Zenith Bank to raise N100bn‎ capital, propose N2.02 final dividend

FOLLOWING the release of Zenith Bank’s full year results on Monday, the lender seeks additional N100 billion from the capital market if approved by its shareholders.

According to Reuters, “Zenith Bank said on Tuesday it would seek shareholder approval next month to raise N100 billion via a combination of share or bond sale and global depository receipts.

The lender also said it would seek approval to increase its share capital to N40 billion from N20 billion at the shareholders’ meeting on March 22.”

However, the intent of the planned capital raise was not disclosed, having recently proposed a final dividend payout of N1.77 kobo per ordinary share in addition to the interim dividend last year; bring the total of dividend for 2016 financial year to N2.02 per share.
Zenith Bank had reported a profit after tax of N129.7 billion for its full year ended 31st December 2016, through a statement to the Nigerian Stock Exchange on Monday.

The profit was 22.7 per cent higher than N105.7 billion made in the same period of 2015

The bank’s management in reacting to the disclosed full year financials stated: “The performance for the year ended December 31, 2016 re-affirms Zenith’s industry leadership and consistency in providing superior financial returns.

This is demonstrated by the 25 per cent and 23 per cent growth in Profit Before Tax (PBT) and Profit After Tax (PAT) respectively despite the continuously challenging macro-economic backdrop.

The N157 billion PBT and N130 billion PAT reported in the current year resulted in an impressive return on average equity of 20 per cent compared to 18 per cent in the prior year.

The Group reported gross revenues of N507.9 billion representing an increase of 17.4 per cent over the same period in 2015. Furthermore, the results for the year show an increase of 10.4 per cent and 45.9 per cent (Y-o-Y) in interest income and non-interest income respectively.

The impressive growth of non-interest income is primarily attributable to the banks electronic products delivery, retail drive and derivatives income.

The increased focus on retail drive resulted in a 46 per cent Y-o-Y growth in savings deposits. The cost control initiatives embarked by the Group continue to yield positive results with an eight per cent reduction in cost to income ratio to close at 53 per cent for the year ended December 31, 2016.

While the year-end 2016 inflation rate was 18.55 per cent, the Group was able to keep its absolute operating expenses relatively flat moving by four per cent from N167.9billion to N174.5billion Interest expense, however, increased by 16.8 per cent (Y-o-Y) mainly due to a 92 per cent increase in cost of borrowed funds which was is largely driven by the movements in the exchange rate.

The loans and advances of the Group grew by 16 per cent Y-o-Y to close at N2.3 trillion as at December 31, 2016; mainly due to the devaluation of the Naira.

The Group reported a Non Performing Loss (NPL) ratio of 3.02 per cent as at December 2016 compared to 2.18 per cent in 2015 with a coverage ratio of 100 per cent, which are attestations of the quality of the Group’s loan book. Liquidity ratio and Capital Adequacy Ratio (CAR) came in at 60 per cent and 23 per cent, which are higher than the regulatory requirements of 30 per cent and 15 per cent respectively.

In spite of a competitive and challenging operating environment, management’s outlook is very positive barring any unpleasant shock.

Furthermore, the group will continue its focus on cost control and emerging opportunities in the growth and economic recovery agenda of the Federal Government,” the bank’s statement read.