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Zenith Bank, Nigeria’s largest lender by asset, is looking to improve its loan growth in 2019 as the domestic economy shows gradual signs of growth.
In Q4 2018, the National Bureau of Statistics (NBS) reported that the economy expanded by the most in more than ten quarters.
Zenith bank made the disclosure to grow its loan book on Thursday after a 2018 setback in loans reflected weak economic activity.
The tier-1 lender see opportunities in the agricultural sector, which receives good support from the government, and expressed optimism of extending opportunities to the manufacturing sector if the economic recovery continues.
“Our expectation is that the economy will continue to strengthen,” the bank told an analysts’ call. “It will throw up opportunities to grow the loan book.”
Although Zenith initially guided for loan growth of 2.5 percent in 2018, it is currently eyeing a growth target of 7.5 percent in 2019, noting that borrowers were replacing overdrafts with term loans.
The tier-1 bank’s audited result for 2018 shows that loans and advances trended 13 percent lower in 2018 compared to N2.1 trillion offered as credit in the corresponding period of 2017.
A further breakdown shows that Gross loans and advances to customers fell 10.46 percent to N2 trillion in 2018 and allowance for impairment, which is a provision for the potential future loss of capital that has been lent out, rose 27.40 percent in 2018.
The Bank’s Non-Performing Loan (NPL) stood at N100.5 billion, down from N105.87 billion noted in 2017. Consequently, the NPL increased to 4.98 compared to 4.7 recorded in 2017.
In 2018, the Bank offered the most credit to Manufacturing sector (N579.86 billion) followed by Oil and Gas (N 510.14 billion) although, in 2017, the lender had the highest exposure to Oil and Gas.
Credit to Agriculture in 2018 was N56.42 billion compared to N63.22 billion in the preceding year, while Education (N5.02 billion) received the least credit in 2018.
BusinessDay analysis of the NPL ratio of each sector Zenith was exposed to show that in 2018, Finance and Insurance had the highest NPL ratio at 38.48, followed by Real Estate and Construction at 11.58.
Oil and Gas had an NPL of 7.53 while Agriculture and Manufacturing had 2.09 and 5.38 respectively.
The three sectors with the lowest NPL in 2018 were Government (0.055), Power (0.068) and Transport (0.67)
Zenith reported a profit before tax of N231.68billion for 2018 which represents a 16.2 percent increase compared to the figure for 2017.
At the close of trading Thursday, Zenith stock slumped 1.94 percent to N25.3 bringing it to a Year to Date of 10.63 percent, outperforming both the banking index Year To Date (9.63 %) and the All-share Index Year To Date (3.62%)
The Bank’s profit-After-Tax increased by 11.30 percent to N193.424billion in the 2018 financial year, compared to N173.791 billion in 2017.
The Bank, according to Bloomberg, said its $500 million Eurobond which matures in April would be repaid from its cash flow and has no need to raise capital from the market for the time being.
SEGUN ADAMS
