Zenith Bank records ₦167bn profit in 9-months, gross ₦475bn

Zenith Bank

Zenith Bank Plc Thursday released its financial results for the nine months ended September 30, 2018, showing a decline in top-line but a growth in bottom-line.

Zenith Bank recorded gross earnings of ₦474.697 billion in 2018, down by 11 per cent, compared with the ₦531.2 billion posted by the bank in the corresponding period of 2017.

Its net interest income rose by 13 per cent, from ₦201.492 billion to ₦228.517 billion, while fee and commission income stood at ₦69.967 billion, as against the ₦71.021 billion posted in 2017. Impairment charges fell 70 per cent from ₦47.053 billion to ₦14.338 billion.

As a result, Zenith Bank Plc ended the nine months with profit before tax of ₦167.307 billion, which is 10 per cent above the ₦152.552 billion posted in 2017.

Profit after tax improved by 12 per cent to ₦144.179 billion, up from ₦129.28 billion in 2017.Customers’ deposits increased from ₦3.062 trillion to ₦3.276 trillion, while loans and advances reduced from ₦2.156 trillion to ₦1.824 trillion. Total assets improved to ₦5.618 trillion, up from ₦5.132 trillion in 2017.

In their review of the third quarter performance, analysts at Cordros Capital Limited said the one per cent uptick in gross earnings was largely on the back of 11 per cent growth in interest income to ₦110.39 billion.

According to them, interest earned on customer loans (+8.35 per cent) and government securities (+44 per cent) were major drivers of the increase in interest income.

“On the other hand, decline in fees & commission income (-30 per cent, -10 per cent quarter on quarter q/q) led to a disappointing net interest revenue (NIR) (-18 per cent, -37% q/q) performance in the quarter. Over the nine-month period, NIR dropped 20 per cent, with trading income, other income, and fees and commission income all recording respective negative growth of 35 per cent , 24 per cent , and one per cent,” they said.

According to them, it is worth stating that the bank recorded a tax credit of ₦2.5 billion in Q3-18, owing to a deferred tax asset recognition in tax expenses during the period.

“Further clarification on the item will be obtained upon our meeting with management. Nonetheless, the tax credit gave the boost to the bank’s earnings, as pre-tax profit was down 0.7 per cent y/y in the quarter. The Zenith Bank’s Q3-18 result is impressive. Annualised, the ₦192.24 billion net profit reported as at 9M-18 is above Bloomberg consensus’ estimate for the full year by six per cent , but lags our 2018E by two per cent,” they said.