By Aduragbemi Omiyale
Despite the challenging operating environment characterised by the Naira redesign policy and the foreign exchange (FX) unification policy of the Central Bank of Nigeria (CBN), Zenith Bank Plc showed why it is one of the strongest lenders in the country.
Analysis of its financial statements for the first six months of 2023 showed that its gross earnings surged by 139 per cent to N967.3 billion from the N404.8 billion achieved in the same period of last year.
It was observed from the results filed to the Nigerian Exchange (NGX) Limited on Monday that this triple-digit growth in earnings was influenced by improvements in both interest income and non-interest income.
Interest income grew by 72 per cent to N415.4 billion in H1 2023 from N241.7 billion in H1 2022, while non-interest income expanded by 246 per cent to N515.7 billion from N149 billion.
The growth in interest income was due to the impact of both the growth and repricing of risk assets, with the FX liberalization contributing to the increase in non-interest income as revaluation gains improved significantly.
This jump in the top line, which reflects the company’s resilience and strong market share, also spurred the bottom line as the pre-tax profit went up by 169 per cent to N350.4 billion from N130 billion in H1 2022, while the post-tax profit rose by 162 per cent to N291.7 billion from N111.4 billion.
In terms of efficiency, the cost-to-income ratio improved from 58 per cent to 38.5 per cent in the current period on the back of an enhanced income line.
The liberalization of the forex market, coupled with the heightened risk environment, resulted in the cost of risk growing from 1.4 per cent to 8.8 per cent. Cost of funding also grew from 1.4 per cent in H1 2022 to 2.6 per cent in H1 2023 due to the spike in interest rates between both periods as interest expense grew to N153.6 billion in H1 2023 from N57 billion in H1 2022.
Total assets expanded by 31 per cent to N16.0 trillion from N12.3 trillion in December 2022, mainly driven by growth in customers’ deposits and the devaluation of the local currency, as customers’ deposits grew by 30 per cent to N11.6 trillion in June 2023 from N9.0 trillion in December 2022.
Loans and advances also grew by 32 per cent to N5.38 trillion in June 2023 from N4.12 trillion in December 2022, partly due to the revaluation of the foreign currency-denominated loans as well as growth in local currency loans.
The non-performing loans ratio improved from 4.3 per cent to 3.9 per cent despite the deterioration of the macros and heightened risk environment because of the currency mix of risk assets.
The capital adequacy ratio improved from 19.8 per cent to 22.0 per cent, while the liquidity ratio reduced from 75 per cent to 61 per cent in the current period, both still well above regulatory thresholds.
The reorganisation into a holding company structure has advanced as the group adds new verticals to its businesses and expands into new frontiers. As the year progresses, Zenith Bank said it would continue to remain dynamic in anticipating and responding to the changes in the fiscal and monetary environments in order to sustain growth across all its business segments and markets.
Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards including being recognised as the Number One Bank in Nigeria by Tier-1 Capital, for the 14th consecutive year, in the 2023 Top 1000 World Banks Ranking published by The Banker Magazine; Best Commercial Bank, Nigeria, for three consecutive years from 2021 to 2023, in the World Finance Banking Awards; Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022 and 2023; Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020 and 2022; Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best in Corporate Governance’ Financial Services’ Africa, for four successive years from 2020 to 2023, by the Ethical Boardroom; Most Sustainable Bank, Nigeria in the International Banker 2023 Banking Awards; Best Commercial Bank, Nigeria and Best Innovation In Retail Banking, Nigeria in the International Banker 2022 Banking Awards.
Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021 and Retail Bank of the Year, for three consecutive years from 2020 to 2022, at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards. Similarly, Zenith Bank was named Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.
