Vanguard Markets | Monday, March 09, 2015 | Issue 032
Verbatim
“
The downward review of the benchmark is purely the initiative of the Senate, having seen how the economy is going. We believe that the $52 oil benchmark is the most realistic parameter to execute the 2015 budget, and not the $65 contained in the Medium Term Expenditure Framework.
”
- Senator Ahmed Maccido, Chairman of the Senate Committee on Appropriation, March 1, 2015
AHEAD BY A MILE
Dusting the pack to the zenith
FOREX RATES
$/N
Zenith Bank reported its first annual results under Peter Amangbo, its third chief executive officer since the bank was founded twenty-five years ago. Coming after Jim Ovia, the eminence grise of Nigerian banking, and Godwin Emefiele, the Central Bank of Nigeria governor, there were market whispers at the time of his appointment questioning how long it would take for him to fill the big shoes of his illustrious predecessors. The latest results have provided a resounding answer: right away At the acme
rency, likely further monetary policy and regulatory actions and increased political uncertainty.’ Notwithstanding the grey clouds on the horizon, Fitch noted that ‘Zenith’s viability rating (VR) considers its strong franchise, management quality, conservative risk appetite and robust financial metrics. Asset quality is sound and upstream oil & gas exposure represented a limited 6% of loans at end-September 2014. Zenith has a track record of good client selection and we do not expect major impairments in its corporate book. The bank’s capitalisation and leverage compare well with peers and benefit from a strong funding franchise, sound liquidity and proven access to wholesale markets. Zenith’s resilient financial performance stands out, and the bank should manage 2015 better than most peers.’ Reading this, one has to do a doubletake to be sure that it was not written by Zenith Bank’s PR department. Analysts at Afrinvest said pretty much the same thing. ‘Zenith recorded positive growth in both top and bottom line notwithstanding Central Bank of Nigeria’s numerous tightening policies in 2014, which tapered the industry’s earnings generation capacity.’
HERE IS ONE INCONT trovertible truth about investors. They love good news. Their reception does not stop at affection. Investors reward the harbinger of glad tidings generously. This was the case last week Thursday when Zenith Bank released its results for the year ended December 31, 2014. In the space of two days, the stock had climbed 10.21%, ending the week with a total gain of 18.98%. Looking at the numbers, it is tempting to conclude that Zenith Bank has joined the league of financial institutions with the Midas touch, banks that continue making money irrespective of the economic cycle. It will be in good company with the likes of Goldman Sachs, JP Morgan Chase, and Wells Fargo. Whether in boom times or lean times, Zenith Bank’s profit engine keeps humming along quietly, confirming the muted aggressiveness of its 4WD business model.
Widespread applause Immediately the bank’s performance was made public, analysts competed to outdo one another with accolades. Impressive, reassuring, outstanding, pleasant surprise, ahead of expectations, and bar raising are just a few of descriptors that were pinned to their commentary. According to Adesoji Solanke, banking analyst at Renaissance Capital, the FY 2014 results ‘buttress why Zenith is a class act in the Nigerian banking space’. In the best economic conditions,
Results review This man acts in your best interest. Peter Amangbo, CEO, Zenith Bank
felicitations like these are given grudgingly. In this case, the results were achieved against the odds. Only last month, Fitch, a global ratings agency, issued a cautionary review of
the Nigerian economy and 10 leading banks. It concluded that ‘The Nigerian operating environment is affected by persistently low oil prices, continuing pressure on the domestic cur-
196.5
198.0 197.5 197.0 196.5 196.0
Zenith Bank’s gross earnings rose 14.8% in 2014 to N403.3 billion. This was achieved on the back of 39.1% and 15.9% growth in noninterest income and interest income respectively.
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Fr
Mo
Tu
£/N
We
Th
Fr
298.3263
305.0 303.0 301.0 299.0 297.0 Fr
Mo
Tu
Euro/N
We
Th
Fr
215.1479
222.0 220.0 218.0 216.0 214.0 Fr
Mo
Tu
We
CNY/N
Th
Fr
31.3743
31.80 31.60 31.40 31.20 31.00 Fr
Mo
Tu
We
CFA/N
Th
Fr
0.3216
0.35 0.33 0.31 0.29 0.27 Fr
Mo
Tu
We
Th
Currency
Central Rate
SWISS FRANC
200.9202
YEN
1.6371
WAUA
273.8745
RIYAL
52.3944
DANISH KRONE
28.8699
SDR
274.5695
Fr
FIXED INCOME & FOREX
Source: FMDQ