Zenith Bank records double-digit growth in Q1 2023 

By Cynthia Ezekwe 

Zenith Bank Plc recorded an exceptional double-digit growth of 41 per cent  in its  gross earnings, increasing from N191.5 billion in Q1 2022 to N270 billion in Q1 2023.

According to the unaudited financial  statement of the commercial bank for the first quarter of 2023, the significant double-digit growth in the topline also boosted the bottom line, with the group experiencing an impressive 27 per cent year-on-year (YoY) increase in Profit Before Tax (PBT), rising from N68 billion in Q1 2022 to N86.6 billion in Q1 2023. Profit After Tax (PAT) also grew by 13 per cent from N58.2 billion to N66 billion during the same period.

The financials noted that the growth in the topline was propelled by substantial increase in both interest income and non-interest income. Interest income grew  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 billion to N72.8 billion. The growth in interest income can be attributed to the impact of risk asset repricing, while the increase in non-interest income primarily resulted from loan recoveries and foreign currency revaluation gains.

Also, zenith bank’s cost-to-income ratio improved from 55 per cent  to 53.4 per cent  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 due to an enlarged loan book.

On the contrary, the cost of funding doubled YoY from 1.3 per cent  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 increased from N25.8 billion in Q1 2022 to N70.8 billion in Q1 2023. This impacted the net interest margin (NIM), which reduced from 7.3 per cent  to 6.9 per cent over the same period.

Additionally, total assets grew  by 9 per cent  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. Customer deposits increased by 2 per cent  from N8.98 trillion in December 2022 to N9.14 trillion in March 2023.

Loans and advances also experienced a 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 robust at 19.5 per cent  and 72 per cent , respectively, with both prudential ratios comfortably exceeding regulatory thresholds.