Zenith Bank To Reduce OpEx, Improve Cost Of Funds, Enhance Returns

•As Shareholders Approve N87.91bn Dividend

Shareholders of Zenith Bank Plc, at the annual general meeting on Monday in Lagos unanimously approved a proposal by the directors for the distribution of N2.50 final dividend, representing a payout of N78.491bn.
The board had at the end of half year paid 30 kobo interim dividend, bringing total payout for the year N2.80 or N87.91bn, from profit after tax of N193.424bn, for the year ended December 31, 2018, compared to N173.791bn in the prior full-year.
Responding to questions from shareholders at the meeting, Peter Amangbo, its group chief executive, assured that the management of Zenith Bank will strive to continue driving down its cost of funds. This, he believes, will ultimately impact top and bottom-lines, as well as ensure juicier dividend payment for shareholders and better returns to investors through an anticipated growth in share price on the Nigerian Stock Exchange (NSE).

He acknowledged the happiness expressed by Nornah Awoh, a shareholder over the drop in the group’s operating expenses, a situation he said is deliberate at a time the operating environment is daily becoming unfriendly.
Addressing the shareholders, Jim Ovia, the chairman said the result reflect Zenith Bank’s exceptional financial health, even as it “remains committed to delivering superior returns to our much-valued shareholders by ensuring that a good chunk of our profit is set aside for you.”
Awoh had challenged the management to do more in the area of lowering its cost of funds more significantly for the good of shareholders.

Cost of funds for the period dropped to 3.1%, from 5.2% in 2017, while cost of risk stood at 0.9% from 4.3%; and cost-to-income ratio to 49.3% from 52.8%, among others.
He also challenged the board and management improving investor confidence, by ensuring more disclosures, even as he drew attention to the fact that directors are buying out small shareholders as shown in the holding structure. This situation, he said, speaks about confidence in the financial institution.
“The people who make the share (price rise and fall) are the small players (who trade their shares)… We may be a Nigerian company, but we are playing global, and the money we get from FDI (Foreign Direct Investment), the better,” he stressed.
Also commenting on the bank’s performance, Sir Sunny Nwosu, National Coordinator emeritus of the Independent Shareholders Association of Nigeria (ISAN), applauded plans by the management of Zenith Bank to extend a portion of its loan book to smallholder borrowers (small and medium-scale enterprises), while de-emphasising large borrowers. History, he said, has shown that small-holder borrowers are very faithful in the payment of loans they take.

Gross earnings for the period stood at N630.344bn from N745.189bn in prior year, with interest income showing the tightness of the operating environment, as it dropped marginally from N474.628bn in 2017 to N440.052bn; just as management successfully constrained the interest and similar expenses from N216.637bn to N144.458bn. Net interest income therefore stood at N295.594bn, as against prior year’s N257.991bn.
Net interest income after impairment loss on financial and non-financial instruments stood at N277.222bn, as against N159.764bn in 2017.

Operating expenses dropped to N137.897bn from N144893bn, even as personnel expenses rose to N68.556bn from N64.459bn.
Profit after tax for the period improved by N19.633bn or 11.29% from N173.791bn in 2017 to N193.424bn, representing earnings per share of N6.15,up from N5.53 each reported in the corresponding period of 2017. The directors have proposed a final dividend of N2.50, which brings total payout to N2.80 considering the 30 kobo interim dividend distributed at half year.

Total Assets for the period under review increased by N360.457bn or 6.44% from N5.595tr in 2017 full year to N6.955tr, with customer loans and advance of N1.823tr, as against the previous N2.1tr.
Total liabilities climbed to N5.139tr from N4.783tr, representing aN356.822bn or 7.5%, following the jump in customer deposits from N3.437tr to N3.69tr; following which shareholders’ funds climbed to N815.751bn from N812.116bn.

https://investdata.com.ng/2019/03/zenith-bank-to-reduce-opex-improve-cost-of-funds-better-returns/