By Dipo Olowookere
The management of Zenith Bank Plc has disclosed that there is no immediate plan to approach the debt market to borrow fresh funds to boost its operations and revenue.
This disclosure was made last Thursday at the analyst call of the financial institution after the release of its financial statements for the year ended December 31, 2018 last Tuesday.
Addressing financial experts and investors during the conference call, Zenith Bank said after repaying its $500 million Eurobond, which matures on April 22, 2019, it has no intention to make another borrowing anytime soon.
Business Post reports that in 2014, Zenith Bank sold a $500 million Eurobond to investors, with the exercise conducted for the lender by Goldman Sachs and Citibank.
The $500 million Eurobond was the first tranche of the bank’s $1 billion Global Medium Term Note programme.
The exercise, which received 200 percent oversubscription, had offers from investors across the globe, including from Europe, the United States, Africa, Asia and the Middle East.
Also during the analyst call last week, Zenith Bank said its outlook for 2019 was positive, supported by a fairly stable inflation rate, converging foreign exchange market and near target oil production. The bank further said it would continue its investment in the retail segment of the market to consolidate its leadership position in both the retail and corporate segments while it maintains its shock proof balance sheet.
In addition, Zenith Bank plans to grow its loans by 7.5 percent during this fiscal year against the loan growth of 2.5 percent recorded in 2018.
The financial institution said it hopes to tap into the agricultural sector this year to improve its earnings and profit.
It said in 2019, there are strategies to provide more credit facilities manufacturers in the sector, which will in turn grow the economy.
An analysis of the company’s 2018 financial results showed that the profit before tax (PBT) increased by 16 percent to N232 billion from N199 billion reported in 2017. The record PBT was achieved through the firm’s optimisation of its cost of funds, cost-to-income ratio and cost of risk, ensuring that earnings per share strengthened by 11 percent to N6.15.
However, due to a challenging macro-environment, gross earnings and interest income reduced by 15 percent and 7 percent respectively, driven by declining trading income, compressed yields on assets, and a reduction in the loan book by 10 percent.
Despite the decline in gross earnings, Zenith Bank mitigated these knock-on effects through growth of its net interest income and operating income by 15 percent and 8 percent respectively as it was able to ensure improved cost efficiencies across the business.
This focus on cost efficiencies is yielding tangible benefits as the lender recorded its lowest ever cost to-income ratio at 49.3 percent from 52.8 percent in 2017.
