On June 1, 2019, Ebenezer Onyeagwu assumed the position of Group Managing Director/CEO of Zenith Bank Plc, replacing Peter Amangbo whose 5-year tenure ended the previous day.
According to the bank’s official statement, his appointment was in line with the succession strategy of grooming leaders from within. Onyeagwu, at the time, already had almost 30 years’ banking experience, with 17 years spent in Zenith Bank, so if anyone knew the bank well enough to take up the position, it surely would have been him.
He had served as Executive Director, General Manager, Deputy General Manager and Senior Manager, and had basically covered all of the bank’s departments, from Financial Control and Strategic Planning, to Risk Management, Retail Banking, Institutional and Corporate Banking Business Portfolios, IT Group, Credit Administration, and Treasury and Foreign Exchange Trading,
Today marks one year since he became GMD, and this article seeks to highlight strides achieved within that period.
Coming in at the end of the second quarter, the impact of Onyeagwu’s leadership would first be seen in the Q3 results. When the results were released sometime in November, the first thing that was obvious was that gross earnings increased by 4% to N491.3 billion when compared to Q3 of the previous year where the group recorded gross earnings of N474.6 billion.
With the expansion of channels and platforms of services, fees from electronic products doubled to N35.3 billion from N17.6 billion in Q3 2018. Profit Before Tax (PBT) grew by 5% from N167.3 billion in Q3 2018 to a record N176.2 billion in Q3 2019.
The conclusion at that point was that the group had applied cost optimization strategies and aggressive retail banking to get the results it was showing. Earnings Per Share (EPS) also grew by 5% from N4.58 in Q3 2018 to N4.80 in Q3 2019.
The group increased its share of the industry deposits, with customer deposits growing to N3.95 trillion from N3.69 trillion.
All of these gains would be consolidated by the end of 2019 when the Group released the FY 2019 results.
Compared to FY 2018, the Zenith Bank Group recorded 5% growth in gross earnings from N630.3 billion to N662.3 billion, with fees on electronic products growing by over 100% from N20.4 billion in 2018 to N42.5 billion in 2019.
Total assets also increased by 7% from N5.96 trillion to N6.35 trillion, and Earnings per Share (EPS) grew 8% from N6.15 to N6.65 in 2019. Profit before Tax increased, by 5% from N232 billion in 2018 to N243 billion in 2019.
The group increased its share of the market as it secured more customer deposits across the corporate and retail space, with deposits growing by 15% to close at N4.26 trillion. The strategy, according to the bank’s report, was efficient cost management while employing digital innovation and digital assets to expand retail franchises.
Among all five tier 1 banks, Zenith Bank Plc registered the highest profit after tax, which also increased from N193.42 billion in 2018 to N208.84 billion in 2019.
The Q1 2020 result was released on April 29, and again, there was an all-round improvement compared to Q1 2019. Gross earnings were 6% higher than last year’s first quarter (N158.1 billion in March 2019 to N166.8 billion), Non-interest income practically exploded by 43% (from N32.7 billion in Q1 2019 to N46.6 billion in Q1 2020).
Profit before tax improved by 3% from N57.3 billion in Q1 2019 to N58.8 billion in Q1 2020.
Customer deposits increased by some N200 billion in the quarter, increasing the total customer deposits from N4.26 trillion in December 2019 to N4.46 trillion by the end of the first quarter of 2020.
As with other banks, the COVID-19 pandemic posed challenges for Zenith bank, but as contained in the report, the bank activated its business continuity plan, while deploying enhanced digital channels to handle the increased volumes of customer transactions.
It is clear to both shareholders and board management, at this point, that picking an MD from within the existing structure definitely paid off. Currently, using Profit after tax, market share value, and earnings per share, one can say that Zenith Bank is cruising at the number one position among Nigeria’s top banks.
Conoil Plc declares dividend payment for FY 2019, announces AGM soon
The current share price of the oil marketing firm as of July 9, 2020, is N18.90 per share.
Oil marketing giant, Conoil Plc, has announced a final dividend payment of N2.00 per ordinary share of 50 kobo each for the period ended December 31, 2019.
The final dividend payment which will be paid to shareholders whose names appear in the Register of Members as at close of business on Monday, July 13, 2020, is, however, subject to the appropriate withholding tax deduction and the approval of the shareholders.
This information was contained in a notification that was sent by Conoil Plc to the Nigerian Stock Exchange (NSE) on Thursday, July 9, 2020, and signed by its Company Secretary/Legal Adviser, Conrad Eberemu after the release of the full-year audited financial statement for the year ended 2019.
The statement from Conoil says, ‘’A final dividend of 200 kobo per 50 kobo ordinary share, subject to appropriate withholding tax and approval will be paid to shareholders whose names appear in the Register of Members as at the close of business on the Monday, 13th day of July 2020.’’
‘’The Register of Shareholders will be closed from Tuesday, 14th to Friday, 17th July 2020.’’
