March 3, 2022/FSDH Research
Key Performance Highlights:
- Zenith Bank reported good results for FY21, with the gross earnings recording a 9.9% YoY jump and the net profit growing by 6.1% YoY to N244.6 billion in FY21. The gross earnings rose 9.9% YoY to N765.6 billion in FY21, powered by a 37.6% YoY spurt in Trading Income, supported by a 31.0% YoY jump in the net fee and commission income, which was partially offset by a 25.9% fall in other income in FY21. The net interest income grew due to solid management of the treasury portfolio that increased efficiency, resulting in a drop in interest expense by 11.8% from N121.1 billion in FY20 to N106.8 billion in the current year.
- The Bank’s Interest and similar income was up 1.6% YoY to N427.6 billion, which was enhanced by an 11.8% YoY drop in Interest and similar expense. The rise in interest income was primarily driven by 16.5% growth in interest income from loans and advances on the back of an increase in gross loans of 20% year on year, partially offset by a 74.4% drop in income from Placement with banks and discount houses to N6.8 billion and an 82.6% decline in income from promissory notes. The earnings from treasury bills were also down 24.9% YoY to N40.4 billion in FY21. The group’s enhanced efficiency helped reduce interest expense by 11.8% YoY to N106.8 billion FY21. Resultantly, the net interest income rose 7.0% YoY to N320.8 billion in FY21, up from N299.7 billion in FY20. The impairment charge for the period was up 51.6% YoY basis. After impairment, the net interest income marginally increased by 0.3% YoY to N260.9 billion in FY21.
- The Bank reported a 22.8% YoY jump in non-interest income to N309.0 billion in FY21. The Bank’s personnel expenses marginally grew by 0.5% YoY to N79.9 billion in FY21, while the operating expenses increased 22.1% YoY. Profit before tax was up 9.6% YoY to N280.4 billion in FY21. The company reported an after-tax profit of N244.6 billion compared to N230.6 billion in the prior year. The Group Earnings per Share grew from N7.34/share in FY20 to N7.78/share in FY21.
- In 4Q21, the Bank recorded a 31.7% YoY growth to N246.9 billion in Gross earnings. The Non-interest revenue also spurted 48.6% YoY in 4Q21 to N116.3 billion. The net interest income grew by 15.5% YoY, partially offset by the increase in the Interest and similar expenses by 18.9% to N32.7 billion in 4Q21. Operating expenses rose 33.7% YoY to N43.6 billion. The strong performance percolated down as the profit jumped 17.8% to N84.0 billion in 4Q21 from N71.3 billion in 4Q20. The EPS stood at 2.67/share in the fourth quarter compared to N2.27/share in the prior-year period.
- The group remains focused on its drive to increase retail deposits for the past three years, combined with the strategic rebalancing of its funding base helped reduce the cost of funds by 28% to 1.5% from 2.1% year on year. Further, the group continues to make significant progress in its retail banking drive, evidenced by remarkable growth in transaction volumes and value across our digital platforms and strong growth in customer acquisitions. Total deposits grew by 21% to close at N6.5 trillion from N5.3 trillion on 31 December 2020, with a substantial contribution from retail deposits. Total assets also increased by 11% to N9.5 trillion in the current period, mainly driven by growth in customer deposits.
- On 28 February 2022, Zenith proposed a final dividend of N2.8 per share, subject to appropriate withholding tax and approval by shareholders. The final dividend will become payable on Wednesday, 6 April 2022, to all shareholders registered in the company’s books at the close of business on Friday, 25 March 2022.
Market Reaction: The investor reaction to the strong results was lukewarm as the stock closed 0.37% down at N27.00 versus a 0.75% fall for the NGX banking index and a marginal 0.19% gain for the All-Share Index (1/3).
Zenith Bank Earnings Highlight FY21
Source: Company Financials, FSDH
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