Following report by the Economyng.com penultimate week that the big banks including Zenith Bank were delaying the release of their half-year report, Zenith Bank Plc has now announced its unaudited results for the half year ended June 30, 2020, with profit after tax of N103.83bn from N88.88bn, accounting for 16.82 per cent growth.
From the unaudited statement of account which was presented to the Nigerian Stock Exchange on Thursday, the bank’s gross earnings rose by 4.37 per cent from N331.59bn in March 2019 to N346.09bn.
Profit before tax stood at N114.12bn from N111.68bn in 2019, representing a growth of 2.19 per cent.
Interest income grew by 1.1 per cent y/y to N216.95bn, supported primarily by the income from loans and advances to customers (+11.6 per cent y/y to NGN128.37bn) as risk asset creation has been strong in the year so far (+13.8 per cent YTD to NGN2.62tn).
The other contributory line recorded a decline – investment securities (-18.1 per cent y/y).
The decline in income from investment securities was expected, as yields across assets had pared significantly from the previous year.
Also, interest expense declined by 17.4 per cent y/y to NGN59.55bn, reflecting lower interest cost on borrowings over the corresponding period of the prior year (-50.7 per cent to NGN17.00bn) and despite the increased cost on deposits from customers (+13.3 per cent to NGN42.54bn).
Continuing the trend during the year, non-interest income was strong, settling 6.2 per cent higher y/y at NGN116.49bn.
The strong growth recorded was supported by expansions in FX revaluation gains (+239.6 per cent y/y to NGN22.02bn), and gains on investment securities (+30.4 per y/y to NGN58.83bn).
This expansion in NII, alongside the growth in net interest income, led to an expansion in operating income of 4.8 per cent y/y to NGN249.97bn.
According analysts at Cordros Capital, operating expenses growth was moderate, as the bank continued to focus on cost management in the face of moderate gross earnings growth.
Opex grew by 7.1 per cent y/y to NGN135.85bn, with the most pressure exerted by other operating expenses (+16.6 per cent y/y to NGN21.22bn) such as I.T, and maintenance costs.
Consequent to the Opex growth relative to operating income growth, the bank’s cost-to-income ratio settled higher at 54.3 per cent relative to 52.7 per cent and 50.9 per cent in the prior quarter and the corresponding period of the previous year.
Also, profitability was stronger, with profit-before-tax settling 2.2 per cent higher year-on-year.
However, profit-after-tax settled 16.8 per cent higher year-on-year, on account of a 54.8 per cent decline in income tax expense.