Zenith Bank exposures to oil & gas, manufacturing sectors hit N1.35trn in 2020
By Kayode Tokede
Amid COVID-19 lockdown, Zenith Bank Plc reported N1.35 trillion loans and advances to Oil & gas and manufacturing sectors in 2020 financial year.
The lender’s total exposure to real sector of the economy, according to our correspondent findings was N2.29 trillion in the year under review.
The breakdown revealed that loans & advances by the management of Zenith bank in the oil & gas sector rose by 18.1 per cent to N731.52billion in 2020 as against N619.4 billion reported in 2019.
In addition, the lender’s loans & advances to the manufacturing sector grew by 26.71 per cent to N620.3billion in 2020 compared to N489.5billion reported in 2019.
The bank loans & advances to both sectors was at N1.11 trillion in 2019, our correspondent can report.
The lender in its audited results for year ended December 31, 2020 reported significant loan provisions for oil & gas sector as demanded by the Central Bank of Nigeria (CBN) prudential guidelines.
In the year under review, the bank impairments allowance in the oil & gas sector was N50.8billion as against N53.8billion reported in 2019.
Amid the impact of the coronavirus, the nation’s economy slipped into another recession in the five years, contracting by 6.1 per cent and 3.62 per cent, year-on-year in real terms, in the second and third quarter of 2020 financial year, respectively.
The adverse performance of the oil & gas sector was occasioned by a sharp slump in the crude oil prices from about $100 in December 2019 to around $49.9 per barrel.
According to the bank, “Despite the prevailing macroeconomic headwinds in the period under review, Zenith bank remained resilient and delivered yet another superior financial performance, characterized by high-quality assets, robust earnings and Capital Adequacy Ratio (CAR).
“The bank regularly assesses its resilience to changes in micro and macro environments with specific actions to address any observed or anticipated challenges.
“The bank strongly believes it is well positioned to deal with liquidity risk and funding challenges that may arise from any adverse situations and our capital and earnings capacity (profitability) can withstand the shocks that may arise.”
The bank added that, “In 2021, the global economy looks set for a recovery with the rollout of vaccines, and growing confidence, driving an increase in economic activities across most economies.
“This has also driven an increase in crude oil prices, an improvement in interest rates and recovery from recession in Q4 2020 in the domestic economy.
“The Group is well-positioned to maximise the opportunities these recovering fundamentals represent while leveraging technology and expanding its retail footprints to deliver improved returns to all stakeholders.”
The bank had reported 10.41 per cent increase in profit to N230.57 billion in its audited financial statement for full year ended December 31, 2020 as against N208.84 billion profit reported prior full year ended December 31, 2019.
The lender in its results on The Nigerian Stock Exchange (NSE) on Tuesday also reported 5.2 per cent increase in Profit Before Tax (PBT) to N255.86 billion in 2020 as against N243.29 billion PBT reported in 2019.
The bank explained that increase in PBT was from a combination of growth in the top-line and a significant reduction in interest expense. Interest expense reduced from N148.5 billion in 2019 to N121.1 billion in 2020, significantly increasing our net interest income from N267.0 billion in 2019 to N299.7 billion in 2020.
The lender’s management proposed final dividend of N2.70 for year ended 2020, about eight per cent increase over N2.50 declared in 2019.
