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Zenith Bank posts N180 billion profit before tax in nine months amid headwinds

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Zenith Bank Plc has posted a profit before tax of N180 billion for the nine months ended September 30 amid headwinds.

The Group’s unaudited nine months financial results presented to the Nigerian Exchange Limited revealed this.

The results were presented on Sunday in Lagos.

The PBT reflected a 1 per cent growth over the N177 billion recorded in the comparative period of 2020, notwithstanding the challenging macroeconomic environment, exacerbated by the COVID-19 pandemic.

Also, the results showed a 2 per cent increase in gross earnings to N519 billion from N509 billion recorded in the same period of 2020, attributable to growth in current account maintenance fees, as well as fees from electronic products.

The financial statement also said despite continuing economic uncertainties, the Group grew its net earnings through a reduction in the cost of funds, while keeping the cost of risk flat, which strengthened earnings per share by 1 per cent to N5.11 billion.

Similarly, the Group achieved a 9 per cent growth in interest income from loans and advances on the back of an increase in gross loans of 9 per cent year-to-date and enhanced efficiency, resulting in a 21 per cent drop in interest expense to N74 billion from N94 billion.

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It also showed that the growth in net interest income of 4 per cent rose to N235 billion from N225 billion recorded in the comparative period of 2020.

Total assets also increased by 3 per cent to N8.8 trillion in the current period, while total deposits grew by 13 per cent to close at N6.0 trillion from N5.3 trillion as at December 2020, with a substantial contribution from retail deposits, the statement also showed.

As a result of the focused drive to increase retail deposits in the past three years, there was a decrease in the Group’s cost of funds by 35 per cent to 1.4 per cent from 2.2 per cent year-on-year.

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For the year’s final quarter, the management’s outlook remained positive, buoyed by a declining inflationary trend, expected increase in foreign exchange inflows, and improvement in oil production, as the Group focused on increasing its retail market share, consolidating its leadership position in the corporate segment and maintaining a robust balance sheet.

In recognition of its track record of excellent performance, Zenith Bank received several awards including being voted as Best Commercial Bank in Nigeria in the World Finance Banking Awards 2021, Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020.

Also Best Bank in Nigeria in the Global Finance World’s Best Banks Awards 2020 and 2021 and Best in Corporate Governance Financial Services Africa 2020 and 2021 by the Ethical Boardroom among many others have been won by the bank.

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Business & Finance

CBN may hike interest rates as inflation heads to seven-month high

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CBN may hike interest rates as inflation heads to seven-month high.

The Central Bank of Nigeria (CBN) may raise the nation’s benchmark interest rate as inflation rate heads to a seven-month high.

The apex bank is projected to abandon its dovish stance and start a tightening cycle by raising the baseline interest rate in response to spiraling inflationary trend, which is expected to hit a seven-month high at the next announcement.

The National Bureau of Statistics (NBS) is scheduled to release the April 2022 inflation rate ahead of the meeting of the CBN’s Monetary Policy Committee (MPC) on May 23 and 24, 2022.

Economic and finance experts at the weekend said the spiraling inflationary trend would continue, and the third consecutive increase expected for April would be a game-changer for the apex bank. They attributed recent dynamics in the nation’s financial markets as anticipatory moves against the headwinds.

CBN’s Monetary Policy Rate is currently at 11.50 per cent but experts have predicted at least 50 basis points increase to at least 12.0 per cent.

In a report at the weekend, Financial Derivatives Company (FDC)- a high-level think-tank led by Bismarck Rewane, a member of President Muhammadu Buhari’s Economic Advisory Council, stated that its independent survey indicated that inflation rate may rise to 16.2 per cent for April 2022, 0.28 per cent ahead of 15.92 per cent announced for March 2022.

FDC’s projection was based on time series analysis and survey of major markets in the Lagos Metropolis, a method it had used earlier to correctly predict inflationary trend.

According to FDC, all inflation sub-indices except for month-on-month inflation are expected to increase with headline inflation.

“The MPC is widely expected to raise interest rates at its meetings on the 23rd and 24th of May. This is likely to be the commencement of a tightening cycle and could see the CBN use open market operations mainly for liquidity management purposes as against the unorthodox approach adopted in the last few years. The committee’s decision to tighten would also come after several nations both in advanced and emerging economies have accepted a much more aggressive tightening stance,” Rewane’s FDC stated.

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According to analysts, the implications of higher interest rates on cost of borrowing, return on savings and stock market valuations are already causing some jitters in money and capital markets.

Afrinvest, a major finance and investment group, also at the weekend said the proposed increase in tariffs by telecommunication operators would have a spiral inflationary effect on the general economy if implemented, given the strategic nature of telco services to business and households existence.

