Dipo Olowookere
By Dipo Olowookere
Zenith Bank Plc has again demonstrated that its shareholders can go into a deep sleep, knowing that the company is in safe hands and their investments will continue to grow.
On Thursday, the financial institution announced its unaudited results for the third quarter ended September 30, 2022, with gross earnings growing by 20 per cent to N620.6 billion from the N518.7 billion achieved in the same period of last year.
The organisation generated more revenue from its various business segments despite a challenging macroeconomic environment, which has put some companies under pressure.
It was observed that the top line was driven by interest and non-interest income growth, with the former rising by 27 per cent to N390.8 billion from N308.8 billion due to growth in risk assets and an improvement in pricing, strengthening earnings per share (EPS) by 9 per cent to N5.55.
As for the latter, the non-interest income, it was boosted by the firm’s retail strategy, with continued substantial customer acquisition driving transactions, deposit growth and growth in electronic banking income.
Due to inflationary pressure and the rising cost of doing business, operating costs grew by 17 per cent, which was below the 20 per cent growth in gross earnings, thereby facilitating the double-digit growth in the bottom line.
The continuing elevated yield environment affected the cost of funding which increased from 1.4 per cent to 1.7 per cent in the current period, affecting the net interest margin (NIM), which dropped due to the immediate implementation of higher yields on interest-bearing liabilities.
However, the NIM is expected to see a correction in subsequent quarters as the assets side is repriced correspondingly.
A look at the bottom line showed that Zenith Bank recorded a 13 per cent increase in profit before tax to N202.5 billion from N179.8 billion in Q3 2021, while the profit after tax expanded by 9 per cent to N174.3 billion from N160.6 billion.
As for the balance sheet, the total assets grew by 20 per cent from N9.45 trillion to N11.34 trillion, mainly due to the 24 per cent growth in customers’ deposits to N8.04 trillion in September 2022 N6.47 trillion in December 2021 as a result of the market’s confidence in the brand.
Loans and advances also grew by 16 per cent from N3.5 trillion in December 2021 to N4.06 trillion in September 2022, boosting the lender’s interest income and displaying the group’s appetite for high-yielding risk assets creation.
As a result of this growth, the capital adequacy ratio reduced to 19.1 per cent from 21 per cent, while the liquidity ratio reduced to 68.9 per cent from 71.6 per cent. Both prudential ratios remain very strong and are still well above regulatory thresholds.
The management has expressed its determination to sustain the strong performance trajectory while adapting to changes in the regulatory environment and focusing on creative initiatives to mitigate inflationary trends, foreign exchange pressures and the growing competitive environment.
