-Joke Thomas,April ,18,2017,Lagos.
Zenith Bank has received accolades from investors who have been rewarded with the highest dividend (N2.02) in the banking industry in 2016, a period with harsh economic climate couple with the slip into recession.
However, a review on the bank’s financials by WorldStage Newsonline revealed the general trend of challenges in the industry where non-performing loans (NPL) are shooting northward.
An assessment of financial position showed that the size of Zenith Bank’s balance sheet improved by 18 percent as the lender increased total assets to N4.7 trillion while profit efficiency as measured by Return on Assets showed a 0.1 percentage point increase to 2.74 percent from 2.63 percent in 2015.
On the soundness of Zenith Bank’s investment decision in 2016 through Net Interest Margin showed a depreciation of 0.8 percentage points from 11.3 per cent in 2015 to 10.5 per cent in 2016.
The decrease in Net Interest Margin was as a result of an increase in debt situations as seen in non-performing loans of 71.4 billion in 2016 against 44.9 billion in 2015, this is even as total liabilities increased 18 percent to N4.0 trillion.
NPL ratio consequently stood at 3.02 percent as at December 2016 compared to 2.18 percent in 2015 with a coverage ratio of 100 percent, which are attestations of the quality of the group’s loan book.
Operational efficiency of the bank however improved as Cost to Income Ratio dropped to 56 percent from 86 percent in 2015, and indication of prudent management, as costs of operation were seen to be rising at a slower pace than income.
The lender recorded a 56 percent increase in total comprehensive income year on year, while operating expenses rose by 4 percent to N94.4 billion in the period under review.
Further confirming profitability of the group, Zenith Bank recorded an increase in return on equity (ROE) of 18.4 percent in 2016 from 17.8 percent in 2015. Evident in its 25 percent appreciation in Profit before Tax to N156.7 billion.
Loan to deposit ratio remained stable at 77 percent, showing financial liquidity, and adequate funds to pay depositors.
The bank Liquidity ratio and Capital Adequacy Ratio (CAR) stood at 60 percent and 23 percent, higher than the regulatory requirements of 30 percent and 15 percent respectively, and comfortably positions the group for further business explorations in strategic sectors of the economy.
In his remarks to investor’s at the end of the 2016 financial year, Chairman of Zenith Bank Group, Jim Ovia, said “Zenith Bank in company terms or group consideration, fully exploited the opportunities within the environment translating into an excellent performance that stands as a testament into the durability and resilience of the brand.”
On the future outlook for the bank, “he said “As a bank we are monitoring developments both in the local and global economy, and applying pragmatism and dynamism as appropriate.
“Our strategies and approach in the pursuit of financial inclusion and sustainability gives us a lot of competitive advantage to explore even new frontiers in the market.”