It is that time of the year where many of the quoted companies on the Nigerian Stock Exchange (NSE) will be showcasing their performance for the prior year by way of releasing their earnings reports to shareholders and/or investors. The latest report to the bourse came from Zenith Bank, the first bank to release their full year financial statement in 2019.
In the financial statement to the bourse earlier this week, Zenith Bank posted a decrease in gross earnings by 15.4 per cent from N745.2 billion in full year (FY) 2017 to N630 billion in 2018. Similarly, interest income stood at N440.1 billion in 2018 relative to N474.6 billion recorded in the preceding year.
The poor figures came about as a result of a sharp decline in the interest income accruable from loans and advances granted to customers and also interest income from investment in treasury bills – both fell by 13.2 per cent and 8.4 per cent to N273.2 billion and N100.5 billion respectively.
On the contrary, the tier-one lender’s net interest income increased by 14.6 per cent bolstered by a 33.3 per cent drop in interest expenses from N216.7 billion in 2017 to N144.5 billion in 2018.
Profit before tax (PBT) spiked from N199.3 billion recorded in 2017 to N231.7 billion with a total value of N180 billion posted as net income realized from fees and commissions, trading gains in government securities and derivatives including other operating incomes in 2018 and over N225 billion being the total sum of personal expenses, depreciation of property and equipment and amortization of intangible assets.
“Gross earnings of the Group decreased by 15.4 per cent and profit before tax increased by 16.2 per cent. This is largely due to the reduction of 25 per cent in expenses,” the bank said in the report.
The total gross loans of the bank stood at N2.01 trillion in 2018 representing a decrease of 10.5 per cent from N2.25 trillion in 2017. The bank target was to grow loan by 2.5 per cent in 2018. Non-performing loans (NPLs) sank, amounted to N100.5 billion from N105.9 billion in 2017.
A further examination of the top tier lender’s financial statement reveals that manufacturing sector was the biggest recipient of loans and advances, gulping N579.9 billion in 2018 and outpacing the oil and gas sector with total gross loans of N510.1 billion relative to N660.2 billion in 2017.
Nevertheless, the oil and gas sector, with over N38 billion non-performing loans (NPLs), still dominates the non-performing loan industry breakdown for the bank, albeit at slow rate.
According to Reuters, Zenith Bank aimed to grow loans by 7.5 percent in 2019 after loans and advances declined last year as a result of early repayments.
Total assets of Zenith Bank as at the end of the year 2018 was N5.96 trillion compared to N5.60 trillion recorded as at the end of the prior year. Total liabilities followed same trend, rising by 7.5 per cent to N5.14 trillion. Consequently, the shareholders’ fund stood at N815.8 billion as against N812.1 billion in the previous year.