Zenith Bank Says Poised For Economic Recovery Prospects
The management of Zenith Bank Plc says it is well-positioned to maximize opportunities expected from the ongoing recovery in Nigeria’s economic fundamentals over the coming weeks and months, as it continues to leverage technology while expanding its retail footprints to deliver improved returns to all its stakeholders.
In a statement following the submission of its audited half-year result to the Nigerian Exchange on Friday, the group linked its optimism to the improvements noticed on the domestic economy, following last week’s release of the Gross Domestic Product (GDP) showing a growth of 5.01% in the second quarter of 2021. Added to this, it noted, is the inflation rate which has dropped gradually from its 18.17% peak in March 2021, to 17.38% as of July 2021.
Zenith Bank the half-year financials is a clear demonstration of its resilience, showed positive growth across key financial metrics despite a challenging macroeconomic environment exacerbated by the COVID 19 pandemic.
Group profit before tax rose by 3% from N114bn reported in the half-year ended June 30, 2020 to N117bn in the corresponding period of 2021; and a 9% growth in non-interest income from NGN116bn in June 2020 to NGN127bn in June 2021. There was a significant 26% reduction in interest expense and growth in non-interest income by 9%, which culminated in the improved profitability.
The Group’s retail journey continues to deliver positive results as retail deposits grew by N38.2bn from N1.72tr to N1.76tr year-to-date (YTD), just as savings balances grew marginally by 2% YTD to close at N1.18tr from N1.16tr as at December 2020.
The drive for increased retail deposits and a low-interest yield environment helped reduce the cost of funding from 2.2% to 1.3% in the current period, the statement added, as operating expenses grew by 10% YoY. This growth, it added, remains below the inflation rate, while the group improved its Earnings per Share (EPS) which grew 2% from N3.30 to N3.38 for the half-year ended June 2021.
The group also increased total customer deposits by 8%, closing the period at N5.77tr, demonstrating growth in the market share. Total assets grew marginally to N8.52tr as at June 2021 from N8.48tr recorded as at the end of December 2020.
“Despite the COVID-19 pandemic induced challenges and the challenging operating environment, the Group grew its risk assets as gross loans were up by 3% YTD, from N2.92tr to N2.99tr. This was conservatively achieved at a low Non-Performance Loans (NPL) ratio of 4.51% (FYE 2020: 4.29%) and a reduced cost of risk of 1.3% (June 2020: 1.8%). Prudential ratios such as liquidity and capital adequacy also remained above regulatory thresholds at 69.9% and 22.0%, respectively,” the statement added.