The performance demonstrates the bank’s strong market share despite challenging macroeconomic environment.
By Jeffrey Agbo
Zenith Bank Plc has recorded an impressive triple-digit growth of 139% in gross earnings from N404.8 billion reported in the first half of 2022 to N967.3 billion in the first half of 2023.
According to the bank’s audited half-year financial results ended June 30, 2023 and presented to the Nigerian Exchange (NGX) on Monday, September 11 2023, the triple-digit growth in the top line also spurred the bottom line as the Group recorded a 169% Year on Year (YoY) increase in profit before tax, growing from N130 billion in H1 2022 to N350.4 billion in H1 2023.
Profit after tax also grew by triple digits (162%) from N111.4 billion to N291.7 billion in the same period.
The performance demonstrates the bank’s strong market share despite challenging macroeconomic environment.
The growth in gross earnings arose from both interest income and non-interest income. Interest income grew by 72% from N241.7 billion in H1 2022 to N415.4 billion in H1 2023, while non-interest income grew by 246% from N149 billion to N515.7 billion. The growth in interest income is attributed to the impact of both the growth and repricing of risk assets. The liberalisation of the foreign exchange market during the period spurred the growth in non-interest income as revaluations gains improved significantly.
In terms of efficiency, cost-to-income ratio improved from 58% to 38.5% in the current period on the back of an enhanced income line. The liberalisation of the foreign exchange market coupled with the heightened risk environment resulted in cost of risk growing from 1.4% to 8.8%. Cost of funding also grew YoY from 1.4% in H1 2022 to 2.6% in H1 2023 because of the spike in interest rates between both periods as interest expense grew from N57 billion in H1 2022 to N153.6 billion in H1 2023.
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Total assets grew by 31% from N12.3 trillion to N16.0 trillion in December 2022, mainly driven by growth in customers’ deposits and the devaluation of the local currency. Customers’ deposits grew by 30% from N9.0 trillion in December 2022 to N11.6 trillion in June 2023.
Loans and advances also grew by 32% from N4.12 trillion in December 2022 to N5.38 trillion in June 2023 partly due to the revaluation of the foreign currency denominated loans as well as growth in local currency loans. Non-performing loans ratio improved from 4.3% to 3.9% in December 2022 despite the deterioration of the macros and heightened risk environment because of the currency mix of risk assets. Capital adequacy ratio improved from 19.8% to 22.0%, while liquidity ratio reduced from 75% to 61% in the current period. Both prudential ratios are still well above regulatory thresholds.
The Group said the reorganisation into a holding company structure has advanced, as it adds new verticals to its businesses and expands into new frontiers.