The Association of Licensed Telecommunication Operators of Nigeria (ALTON) had last week announced a proposed 40 per cent increase in service tariffs, citing sustained increase in telecommunication companies’ operating expenses, especially energy costs. Based on the proposal, tariffs for calls and SMS are estimated to rise 39.8 per cent and 40.3 per cent to N8.95 and N5.61 respectively.

Afrinvest stated that while the underlying business rationale may be compelling enough given that the average retail price of Diesel had surged by more than 129 per cent, Nigerians should brace up for higher inflationary trend amid declining purchasing power.

Analysts at Cordros Group underlined that global monetary authorities are expected to further increase interest rates, which may have a colouration and softening effect on other economies.

The United States (US)’s Federal Open Market Committee (FOMC) had increased the target range for federal funds rate by 50 basis points to between 0.75 per cent and one per cent as against previous range of 0.25 per cent and 0.50 per cent. Analysts noted that given the underlying tone and the Russia-Ukraine conflict’s near-term impact on inflation, FOMC may further increase its policy rate by 50 basis points at its next meeting in June 2022.

In United Kingdom, the Monetary Policy Committee (MPC) of the Bank of England (BoE) had also increased its main policy rate by 25 basis points to 1.00 per cent, the fourth consecutive increase since BoE adopted a hawkish stance last December.

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FDC stated that Nigeria’s inflationary trend may be worse than estimated noting that whilst official headline inflation was reported at 15.92 per cent for March 2022, the actual reality of things painted a much higher number.

According to analysts, global inflation is at record levels with a four-decade level in U.S. and three-decade high in United Kingdom and European Union (EU), and the spiraling upward trend may continue in Nigeria and other Sub-Saharan African countries.

FDC indicated that its projection on increase in Nigeria’s benchmark interest rate was a consensus estimate of most analysts.

“Our time series model points to a possible decline in month-on-month inflation to 1.22 per cent, 15.67 per cent annualised, in April from 1.74 per cent, 23.15 per cent annualised, in March. This largely reflects weak aggregate demand as consumer disposable income remained squeezed.

“Four of the country’s land borders have been reopened. While this move has been misconstrued by some as a political agenda, analysts are more focused on the expected economic impact particularly on food inflation. Based on our analysis, the annual composite food index is projected to increase again to 17.35 per cent in April from 17.2 per cent in March. In subsequent months, we expect the reopening of the land borders to boost food supply and taper commodity prices. The unintended consequences would be a possible rise in smuggling activities,” FDC stated.

FDC noted that most African countries are grappling with the twin shock of rising inflation and high debt levels and according to the Standard Bank Group, five of Africa’s heavily-indebted countries-Ghana, Kenya, Angola, Ethiopia and Zambia, are at the verge of a debt distress.

FDC pointed out that SSA countries’ debt crisis could become worse as most advanced economies adopt a tighter monetary policy stance, pushing up debt service costs.

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Nigerian Stock Exhange

Stockbrokers elect Adeosun president

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Stockbrokers elect Adeosun president.

Managing Director, Chartwell Securities Limited, Mr Oluwole Adeosun has been elected as the new president and chairman of the Governing Council of the Chartered Institute of Stockbrokers (CIS).

The CIS is the self-regulatory organisation that regulates the practice of stockbroking and it is the largest professional body in the capital market.

Adeosun, a former 1st Vice President, succeeded the erstwhile President, Mr Olatunde Amolegbe whose tenure has been roundly commended for several achievements. The institute’s 2nd Vice President, Mr Oluropo Dada also emerged the 1st Vice President .

A product of the prestigious Loyola College, Ibadan, he holds a B.Sc. (Hons) in Business Administration from the University of Ilorin in 1986 and capped it with Master’s Degree in Business Administration (MBA) and specialises in Finance and Banking from University of Lagos in 1993. Adeosun trained at Coopers and Lybrand (Chartered Accountants) now PricewaterhouseCoopers and qualified as a Chartered Accountant in May 1991. He later qualified as a Chartered Stockbroker and Banker.

He has been a long-standing member of the Governing Council of the CIS since April 2013 and has served as the institute’s First Vice President in 2020-2022 and Second Vice President from 2018 to 2020. He also served as a member of the finance and general-purpose committee of the Chartered Institute of Bankers of Nigeria aandts investment subcommittee.

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The change in leadership was at the institute’s hybrid annual general meeting (AGM) in Lagos. Adeosun shall be formally inaugurated at the institute’s investiture programme later this year.

Adeosun, a Fellow of the institute and multidimensional professional, brings on board more than two decades of experience in the financial market.

A product of the prestigious Loyola College, Ibadan, he holds a B.Sc. (Hons) in Business Administration from the University of Ilorin in 1986 and capped it with Master’s Degree in Business Administration (MBA) and specialises in Finance and Banking from University of Lagos in 1993. Adeosun trained at Coopers and Lybrand (Chartered Accountants) now PricewaterhouseCoopers and qualified as a Chartered Accountant in May 1991. He later qualified as a Chartered Stockbroker and Banker.

