Zenith Bank grows profit after tax by 16.9%

Zenith Bank Plc made a profit after tax of N83.087bn in the nine months to September 30, 2015.

The figure is 16.95 per cent higher than the N71bn PAT it made in the same period of 2014.

The group’s financial statements for the period showed that its profit before tax rose by 19.85 per cent from N86.818bn to N104.052bn in the review period.

This followed a 23.06 per cent year-on-year growth in earnings for the period. The group’s earnings rose from N273.738bn to N336.843bn.

According to analysts, the positive performance recorded by the bank is likely to lead to higher consensus estimates.

In the third quarter, the group said it earned N107.771bn and made N31.851bn and 29.907bn as PBT and PAT, respectively.

Commenting on Zenith Bank’s performance in the third quarter, analysts at FBN Capital Research said of the results showed that Q3 PBT grew by 10 per cent year-on-year.

They noted, however, that PAT growth was just 4.4 per cent year-on-year, slower than the 10 per cent on the PBT line, because the other comprehensive income was down significantly (-62 per cent y/y).
Explaining further, they said, “Although profit before provisions (and opex) of N76bn grew by almost 12 per cent y/y – thanks largely to a faster growing non-interest income (16 per cent y/y) compared with funding income (nine per cent y/y), this was matched by opex growth (12 per cent y/y).

“To a lesser extent, a 31 per cent y/y rise in loan loss provisions also contributed (the magnitude of the provisions was not significant, however).”

Compared with the analyst’s estimates, PBT was slightly behind, by 6.5 per cent. However, PAT beat the estimate by 13 per cent, thanks to a combination of lower-than-expected taxes (-62 per cent) and the OCI (they had forecasted zero on this line).

“Returning to the PBT, the slight weakness relative to our forecast was driven by funding income, similar to what we saw for the q/q trends. Non-interest income, loan loss provisions and opex all surprised positively,” they said.

According to them the full-year consensus PBT for Zenith Bank at N132bn is pessimistic.

“On the back of the Q3 results, we would expect consensus forecasts to move up slightly, towards the mid-N130bn range,” they analysts said.

“Our estimates are under review. We rate Zenith shares outperform.”

Zenith Bank had reported a 24 per cent rise in profit before tax – from N58bn to N72bn – in the first half of the year while profit after tax rose to N53bn from N47bn in the first half of 2014.

The bank also grew its gross earnings by 24 per cent from N184.4bn to N229.08bn.

Based on the result, the bank had paid an interim dividend of 25 kobo per share, the first in its history.

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