Zenith Bank Plc said its profit before tax rose by five per cent to N255.9billion as of the end of December 2020 from N243.3billion reported in the corresponding period of 2019.
In a statement on Tuesday February 23, 2021 titled ‘Zenith Bank’s profit before tax rises by five per cent to N255.9billion’, it said this was in spite of a challenging macro-economic environment exacerbated by the Covid-19 pandemic.
This increase arose from a combination of growth in the topline and a significant reduction in interest expense from N148.5billion in 2019 to N121.1billion in 2020, significantly increasing the net interest income from N267billion in 2019 to N299.7billion in 2020.
According to the bank’s audited financial results for the 2020 financial year presented to the Nigeria Stock Exchange, the Group recorded a growth in gross earnings of five per cent from N662.3billion in the previous year to N696.5billion.
The Group stated that it recorded eight per cent growth in non-interest income from N232.1billion in 2019 to N251.7billion in 2020 and a one per cent increase in interest income from N415.6billion in 2019 to N420.8billion in 2020.
The Group’s increased retail activities translated to a corresponding increase in retail deposits and loans.
According to the statement, retail deposits grew by N612.7billion from N1.11trillion to N1.72trillion year-on-year), while savings balances significantly grew by 88 per cent YoY and closed at N1.16trillion.
This retail drive, coupled with the low-interest yield environment, helped reduce the cost of funding from 3.0 per cent to 2.1 per cent and also reduced interest expense, it stated.
However, it added, the low-interest environment also affected the 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, 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 N5.34trillion, driving growth in market share.
Total assets also increased significantly by 34 per cent, from N6.35trillion to N8.48trillion.
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 N2.46trillion to N2.92trillion.
This was achieved while maintaining a stable and low overall non-performing loan ratio of 4.29 per cent (2019: 4.3 per cent) across the entire portfolio and an increase in the 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 23.0 per cent and remained above regulatory thresholds of 30 per cent and 15 per cent, respectively.
In demonstration of its commitment to its shareholders, the bank announced a proposed final dividend payout of N2.7 per share, bringing the total dividend to N3 per share.