Zenith Bank’s half year results trigger buying interest in its Eurobonds
Strong indications have emerged that the significant buying interest in Zenith Bank’s Eurobonds may be connected to the recently released impressive half year (H1):2017 result of the bank, according to dealers.
Across the Nigerian Corporate Eurobonds, performance remained mixed as Tier-1 banks’ bond yields fell while some Tier-2 yields rose. Investor interest was majorly centered on the ZENITH 2022 and 2019 bonds (which fell 17bps and 3bps respectively), the Subordinated and Senior ACCESS 2021 debt Notes (yields declined 3bps apiece) and FBN 2021 (-5bps) and GUARANTY (-1bp). DIAMOND 2019 and FBN 2021 instruments remain the top price gainers in the year, up 22.5per cent and 19.1per cent year to date (YTD).
Zenith raised $500 million Eurobond in May which analysts said could increase its funding costs.
The bank had recently announced an interim dividend of ₦9.42 billion for the half year (H1) ended June 30, 2018, following the release of it’s results.
The dividend, which translates to 30 kobo per share, is higher than the ₦7.5 billion or 25 kobo paid in the corresponding period of 2017.
According to notification to the Nigerian Stock Exchange (NSE), the interim dividend would be paid to shareholders whose names appear on the bank’s register on August 17, while payment would be made on August 24, 2018.
The ₦9.42 billion interim dividends would be paid from a profit after tax (PAT) of ₦81.7 billion recorded by for the H1, up from ₦75.3 billion in 2017.
Zenith Bank Plc posted gross earnings of ₦322.2 billion in 2018, down from ₦380.4 billion in 2017. Net interest income stood at ₦154 billion compared with 139 billion in 2017.
Impairment charges fell from ₦42.4 billion to ₦9.7 billion, while non-interest income reduced from ₦118.2 billion to ₦93.5 billion.
Profit before tax improved from ₦92.2 billion to ₦107.4 billion, while PAT stood at ₦81.7 billion, compared with ₦75.3 billion in 2017.
Market operators said with higher interim dividend, shareholders should expect a higher final dividend at the end of the year. The bank had paid a total dividend of ₦2.70 per share for 2017.
The Chairman of the bank, Mr. Jim Ovia, had told shareholders at the annual general (AGM) last despite the challenging operating environment, the bank was able to achieve improved performance in its financial results in 2017.
He said profit before tax rose by 24 per cent from ₦140 billion in 2016 to ₦174bn in 2017, while total assets of the bank grew by 13 per cent from ₦4.28 trillion in 2016 to ₦4.83 trillion in 2017.
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