Zenith Bank Plc has said it made a provision on 30 per cent of its loan to 9mobile, formerly known as Etisalat Nigeria, saying it would continue to seek opportunities to grow its risk assets while maintaining a low NPL ratio and sustaining its improved coverage ratio.
Managing Director and Chief Executive of the bank, Peter Amangbo, in a conference call with investors stated that the bank had taken about 30 per cent of the loan “as a provision which we believe is very prudent as the company is undergoing restructuring to prepare for a new investor.”
Regulators had stepped in last month to save Etisalat Nigeria from collapse and prevent lenders placing the country’s fourth biggest telecoms group into receivership, prompting a board, management and name change.
9Mobile had taken out a $1.2 billion loan four years ago from a consortium of banks but struggled to repay it due to a currency crisis and a recession in Nigeria.
Zenith Bank is the largest lender to 9Mobile, one source familiar with the matter said.
The bank has declined to disclose its total exposure to the telecoms group.
The bank last week reported a pre-tax profit of N92.18 billion for its half year against N53.91 billion a year ago.
Amangbo noted that the bank’s creativity for market dominance and risk management for superior performance has helped it to build a shock-proof balance sheet with its Capital Adequacy Ratio at 21 per cent.
Its liquidity ratio at the end of the half year period stood at 61.1 per cent, non-performing loans ratio at 4.3 per cent, cost of risk at 3.6 per cent and coverage ratio at 117 per cent.
The bank’s chief executive stated that its strong bottom-line profitability, driven by robust core earnings generation and continued cost control helped it to deliver improved operating leverage and sustainable stakeholder value and in spite of the macroeconomic backdrops.
He further stated that the banking group’s approach to loans and advances was largely cautious and reflective of the realities of its operating environment while its focus remained on advances to large corporates supported predominantly by demand deposit funds.
The audited half year result showed that the bank recorded gross earnings< of N380.4 billion, up by 77 per cent from N214.8 billion posted in the corresponding period of 2016.
Net interest income stood at N138.962 billion, as against N127 billion in 2016.
However, impairment charges increased by 196 per cent from N14.2 billion to N42 billion.