NIGERIA– Zenith Bank Plc, one of the leading commercial banks in Nigeria has recorded a profit rise of 16% despite of the bank operating in difficult economic environment occasioned by the Covid-19 pandemic.
Unaudited results for the half year ended June 30, 2020 revealed that the bank’s profit after tax stood at N103.83bn (about US$272.52 million).
This is a 16.82% rise when compared to the N88.88bn (US$233.28 million) recorded during the same period in 2019.
The bank’s gross earnings rose by 4.37 per cent from N331.59bn (US$ 870.31 million) in March 2019 to N346.09bn (US$ 908.37 million).
Profit before tax stood at US$299.53 million, a 2.19% rise when compared to the US$293.12 million recorded in 2019.
The bank further noted that its interest income grew by 1.1 per cent year-on-year to reach N US$569.42 million, supported primarily by the income from loans and advances to customers.
The Bank further noted that income from investment securities declined by 18% y/y as yields across assets had pared significantly from the previous year.
Also, interest expense declined by 17.4 per cent y/y to US$156.30 million, reflecting lower interest cost on borrowings over the corresponding period of the prior year.
Continuing the trend during the year, non-interest income was strong, rising by 6.2 per cent y/y to settle at US$116.49 million.
The strong growth recorded was supported by expansions in FX revaluation gains and gains on investment securities.
This expansion in NII, alongside the growth in net interest income, contributed to a 4.8 percent y/y increase in operating income which ended up standing at US$656.09 million.
According analysts at Cordros Capital, operating expenses growth were moderate, as the bank continued to focus on cost management in the face of moderate gross earnings growth.
Operating expenses (Opex) grew by 7.1 per cent y/y to US$356.56 million, with the most pressure exerted by other operating expenses such as I.T, and maintenance costs.
Consequent to the Opex growth relative to operating income growth, the bank’s cost-to-income ratio settled higher at 54.3 per cent relative to 52.7 per cent and 50.9 per cent in the prior quarter and the corresponding period of the previous year.
The Banks, profitability however closed the half-year stronger, with profit-before-tax settling 2.2 per cent higher year-on-year.