Zenith Bank Profit Spikes Despite Macroeconomic Headwinds

Zenith Bank Profit Spikes Despite Macroeconomic Headwinds

With strong profitability records, Zenith Bank Plc surmounted macroeconomic headwinds as earnings popped, according to the group’s unaudited results for the third quarter ended 30 September 2022.

The bank delivered a remarkable double-digit growth of 20% in gross earnings from N518.7 billion reported in Q3 2021 to N620.6 billion in Q3 2022. This performance demonstrates the Group’s resilience against a challenging macroeconomic environment, the bank said in a statement.  

According to the unaudited account presented to the Nigerian Exchange (NGX), the growth in the topline was driven by interest and non-interest income growth.

Interest income grew by 27% from N308.8 billion to N390.8 billion, driven majorly by growth in risk assets and an improvement in pricing. This also strengthened Earnings Per Share (EPS) by 9% to N5.55.

This double-digit growth in the topline also aided the bottom line, as the Group also recorded a 13% year-on-year increase in profit before tax, growing from N179.8 billion in Q3 2021 to N202.5 billion in Q3 2022.

Profit after tax equally grew by 9% from N160.6 billion to N174.3 billion in the same period. Growth in non-interest income was enabled by the Group’s retail strategy, with continued substantial customer acquisition driving transactions, deposit growth and growth in electronic banking income.

Due to inflationary pressure and the rising cost of doing business, operating costs grew by 17%. However, this was below the growth in gross earnings (20%), thereby facilitating the double-digit growth in the bottom line.

The continuing elevated yield environment affected the cost of funding which increased from 1.4% to 1.7% in the current period. This affected the net interest margin (NIM), which dropped due to the immediate implementation of higher yields on interest-bearing liabilities.

However, the NIM is expected to see a correction in subsequent quarters as the assets side is repriced correspondingly.

Total assets grew by 20% from N9.45 trillion to N11.34 trillion in 2022, mainly driven by growth in customers’ deposits. Customer deposits grew by 24% from N6.47 trillion in December 2021 to N8.04 trillion in September 2022 due to the market’s confidence in the brand.

Loans and advances also grew by 16% from N3.5 trillion in December 2021 to N4.06 trillion in September 2022, boosting the Group’s interest income and displaying the Group’s appetite for high-yielding risk assets creation. READ: Yield on T-Bills Spikes, Bond Slides Small as Naira Falls

As a result of this growth, the capital adequacy ratio reduced from 21% to 19.1%, while the liquidity ratio reduced from 71.6% to 68.9%. Both prudential ratios remain very strong and are still well above regulatory thresholds.

In the year’s final quarter, management is determined to sustain the strong performance trajectory while adapting to changes in the regulatory environment and focusing on creative initiatives to mitigate inflationary trends, foreign exchange pressures and the growing competitive environment. # Zenith Bank Earnings Spikes Despite Macroeconomic Headwinds

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