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Economy

Q1 2022: Zenith Bank Tickles Market With 22% Growth in Gross Earnings

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Zenith Bank

By Dipo Olowookere

The investing community was thrilled on Thursday by the strong double-digit growth posted by Zenith Bank in the first quarter of 2022 as revealed in its financial statements for the period.

In the unaudited statement of account presented to the Nigerian Exchange (NGX) Limited yesterday, the tier-one lender maintained its growth trajectory both in the topline and bottomline.

The company, according to the results, declared N191.5 billion as its gross earnings in the first three months of this year, 22 per cent higher than the N157.3 billion reported in Q1 2021.

It was observed that the growth in the topline arose from both interest income and non-interest income as the former grew by 25 per cent to N126.4 billion from N101.1 billion, while the latter appreciated by 12 per cent to N57.2 billion from N51.2 billion.

Analysis showed that the growth in interest income and non-interest income arose from the combined effects of an improvement in interest income on loans and advances (as risk assets continue to grow and pricing is gradually improving) and an improvement in non-interest income as the bank continues to deploy its retail strategy, thereby acquiring more customers and expanding its electronic banking income from the increased volume of transactions across all its channels.

As earlier stated, this impressive performance helped the lender to remain highly profitable as the pre-tax profit recorded an 11 per cent expansion to N68.0 billion from N61.0 billion, while the net profit rose by 10 per cent to N58.2 billion from N53.1 billion.

In the period under review, Zenith Bank increased its total assets by 9 per cent from N9.5 trillion to N10.3 trillion, with loans and advances rising by 6 per cent from N3.5 trillion in December 2021 to N3.7 trillion in March 2022, boosting the group’s interest income and displaying its appetite for high-yielding risk assets creation.

This development also helped to boost the net interest margin (NIM) as it improved from 6.0 per cent in March 2021 to 7.3 per cent in the current period, while the capital adequacy ratio improved slightly from 21.1 per cent to 22.1 per cent.

Also, Zenith Bank improved its customers’ deposits by 12 per cent on a year-to-date basis from N6.5 trillion in December 2021 to N7.3 trillion in March 2022.

Savings account balance, which is solely retail, grew by over N68 billion, validating the robust customer acquisition strategy and versatile electronic platforms and digital channels.

Going into the remainder of 2022, the Group will continue to focus on sustainable growth across all its business segments and deploy technology platforms and digital assets intuitively to serve its various customers’ needs to deliver enhanced returns to its stakeholders.

Zenith Bank’s track record of excellent performance has earned the brand numerous awards, including being voted as Best Bank in Nigeria in the Global Finance World’s Best Banks Awards, for three consecutive years from 2020 to 2022, Best Commercial Bank in Nigeria in the World Finance Banking Awards 2021, Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020, and Best in Corporate Governance’ Financial Services’ Africa 2020 and 2021 by the Ethical Boardroom.

Also, the financial institution emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, Number One Bank in Nigeria by Tier-1 Capital in the “2021 Top 1000 World Banks” Ranking by The Banker Magazine and the Retail Bank of the year at the BusinessDay Banks and Other Financial Institutions (BOFI) Awards 2020 and 2021.

Similarly, Zenith Bank was honoured as Bank of the Decade (People’s Choice) at the ThisDay Awards 2020 and emerged winner in four categories at the Sustainability, Enterprise, and Responsibility (SERAS) Awards 2021, carting home the awards for “Best Company in Reporting and Transparency”, “Best Company in Infrastructure Development”, “Best Company in Gender Equality and Women Empowerment”, and the coveted “Most Responsible Organisation in Africa.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

JUST IN: CBN Raises Benchmark Interest Rate to 13%

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killing interest rate

By Dipo Olowookere

For the first time in two years, the Monetary Policy Rate (MPR) has been raised by the Central Bank of Nigeria (CBN) to 13.0 per cent from 11.5 per cent.

Mr Godwin Emefiele, the Governor of the CBN, who announced this development on Tuesday in Abuja, explained that the decision to increase the benchmark interest rate was taken at the Monetary Policy Committee (MPC) meeting held yesterday and today.

While addressing financial reporters this afternoon, Mr Emefiele said members of the committee were unanimous with the decision to hike the rates as it was the best thing to do after holding them for about two years.

According to the central bank chief, one of the reasons for raising the rate is to control liquidity ahead of the 2023 general elections as politicians would be expected to flood the system with cash in a bid to woo voters.

