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Following the shock that ensued after UBA’s announcement of a profit warning for 2011, it was a relief for investors when Zenith Bank announced on Monday that it made a profit after tax of N44.2b. That was an increase of 18.2% from N37.41b made in 2010. The bank also announced a gross earnings of N244b an increase of 26.8% from N192.49 made in 2010. However, their Gross Income Margin (Profit before Tax/Gross Earnings) dropped marginally from 25.9% in 2010 to 24.8% for 2011, showing an increase in expenses.

The full annual results are yet to be published (as at when this blog was posted) for anyone to make a proper analysis. However, the summary of results and Published Summary Results announced by them serve as a guide. Despite that, the following is a snap shot analysis of their performance;

  • Based on this result Zenith Bank has an Earnings Per Share of 140k (N1.4). With a market price (as at 12/3/2012) of  13.71 that gives a price earnings ratio of 9.7X. Their closest competitors GTB and First Bank both have PE’s of 8.9X and 8.2X respectively
  • Their total loans and advances was N832.8b up 14.3%. That is also about 50% of the total customer deposits of N1.6tr. They have a cash balance (less treasury bills) of N223b which is about 13.5% of their total deposit liabilities. However, the industry approved CAR and Liquidity Ratio was 27% and 61% respectively. Way above Industry Requirements.
  • Their non performing loans for the year was N36.8b which is 83.4% of the profit after tax. A decision to write that off may thus see them in a profit position of N7.3b. In 2010, N44.2b was categorized as non-performing. As such I will imagine that decrease was due to a write off rather than a recovery.
  • Investment in safe assets also increased by  from N298.9b to N516.1b showing a massive 72% increase. That is expected considering the mouth watering yields treasury bills have been offering in the last 12 months.
  • Net Interest Income which is predominantly the banks source of revenue increased from N91.5b to N125.6b. Foreign Exchange Income also increased (quite surprisingly) from N10.8b to N18b. 
Like I said, without the full annual report it is impossible to dig into details and possibly explain their performance objectively. Till then, I guess we just make do with the above. 


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