Zenith Bank Plc has posted a solid first half for 2021. This it did with its profit before tax (PAT) increasing by N3 billion. In other words, Zenith Bank Group recorded a growth in profit before tax of 3%, rising to NGN117 billion from NGN114 billion reported in the previous year. The Group also recorded a 9% growth in non-interest income from NGN116 billion in June 2020 to NGN127 billion in 2021, while interest income dropped by 6% from NGN217 billion to NGN204 billion as yields from some interest-bearing assets declined. This was mitigated by a 26% decrease in interest expense from NGN60 billion in June 2020 to NGN44 billion in June 2021 resulting in an increase in net interest income from NGN157 billion to NGN160 billion in June 2021.
Overall, the significant reduction in interest expense by 26% and growth in non-interest
income by 9% gave rise to improved profitability.
The Group’s retail journey continues to deliver positive results. Retail deposits grew by
NGN38.2 billion from NGN1.72 trillion to NGN1.76 trillion year-to-date (YTD). Savings balances grew marginally by 2% YTD to close at NGN1.18 trillion from NGN1.16 trillion 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.
However, the low-interest environment also affected the net interest margin, which
declined from 9% to 6.5% in the current year due to the re-pricing of interest-bearing
assets. Operating expenses grew by 10% YoY but growth remains below the inflation rate.
Although returns on equity and assets also reduced from 21.5% to 18.5% and from 3.0% to
2.5%, respectively, the Group improved its Earnings per Share (EPS) which grew 2% from
NGN3.30 to NGN3.38 for the half year ended June 2021.
The Group also increased total customer deposits by 8% to close the period at NGN5.77 trillion, which demonstrates growth in the Group’s market share. Total assets grew marginally to NGN8.52 trillion as at 30 June 2021 from NGN8.48 trillion as at 31 December 2020. Despite the challenges imposed by the COVID-19 pandemic and the challenging operating environment, the Group grew its risk assets as gross loans grew by 3% YTD, from NGN2.92 trillion to NGN2.99 trillion. This was conservatively achieved at a low 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.
Despite the continued prevalence of COVID-19, there is a cautious optimism that the global
economy will continue to recover as vaccination programmes are intensified. Locally,
Nigeria’s GDP grew by 5.01% in the second quarter and inflation which peaked in March
2021 at 18.17% is gradually trending down (currently at 17.38% as at July 2021). The Group
is well-positioned to maximise the opportunities that these recovering fundamentals
present while leveraging e-technology to expand the retail footprint to deliver improved
returns to all its stakeholders.