Business a.m.
Zenith Bank Plc has once again demonstrated its financial prowess with a remarkable triple-digit surge of 189 percent in gross earnings, rising from N270 billion in Q1 2023 to N781 billion in Q1 2024.
A deeper dive into the company’s unaudited results for the first quarter ended 31st March 2024, reveals an impressive growth achieved by the multinational financial services provider, defying the adversities posed by a challenging operating environment and the implementation of a tightening monetary policy stance.
The unaudited statement of account submitted to the Nigerian Exchange (NGX), recently, showed that the impressive growth in the topline also enhanced the bottomline, as profit before tax skyrocketed to N320 billion in Q1 2024, representing an increase of 270 percent from the N87 billion reported in Q1 2023. In a similar trajectory, profit after tax grew significantly by 291 percent from the N66 billion reported in Q1 2023 to N258 billion in the current period.
According to the financials, interest and non-interest income contributed significantly to the growth in gross earnings. This is as interest income grew by 155 percent from the N192 billion reported in the quarter ended March 2023 to N489 billion in the period to 31 March 2024.
The growth in interest income was attributed to the repricing of risk assets, owing to the increase in the central bank’s Monetary Policy Rate (MPR), which currently stands at 24.75 percent. Meanwhile, the growth in net interest income was largely attributed to the increase in fees and commissions as well as trading grains.
In a notable development, the group’s impairment charge for Q1 2024 escalated to N56 billion, witnessing a substantial rise from the N8 billion recorded in Q1 2023. The surge is primarily attributed to the significant expansion in risk assets, fueled by the revaluation of its USD loans, which consequently led to additional impairment on the bank’s foreign currency-denominated loans.
In Q1 2024, the cost of funds rose 48 percent from 2.7 percent in the same period of the previous year to 4 percent. This increase was attributed to the prevailing high-interest rate environment. Additionally, interest expense witnessed a significant uptick, soaring by 157 percent from N71 billion reported in Q1 2023 to N182 billion in the period ending March 2024.
Notwithstanding the year-on-year (YoY) increase in interest expense, net interest margin (NIM) grew by 20 percent from 6.9 percent in the 3 months ended March 2023 to 8.3 percent in the current period ending 31 March 2024. Return on Average Equity (ROAE) and Return on Average Assets (ROAA) increased year-on-year by 114 percent and 119 percent, respectively, due to improved profitability.
In a testament to Zenith Bank’s robust performance, gross loans, predominantly fueled by customer deposits, experienced a notable 30 percent appreciation, climbing from N7.1 trillion in December 2023 to N9.2 trillion by March 2024. Simultaneously, customer deposits showcased an impressive 11 percent increase, rising from N15.2 trillion in December 2023 to N16.8 trillion by March 2024.
The group’s financials also showed that it has consistently maintained all prudential ratios well above the minimum regulatory requirement. At the end of Q1 2024, Capital Adequacy Ratio (CAR) and liquidity ratio stood at 20 percent and 67 percent, respectively, demonstrating the group’s ability to maintain a strong and liquid balance sheet.
Zenith Bank also announced significant advancements in its planned capital raise aimed at bolstering future growth endeavours, expressing confidence in meeting the new minimum capital requirements aligned with the Central Bank of Nigeria’s recapitalisation directive.
Concurrently, the group is intensifying efforts in migrating to its new technology architecture and transitioning into a holding company, reflecting its unwavering commitment to enhancing value for all stakeholders.
