Thursday, April 19, 2018 /03:45 PM /FBNQuest Research 

Event: Zenith Bank reportsQ1 2018results
Implications: Muted reaction from the market likely; we believe the bankis on track to meet its FY2018 PBT guid. of N210bn
Positives: Double-digit PBT and PAT y/y growth
Negatives: Limited 

Thisafternoon, Zenith Bank (Zenith) published its Q12018 results. PBT ofN54bn grew 22%  y/y and puts the bank on track to meeting its full yeartarget of N210bn in our view. Revenue growth was mixed: funding income grew 36%y/y while non-interest income fell -10% y/y. Notwithstanding, total revenuesgrew by a healthy 22% y/y and helped to offset a 33% y/y rise in opex. A -42%y/y reduction in loan loss provisions also helped. PAT grew faster than PBT (by33% y/y) because of a helping hand from other comprehensive income (N4.8bn),thanks mainly to fx translation gains.

The bank’s earnings were close to our forecasts. We are surprised at therevenue split, however. The q/q changes are material: 70% in magnitude forboth. We suspect some reclassification is at play here. As such, we choose notto place too much emphasis on the separate revenue lines, but the total revenueinstead which was in line with our forecast. Q1 results are not audited. Assuch, we also would not make too much of the differences between the opex andprovisions figures compared with ours for now. 

On the balance sheet, a -16% q/q decline in the loan book is a majorsurprise. Zenith’s loan book has now declined, consistently, from a peak ofN2.3trn in Q1 2017 as non-interest income and govt securities have beenpreferred to lending. The bank guides to loan growth of 10% for the full year.With govt yields continuing to trend down, loan growth will have to pick upsubstantially over the coming quarters. 

On the back of these results, we would not expect a significant changeto consensus estimates (FY2018 PBT of N199bn). We expect the market’s reactionto be muted. We continue to believe that the bank can meet its FY PBT guidanceof 2018 of N210bn. Our estimates are under review. We rate Zenith sharesOutperform. 

Zenith Bank Q1 2018results: actual vs. FBNQuest Capital Research estimates (N millions)

Source: NSE; FBNQuest Capital Estimates  



Related News

1. ZENITHBANKDeclares N47.08bn PAT in Q1 2018 Results, (SP:N27.00k)

2. Zenith BankIntroduces Pounds Sterling and Euro Visa Debit Cards

3.Jim Ovia Speakson Fintech and the Future of the Nigerian Banking Industry

4. Zenith Bank Plc- Strong Trading Gains Mask Huge Provisioning

5.Zenith Bank Plc Reports Q4 2017 Results – Q4 ProvisionsSpiked by 388% YoY

6.ZENITHBANKDeclares N177.93bln PAT in 2017 Audited Results; Proposes N2.45k FinalDividend(SP:30.90k