By Peter Egwuatu
The equity market on the Nigerian Stock Exchange, NSE, yesterday rebounded to a positive territory shaking off the election tensions which led to sell off of shares by investors on Monday.
Yesterday, the NSE All Share Index (ASI) rose 0.7 percent to 32,406.18 points due to buying interests in bellwether stocks with Zenith Bank leading the bullish train, gaining +5.6 percent, at the backdrop of its impressive full year 2018 financial results released on the exchange.
Consequently, market capitalisation increased N80.6billion to N12.1trillion while Year to Date, YtD gain settled at 3.1 percent. Activity level also strengthened as volume and value traded improved 55.4 percent and 23.7percent to 361.8million units and N4.2billion n respectively.
Meanwhile in a clear show of its resilience and strong market share, Zenith Bank announced an impressive result for the year ended December 31, 2018 with profit before tax (PBT) rising to N232 billion.
Also, in demonstration of its commitment to its shareholders, the bank has announced a proposed final dividend pay-out of N2.50 per share, bringing the total dividend to N2.80 per share, representing a yield of 11.2 per cent.
According to the bank’s audited financial results for the 2018 financial year released in Lagos on Tuesday, this represents an increase of 16.6 percent over the N199 billion recorded for the same period in 2017. It is the highest so far published by any bank in the Nigerian Banking Industry in the current reporting period. Also, the results showed that profit after tax (PAT) witnessed an impressive growth of 11 per cent year-on-year to N193 billion from N174 billion.
This record profit before tax (PBT) was achieved through the Group’s optimisation of its cost of funds, cost-to-income ratio and cost of risk, ensuring that earnings per share strengthened by 11 percent to ¦ 6.15.
Despite the challenging macro-environment, the Group mitigated the knock-on effects through growth of its net interest income and operating income by 15 percent and 8 percent respectively as it was able to ensure improved cost efficiencies across the business. This focus on cost efficiencies is yielding tangible benefits as the Group recorded its lowest ever cost-to-income ratio at 49.3 percent from 52.8 percent in 2017.
The bank’s balance sheet remains shockproof as loan to deposit ratio, liquidity ratio and capital adequacy ratio were 44.2%, 72.0% and 25.0% respectively and all above the regulatory threshold.
Our risk-centric approach also ensured that cost of risk reduced significantly by 79 percent from 4.3 percent in the prior year to 0.9 percent in 2018. This was reflected through the drop-off in impairment charges by 81 percent (¦ 80 billion) compared to 2017, re-affirming the Group’s enhanced asset quality. In the same breadth, coverage ratio increased by 34.2 percent from 143.4 percent to 192.4 percent over the same period, reflecting a prudent disposition to credit risk management. Cost of funds also moved in the positive direction, declining by 41 percent from 5.2 percent in 2017 to 3.1 percent for the year, supported by a 33 percent decrease in interest expense (¦ 72 billion) over the same period, demonstrating a robust treasury and liquidity management.
The Group’s efforts to deepen its roots in the retail segment have started yielding benefits. This has resulted in a remarkable increase in the volume of transactions across various electronic platforms as well as significant customer acquisitions. This growth in transactions on its digital channels continues to support its retail push as fees from e-products increased by 44 percent over 2017 with retail deposit balances also growing by 25 percent.