Zenith Bank Plc has attributed the increase in profit in its unaudited result for the First Quarter (Q1) ended March 31, 2020, to the twin effects of continuing and focused cost-of-funds optimisation.
Specifically, the bank said its cost of funds declined significantly from 3.0 per cent year-on-year, and 10 per cent decrease in interest expense, which dropped from N36.3billion to N32.8billion in the period in review.
Despite this drop, the current low yield environment necessitated the re-pricing of interest-bearing assets, which in turn resulted in a 13 per cent compression in net interest margin, falling from 8.9 per cent to 7.7 per cent year-on-year.
The bank posted a Q1 Profit Before Tax of N58.7billion or three per cent rise above the N57.3billion posted a year earlier. The Group also recorded a six per cent increase in Gross Earnings from N158.1 billion in March 2019 to N166.8 billion for the period.
This top line growth is an outcome of the 43 per cent expansion in non-interest income from N32.7 billion in the prior-year period to N46.6 billion in March 2020.
Non-interest income growth was driven by a 98 per cent surge in trading income from N7.8 billion in March 2019 to N15.5 billion in the quarter.
“Zenith Bank has continued to gain customer acceptance with customer deposits increasing by five per cent from N4.26trillion in December 2019 to N4.46trillion in the current period.
“Our customer deposit mix rebalancing remains on-track as the Group added N150billion in savings account balances in Q1 2020, supported by our retail drive.”
Its total assets increased by 12 per cent growing from N6.35trillion in December 2019 to close at N7.13trillion in the current period. Furthermore, the bank said gross loans grew by 11 per cent from N2.46trillion in December 2019 to N2.74trillion within the period.
“While seeking opportunities in select sectors, risk management and prudence took precedence as cost of risk moved marginally from 0.4 per cent to 0.6 per cent.
“Our conservatism over the years has put us in a very strong position from a balance sheet, capital adequacy and liquidity standpoint allowing for our prudential ratios to exceed the relevant regulatory thresholds as at end-March 2020.”
