Zenith Bank posts 189 per cent growth in Q1 earnings

Zenith Bank Plc has announced its unaudited results for the first quarter that ended on 31st March 2024, with an impressive triple-digit growth of 189 per cent in gross earnings, from ₦270 billion reported in Q1 2023 to ₦781 billion in Q1 2024.

This is despite the challenging operating environment and tightening monetary policy stance. From the unaudited statement of account submitted to the Nigerian Exchange (NGX) on Friday, the growth in the topline also enhanced the bottom line as profit before tax (PBT) rose to ₦320 billion in Q1 2024, representing an increase of 270 per cent from the ₦87 billion reported in Q1 2023.

Profit after tax (PAT) equally grew significantly by 291 per cent from the ₦66 billion reported in Q1 2023 to ₦258 billion in the current period. Interest and non-interest income contributed significantly to the growth in gross earnings. Interest income grew by 155 per cent from the ₦192 billion reported in the quarter ended March 2023 to ₦489 billion in the period to 31 March 2024.

The growth in interest income is due to the re-pricing of risk assets, owing to the increase in the central bank’s monetary policy rate (MPR), which currently stands at 24.75 per cent. The growth in net interest income is primarily due to the increase in fees and commissions as well as trading grains.

The group reported an impairment charge of ₦56 billion, up from ₦8 billion recorded in Q1 2023. This is attributable to significant growth in risk assets, primarily driven by the revaluation of its dollar loans, which necessitated additional impairment on the bank’s foreign currency-denominated loans.

The cost of funds grew by 48 per cent from 2.7 per cent in Q1 2023 to four per cent in Q1 2024 due to the high-interest rate environment, while interest expense increased by 157 per cent from ₦71 billion reported in Q1 2023 to ₦182 billion in the period to March 2024.

Notwithstanding the year-on-year (YoY) increase in interest expense, net interest margin (NIM) grew by 20 per cent from 6.9 per cent in the three months ended March 2023 to 8.3 per cent in the current period ending 31 March 2024. Return on average equity (ROAE) and return on average assets (ROAA) increased year-on-year (YoY) by 114 per cent and 119 per cent, respectively, due to improved profitability.

Gross loans, which are largely funded by customer deposits, grew by 30 per cent from ₦7.1 trillion in December 2023 to ₦9.2 trillion in March 2024. Customer deposits also grew by 11 per cent from ₦15.2 trillion in December 2023 to ₦16.8 trillion in March 2024, underpinning continued customer confidence in the Zenith brand.

Total assets increased by 19 per cent to ₦24 trillion within the same period. The group has consistently maintained all prudential ratios well above the minimum regulatory requirement. At the end of Q1 2024, the capital adequacy ratio (CAR) and liquidity ratio stood at 20 per cent and 67 per cent, respectively, demonstrating the group’s ability to maintain a strong and liquid balance sheet.