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Zenith Bank’s Q1 Profit After Tax Grows To N50bn



Zenith Bank Plc has recorded a profit after tax of N50.234 for the first quarter ended March 31, 2019.

The bank unaudited financials for the first quarter ended March 31, 2019, released on the Nigerian Stock Exchange (NSE) showed a growth of 6.7 per cent in its profit after tax from N47.079 billion in Q1, 2018 to N50.234 billion, while earnings per share stood at N1.60, up from N1.50.

Gross earnings however dropped marginally by 6.55 per cent to N158.111 billion in Q1 2019. Interest and similar income stood at N122.48 billion, up from N116.712 billion, while net interest income stood at N86.137 billion, representing an improvement of 23.07 per cent from the N69.992 billion in 2018.

Operating income stood at N116.697 billion slightly from N115.702 billion in Q1, 2018, while operating expenses went down from N61.701 billion to N59.404 billion in 2019.

On the balance sheet of the bank, gross loans and advances went down by four per cent to N1.938 trillion from N2.017 trillion as at December 2018, while customers’ deposits stood at N3.571 trillion lower than N3.690 trillion recorded in 2018. The bank total asset declined marginally by one per cent to N5.877 trillion from N5.956 trillion, while shareholders’ funds declined from N815.751 billion in December, 2018 to N780.887 billion under the period review.

The bank in a release to LEADERSHIP said “In the first quarter ended March 31, 2019, Zenith Bank Group recorded improved numbers across key metrics, driven by a solid performance in all business segments.

“This resulted in a Profit before Tax (PBT) of N57 billion, representing a six per cent growth over the N54 billion achieved in the corresponding period in 2018.”

It stated that the Group’s on-going commitment to cost optimisation on the income statement and statement of financial position ensured earnings per share increased by seven per cent to N1.60 compared to Q1 2018.

According to the bank, the growth in net interest income and operating income by 23 per cent and one per cent respectively mitigated the decline in gross earnings.

“The effective management of cost-to-income ratio, cost of funds and cost of risk offset top-line declines to deliver an enhanced operating income in the period.”

It explained further “Our risk and asset quality continues to improve as cost of risk dropped significantly by 52 per cent from 0.9 per cent in the prior year to 0.4 per cent for the period. This was achieved as impairment charges declined by 54 per cent. Our cost of funds also improved, declining by 25 per cent from four per cent in Q1 2018 to three per cent at quarter-end. This was supported by a 22 per cent decrease in interest expense of N10 billion over the same period, affirming the Group’s robust treasury and liquidity management.”

Zenith Bank added that “Our prudent cost management led to a five per cent decline in our cost-to-income ratio by five per cent from 53.3 per cent in 2018 to 50.9 per cent in the period with an absolute reduction in operating expenses by N2.3 billion year-on-year.”

It explained further that the Group’s retail franchise continues to increase as retail deposits grew by N80 billion between December 2018 and March 2019 representing a nine per cent growth notwithstanding the fact that total customer deposits dropped marginally by three per cent.

It noted that the drop in customer deposits was as a result of rebalancing of the deposit mix as expensive purchased deposits were forgone in favour of cheaper and stickier retail deposits.

“The volume and value of transactions across our electronic and digital platforms continue to grow as new customers are being acquired. Our balance sheet continues to strengthen as liquidity ratio is at 66.7 per cent, loan to deposit ratio closed at 43 per cent, and capital adequacy ratio ended the period at 25 per cent respectively and remain above the relevant regulatory thresholds as at 31 March 2019,” it stated.

Going into the rest of the year and with improving economic fundamentals, the bank said it is confident of delivering value to all its stakeholders on its commitments even as it create more opportunities for businesses by supporting them through selective risk asset creation.

It added that “We shall continue our investments in the retail segment of the market as we consolidate our leadership position in the corporate segment while maintaining a strong balance sheet.”