Zenith bank plc has reported 10.41 per cent increase in profit to N230.57 billion in its audited financial statement for full year ended December 31, 2020 as against N208.84 billion profit reported prior full year ended December 31, 2019.
The lender in its results on The Nigerian Stock Exchange (NSE) on Tuesday also reported 5.2 per cent increase in Profit Before Tax (PBT) to N255.86 billion in 2020 as against N243.29 billion PBT reported in 2019.
The bank explained that the increase in PBT was from a combination of growth in the top-line and a significant reduction in interest expense. Interest expense reduced from N148.5 billion in 2019 to N121.1 billion in 2020, significantly increasing our net interest income from N267.0 billion in 2019 to N299.7 billion in 2020.
The lender’s management proposes a final dividend of N2.70 for year ended 2020, about eight per cent increase over N2.50 declared in 2019.
The Zenith Bank Group recorded a growth in gross earnings of five per cent rising to N696.5 billion in 2020 from N662.3 billion reported in 2019.
Despite a challenging macro-economic environment exacerbated by the COVID 19 pandemic, the Group recorded eight per cent growth in non-interest income from N232.1 billion in 2019 to N251.7 billion in 2020 and a one per cent increase in interest income from N415.6 billion in 2019 to N420.8 billion in 2020.
The bank said “Our increased retail activities have translated to an increase in retail deposits and loans. Retail deposits grew by N612.7 billion from N1.11 trillion to N1.72 trillion year-on-year (YoY).
“Savings balances significantly grew by 88 per cent YoY and closed at N1.16 trillion.
“This retail drive, coupled with the low-interest yield environment helped reduce our cost of funding from three per cent to 2.1 per cent and also reduced our interest expense.”
However, the low-interest environment also affected net interest margin, which declined from 8.2 per cent to 7.9 per cent in the current year due to the re-pricing of interest-bearing assets.
Operating costs grew by 10 per cent YoY but are still tracking well below inflation which at the end of the year stood at 15.75 per cent.
Although returns on equity and assets also reduced from 23.8 per cent to 22.4 per cent and from 3.4 per cent to 3.1 per cent respectively, the Group still delivered improved Earnings per Share (EPS) which grew 10 per cent from N6.65 to N7.34 in the current year.
The Group also increased corporate customer deposits, which alongside the growth in retail deposits delivered total deposit growth of 25 per cent, to close at N5.34 trillion, driving growth in market share.
Total assets also increased significantly by 34 per cent from N6.35 trillion to N8.48 trillion.
The bank in a statement stated that, “Despite the COVID-19 pandemic and its associated challenges, the Group managed to create new viable risk assets as gross loans grew by 19 per cent from N2.46 trillion to N2.92 trillion.
“This was achieved while maintaining a stable and low overall NPL ratio of 4.29 per cent (2019: 4.3 per cent) across the entire portfolio and an increase in cost of risk from 1.1 per cent to 1.5 per cent, reflecting the elevated risk environment in 2020.
“The Group recorded impressive liquidity and capital adequacy ratios of 66.2 per cent and 23 per cent and remained above regulatory thresholds of 30 per cent and 15 per cent respectively.
“In 2021, the global economy looks set for a recovery with the rollout of vaccines, and growing confidence, driving an increase in economic activities across most economies.
“This has also driven an increase in crude oil prices, an improvement in interest rates and recovery from recession in Q4 2020 in the domestic economy.
“The Group is well-positioned to maximise the opportunities these recovering fundamentals represent while leveraging technology and expanding its retail footprints to deliver improved returns to all stakeholders.”
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