Banking
Zenith Bank Shares Crash After Declaring 25k Interim Dividend
By National Daily
For a second session in a row last Friday, Zenith Bank shares depreciated despite a sharp rise in its first-half earnings.
Last Thursday, the lender announced that its pre-tax profit in the first six months jumped 71 percent to N92.2 billion.
Afterwards, the board of directors of the financial institution declared an interim dividend of 25 kobo, an amount some investors believed was lower than expected.
According to National Daily, Zenith Bank stock fell one percent to N23.75 on Friday, the lowest since July 26.
In May 2017, the bank raised $500 million Eurobond which could increase its funding costs.
Recall that the first tier lender Q2 2017 results showed that PBT grew by a remarkable 120% y/y to N48 billion. The strong PBT growth was mainly driven by a stellar growth of 389% y/y to N88.5 billion on the non-interest income line.
Growth on this line was underpinned by a strong performance in forex trading income which grew to N46 billion from a forex loss of N496 million in 2016. In contrast, funding income came in flat y/y.
The strong revenue contribution was strong enough to completely offset increases of 196% y/y and 39% y/y in loan loss provision and opex respectively.
Further down the P&L, PAT declined by 19% y/y to N31.4 billion mainly because of a negative result of N6.3 billion in other comprehensive income line (OCI) compared with a strong gain of N30.2 billion in Q2 2016 on the same line.
On a sequential basis, the results mirrored the y/y trends. PBT was up by 9% q/q.
Again, robust growth of N199% q/q on the non-interest income line was the key driver underpinning the q/q growth in PBT. PAT fell by -19% q/ because of the negative result on the OCI line.
Compared with our forecasts, PBT beat by 22%.
However, PAT was broadly (-4%) in line with our N32.8 billion forecast.
In terms of the H1 performance, PBT and PAT expanded by 71% y/y and 8% y/y to N92.2 billion and N70.3 billion respectively.
Although both revenue lines contributed to the strong results, non-interest income which grew by 254% y/y was the major driver. The y/y growth on the funding income line was 9% y/y.
The company is proposing an interim dividend of N0.25 which is flat y/y and in line with our expectations. The proposed dividend translates to a dividend yield of 1.0% and a payout ratio of 11.2%.
While the strength of the non-interest income result will be welcomed, we believe the weakness on the funding income line and the spikes in impairments and opex will also attract investors’ attention.
On funding income, it appears that Zenith Bank also may have struggled to capitalise (effectively) on the elevated yields in the fixed income market because sourcing deposits may have been trickier, and the workings of the NAFEX forex market may also have led to a loss of funds from customers.
Its deposits fell -1% q/q. Pending comments from management, we believe that the bank may have capitalised on the strong set of results to book significantly higher provisions. It is not clear why opex jumped 55% q/q.
Zenith Bank’s H1 PBT tracks well ahead of consensus FY 2017 PBT forecast of N165 billion. As such, we expect to see marked upward revisions to consensus PBT forecast. The shares have outperformed the Index this year. They have gained 62.7% ytd vs. 41.8% ytd for the ASI.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
By Adedapo Adesanya
The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.
The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.
Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.
Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.
“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”
Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.
“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.
Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.
By Aduragbemi Omiyale
In recognition of its unwavering commitment to fostering access to financing for Nigerian micro, small and medium enterprises (MSMEs), Development Bank of Nigeria Plc has been rewarded with the Financial Inclusion Leadership Award at the Champions of Inclusion Nigeria Financial Inclusion Awards.
This was at the 2024 International Financial Inclusion Conference (IFIC) organised by the Central Bank of Nigeria (CBN) in collaboration with the World Bank and other stakeholders.
The chief executive of the lender, Mr Tony Okpanachi, said the recognition affirms the company’s efforts in expanding access to financial services for MSMEs in Nigeria.
“We are honoured to receive the Financial Inclusion Leadership Award, which is a testament to our bank’s commitment to expanding access to financial services for all Nigerians. This award recognises our efforts to bridge the financial inclusion gap, particularly for a priority sector like the MSMEs.
“Additionally, this award is a validation of our strategic focus on driving financial inclusion for small businesses, and we are proud to be at the forefront of this initiative that drives that. We will continue to innovate and expand our financial inclusion programmes, ensuring that more Nigerian small and startup businesses have access to services,” he stated.
On his part, the Chief Operating Officer of DBN, Mr Bonaventure Okhaimo, said the accolade demonstrates the firm’s dedication to driving financial inclusion and economic growth in Nigeria.
“This award acknowledges our Bank’s innovative approach to widening opportunities for MSMEs in Nigeria to grow and scale their businesses,” he said.
“This award will motivate us to continue pushing the boundaries of financial inclusion, exploring more innovative solutions and partnerships to expand our reach and impact.
“We are committed to ensuring that more small businesses and startup enterprises in Nigeria have access to financial services, this award will further inspire us to accelerate our efforts in this regard,” he stated.
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