The corporate actions announcement by the oil firm also states that while the payment date will be on a date to be announced shortly, the dividends will be paid electronically to shareholders whose names appear on the Register of Members as at Monday, July 13, 2020, and who have completed the e-dividend registration with a mandate to the Registrar to pay their dividends directly into their bank accounts.
The oil marketing company also noted that shareholders with dividend warrants and share certificates that have remained unclaimed, or yet to be presented for payment or returned for validation are advised to complete the e-dividend registration or contact the Registrar (Meristem Registrars and Probate Services Limited).
The company’s Annual General Meeting (AGM) will be held at a venue and date to be announced shortly.
Conoil PLC, in its recently released audited financial statement for full-year 2019 announced a Profit after tax of N1.99 billion as of December 31, 2019. This represented an increase of 11% when compared to the N1.8 billion that was recorded for the corresponding period in 2018.
The profit after tax was recorded on a Revenue of N139.76 billion as of December 31, 2019. This also represents an increase of 14% when compared to the N122.21 billion that was achieved for December 31, 2018.
The Profit before tax as of December 31, 2019, was N2.78 billion as against the N2.57 billion achieved for the corresponding period in 2018.
The current share price of the oil marketing firm as of July 9, 2020, is N18.90 per share and the earnings per share is N2.77.
NSIA records total comprehensive income of N36.15 billion in 2019
The NSIA recorded an increase in total assets to N649.84 billion at the end of the financial year.
The Executive Director, Nigeria Sovereign Investment Authority (NSIA), Stella Ojekwe-Onyejeli, announced in a virtual briefing to newsmen on Friday that the NSIA recorded a Total Comprehensive Income (TCI) of N36.1 5 billion in 2019.
She revealed that the 2019 income was less than the TCI for 2018, which was N44.34 billion. However, the NSIA recorded an increase in total assets to N649.84 billion at the end of the financial year, as opposed to that of 2018 which closed at N617.70 billion.
Ms Ojekwe-Onyejeli said that TCI income for 2019 included foreign exchange gains at N1.26 billion compared to N18.05 billion in 2018, noting that the gain in forex was due to changes in Nigeria’s official exchange rate from N305 to a dollar to N325.
“As of year-end 2019, NSIA’s core capital remained at 1.5 billion dollars.” She said. “The Authority continues to manage 3rd party funds on behalf of some government institutions. We currently manage funds for the Debt Management Office (DMO) and the Ministry of Finance.
“For DMO, the current value of Assets under Management (AuM) is 124.03 million dollars. For 2018, this fund stood at 122.60 million dollars in AuM.
“For the Nigeria Stabilisation Fund, managed on behalf of the Ministry of Finance, the Fund Balance was N33.365 billion. As of 2018, this balance increased to N20.814 billion.”
“However, the National Economic Council voted for an additional capital contribution of 250 million dollars in 2019, which was received on April 8,” she explained.
She added that the group’s strategy to invest in diversified products across the yield curve provided returns and that the Stabilisation Fund (SF), which had been fully invested by the end of 2019, returned 5.81%, outperforming its benchmark by 381 basis points.
She also stated that the Future Generations Fund (FGF), deployed by the NSIA across multiple global equities, hedge funds and other diversifiers, returned 6.45% at the end of 2019, outperforming its benchmark of 6.43%.
“As of year-end 2019, we had deployed over 90 percent of the capital in the Future Generations Fund,” she said.
Sterling Bank’s earnings to remain pressured but valuations still attractive
We project Pre-tax Profit of N9.0bn (down 15% y/y) and we estimate ROAE of 6.9% in 2020e (FY 2019; 9.8%).
Sterling Bank’s Q1 2020 numbers were largely impacted by the regulatory-induced fee cut on e-banking transactions resulting in a decline in Net Fee and Commission (down 16% y/y) and weak operating efficiency given the higher growth in OPEX (up 8% y/y) compared with the increase in operating income (up 3% y/y). Net Interest Margin (NIM) however improved to 7.7% in Q1 2020 (Q1 2019; 7.4%) on the back of lower funding cost (5.1% in Q1 2020 compared with 6.6% in Q1 2019).
Sterling bank’s NPL ratio declined to 2.0% in Q1 2020 from 8.9% in Q1 2019 following the declassification of exposures in stressed sectors. We do not expect asset quality issues to crystallise in the short term, as we expect the bulk of the loans in the Oil and gas upstream/midstream (c.27% of gross loan) to be restructured. We however expect earnings to weaken in 2020, due to low asset yields amidst weak loan creation and the downward adjustment in fees on e-banking transactions. We Project Pre-tax Profit of N9.0bn (down 15% y/y) and we estimate ROAE of 6.9% in 2020e (FY 2019; 9.8%).
Following the downward revision to our 2020 earnings forecast, we have revised our target price downwards to N1.67/s from N2.84/s previously. We however maintain our BUY recommendation due to attractive valuations (P/E; 3.7x and P/B; 0.3x) and the 34% upside from the last closing price of N1.25/s. We note that the steep decline in the stock price (down c.37% since the start of the year) presents an attractive entry point.
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