BUSINESS

Core, Non-Core Income Growth Boost Zenith Bank’s H1 2022 Performance

 

Zenith Bank Plc has announced impressive corporate earnings in audited half year (H1) ended June 30, 2022 to maintain its positioned as the most profitable bank in Nigeria.

The H1 2022 performance was driven by a combination of core and non-core income growth as the bank benefited from the improved interest rate environment.

Consequently, the bank recorded an EPS growth of five per cent to N3.55 in H1 2022 from N3.38 in H1 2021, while an interim dividend of N0.30/share (same as the corresponding period last year) was proposed, which represents a dividend yield of 1.4per cent based on the last closing price of N22.00 as of August 23, 2022.

The performance also showed Zenith bank as industry leadership and consistency in providing superior financial returns on the backdrop of interim dividend payout to shareholders.

The group reported N130.01billion profit before tax in its H1 2022 audited result and accounts, an increase of 11.06 per cent from N117.06billion reported in corresponding half year ended June 30, 2021.

The lender on the Nigerian Exchange Limited (NGX) also reported N111.41billion profit after tax in H1 2022 from N106.11 reported in H1 2022 on the backdrop of N18.59billion income tax expense in the period under review as against N10.94billion reported in prior period.

The growth in profits impacted on Earnings per share (EPS) that also grew from N3.38 in H1 20222 to N3.55 reported in H1 2021.

Key drivers in Zenith Bank growth in profits include 17 per cent increase in gross earnings to N404.76billion in H1 20222 from N345.56billion in H1 2021, while net interest income rose by 116 per cent to N184.7billion in H1 2022 from N159.94billion reported in H1 2021.

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From the profit & loss figures, the net interest income growth reported was underpinned by a 19per cent YoY growth in interest income from N204 billion to N242billion and an 18per cent YoY growth in non-interest income from N127 billion to N149 billion.

The growth in interest income was driven by the modest increase in the loan book and improved interest margins. The increase in non-interest income attests to the Group’s success in its income diversification strategy.

Increase in customer deposits, loans drive total assets

The Group recorded an 11per cent year-to-date (YtD) increase in total customer deposits to close the period at N7.15 trillion from N6.47trillion reported in 2021FY, while Gross loans rose by five per cent to N3.66trillion as of June 30, 2022 from N3.5trillion reported in 2021FY.

The interplay between the two drives total assets increase to N10.12 trillion at the end of June 30, 2022 from N9.45 trillion reported in 2021FY.

The retail strategy of the Group continues to deliver outstanding results as retail deposits grew by 17per cent YtD from N1.82 trillion to N2.13trillion.

Retail activities also supported the growth recorded in fees on electronic products which grew by 45per cent YoY from N17 billion to N25 billion.

Despite the elevated yield environment, the cost of funds increased only marginally from 1.3 per cent in June 2021 to 1.4 per cent in June 2022.

The increase in the cost of funds was lower than the increase in yields on interest-generating assets, giving rise to an improved Net Interest Margin (NIM) of 7.1 per cent from 6.4 per cent in June 2021.

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The Group was able to achieve a moderate Non-Performing Loan (NPL) ratio of 4.4 per cent (FYE 2021: 4.2 per cent) and cost of risk of 1.4 per cent (June 2021: 1.3 per cent).

Prudential ratios such as liquidity and capital adequacy also remained stable and well-above regulatory thresholds at 60.5 per cent and 21 per cent respectively.

The Group in a statement said, it is focused on advancing its digital banking strategy anchored on a strong technology base, and intends to consolidate on the gains achieved in prior years across all business segments.

“Combined with the Group’s industry leadership, we expect this to drive improved performance and deliver enhanced returns to stakeholders,” the statement added.

 

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