Nigeria’s Zenith Bank posts 57.3 billion Naira profit for first quarter of 2019

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Zenith Bank posted a Profit Before Tax (PBT) of 57.3 billion naira in its first quarter (Q1) operations, against 54 billion naira recorded in the corresponding period in 2018, showing a 6.1 percent rise from 54 billion naira.

The bank’s unaudited first quarter result for the period ended March 31, 2019, also showed a 6.7 percent increase in profit after tax (PAT) from 47.1 billion naira to 50.2 billion naira during the period under review.

According to Zenith Bank, its on-going commitment to cost optimisation on the income statement, and statement of financial position ensured earnings per share increased by seven percent to 1.60 naira compared to the first quarter of 2018.

The bank explained that net interest income and operating income grew by 23 percent and one percent respectively, mitigating the decline in gross earnings, while effective management of cost-to-income ratio, cost of funds, and cost of risk offset top-line declined to deliver enhanced operating income in the period.

The report released by the bank said “our risk and asset quality continues to improve as cost of risk dropped significantly by 52 percent from 0.9 percent in the prior year to 0.4 percent for the period. This was achieved as impairment charges declined by 54 percent (2.5 billion naira year on year reduction). Our cost of funds also improved, declining by 25 percent from 4 percent in Q1 2018 to 3 percent at quarter-end”.

The report also noted that “this was supported by a 22 percent decrease in interest expense of 10 billion naira over the same period, affirming the Group’s robust treasury and liquidity management. Our prudent cost management led to a 5 percent decline in our cost-to-income ratio by 5 percent from 53.3 percent in 2018 to 50.9 percent in the period with an absolute reduction in operating expenses by 2.3 billion naira year-on-year”.

The report revealed that Zenith Bank’s retail franchise continues to increase, even as its retail deposits grew by 80 billion naira between December 2018 and March 2019, representing a nine percent growth, notwithstanding that total customer deposits dropped marginally by three percent.

Zenith bank said the drop in customer deposits, were as a result of rebalancing of deposit mix, as expensive purchased deposits were forgone in favour of cheaper and stickier retail deposits.

According to Zenith Bank, “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 percent, loan to deposit ratio closed at 43 percent, and capital adequacy ratio ended the period at 25 percent respectively and remain above the relevant regulatory thresholds as at 31 March 2019”.

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