He has been a long-standing member of the Governing Council of the CIS since April 2013 and has served as the institute’s First Vice President in 2020-2022 and Second Vice President from 2018 to 2020. He also served as a member of the finance and general-purpose committee of the Chartered Institute of Bankers of Nigeria and its investment subcommittee.

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Among the highlights of the meeting was the re-election of Mrs Fiona Ahimie and Mr Adeyemi Aina to the institute’s Governing Council and election of Mr Ayodeji Ebo and Mrs Elile Olutimayin to the board.

Adeosun is a fellow of many professional bodies including Institute of Chartered Accountants of Nigeria (ICAN), Chartered Institute of Bankers of Nigeria (CIBN) and Chartered Institute of Taxation of Nigeria (CITN) , among others.

Senior stockbrokers commended the principal officers and management of the institute for its visibility and returning to profitability despite the inclement operating environment. Among them were Mrs Elizabeth Ebi, Group Managing Director of Futureview Group, Mr Oladipo Aina and Mr Oluwaseyi Abe, both past presidents.

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Nigerian equities hit 14-year high amid bargain-hunting

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Nigerian equities hit 14-year high amid bargain-hunting.

Investors in Nigerian equities closed weekend with net capital gains of N699 billion as share prices of several quoted companies rallied to their highest points in recent period.

In three successive bullish days, aggregate market value of all quoted equities at the Nigerian Exchange (NGX) rose from its week’s opening value of N26.761 trillion to close weekend at N27.460 trillion, indicating net capital gains of N699 billion.

The benchmark index for Nigerian equities, the All Share Index (ASI), indicated average gain of 2.61 per cent. This nudged the average year-to-date return to 19.24 per cent. The ASI, which had opened the week at 49,638.94 points, crossed another threshold to a new high at 50,935.03 points, its highest point since March 2008.

Market pundits traditionally regard the 50,000 mark as a psychological threshold, a milestone for a bullish market.

The sustained three-day rally came on the back of first quarter corporate earnings showing stable improvement in performance of several companies.

Analysts agreed that the sustained rally was due to positive corporate earnings outlook as quoted companies defied macroeconomic constraints to post considerable first quarter results.

Most quoted companies at the NGX were mandatorily required to submit their interim reports and accounts for the first quarter ended March 31, 2022 by April 30, 2022. Extant rules at the stock market require quote companies to submit their interim results not later than 30 days after the end of the quarter.

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Analysts at Afrinvest Securities said the extended bullish rally was “driven by investors’ positive reaction to the impressive first quarter2022 earnings”.

Cordros Securities noted that the bullish momentum gained steam due to bargain hunting for blue-chip stocks, most of which delivered impressive growths.

Analysts, however, said investors might begin to take profit by selling down on their portfolios, thus moderating the bullish momentum.

“In the coming week, we expect gains to taper on the back of mild profit-taking,” Afrinvest Securities stated.

Analysts at Cordros Securities noted that given that the first quarter 2022 earnings season has run its course with the upward repricing of cyclical stocks that ensued, the market may witness subdued performance in the days ahead.

“The bears will likely dominate market performance, as investors cash out on the gains across bellwether stocks over the past two weeks. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the weak macro story remains a significant headwind for corporate earnings,” Cordros Securities stated.

Pricing trend analysis showed that there were 49 gainers and 32 losers during the week compared with 56 gainers and 26 losers recorded during the previous week. Champion Breweries led the gainers, in percentage terms, with a gain of 32.54 per cent to close at N3.34 per share. International Breweries trailed with a gain of 32.35 per cent to close at N6.75. Cadbury Nigeria placed third with a gain of 32.2 per cent to close at N13.55 per share.

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On the negative side, Oando led the losers with a drop of 11.75 per cent to close at N5.56 per share. Trans-Nationwide Express followed with a loss of 9.88 per cent to close at 73 kobo. AXA Mansard Insurance ranked third with a drop of 9.84 per cent to close at N2.20 per share.

Total turnover during the week stood at 1.598 billion shares worth N19.60 billion in 21,494 deals in contrast to a total of 8.21 billion shares valued at N49.15 billion traded in 28,622 deals two weeks ago.

The financial services sector remained atop the activity chart with a turnover of 1.057 billion shares valued at N7.727 billion in 8,670 deals, representing 66.15 per cent and 39.42 per cent of the total equity turnover volume and value respectively. The conglomerates sector occupied a distant second with a turnover of 148.174 million shares worth N250.567 million in 852 deals. The consumer goods sector placed third with a turnover of 145.471 million shares worth N5.226 billion in 4,557 deals.

The trio of Union Bank Of Nigeria, FCMB Group and Transnational Corporation were the most active stocks. They accounted for 547.576 million shares worth N2.330 billion in 957 deals, representing 34.26 per cent and 11.89 per cent of the total equity turnover volume and value respectively.

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