Zenith, GTBank Bring Relief to Shareholders
Goddy Egene writes that the improved results and dividends declared last week by Zenith Bank and GTBank elicited a huge sigh of relief from shareholders who had expected disappointing results from banks in 2014
When banks released their nine months results ended September 30, 2014, many shareholders and investors were highly apprehensive. The simple reason for their apprehension was the little growth recorded in the bottom lines of the banks compared to the corresponding period of 2013. Some of the banks even recorded decline in their performance. The poor nine months performance resulted from the negative impact of headwinds in the banking industry induced by tight regulation by the Central Bank of Nigeria (CBN). This apprehension among investors weakened demand for the banking stocks. shares. Many investors have the belief that since the nine months were below expectations, the full year results would follow the same pattern.
However, two banks, Zenith Bank Plc and Guaranty Trust Bank Plc that released their audited results for the year ended December 31, 2014, last week, delivered improved performances that have brought relief to shareholders and investors. The two banks recorded higher bottom lines and rewarded their shareholders with dividends.
Zenith Bank
The bank was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on 30, May,1990. It was granted a banking licence in June 1990, to carry on the business of commercial banking and commenced business on 16 June 1990. Zenith Bank was converted into a public limited liability company on 20 May 2004 and got listed on the Nigerian Stock Exchange(NSE) in October 2004. The principal activity of the bank is the provision of banking and other financial services to corporate and individual customers. Such services include granting of loans and advances, corporate finance and money market activities. Zenith Bank has five subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pension Custodian Limited, Zenith Bank(UK) Limited, Zenith Bank (Sierra Leone) Limited, and Zenith Bank (Gambia) Limited. During the year, Zenith Bank opened seven new branches, six in Nigeria, and one in The Gambia.
The Chairman of Zenith Bank is Jim Ovia while Managing Director is Peter Amangbo. Mr.Peter Amangbo. The executive directors are: Ms. Adaora Umeoji, Mr.Ebenezer Onyeagwu, Mr.Oladipo Olusola. Non-executive directors are: Babatunde Adejuwon, Alhaji Baba Tela, Prof. Chukuka Enwemeka, Mr.Jeffrey Efeyini, Mrs Chinyere Asika, and Dr Haruna Usman Sanusi.
2014 results
Zenith Bank grew gross earnings by 14.76 per cent to N403.3billion, up from N351 billion. Interest Income grew by 15.9 per cent from N272 billion to N313.4 billion, while non-interest income rose by 39.1 per cent to N90.1billion.
Profit before tax (PBT) increased by 12.8 per cent from N106 billion to N119.8 billion while profit after tax (PAT) for the year rose by 8.6 per cent N91.5 billion to N99.5 billion. The board has proposed a dividend of N1.75 per share. Return on average equity stood at 18.7 per cent, while return on average asset stood at 2.9 per cent. Loan to deposit was 68.2 per cent up from 55 per cent in 2013. Cost to income ratio was 55.2 per cent, as against 55.7 per cent in 2013. Net margin was 24.7 per cent compared with 27.1 per cent.
Analysts’ comments
Assessing the full results, analysts at FBN Capital Limited, said the bank met its full year PBT target of N120 billion, implying an 8.3 per cent growth.
According to them, the fourth quarter (Q4) PBT 2014 PBT worked out as N33.0 billion, up 19.7 per cent.
“Q4 2014 PAT growth was less impres- sive at 6.5 per cent because tax more than doubled and other comprehensive income fell 78 per cent. While funding income grew by a modest 3.9 per cent to N63 billion, non-interest income more than doubled to N29.7 billion,” they said.
The analysts added that the picture was similar for the most part down to the PBT line: double-digit q/q growth on the revenue lines more than offset cost/loan loss expense increases.
“Again, non-interest income was the standout performer: it grew by 96 per cent q/q. Notwithstanding, PAT fell by 9.1 per cent q/q because the impact of a marked reduction in other comprehensive income proved significant. Relative to our forecasts, PBT was ahead by 26 per cent and PAT by 15 per cent. The difference in magnitude between the two percentage figures was down to the tax rate (13.9 per cent) coming in well ahead of our 4.5 per cent forecast,” they said.
