Zenith Bank Offers Shareholders Highest Half year Dividend Pay-out of N1

By Dipo Olowookere

Shareholders of Zenith Bank Plc will receive the highest half-year dividend pay-out of N1 per share in the company’s history for the first half of 2024, Business Post reports.

The board of the lender confirmed this development in the financial statements for the period ended June 30, 2024, filed to the Nigerian Exchange (NGX) Limited over the weekend.

The cash reward, expected to be paid to shareholders in the coming weeks, will also be the highest interim dividend in the Nigerian banking sector to date.

In the first six months of this year, the financial institution posted an impressive triple-digit growth of 117 per cent in gross earnings from N967.3 billion in H1 2023 to N2.1 trillion, largely driven by acceleration in both interest income and non-interest income.

It was observed that the interest income surpassed the N1 trillion mark with a growth of 177 per cent to N1.1 trillion from N415.4 billion in the same period of last year, helped by the growth of and by the effective pricing of risk assets.

On its part, the non-interest income grew by 74 per cent in the period under consideration to N899.3 billion from 515.7 billion.

The results showed that the top line growth, which happened amid a challenging microenvironment, propelled the bottom line, with a 108 per cent year-on-year (YoY) increase in profit before tax to N727 billion from N350 billion in H1 2023 as the post-tax profit jumped by 98 per cent from N292 billion to N578 billion in the same period, leading to a 98 per cent spike in earnings per share (EPS) to N18.41 from N9.29 in H1 2023.

As for the balance sheet, total assets grew by 35 per cent on a year-to-date basis from N20.4 trillion in December 2023 to N27.6 trillion in June 2024, while customer deposits increased by 29 per cent from N15.2 trillion in December 2023 to N19.6 trillion in June 2024, with gross loans up by 44 per cent from N7.1 trillion in December 2023 to N10.2 trillion in June 2024, aided by loans disbursements to customers and the translation effect of foreign currency denominated loans.

However, the organisation’s consistently stringent risk acceptance criteria helped ensure that the non-performing loan ratio continued to show only modest growth, increasing from 4.4 per cent in December 2023 to 4.5 per cent in June 2024 despite the challenging macroeconomic environment.

Policies put in place by the team for operational efficiency resulted in only a marginal increase in the cost-to-income ratio on a y-o-y basis from 38.5 per cent to 39.4 per cent.

But the heightened risk environment has fuelled a growth in impairment levels, thus mildly elevating the cost of risk from 8.8 per cent to 9.7 per cent, with the cost of funds up from 2.6 per cent to 4.4 per cent due to the high-interest rate environment, which also led to growth in interest expense from N153.6 billion in H1 2023 to N434.4 billion in H1 2024.

Despite this, net interest margin grew by 49 per cent from 5.9 per cent in H1 2023 to 8.8 per cent in H1 2024, underscoring the efficient repricing of interest-earning assets and interest-accruing liabilities.

In the period under review, the capital adequacy ratio improved from 21.7 per cent in December 2023 to 23 per cent in June 2024, the loan-to-deposit ratio grew by 11 per cent from 46.5 per cent to 51.7 per cent, while the liquidity ratio reduced from 71 per cent to 59 per cent. All prudential ratios are still well above regulatory thresholds.