Zenith Bank’s Profit After Tax rises by 5% in Q1 2021 despite headwinds

Going forward in 2021, the bank expects that the ongoing economic recovery and improvements in the yield environment will translate into improved numbers for the Group

In a clear demonstration of its resilience, Zenith Bank Plc on Friday announced its unaudited results for the first quarter ended 31st March 2021, with Profit After Tax (PAT) rising by 5 percent to N53.1 billion, from N50.5 billion recorded in March 2020.

This is despite a very challenging macroeconomic environment aggravated by the COVID-19 pandemic.

From the unaudited statement of account presented to the Nigerian Stock Exchange (NSE) on Friday, the Group’s Profit Before Tax (PBT) also grew by 4 percent, from N58.8 billion to N61.0 billion in the same period.

The profitability was driven by the optimisation of the cost of funds and improvement in non-interest income. The bank’s cost of funds reduced significantly from 2.6 percent in March 2020 to 1.1 percent in March 2021.

This was also reflected in interest expense which dropped by 45 percent from N32.8 billion to N18.0 billion over the same period. Non-interest income increased by 10 percent from N46.6 billion to N51.2 billion, driven by growth in credit-related fees and fees on electronic products.

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Non-interest income was boosted by the increase in fees and commission income, which resulted from the increased volume of transactions across all the bank’s channels.

Cost of risk dropped from 0.6 percent in March 2020 to 0.5 percent in March 2021, which affirms the bank’s prudent risk management, even as gross loans increased by 2 percent from N2.92 trillion to N2.98 trillion in Q1 2021.

The bank’s robust customer acquisition strategy and the effectiveness of its electronic platforms and digital channels enabled it to deliver a N54 billion increment in the savings account balance, which is solely retail. Customer deposits grew by 6 percent from N5.34 trillion in December 2020 to N5.68 trillion in March 2021. Transactions on electronic channels also grew astoundingly as new customers continue to be attracted to the bank’s various user-friendly digital platforms.

Going forward in 2021, the bank expects that the ongoing economic recovery and improvements in the yield environment will translate into improved numbers for the Group. This is expected to be supported by local and international COVID-19 vaccination campaigns, rising commodity prices, and global economic growth of up to 6 percent, as estimated by the International Monetary Fund (IMF).

The Group will continue to position itself to take advantage of positive developments in the domestic and global economy to deliver improved financial performance and returns to all its stakeholders.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.