amidst fears that the Nigerian economy could possibly slip into yet another recession, in view of the happenings in the domestic and global scene, unless something dramatic happens soon.
Investors seem to have reacted slightly positively to the result, which may be a sign of showing understanding, judging by the 40 kobo or 2.41% rise in the share price, which stood at N17 at about when trading closed for the day.
Other highlights of the score-card included a constrained 2.9% growth in gross earnings, while profit before tax inched 4% up; while net profit stood at N88.886bn, from N81.737bn, representing Earnings Per Share of N2.83, as against the N2.60 reported in the previous half-year, the directors have recommended a dividend of 30 kobo per share, totaling N9.42bn.
Register of members for the purpose, according to the directors, closes August 30, 2019, while qualification date is August 29, 2019; following which the interim “dividend will be paid electronically to shareholders whose names appear on the register of members as at August 29, 2019, and who have completed the e-dividend registration and mandated the registrar to pay their dividend directly into their bank accounts.”
The Non-Performing loan ratio for the period under review increased from 4.9% to 5.3%
Also, the value of loss to the bank arising from frauds and forgeries soared from just N2.979m in the first half of 2018, to N1.026bn; while total volume stood at 170, up from 161 in the prior half-year. The bulk of the actual loss totaling N992.167m or 96.68%, was perpetrated by 97 staff of the bank; up from N2.0m involving 67 staff in 2018. The bank also recorded N30.643m via three cases of internet banking, compared to zero loss from two incidences in the preceding half-year; among others.
Meanwhile, gross earnings for the period rose by a marginal N9.385bn or 2.91% from N322.201bn in the first half of 2018 to N331.586bn; as interest and similar income fell by N14.069bn or 6.15%; a decline that was not as much as the drop in interest expense from N74.709bn to N72.086bn. Net interest income, therefore, slipped from N153.961bn to N142.515bn. Impairment loss on financial and non-financial instruments dropped to N13.735bn from N9.72bn.
A breakdown of the numbers showed that N289.583bn of the earnings was derived from the group’s Nigerian business; followed by N35.277bn from other African operating fields, while Europe contributed N11.678bn. Interest expense attributable to Nigeria amounted to N61.385bn; while Africa and Europe accounted for N10.029bn and N2.024bn; just as impairment loss on financial assets was equally driven by Nigeria’s N13.156bn.
Net interest income after impairment loss on financial and non-financial instruments stood at N128.78bn, down by N19.461bn or 13.49% from N144.241bn.
Net income on fees and commission however improved, rising to N55.815bn, up by N14.043bn or 33.61% from N41.772bn, boosted by the N27.076bn earned from electronic products, which soared from N10.077bn in 2018; followed by N12.684bn from credit-related fees, up from N8.781bn. Trading gains climbed from N36.807bn to N45.101bn, representing an increase of N8.294bn or 22.53%, the bulk of which was the N55.253bn treasury bills trading income, from N55.085bn. This gain was however impaired by the derivatives loss of N13.825bn, after dropping from N18.594bn; while bonds trading income soared to N3.675bn from N316m. Other operating income slowed down from N10.016bn to N8.814bn. Depreciation of property and equipment rose to N9.791bn from N7.967bn; amortization of intangible assets rose marginally from N1.117bn to N1.514bn; personnel expenses from N34.808bn to N38.725bn; while operating expenses dropped by N4.783bn or 5.86% from N81.586bn to N76.803bn; with the Asset Management Corporation of Nigeria (AMCON) sinking fund levy gulping all of N28.654bn.as against N28.542bn; while deposit insurance premium rose to N6.449bn, up from N5.531bn; ahead of the N6.592bn spent on fuel and maintenance, down from N9.085bn; among others.
Profit before tax, therefore, stood at N111.677bn from N10.358bn, just as income tax expense at N20.935bn, down from N23.957bn resulted in net profit of N88.882bn; compared to N81.737bn; translating to Earnings Per Share of N2.83, from which the board recommended an interim dividend of 30 kobo each; compared to the previous N2.60. Of the net profit, N78.111bn was derived from Nigeria; just as Africa followed with N9.293bn and Europe, N5.478bn.
Total assets for the period dropped marginally from N5.955tr to N5.898bn; out of which customer loans and advances stood at N1.801tr from N1.823tr; while investment in treasury bills closed at N1.006tr, from N1.0tr; while total liabilities declined also from N5.139tr in the corresponding period of N5.139tr to N5.079tr, the lion’s share of which was the customer deposits at N3.81tr, up from N3.69tr in the same period of 2018.
Shareholders’ funds for the period, therefore, rose marginally from N815.751bn to N819.514bn.