Zenith Bank Plc FY ’13 results
Current rating: Buy
Performance: Results slightly ahead of expectation
- EPS was down 6% y/y from NGN 3.19 in FY12 to NGN 3.01 in FY13.
- Proposed dividend implies a DPR of 58%, up from 50% in FY12
- The gradual increase in the DPR is very encouraging given that Zenith is currently sitting on excess capital.
- The 17% y/y increase in total operating income was offset by a 23% y/y increase in operating expenses
- PBT was up 8% y/y to NGN 110.6bn. On a q/q basis (3Q13 vs 4Q13) PBT was up 9%.
- The bank realized a PAT of NGN 95.7bn, ahead of our estimate of NGN 93.2bn.
- Loans and deposits were up 26% and 18% y/y respectively.
- FY13 RoE came in at 20%
- FY14 will likely be a more challenging year for Zenith and Nigerian Banks
- We expect earnings pressure to came from
- Lower earning assets ratios ( EAR), underpinned by an upward revision in the CRR for public sector funds from 50% to 75%
- Decline in COT charge from 30 bps to 20bps
- Additional AMCON expenses levied on 30% of total off balance sheet exposure.
- Performance may however be supported by strong growth in volumes
- The sharp growth in deposits and loans in 4Q13 is very encouraging
- We place our BUY recommendation under review and will update our rating after knowing management’s intention in the coming weeks
- Among other things, there is a need for more clarity on the management succession plan given the anticipated departure of the incumbent CEO this year.
- Currently, Zenith is trading on FY13 PE of 7.1x, FY13 PBV of 1.4x, and FY13 dividend yield of 8%.