Zenith Bank at Three-Week Low as First-Half Profit Slides

LAGOS, Nigeria, Capital Markets in Africa: Zenith Bank Plc, Nigeria’s second-largest lender by market value, fell to the lowest level in almost three weeks after reporting a 16 percent drop in first-half profit.

The stock, which has declined in six out of the past seven days, slid 2.5 percent to 15.60 naira, the lowest closing price since July 22. That pared gains this year to 11 percent, making it the fourth best-performing bank on the Nigerian Stocks Exchange All Share Index and giving Lagos-based Zenith a market value of 490 billion naira ($1.5 billion).

Net income dropped to 44.7 billion naira from 53.1 billion naira a year earlier, the bank said in a statement posted on the Nigerian Stock Exchange’s website on Thursday. Impairment losses almost doubled to 14.2 billion naira and trading income plummeted to a loss of 864 million naira from a year-earlier profit of almost 12 billion naira.

The lender provided 11.7 billion naira for loan losses, which was “significantly higher than our 4.4 billion naira estimate,” FBNQuest analysts, including Tunde Abidoye and Olubunmi Asaolu, said in an e-mailed note. “It will draw some scrutiny.”

A quarter-on-quarter increase in provisions and operating expenditure “proved detrimental and overshadowed a healthy 18% quarter on quarter growth in profit before provisions,’’ the analysts said.

The company’s non-performing loan ratio worsened to 2.34 percent from 1.44 percent a year ago, while loans extended to customers expanded 15 percent in the six months through June, Zenith said.

Source: Bloomberg Business News