Zenith Bank Bolsters Performance as Profit Rises 17% to ₦103.83bn
In what came as a surprise, Zenith Bank Plc bolstered first half performance as lender’s profit grew by 16.81% year on year to ₦103.83 billion.
In the stock market on Thursday, Zenith Bank stock jumped from N16.95 kobo per share to N17.20 after the board of directors announced interim dividend.
Compare with industry projections, lender beats analysts’ consensus estimates following an initial bearish stance on the industry outlook due to COVID-19 challenge.
A slew of investment banking analysts had projected significant earnings miss for deposits money banks due to the Central Bank of Nigeria’s earnings dilutive policies.
However, Zenith Bank gross earnings came stronger, recorded 8.58% year on year increase from N252.245 billion in the first half of 2019 to N273.895 billion a year after.
While interest income from interest yielding assets pool leveled at 1.1% year on year increase, it follows that lender’s deposit funding declined.
Specifically, interest expenses tail off strongly declined 17.4% to N59.545 billion in the first half of 2020 from N72.086 billion in the comparable period.
The decline could be attributed to lower interest rate environment which has prompted deposits re-pricing in the banking sector.
So, net interest income closed the period 10.45% higher than what the lender recorded in the first half of 2019.
In the period, Zenith’s net interest income printed at N157.409 billion as against N142.515 billion in the comparable period in 2019.
Amidst the industry challenges in financial assets pricing, the lender was hard hit due to decline in fair value of its portfolio assets.
In the period, a sum of N23.923 billion was charge against income statement as impairment on financial assets class, which is more than 74% above N13.735 billion the lender booked in the comparable period.
Meanwhile, about 40% year on year decline in net fee and commission income drag the lender’s operating income in the first half.
However, there was significant uptick in net trading and other income lines, thus compensated for drag in fee and commission income.
Net trading income expanded 30.5% year on year from N45.101 billion to N58.83 billion at the end of first half of 2020.
Similarly, other income line came stronger at 174% year on year increase from N8.81 billion to N24.151 billion.
At the bottom line, Zenith boosts pre-tax profit by 2.19% from N111.677 billion to N114.124 billion.
However, profit after tax came stronger above pre-tax trend line follows a 54.82% decline in tax payment in the first half.
This resulted to a 16.18% year on year increased in profit after tax, from N88.88 billion to N103.826 billion in the first half of 2020.
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Zenith Bank Bolsters Performance as Profit Rises 17% to ₦103.83bn
