Zenith Bank posts N60bn profi - to pay dividend of 95k per share

Lagos – Zenith Bank has posted a Profit Before Tax (PBT) of N60bn which represents an increase of 21 per cent over the N50bn recorded in the corresponding period of 2010.

Profit after Tax (PAT) stood at N44bn over N37bn, an increase of 18 per cent. The Bank has proposed a dividend pay -out of N29.8 billion up from N26.7 billion paid out in 2010.

The result which was released on the floor of the Nigerian Stock Exchange (NSE) in Lagos on Friday showed that the bank’s gross earnings rose by 27 per cent to N244billion, from N192billion, indicating an increasing dominance in its market share.

By this performance, Zenith Bank has surpassed analysts’ projections at Gabros Capital which had forecast a gross earning of N217.95 billion and a profit after tax of N51.63billion. Over the period, the Bank also grew its total assets (plus contingents) by 25 per cent to N3.5 trillion from the N2.8 trillion of the previous year. The result also shows the bank’s prudent approach to loan management as total non-performing credit facilities to total credit facilities stood at 4.00 per cent, a remarkable improvement over the 5.53 per cent recorded last year.

Net Interest Margin increased to 8.5 per cent in 2011 financial year end from 7.8 per cent in 2010. This highlights the bank’s ability to manage its funding cost resulting from its ability to generate cheap deposit liability. It is noteworthy, however, that the bank’s impairment charge increased to N24.3bn compared to N4.3bn in 2010 Financial Year.

The increase was largely caused by the N10.2bn general provision on Performing Credit Facilities and the haircut of about N5 billion on some legacy loans sold to the Asset Management Company of Nigeria (AMCON) and further downgrade of already provisioned loans.

The provision on Performing Credit Facilities was waived for all banks in 2010 by the Central Bank of Nigeria to aid recovery from the huge provisions of the previous year on Capital Market facilities. Furthermore, the bank in making the general provisions on performing loan facilities took some conservative positions by booking its provisions at higher than 1 per cent, a push towards returning provisions coverage to historical high level.

Only last February, the Bank emerged one with highest capitalization on the Nigerian Stock Exchange (NSE) with market capitalization of N424billion. Analysts and investors have hailed the result, which enhances Zenith Bank’s reputation as a market leader especially with regards to return on investment.