Aduragbemi Omiyale
By Aduragbemi Omiyale
Despite a very challenging macroeconomic environment, Zenith Bank Plc demonstrated resilience and strong market share by dazzling its shareholders with triple-digit top-line and bottom-line growth in the third quarter of the year ended September 30, 2023.
Details of its unaudited results for the period under review showed that the profit before tax (PBT) expanded by 149 per cent to N505.0 billion from N202.5 billion in the corresponding period of 2022, and the profit after tax (PAT) also rose by 149 per cent to N434.2 billion from N174.3 billion.
It was observed that the impressive performance of the bottom line of the financial statements was supported by the triple-digit growth recorded in the top line, as the lender generated N1.33 trillion in Q3 of 2023 compared with the N620.6 billion achieved in Q3 of last year, indicating a 114 per cent year-on-year increase.
This was buoyed by improvement in both interest income and non-interest income, with the former rising by 72 per cent to N670.9 billion from N390.8 billion and the latter growing by 186 per cent to N607.2 billion from N212 billion.
Business Post reports that interest income increased due to the growth in risk assets as well as the effective pricing thereon, while the non-interest income growth was largely driven by the revaluation gain from the unification of exchange rates during the year.
The cost-to-income ratio reduced from 55.8 per cent in Q3 2022 to 37.8 per cent in the current period, while impairment levels increased due to the deliberate incremental provisions necessitated by the conservative approach towards the heightened risk environment and the creation of a counter-cyclical buffer needed to deal with any impending volatility of exchange rates.
This caused the cost of risk to deteriorate from 1.3 per cent in Q3 2022 to 5.5 per cent in Q3 2023, though this is an improvement from Q2 2023 where the cost of risk printed at 8.8 per cent because of prudent management of risk assets.
Further analysis of the results indicated that total assets grew by 48 per cent from N12.3 trillion to N18.2 trillion due to growth in customers’ deposits by 49 per cent from N8.98 trillion in December 2022 to N13.38 trillion in September 2023.
The growth in customers’ deposits cuts across both corporate and retail segments, with the savings portfolio (all currencies) growing from N2.7 trillion in December 2022 to N4.6 trillion in September 2023.
Gross loans increased by 48 per cent from N4.1 trillion in December 2022 to N6.1 trillion in September 2023 due to the revaluation of foreign currency-denominated loans as well as the growth in local currency loans to strategic and thriving sectors of the economy.
The non-performing loan ratio improved to 3.8 per cent, which is well below prudential limits. Net interest margin (NIM) printed at 5.6 per cent from 6.2 per cent reported in September 2022 due to low yield in government securities.
The capital adequacy ratio improved marginally to 20.1 per cent from 19.8 per cent while the liquidity ratio declined from 75 per cent to 68 per cent.
