Zenith Bank, a tier-one bank in Nigeria, has reported a 98% rise in its after-tax profit in the first half (H1) of 2024.
According to the bank’s financial statement, its after-tax profit increased to N577.9 billion in H1 from N291.7 billion in the corresponding period of last year.
The bank reported a 117.6% increase in its gross earnings to N2.1 trillion in H1 2024 from N967 billion in the same period of 2023, driven by an acceleration in both interest income and non-interest income.
Propelled by the growth of and by the effective pricing of risk assets, interest income surpassed the N1 trillion mark, a half-year record, growing by 177 percent from N415.4 billion in H1 2023 to N1.1 trillion in H1 2024.
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Non-interest income grew by 74% from N515.7 billion to N899.3 billion.
The bank’s interest expense surged 183.6 percent to N434 billion from N153.5 billion, driven by the high-interest rate environment.
A further breakdown of the financial statement showed that Zenith’s interest income grew by 174.6% in H1, as all major contributory lines recorded increases in loans and advances to customers (141.1% to N610 billion), treasury bills (272.8% to N261 billion), and government and other bonds (221% to N193 billion).
“In furtherance of its expansion plans, the Group has received regulatory approval for the establishment of a third-country branch in Paris, France, which, when fully operational, will enhance its product offerings in international markets,” the bank said in a statement.
During the period, the bank recorded a 173.9% growth in net interest income to N715 billion from N261 billion. Net fee and commission income increased to N109.6 billion from N43.9 billion.
Items in fees and commission income include: fees on electronic products (N41 billion), account maintenance fees (N32.7 billion), foreign withdrawal charges (N31 billion), commission on letters of credit (N14 billion), income from financial guarantee contracts issued (N13.9 billion), commission on agency and collection services (N7 billion), among others.
The bank during the period reported that operating expenses increased to N333.2 billion from N148 billion, on the back of an increase in Asset Management Corporation of Nigeria’s surcharge amounting to N92 billion.
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Total tax expenses increased by 156.8% to N149 billion from N58 billion. Earnings per share increased to N18.41 kobo from N9.29 kobo in the first six months of last year.
The statement noted that the group continued to strive for operational efficiency, resulting in only a marginal increase in the cost-to-income ratio y/y from 38.5% to 39.4%.
It said, “The heightened risk environment has fuelled a growth in impairment levels, thus mildly elevating the cost of risk from 8.8% to 9.7%. Cost of funds grew Year on Year (YoY) from 2.6% to 4.4% given the high-interest rate environment. This also resulted in growth in interest expense from N153.6 billion in H1 2023 to N434.4 billion in H1 2024. Despite this, net interest margin grew by 49% from 5.9% in H1 2023 to 8.8% in H1 2024, underscoring the efficient repricing of interest-earning assets and interest accruing liabilities.”
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Total assets grew to N27.5 trillion from N16 trillion on the back of loans and advances to customers amounting to N9.2 trillion.
Deposits from customers totalled N19.6 trillion while the bank’s total liabilities also rose to N24 trillion, leaving its shareholders fund at N3.1 trillion.
Net cash flows from operating activities fell to N177 billion from N986 million.
Cash and cash equivalents at the end of the period totalled N4.38 trillion from N2.46 trillion.
