Zenith Bank beats estimates on surge in Treasury Trading Income
Zenith Bank Plc reported 35.48 percent increase in 2017 third quarter profit as fixed income trading revenue recorded the biggest surge for that line of business in the industry.
Net income rose to N129.23 billion, from N95.38 billion in the corresponding period of 2016, the Lagos-based company said in a statement. This beat the N100.50 billion estimate of 8 analysts surveyed by BusinessDay.
The bank’s earnings was underpinned by 974.14 percent surge in Treasury bill (T-bill) Trading income to N52.88 billion as the lender continues to gain traction in the electronic banking space.
|Zenith Bank’s Third Quarter Financial Highlights|
|2017 (N’m)||2016 (N’m)||% Change|
|Profit B/f Tax||152,662.00||116,587.00||0.31|
|Profit After Tax||129,235.00||95,386.00||0.35|
|Market Capitalisation as at October 19 2017||824,150.00|
Source: Company Financials; BusinessDay Analysis
Revenue also followed the same growth trajectory as interest income and similar charges spiked by 26.67 percent to N361.78 billion while gross earnings leaped 39.67 percent to N531.26 billion as at September 2017.
A breakdown of interest income showed that interest income on loans and advances to customers and income from T-bills increased by 15.63 percent and 125.35 percent, respectively, to N241 billion and 84.33 billion.
The Nigerian lender’s fee and commission income increased by 53 percent to N71.02 billion, driven by fees on electronic products, current account maintenance, credit related fees, and commissions on agency and collection services.
Analysts are upbeat that Nigerian banks will continue to outperform the NSE ASI in as long as the central bank maintains the current foreign exchange policy.
The introduction of the Investors’ and Exporters’ (I & E) window by the apex bank, as well as the subsequent liberalization of the foreign exchange market, has resulted in increased dollar supply.
Zenith Bank’s shares have gained 78 percent since the beginning of the year, outperforming the Nigerian Stock Exchange (NSE) All Share Index (ASI) that has gained 36 percent ytd return on as analysts expects a slight positive reaction from the market.
Further analysis of Zenith Bank’s financial statement showed that loans and advances to customers fell by 11.52 percent to N2.15 trillion in September 2017, from N2.42 trillion as at September 2016.
Deposits from customers were up 13.75 percent to N3.06 trillion in the period as against N2.69 trillion the previous yearm, while impairments surged 115.30 percent to N47.05 billion in the period under review.
“Management noted at the last conference call that this rise in loan loss expense was partly due to significant impairments taken from the telecoms sector and the aviation sector, which we believe relates to Etisalat (now 9mobile) and Arik Airline,” said Analysts at Lagos Nigeria-based CSL limited.
The lender’s shares stood at N26.30 as at 1:30 pm on the Nigerian Stock Exchange in Lagos, while market capitalization stood at N822.27 billion.
With cash and cash equivalent of N782.39 billion, Zenith Bank has enough fund to pay future dividend and finance future expansion plans.
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