Zenith Bank Nets N434.2bn 9-Month Profit, As Earnings Soar On FX Revaluation Gain

Zenith Bank Plc on Tuesday presented its unaudited report for the nine months ended September 30, 2023, the highpoint of which was the significant growth in top and bottom lines, helped by the 114% growth in earnings income from from N620.6bn in the corresponding period of 2022, to N1.33tr, with net profit jumping by 149% from N174.3bn to N434.2bn.
The growth, the bank noted, was despite the increased impairment levels due to a “deliberate incremental provisions necessitated by the conservative approach towards the heightened risk environment and the creation of a counter-cyclical buffer needed to deal with any impending volatility of exchange rates.
The performance, which the statement said demonstrates the group’s resilience and strong market share, despite a very challenging macroeconomic environment, was boosted by the robust growth in interest and non-interest income. Interest income improved by 72% to N670.9bn from N390.8bn, while non-interest income grew by 186% from N212bn to N607.2bn. Non-interest income growth, the bank said in a statement, was largely driven by the revaluation gain due to the unification of exchange rates during the year.
According to the unaudited results presented to the Nigerian Exchange (NGX), as the Group recorded a 149% Year on Year (YoY) increase in profit before tax, growing from N202.5bn in Q3 2022 to N505bn in Q3 2023.
The growth in profit was similarly attributable to the twin effects of the improvement in interest and non-interest income. Interest income increased because of the growth in risk assets as well as the effective pricing thereon.
Cost-to-income ratio reduced during the period from 55.8% in Q3 2022 to 37.8%, causing the cost of risk to deteriorate from 1.3% in Q3 2022 to 5.5% in Q3 2023, representing an improvement from Q2 2023 where cost of risk printed at 8.8% because of prudent management of risk assets.
Total assets grew by 48% from N12.3tr to N18.2tr in the period ended 30 September 2023, mainly driven by growth in customers’ deposits.
Customers’ deposits grew by 49% from N8.98tr in December 2022 to N13.38tr in September 2023, cutting across both corporate and retail segments with the savings portfolio (all currencies) growing from N2.7tr in December 2022 to N4.6tr in September 2023.
Gross loans increased by 48% from N4.1tr in December 2022 to N6.1tr due to the revaluation of foreign currency denominated loans as well as the growth in local currency loans to strategic and thriving sectors of the economy.
The non-performing loan ratio improved to 3.8% in the period ended 30 September 2023, which is well below prudential limits. Net interest margin (NIM) printed at 5.6% from 6.2% reported in September 2022 due to low yield in government securities. Capital adequacy ratio improved marginally to 20.1% from 19.8% while liquidity ratio declined from 75% to 68%. However, all our prudential ratios remain above regulatory thresholds.
The Group expressed hope of finishing the year 2023 strong, with focus on sustainable quick wins that would boost growth across all business segments and enhance stakeholder value.