Zenith Bank Plc (NSE Ticker: ZENITHBANK) on Thursday released its half year interim financial report for the period ended 30 June 2020, to the Nigerian Stock Exchange (NSE) and the investing public.
In a follow up corporate action announcement, ZENITHBANK announced that the Board of Directors proposed an interim dividend of N9.4 billion, being 30 kobo per share (2019: Interim dividend of 30 kobo per share) from the retained earnings account as at 30 June, 2020.
- Also read: Guaranty Trust Bank makes N94.271 billion profit in H1 2020, declares 30kobo interim dividend
- MTNN, ZENITH, GUARANTY gain as investors wealth grew by N26.6 billion
The proposed dividend will be presented for ratification by the shareholders at the next Annual General Meeting. Payment of dividends is subject to withholding tax at a rate of 10% in the hands of qualified recipients.
Highlights of the dividend corporate action;
- Period ended: 30th June, 2020
- Proposed Dividend: An interim dividend of 30 kobo
- Qualification date: September 16, 2020
- Payment Date: On September 22, 2020, dividends will be paid electronically to shareholders whose names appear on the Register of Members as at September 16, 2020 and who have completed the e-dividend registration and mandated the Registrar to pay their dividends directly into their Bank accounts. GDR holders will be paid after this date.
Analysis of the report: Income Statement
The bank recorded a marginal growth of 1.10% in its interest and similar income; growing it from N214.601 billion in H1 2019, to N216.954 billion in H1 2020.
The biggest growth in “income” was recorded by the bank in its “Other operating income” segment, which grew by 174.01%, from N8.814 billion to N24.151 billion. The jump in this income is as a result of N22.021 billion foreign currency revaluation gain (2019: this was only N6.484 billion).
Trading gains also increased by 30.45% to N58.832 million, as the bank made N65.697 billion from Treasury bills, approximately N10 billion more than it made in the preceding year.
The increase in earnings from the various income streams, and a control of expenses, ensured the bank recorded a 16.81% growth in its profit after tax for the period.
ZENITHBANK is said to be the next most efficient bank in Nigeria, after Guaranty Trust Bank. It recorded a Return on Average Equity (ROaE) of 10.75% in the first six months of the year (GUARANTY recorded an ROaE of 13.39% in the same time period). The bank earned N3.30 per Share.
Analysis of the report: Statement of Financial Position
The asset column of the balance sheet shows a total assets of N7.580 trillion as at 3o June, 2020. This 19.43% higher than the total assets held as at 31 December, 2019.
The bank attracted 15.08% more deposits from customers, and the total liabilities increased by 21.95% to stand at N6.591 trillion at the end of the period.
Total Shareholder’s equity increased by 5%, to N988.978 billion, up from the N941.886 billion as at 31 December, 2019.
Analysis of the result: Statements of Cash Flows
An analysis of the Cash flow statement shows the below movement in cash over the period in review;
- Net cash flows generated from operations reduced to N72.952 billion, from N137.240 billion generated in 2019.
- Net cash used in investing activities reduced to N12669 billion, as the bank spent less money in the purchase of property and equipment.
- Net cash of N8.362 billion was generated from financing activities (from the long term borrowing), in 2019, the bank used N282.447 billion in financing activities as it spent N192.516 billion in the repayment & repurchase of debt securities.
Cash and cash equivalents at the end of the period was N786.185 billion, a little increase from the N779.442 billion held as the same time in 2019.
Table 1: Financial Highlights
About the Company
Zenith Bank Plc (the “Bank”) was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on May 30, 1990. It was granted a banking licence in June 1990, to carry on the business of commercial banking and commenced business on June 16, 1990.
The Bank is domiciled in Nigeria and was converted into a Public Limited Liability Company on May 20, 2004. The Bank’s shares were listed on October 21, 2004 on the Nigerian Stock Exchange. In August 2015, the Bank was admitted into the Premium Board of the Nigerian Stock Exchange.
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.
The Bank has six subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pensions Custodian Limited, Zenith Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited, Zenith Bank (The Gambia) Limited and Zenith Nominees Limited. The Bank also has a representative office in China in addition to operating a branch of Zenith Bank (UK) Limited in the United Arab Emirates.
The bank has a total of 31,396,493,786 outstanding shares and a market capitalization of N540.019 billion. Jim Ovia, CON owns 11.29% of the shares of the bank, he is the only shareholder that holds more than 5% of the issued share capital of the bank.
Price Movement
The share price of ZENITHBANK has recovered from the low prices it dropped to at the onset of the Covid-19 pandemic, YTD, the stock price is down by only 7.53%, and down by 4.44% over the past year.
Over 5 Years, the stock is up by 1.24%, and down 27.58% over the last 3 years.
The 52 week high and low prices are N23.00 and N10.70 respectively.
Source: Mytradebook
Analyst’s view
ZENITHBANK is rated BUY by Analysts at Investogist, and it remains so. The bank’s stock is trading at only 2.59x of its earnings, well below the NSE average and even below that GUARANTY.
Written by;
Nnamdi M.