They noted that all in all, the results were ahead of expectations, stressing that “Zenith delivered an ROAE of 19 per cent for 2014. We would expect consensus estimates for 2015 to move up slightly. On the back of the results, we would expect the market to react positively, with the caveat that concerns about the impact of the fallout from the decline in oil prices are likely to linger a bit. Zenith shares have outperformed the index this year, gaining 3.2 per cent compared with a loss of
12.4 per cent for the All-Share Index (ASI).
GTBank
GTBank was incorporated as a limited liability company licensed to provide commercial and other banking services to the Nigerian public in 1990. The bank commenced operations in February 1991 and got listed on the NSE in 1996. After its listing on the exchange, GTBank won NSE President’s Merit the same year it was quoted. The bank repeated the feat in 2000, 2003, 2005, 2006, 2007, 2008 and 2009. GTBank was granted a universal banking license in 2002 and later appointed a settlement bank by the Central Bank of Nigeria (CBN) in 2003.The bank presently employs over 10,000 people in Nigeria, Cote d’Ivoire, Gambia, Ghana, Kenya, Liberia, Rwanda, Sierra Leone, Uganda and the United Kingdom. It has a corporate banking bias and strong service culture that have enabled it record consistent year on year growth in clientele base and key financial indices since its inception in 1990.
The Chairman of GTBank is Mr. Egbert Imomoh. Mr. Segun Agbaje is MD/CEO, while Mrs. Cathy Echeozo is the deputy MD/CEO. Executive directors include: Mrs. Olutola Omotola; Mr. Demola Odeyemi; Mr. Ohis Ohiwerei and Mr. Wale Oyedeji. Non-executive directors are: Mr. Adebayo Adeola; Mr. Olabode Agusto; Mr. Ibrahim Hassan; Mr. Andrew Alli; Mr. Akindele Akintoye; Mrs. Osaretin Demuren; and Mr.
Hezekiah Oyinlola.
2014 Results
GTBank grew its gross earnings by 14.8 per cent to N278.5 billion, from N242.7 billion recorded in 2013. Interest income rose by 8.2 per cent from N185.4 billion to N201 billion, while interest expenses rose by 20 per cent from N48.4 billion to N58.2 billion. However, credit impairment charges soared by 146 per cent from N2.9 billion to N7.1 billion. Similarly, operating expenses increased by 14.9 per cent to N95.7 billion, from N82.4 billion in 2013.
PBT rose by 8.7 per cent from N 107.1 billion in 2013 to N116.4 billion in 2014. PAT rose by 9.6 per cent from N90 billion to N98.7 billion.
Based on the performance, the directors recommended final dividend of N1.50 per share. This brings the total dividend to N1.75 per share, having paid an interim dividend of 25 kobo before now.
Commenting on results, the Managing Director/CEO of GTBank, Mr. Segun Agbaje, said,said financial performance attested to the inherent soundness of its strategy and resilience of its earnings.
According to him, Group has delivered a respectable PBT of N116.39billion in spite of all the headwinds the industry experienced in 2014.
“We remain committed to maximising shareholder value and delivering superior and sustainable returns. Our objective is to remain a leading player in the financial services sector whilst expanding our franchise in select, high growth African markets where we believe we have a competitive advantage,” Agbaje said.
Also speaking on the GTBank’s results, analysts at FBN Capital Limited, said the N116.4 billion PBT came in ahead of bank management’s full year guidance of N110 billion.
“The PBT also came in ahead of consensus full year PBT forecast of N109 billion. Given that the positive surprise in the results was driven by non-interest income (and in particular foreign exchange trading), we do not expect much of the surprise to be carried forward as far as consensus forecasts are concerned. More importantly, these results do not yet reflect the fallout from the worst of the marked decline in oil prices. We believe that GT Bank will fare better than most banks and should be viewed as a core holding for investors through the challenging times ahead. However, we also acknowledge that growth, particularly for risk assets, is bound to slowdown in 2015. GTBank’s exposure to the oil and gas sector at over 20 per cent of its loan book is a slight concern also,” they said.