Zenith bank achieves 149% profit increase of N505bn in Q3 2023
Zenith Bank Plc has defied the challenging macroeconomic environment by delivering triple-digit growth in both its top-line and bottom-line figures for the third quarter of the year ending September 30, 2023.
The bank’s unaudited results showed that its profit before tax surged by 149 percent to N505.0billion from N202.5billion in the same period of 2022, while its profit after tax also rose by 149 percent to N434.2billion from N174.3billion.
The impressive performance of the bottom line was supported by a 114 percent year-on-year increase in the top line, with the lender generating N1.33trillion in Q3 2023 compared to N620.6billion in Q3 2022.
This was buoyed by improvement in both interest income and non-interest income, with the former rising by 72 percent to N670.9 billion from N390.8 billion and the latter growing by 186 percent to N607.2 billion from N212 billion.
It was gathered that interest income increased due to the growth in risk assets as well as the effective pricing thereon, while the non-interest income growth was largely driven by the revaluation gain from the unification of exchange rates during the year.
The cost-to-income ratio reduced from 55.8 percent in Q3 2022 to 37.8 percent in the current period, while impairment levels increased due to the deliberate incremental provisions necessitated by the conservative approach towards the heightened risk environment and the creation of a counter-cyclical buffer needed to deal with any impending volatility of exchange rates.
This caused the cost of risk to deteriorate from 1.3 percent in Q3 2022 to 5.5 percent in Q3 2023, though this is an improvement from Q2 2023 where the cost of risk printed at 8.8 percent because of prudent management of risk assets.
Further analysis of the results indicated that total assets grew by 48 percent from N12.3 trillion to N18.2 trillion due to growth in customers’ deposits by 49 percent from N8.98 trillion in December 2022 to N13.38 trillion in September 2023.
The growth in customers’ deposits cuts across both corporate and retail segments, with the savings portfolio (all currencies) growing from N2.7 trillion in December 2022 to N4.6 trillion in September 2023.
Gross loans increased by 48 percent from N4.1 trillion in December 2022 to N6.1 trillion in September 2023 due to the revaluation of foreign currency-denominated loans as well as the growth in local currency loans to strategic and thriving sectors of the economy.
The non-performing loan ratio improved to 3.8 per cent, which is well below prudential limits. Net interest margin (NIM) printed at 5.6 percent from 6.2 percent reported in September 2022 due to low yield in government securities.
The capital adequacy ratio improved marginally to 20.1 percent from 19.8 percent while the liquidity ratio declined from 75 percent to 68 percent.
