The 2016 half year result of Zenith Bank clearly shows that it is one of the best and most profitable banks in the country. An indication is the fact that the bank paid an interim dividend of 25 kobo per share to its shareholders even when several companies listed on the Nigerian Stock Exchange, NSE, incurred losses during the review period. And that is despite a slight decline in the bank’s gross earnings of N192 billion as against the N213.5 billion it earned in the second first half of last year. This was attributed to the crash of crude oil prices, which continues to impact the economy negatively, leading to recession.
Indeed, there were so many high points for the bank during the first half of 2016. For instance, income from interest charged on loans and advances improved marginally from N160 billion in June 2015 to N165.6 billion in June 2016. Interest and similar expenses stood at N49.6 billion as at June 2016 a decline from the N59.2 billion expenses incurred on interest as at June 2015.
Net Interest Income has a positive result of N116 billion over and above the N100.8 billion the bank earned in June 2015. This, however, declined to N104 billion after provisions were made for impairment losses on financial assets. The Profit Before tax stood at N56 billion lower than the N67.7 billion achieved in June 2015. Zenith Bank’s Profit After Tax thus stood at N40 billion while other comprehensive income from the group stood at N44.1 billion. It thus made a profit before making provision for non-performing loans, depreciations and others of N56.964 billion during the review period.
As required by law the bank made Provisions of N11.655billion against nonperforming loans and the sum of N38.89billion was the total cost of running the bank during the period, while personnel cost amounted to N31.745 billion. On removing the provisions made and the cost of running the day-to-day affairs of the bank including staff salaries and allowances, the bank made a profit before tax during the period of N56.016 billion.
The decline in the profit before provisions is as a result of the marginal growth in loans and advances and the decline in non-interest income. The latter stood out more as the magnitude of the declines show, due to low trading income, and to a lesser extent, fees and commission. The bank paid the sum of N15.98billion as taxes to government at the corporate tax rate of 41.4 per cent. It however made some gains of N30.2billion from other comprehensive income net of tax, which swelled its profit after tax.
The bank non-performing credit in the second half of 2016 stood at N35.4billion and its ratio of non-performing loans to total loan portfolio is just 1.64 per cent making it one of the best in the industry. This is for above the 8 per cent industry average and regulatory requirement of ratio of 5 per cent. The bank’s total loans and Advances as at June 2016 had a record of N2.114 trillion as against the N1.849 trillion on its books as at end of December 2015. Zenith total Assets grew from N3.75trillion in December 2015 to N3.952 trillion in June 2016. Its shareholders fund recorded a figure of N542 billion as against the figure of N546 billion in June 2017. This again puts the bank on a comfortable footing as its capital adequacy ratio is above the regulatory requirement.
The bank’s earning per share stood at 126 kobo while it proposed an interim dividend of 25 kobo per share. This will gladden the hearts of shareholders at a time when most companies are returning negative results. In a period where most of its peers are declaring less than average results the bank performance indicators showed it operated profitably though the year on year difference in its Profit Before Tax was 20 per cent lower when compared to its previous year’s record due to the prevailing economic difficulty the country in passing through.