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Business News

Zenith Bank: No major threat to earnings in the near term; Buy recommendation maintained

Zenith Bank’s FY 2019 audited numbers showed a decline in yield on Loans to customers and on money market instruments

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Zenith Bank GMD and CEO Mr. Ebenezer Onyeagwu, Zenith Bank: No major threat to earnings in the near term; Buy recommendation maintained
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Zenith Bank’s FY 2019 audited numbers showed a decline in yield on Loans to customers and on money market instruments, however, impressive growth in Non-Interest Income supported profit growth.

FY 2019 Return on Average Equity (ROAE) of 23.8% compares with 24.3% for FY 2018. Though we expect Income will be impacted in the first half of the year due to the COVID-19 restrictions and have revised down our estimates accordingly, we expect this to be minimally offset by growth in some electronic banking lines.

Asset quality also remains strong with an NPL ratio of 4.3%, Cost of Risk (COR) 1.1% and coverage ratio of 148% as at FY 2019. We do not expect a significant deterioration in asset quality in the near term.

Though we expect a strain in FCY loans following the reduction in oil prices and elevated risks to devaluation in the local currency, we expect that many of such loans will be restructured and their tenors elongated in the near term. We estimate COR of 1.3% for FY 2020e.

[READ MORE: MTN Nigeria: Accelerated growth in data revenue to buoy earnings despite soft macro conditions)

Zenith’s FY 2019 Capital Adequacy Ratio (CAR) of 22% (without the full impact of IFRS 9) remains comfortably above regulatory minimum of 15.0% currently. Zenith bank has c.39% of gross loans in foreign currency. We estimate that a 20% devaluation in the currency will result in a 45bps decline in the Nigerian bank’s 2020e CAR to 19.55% from 20.00% currently.

We find the valuation of the shares compelling (PBV: 0.47x, PE: 2.1x) and though we expect income growth to be challenged owing to the COVID-19 pandemic and the fragile economic conditions, we see no major disaster in view. The bank rates well relative to peers based on capital sufficiency, asset quality and sustainable long-term dividend yield.

We maintain a Buy recommendation on the stock and a revised price target of N30.85/s from N36.37/s previously. Downside risks to our forecasts are worsening macro conditions and an extended lockdown period beyond Q2.

Read the full report here.

SSKOHN

_______________________________________________________________________

CSL STOCKBROKERS LIMITED CSL Stockbrokers,

Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

Stanbic 728 x 90

PO Box 9117,

Lagos State.

 

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Business

Hyundai and Kia to set up an assembly plants in Ghana by 2022

The automobile giants will join Toyota-Suzuki, Nissan, Kantanka, Volkswagen, and Sinotruck who already have plants in Ghana.

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Hyundai to invest $87 billion into producing 44 new electric vehicles, Hyundai partners Kia to invest €100m in electric vehicles 
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Few weeks after Twitter announced its plans to open its first African office in Ghana, Hyundai and Kia have also concluded plans to set up an assembly plants in Ghana by 2022. The automobile giants will join Toyota-Suzuki, Nissan, Kantanka, Volkswagen, and Sinotruck who already have plants.

Ghana’s Minister for Trade and Industry, Alan Kyerematen announced this on Twitter.

READ: This is the New Tarrif Structure For Importing Tokunbo & Brand New Cars

Pleased to announce that Hyundai & KIA are set to establish assembly plants in Ghana by the end of 2022 to join Toyota-Suzuki, Nissan, Kantanka, Volkswagen & Sinotruck. The Ghana Auto Development program = 3,600 assemblies & 6,600 manufacturing parts jobs in Ghana.

The local assembly of vehicles, 3,600 direct and indirect jobs would be created in Ghana, and the addition of components and parts manufacturing will also add about 6,600 direct and indirect jobs.”

READ: Toyota snubs Nigeria as it moves to establish assembly plants in Ghana, Ivory Coast 

Why this matters

More foreign companies are shunning Nigeria in favour of Ghana. Recently, Nairametrics reported that Amazon is set to situate its African Headquarters in South Africa, a multi-billion dollar investment that is projected to create over 20,000 jobs both directly and indirectly.

Following its move to Ghana, Twitter CEO, Jack Dorsey cited a number of human rights-related reasons for the choice of Ghana over Nigeria. Added to this are rising insecurity, stifling government regulations and the gapping infrastructural deficit bedevilling Nigeria. Consequently, our nation is steadily losing opportunities to attract foreign companies that could be very instrumental in bridging its unemployment gap which is currently over 30%.

SSKOHN

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Business

Passports: Backlog of undelievered passports to be fixed before May 31st – Minister

The government also announced the launch of a new passport application system, which would be aided by fast track services nationwide.

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The Federal Government disclosed that all backlogs of undelivered passport requests would be fixed before May 31st, and announced the launch of a new passport application system, which would be aided by fast track services nationwide.

This was disclosed by Minister of Interior, Rauf Aregbesola, in a press briefing with newsmen on Thursday.

What the Minister said

“On or before May 31st, all backlogs of undelivered requests for passports will be totally met, unless such applications have a problem,” he said.

“But before the deadline, the problematic application would be contacted, so that we know what’s wrong with the applications. Assuming there would be no problem, every successful application for a passport would be given a passport on or before May 31st,” he added.

READ: Canada invites 3,900 new PR candidates, introduces new programme to attract Nigerians

The new passport process

The Minister disclosed that the FG will launch a new passport application process which would come into effect soon.

“When you finish your application process, there would be a waiting period of six weeks to collect your passport, however, if you want an express service, there would be fast track centres nationwide, to meet requests for express passport users,” he said.

What you should know 

  • Recall Nairametrics reported last month that the Federal Government inaugurated the Nigeria Immigration Service Passport Express Centre, which is a partnership with the private sector to enable the government offer passport services to Nigerians and make passports available in a maximum of 72 hours of a successful application.
  • The FG also launched the Electronic Temporary Passport to cater for Nigerians desirous of returning home but whose national passport is not available.

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