Zenith Bank records 180% rise in profit before tax to N796bn in 2023
By Jeffrey Agbo
Zenith Bank Plc has announced its audited results for the year ended December 31, 2023, achieving a remarkable triple-digit growth of 125% in gross earnings from N945.6 billion reported in 2022 to N2.132 trillion in 2023.
According to the audited financial results for the 2023 financial year presented to the Nigerian Exchange (NGX), this impressive triple-digit growth in gross earnings resulted in a Year-on-Year (YoY) increase of 180% in Profit Before Tax (PBT) from N284.7 billion in 2022 to N796 billion in 2023. Profit After Tax (PAT) also recorded triple-digit growth of 202% from N223.9 billion to N676.9 billion in the period ended December 31, 2023.
The increase in gross earnings is primarily due to growth in interest and non-interest income. Interest income increased by 112% from N540 billion in 2022 to N1.1 trillion in 2023. Non-interest income grew by 141% from N381 billion to N918.9 billion in the same period.
The increase in interest income is attributed to the growth in the size of risk assets and their effective repricing, alongside the rise in the yield of other interest-bearing instruments over the year. Growth in non-interest income was driven by significant trading gains and an increase in gains from the revaluation of foreign currencies.
The cost of funds grew from 1.9% in 2022 to 3.0% in 2023 due to the high interest rate environment while interest expense increased by 135% from N173.5 billion in 2022 to N408.5 billion in 2023. Notwithstanding the 32% growth in operating expenses in 2023, the Group’s cost-to-income ratio improved significantly from 54.4% in 2022 to 36.1% in 2023 due to improved top-line performance.
Return on Average Equity (ROAE) increased by 118% from 16.8% in 2022 to 36.6% in 2023, underpinned by improved gross earnings, as the Group sought to deliver better shareholder returns. Return on Average Assets (ROAA) also grew by 95% from 2.1% to 4.1% in the same period.
Zenith Bank has continued to deepen its market leadership in key corporate and retail deposit segments as customer deposits increased by 69% from N9.0 trillion to N15.2 trillion in 2023. Its retail drive continues to yield dividends as retail deposits now constitute 46% of total deposits (compared to 44% in 2022) and grew by 77% from N3.97 trillion in 2022 to N7.04 trillion in 2023, also reinforcing increased customer confidence in the Zenith brand.
Total assets increased by 66% from N12.3 trillion in 2022 to N20.4 trillion in 2023, largely due to growth in total deposits and the revaluation of foreign currency deposits. Gross loans grew by 71% from N4.1 trillion in 2022 to N7.1 trillion in 2023 due to the revaluation of foreign currency loans and the growth in local currency risk assets.
As a result of the disciplined and diligent approach to risk assets creation and management, the loan growth did not significantly impact the Non-Performing Loans (NPL) ratio, which increased marginally from 4.3% to 4.4% despite the heightened risk environment and challenging operating environment, an attestation to the Group’s resilience despite headwinds and a challenging macroeconomic environment.
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Also, the prudential ratios remain within regulatory thresholds, with the Capital Adequacy Ratio (CAR) and liquidity ratio at 21.7% and 71.0%, respectively, at the close of 2023.
As a demonstration of its commitment to shareholders, the bank has announced a proposed final dividend payout of N3.50 per share, bringing the total dividend to N4.00 per share.
In 2024, the Group will complete the transition to a holding company structure, which is anticipated to position it advantageously for exploring emerging opportunities in the Fintech space while bolstering its digital and retail banking initiatives.
Furthermore, the Group is undertaking urgent necessary actions to meet the new minimum N500 billion equity capital requirement to maintain its international authorisation within the timeframe stipulated by the Central Bank of Nigeria (CBN). This will strengthen its presence in key markets to continue positioning for sustainable growth and value addition for stakeholders.