However, the other parameters were left unchanged by members at the gathering as the Asymmetric corridor remained around the MPR at +100/-700bps, the Cash Reserve Ratio (CRR) at 27.5 per cent and the Liquidity Ratio (LR) at 30.0 per cent.

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Economy

Nigeria’s GDP Grows by 3.11% in Q1, What Next?

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GDP

By Lukman Otunuga

There are two ways one could interpret Nigeria’s latest Gross Domestic Product (GDP) figure of 3.11% in Q1 of 2022.

The optimists will say the country’s economy grew for the sixth consecutive quarter in Q1 while pessimists may highlight how economic growth slowed for the third consecutive quarter.

Either way, Nigeria’s economy continues to display resilience against external and domestic risks. With the improvement in the non-oil sector driving growth, this may brighten the growth outlook. But could these be signs of Nigeria breaking away from the chains of oil reliance to derive growth from sustainable sources? It may be too early to come to any meaningful conclusion. However, the report is encouraging and illustrates progress made by the country in reclaiming stability post-Covid-19.

With economic conditions somewhat improving, the Central Bank of Nigeria (CBN) is unlikely to raise interest rates this week. Given how Africa’s largest economy has been able to maintain growth in the past six quarters on the back of loose monetary policies by the CBN, a rate hike could disrupt Nigeria’s economic recovery.

As the global war against inflation rages on, central banks are stepping up.

However, the CBN is likely to remain on the sidelines for now. Nevertheless, inflation is still a cause for concern with consumer prices accelerating for the third straight month to 16.82% in April 2022.

With the general elections around the corner, pre-election spending could translate to rising price pressures. On top of this, the widening policy divergence between the Federal Reserve and the CBN could punish the Naira.

It’s worth keeping in mind that the dollar remains heavily supported by aggressive Fed rate hike bets and is likely to remain strong for the rest of 2022. A powerful dollar is bad news for emerging market currencies including the Naira which continues to depreciate in both the official and unofficial markets.

Lukman Otunuga is the Senior Research Analyst at FXTM

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Economy

NGX All Share Index Weakens Further by 0.13%

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All-Share Index

By Dipo Olowookere

The bearish sentiment on the floor of the Nigerian Exchange (NGX) Limited continued on Monday as the bourse further depreciated by 0.13 per cent.

Sustained profit-taking especially in the industrial goods sector contributed to the decline suffered during the session as the All Share Index (ASI) slumped by 68.45 points to close at 52,911.51 points compared with the previous session’s 52,979.96 points.

As for the market capitalisation, it depreciated by N37 billion amid sell-offs in 24 stocks to settle at N28.525 trillion as against last Friday’s closing value of N28.562 trillion.

On the first trading day of this week, the insurance sector depleted by 2.32 per cent, the industrial goods sector fell by 0.09 per cent, while the energy, banking and consumer goods counters increased by 0.28 per cent, 0.10 per cent and 0.05 per cent respectively.

Presco led the losers’ chart yesterday with a price decline of 10.00 per cent to trade at N180.00, Global Spectrum Energy Services lost 9.97 per cent to finish at N3.07, Neimeth fell by 9.66 per cent to N1.59, UAC Nigeria depreciated by 8.33 per cent to N13.20, while NEM Insurance retreated by 7.74 per cent to N4.05.

The gainers’ log had 22 members on Monday, with Conoil leading after its value improved by 9.95 per cent to N34.25. MRS Oil gained 9.93 per cent to quote at N14.95, McNichols appreciated by 9.86 per cent to N2.34, Academy Press increased its price by 9.76 per cent to N1.35, while NPF Microfinance Bank expanded by 8.02 per cent to N2.02.

On the activity chart, a total of 263.3 million stocks worth N3.6 billion exchanged hands in 4,856 deals during the session compared with 436.6 million stocks worth N3.2 billion bought and sold in 4,716 deals in the preceding session. This implied that the volume of trades depreciated by 39.68 per cent, while the value of trades and the number of deals increased by 10.15 per cent and 2.97 per cent respectively.

Jaiz Bank closed the day as the most active stock with the sale of 114.0 million units valued at N101.8 million, GTCO transacted 12.9 million shares for N302.8 million, Transcorp exchanged 12.8 million stocks worth N16.7 million, Access Holdings traded 11.7 million equities valued at N115.7 million, while Zenith Bank sold 8.6 million shares for N207.0 million.

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