Zenith Bank posts mixed Q3 numbers as gross earnings jump 6.3%y/y to N173bn

Amidst a challenging macro environment in Nigeria, Nigeria’s top tier-1 lender, Zenith Bank, reported a mixed set of numbers in the third quarter of 2021 with the bank’s gross earnings jumping 6.3 percent year on year to N173.1 billion from N162.9 billion for the same period in 2020.

According to the bank’s Q3 financial statement filed to the NGX, there was a 0.6 percent year on year marginal decline in its profit before tax to N62.8 billion, while its after tax profit dropped to N54.5 billion from N55.5 billion in 2020 as a result of a 7.9 percent year on year rise in tax expenses.

Also, the bank’s personnel expenses grew 7.9 percent year on year to N22.7 billion in the reported period, while the operating expenses grew by 21.1 percent year on year.

The bank’s interest and similar income was up 3.0 percent year on year to N104.9 billion, which was enhanced by an 11.7 percent year on year drop in interest and similar expenses.

The rise in interest income was primarily driven by growth in interest income from loans and advances of 17.1 percent on the back of an increase in gross loans of 9 percent year to date, partially offset by a 69.3 percent drop in income from placement with banks and discount houses to N1.7 billion and a 91.0 percent decline in income from promissory notes.

The earnings from treasury bills were also down 5.9 percent year on year to N11.3 billion in 3Q21. The rise in other income was primarily due to foreign currency revaluation gain (unrealised gains from the revaluation of foreign currency-denominated assets and liabilities held in the non-trading books) of N2.9 billion in the Q3 of 2021 versus a loss of N1.4 billion in the same period of 2020.

Meanwhile, the group remained focused on its drive to increase retail deposits in the past three years, which has supported the decrease in the cost of funds by 35 percent to 1.4 percent from 2.2 percent year on year.

Also, the bank’s enhanced efficiency helped reduce interest expense by 11.7 percent year on year to N30.1 billion in the reported period. This resulted in net interest income rising 10.4 percent year on year to N74.8 billion in the third quarter of 2021.

Although the impairment charge for the quarter was down 43.6 percent quarter on quarter, it surged 7.6x on a year on year basis. The net interest income after impairment loss declined 1.2 percent year on year to N65.8 billion in the penultimate three months of 2021. The bank reported a 15.8 percent year on year jump in non-interest income to N66 billion in 3Q21.

However, total deposits grew by 13 percent to close at N6 trillion from N5.3 trillion on 31 December 2020, with a substantial contribution from retail deposits.

Total assets also increased by three percent to N8.8 trillion in the current period as the management’s outlook for the fourth quarter remains positive, buoyed by a declining inflationary trend, expected increase in foreign exchange inflows, and improving oil production. The group remains focused on increasing its retail market share, consolidating its corporate segment leadership position, and maintaining a robust balance sheet.