Zenith Bank soars to new heights on triple-digit profit explosion

• Gross earnings surge 125% to hit N2.1trn

Onome Amuge

Zenith Bank Plc, one of the forerunners of Nigeria’s banking sector, has revealed its audited financial results for the year 2023, flaunting an impressive 125 per cent increase in gross earnings, transcending its 2022 earnings of N945.6 billion to a staggering N2.132 trillion in 2023.

The 2023 fiscal year proved to be a remarkable one for the tier-one bank, as reflected in its audited financial results submitted to the Nigerian Exchange (NGX). The bank’s triple-digit growth in gross earnings was underpinned by a 180 per cent Year-on-Year (YoY) surge in Profit Before Tax (PBT), from N284.7 billion in 2022 to N796 billion in 2023. Profit After Tax (PAT) also recorded triple-digit growth of 202 per cent from N223.9 billion to N676.9 billion in the period ended December 31, 2023.

The impressive uptick in Zenith Bank Plc’s gross earnings was fueled by a 112 per cent increase in interest income, which rose from N540 billion in 2022 to N1.1 trillion in 2023. Additionally, non-interest income, another key contributor to the bank’s overall income, recorded an equally impressive 141 per cent surge, vaulting from N381 billion in 2022 to N918.9 billion in 2023.

The bank’s astronomical increase in interest income was primarily driven by a significant expansion in its risk asset portfolio, coupled with effective repricing of these assets to reflect current market conditions. This, in turn, drove a spike in the yields of interest-bearing instruments, further boosting its interest income. In addition, the rise in non-interest income was attributed to the bank’s savvy trading strategies that yielded substantial gains, as well as the fortuitous appreciation of foreign currencies that resulted in significant revaluation gains.

Despite a challenging macroeconomic environment characterised by high interest rates, Zenith Bank noted that it navigated the headwinds with considerable dexterity, posting a substantial 135 per cent increase in interest expense. The bank’s cost of funds also rose from 1.9 per cent in 2022 to 3.0 per cent in 2023, reflecting the general upward trend in interest rates. However, a 32 per cent growth in operating expenses failed to dampen the bank’s robust performance, as its cost-to-income ratio improved markedly from 54.4 per cent in 2022 to 36.1 per cent in 2023.

Zenith Bank’s relentless pursuit of superior shareholder returns paid handsome dividends, with its Return on Average Equity (ROAE) registering a 118 per cent growth, surging from 16.8 per cent in 2022 to 36.6 per cent in 2023. The stellar performance,according to the bank, was buoyed by the substantial growth in gross earnings, which enabled it to maximise its assets and create a significant return on investment. Similarly, the bank’s Return on Average Assets (ROAA) followed suit, recording an impressive 95 per cent growth from 2.1 per cent to 4.1 per cent over the same period.

An unwavering focus on deepening relationships with corporate and retail customers also reaped significant dividends for Zenith Bank, as it recorded an impressive 69 per cent growth in customer deposits. This growth, from N9.0 trillion in 2022 to an impressive N15.2 trillion in 2023, is considered a testament to the bank’s commitment to providing personalised and innovative solutions to its customers. The bank’s retail strategy also paid rich dividends, with retail deposits accounting for 46 per cent of the bank’s total deposits, up from 44 per cent in 2022. 

Zenith Bank’s relentless pursuit of growth and innovation was in full display in 2023, as the bank’s total assets registered a 66 per cent increase, swelling from N12.3 trillion in 2022 to N20.4 trillion in 2023. The rapid growth was largely due to an upsurge in total deposits, as well as the favourable impact of currency revaluations. Similarly, the bank’s gross loans skyrocketed by 71 per cent from N4.1 trillion in 2022 to N7.1 trillion in 2023.

Undeterred by the volatile business landscape, Zenith Bank’s unwavering discipline and risk management acumen proved to be a shield against adversity. Despite the significant increase in gross loans, the Bank’s Non-Performing Loans (NPL) ratio remained remarkably stable, rising by a marginal 0.1 per cent to 4.4 per cent despite a challenging macroeconomic environment that would have crippled lesser institutions. The bank’s prudential ratios remained firmly within regulatory limits, with the Capital Adequacy Ratio (CAR) clocking in at a robust 21.7 per cent, and the liquidity ratio maintaining a reassuring level of 71.0 per cent, firmly within regulatory guidelines

Shareholder satisfaction continues to be a top priority for Zenith Bank, with the bank’s latest announcement of a proposed final dividend of NGN3.50 per share, bringing the total dividend payout to a substantial N4.00 per share. 

The financial year 2024 is expected to be a watershed moment for Zenith Bank, as it prepares to complete its transition into a holding company structure. This strategic move, the bank explained, is envisioned to position it at the forefront of the rapidly evolving fintech landscape, empowering it to harness new opportunities, while simultaneously reinforcing its already formidable digital and retail banking offerings.

Zenith Bank also announced that it is responding swiftly to the Central Bank of Nigeria’s (CBN) directive for banks with international authorisation to maintain a minimum equity capital of N500 billion. According to the bank,this strategic move will not only ensure its compliance with the new requirements but also bolster its presence in key markets and solidify its foothold as a global financial powerhouse.