Zenith Bank Plc, on Wednesday, published its unaudited financials for the first quarter ended March 31, 2019, indicating a decline in gross earnings, even as management successfully reined in on its cost elements, while improving asset quality, leading to a decline in impairment charge for credit loss.
These helped to ensure marginal growth in profit before and after tax for the period, as well as the balance sheet, with total assets recording N203.368bn or 3.58% growth, helped by the loan book, which stood at N1.792tr, up from N1.757tr. Propelled by the N175.188bn or 5.16% increase in customer deposits, total liabilities grew by N157.726bn or 3.19% from N4.94tr to N5.098tr. Shareholders’ funds, therefore, rose to N780.888bn, up from N735.246bn.
Gross earnings dropped marginally by N11.081bn or 6.55% to N158.111bn between January and March 2019, derived mainly from its Nigerian operations, which accounted for N134.184bn. In the 2018Q1, earnings stood at N169.192bn, buoyed by N147.649bn from the Nigerian arm. It was driven by interest and similar income which stood at N122.48bn, up from N116.712bn in the corresponding period of last year, which would have been far better, but for the drop in customer loans and advances income from N77.084bn to N58.3bn; while the impact was significantly mitigated by the rise in revenue from investment in treasury bills to N42.406bn, compared with N24.948bn in 2018Q1; among others.
Interest expense slowed down to N36.343bn, down by N10.377bn or 22.21%, after cost of borrowed funds dropped from N26.6bn in 2018 to N17.965bn and time deposits from N12.366bn to N10.805bn. This resulted in net interest income of N86.137bn, representing an improvement of N16.145bn or 23.07% from the N69.992bn in 2018.
Following N2.477bn or 54.17% drop in impairment charge for credit loss from N4.573bn in 2018 to N2.096bn, driven by the drop in loan loss charge from N4.573bn in 2018Q1 to N1.287bn. Net interest income after impairment charge for credit losses stood at N84.041bn, up by N18.622bn or 28.47% from N65.419bn.
Net fee and commission income stood at N21.315bn from N18.64bn, helped mainly by the rise in fees on electronic products from N3.518bn to N8.738bn; followed by current account maintenance fees at N5.238bn from N4.962bn. Trading income however dropped by a significant N19.807bn or 71.71% from N27.618bn to N7.811bn, after revenue from treasury bill trading reduced from N25.906bn to N12.225bn; and the bank sustained N6.087bn loss in derivatives income, from an income of N1.016bn. Other income fell to N3.53bn from N4.025bn; depreciation of property and equipment rose to N4.75bn from N3.889bn.
Personnel expenses rose from N15.566bn to N18.289bn; just as operating expenses fell to N35.616bn from N41.72bn. The bulk of this remained the N14.327bn payment into the sinking fund of the Asset Management Corporation of Nigeria (AMCON), up from N12.084bn, followed by the N3.09bn deposit insurance premium, up from N2.722bn. It resulted in profit before tax of N57.293bn, up from N54.001bn in the same period of 2018.
Income tax expense rose to N7.059bn from N6.922bn in 2017; resulting in profit after tax of N50.234bn, representing 6.7% rise from N47.079bn, which translates to Earnings Per Share of N1.60, up from N1.50 each.