Zenith Bank Boosts Earnings with N356bn FX Gain
Zenith Bank Plc has delivered a strong earnings boost in the first half of the financial year 2023, a feat that was supported by about N356 billion in gains from its foreign currency transactions revaluation.
Its financial scorecard published on the Nigerian Exchange showed that gross earnings rose by 139% year on year to N967.26 billion from N404.76 billion in the comparable period, due to improved retail lending and non-interest revenue activities.
The Tier-1 lender saw earnings per share increase by 161.7% year on year to N9.29 as against N3.55 reported in the first half of 2022, an uptick advantage supported the impacts of holding strong net foreign currency amidst naira exchange rate reform.
Consequent to the earnings beat, the board of directors proposed an interim dividend of N0.50 per share, which is 67% above N0.30 paid in the comparable period. The bank recorded a 71.9% growth in interest income to N415.43 billion, driven by higher yields in the fixed income market and growth in its earning assets.
The management bank generated higher income from loans and advances to banks, loans and advances to customers, and investment securities, according to its financial scorecard. Following the monetary policy tightening, interest paid to fund providers surged by 169.5% to N153.56 billion, pushing the Tier-1 bank funding costs higher.
In the same vein, the bank’s cost of borrowing increased by 69.4% to N32.70 billion following the increase in interest-bearing borrowings.
After impairment charges, the bank saw its net interest income settle lower by 66.2% year on year to N53.94 billion. The pressure on net interest was a result of about 728% year-on-year increase in impairment charge, indicating asset quality pressures despite FX advantage.
Then, non-interest income (NII) surged by 246.1% year on year to N515.69 billion, as the naira devaluation drove the significant gains generated from foreign exchange revaluation of N355.59 billion.
In the comparable period in 2022, Zenith Bank reported N6.25 billion FX loss to naira fluctuation. Consequently, the impressive expansion from non-interest income alongside the growth in net interest income led to an 84.6% increase in operating income to N568.63 billion.
Battling Nigeria’s rising inflation rate, operating expenses expanded by 22.8% year on year to N219.27 billion, triggered by the increased costs incurred on personnel expenses and NDIC insurance premiums in the review period.
Overall, profit-before-tax grew by 169.5% year on year to N350.36 billion. Its higher tax position drained profitability strength. As a result, Zenith Bank grew profit after tax by 161.8% year on year to N291.73 billion from N1114.11 billion in the first half of 2022. #Zenith Bank Boosts Earnings with N356bn FX Gain Naira Steadies as Banks Issue Update on FX Purchase