Income diversification, improved interest margins lift Zenith Bank’s H1 PBT to N130b

Amid harsh operating environment, Zenith Bank Plc has achieved a profit before tax (PBT) of N130 billion in its half-year operations against N117 billion recorded in the corresponding period in 2021.

Specifically, the bank’s audited results for the half-year ended 30 June 2022, showed 11 per cent rise in PBT from NGN117 billion to NGN130 billion while gross earnings also increased to N405 billion from N346 billion posted during the same period in 2021 representing 17 per cent growth.

According to the bank, the improved performance was underpinned by 19 per cent growth in interest income from N204 billion to N242 billion and 18 per cent increase in non-interest income from N127 billion to N149 billion. Its earnings per share (EPS) also grew from N3.38 to N3.55.

The bank explained that the growth in interest income was driven by the modest increase in the loan book and improved interest margins, adding that the non-interest income growth attests to the Group’s success in its income diversification strategy.

In addition, the Group also recorded an 11 per cent increase in total customer deposits to close the period at N7.15 trillion while retail deposits grew by 17 per cent from N1.82 trillion to N2.13 trillion.

The bank said its retail activities also supported the growth recorded in fees on electronic products, which grew by 45 per cent from N17 billion to N25 billion. It also noted that the cost of funds increased only marginally from 1.3 per cent to 1.4 per cent despite the elevated yield environment.

“The increase in the cost of funds was lower than the increase in yields on interest-generating assets, giving rise to an improved Net Interest Margin (NIM) of 7.1 per cent from 6.4 per cent per cent in June 2021. Total assets rose to N10.12 trillion at the end of June 2022 from N9.45 trillion at the end of December 2021.

“Despite the headwinds imposed by the operating environment, the Group grew its risk assets as gross loans grew by five per cent, from N3.5 trillion to N3.7 trillion. This was achieved at a moderate NPL ratio of 4.4 per cent (FYE 2021: 4.2 per cent) and cost of risk of 1.4 per cent (June 2021: 1.3 per cent). Prudential ratios such as liquidity and capital adequacy also remained stable and well-above regulatory thresholds at 60.5 per cent and 21.0 per cent respectively.”

To consolidate on the performance, the bank said it would focus on advancing its digital banking strategy anchored on a strong technology base, and improving on the gains achieved in prior years across all business segments.

“Combined with the Group’s industry leadership, we expect this to drive improved performance and deliver enhanced returns to stakeholders,” it added.

Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards, including being recognised as number one bank in Nigeria by Tier-1 Capital, for the 13th consecutive year, in the 2022 Top 1000 World Banks Ranking published by The Banker Magazine; Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best Commercial Bank, Nigeria 2021 and 2022 in the World Finance Banking Awards, among others.