Zenith Bank delivers 41% gross earnings growth to N270bn in Q1 2023

By Onome Amuge

Zenith Bank Plc grew its gross earnings by 41 per cent as it amassed N270 billion in Q1 2023 from N191.5 billion in the first quarter of 2022.

This was disclosed in its unaudited statement of account for the first quarter ending 31st March 2023.

The  financials indicated that the growth in gross earnings was propelled by substantial increases in both interest income and non-interest income.

Zenith Bank posted a 27 per cent year-on-year increase in profit before tax from N68 billion in Q1 2022 to N86.6 billion in Q1 2023.

Profit after tax also followed a similar trajectory, rising by13 per cent from N58.2 billion in Q1 2022 to N66 billion in Q1 2023.

According to the bank, the growth in the topline was propelled by an increase in both interest income and non-interest income.

Zenith Bank’s interest income surged by 52 percent to N191.6 billion in Q1 2023 from N126.4 billion in Q1 2022.

Consequently, interest income expanded by 52 per cent from N126.4 billion in Q1 2022 to N191.6 billion  in Q1 2023, while non-interest income appreciated by 27 per cent from N57.2 bn to N72.8 billion.

Non-interest income increased by 27 percent to N72.8 billion from N57.2 billion in the reviewed period.

Zenith Bank attributed the growth in interest income to the impact of risk asset repricing, while the increase in non-interest income primarily resulted from loan recoveries and foreign currency revaluation gains.

Regarding efficiency, the lender reported that cost-to-income ratio improved from 55 percent to 53.4 percent in the current period, supported by a bolstered income line.

The cost of risk also moderated from 0.8 per cent to 0.7 per cent during the same period, underpinned by an enlarged loan book.

However, the bank’s cost of funding doubled year-on-year  from 1.3 percent in Q1 2022 to 2.7 per cent in Q1 2023, owing to a considerable spike in interest rates between both periods as interest expense grew from N25.8 billion in Q1 2022 to N70.8 billion in the period under review. This, according to the financial statement, impacted the bank’s net interest margin which depreciated from 7.3 per cent to 6.9 per cent over the same period.

The bank’s total assets increased nine  percent from N12.29 trillion in December 2022 to N13.36 trillion in March 2023, primarily driven by growth in customer deposits and other funding sources, such as borrowings.

In addition, Zenith Bank’s customer deposits rose by two per cent from N8.98 trillion in December 2022 to N9.14 trillion in March 2023.

Loans and advances also experienced marginal growth of one per cent from N4.12 trillion in December 2022, to N4.15 trillion in March 2023 as customers continued to adjust to the full impact of higher rates on risk assets.
Both the capital adequacy and liquidity ratios remained firm at 19.5 percent and 72 per cent, respectively, with both prudential ratios comfortably exceeding regulatory thresholds.

In 2023, the group said it will maintain its focus on sustainable growth across all business segments as it restructures into a holding co