Zenith Bank announces N50.2bn profit in Q1 2019

Motolani Oseni

Zenith Bank Plc has announced Profits After Tax (PBT) of N50.23 billion in its unaudited financial results for the first quarter (Q1) ended March 31, 2019, representing an increase of 7 per cent compared to N47 billion recorded in the corresponding period of 2018.

Looking at the first quarter unaudited result of the bank, The Daily Times observed that the lender recorded an improved numbers across key metrics, driven by good performance across the business segments.

The Group profit before tax increased to N57.29 billion in Q1 2019 from N54 billion in the Q1 2018, representing an increase of 6 per cent. Profit growth was aided by a 23 per cent improvement recorded in the group’s Net Interest income which closed the period at N86.13 billion from N69.99 billion in Q1 2018.

The Group reported an increase in its earnings per share to N1.60 during the period under review, better than the figure declared in Q1 2018.

Also, the lender reduced its risk and asset quality continues to improve as cost of the risk dropped significantly by 52 per cent from 0.9 per cent in the prior year to 0.4 per cent for the period.

This was achieved as impairment charges declined by 54 per cent (N2.5billion year on year reduction).

According to the bank, its cost of funds also improved, declining by 25 per cent from 4 per cent in Q1 2018 to 3per cent at quarter-end, which was supported by a 22 per cent decrease in interest expense of N10billion over the same period, affirming the Group’s robust treasury and liquidity management.

“Our prudent cost management led to a 5 per cent decline in our cost-to-income ratio by 5 per cent from 53.3 per cent in 2018 to 50.9 per cent in the period with an absolute reduction in operating expenses by N2.3 billion year-on-year.

The Group’s retail franchise continues to increase as retail deposits grew by N80bn between December 2018 and March 2019 representing a 9 per cent growth notwithstanding the fact that total customer deposits dropped marginally by 3 per cent.

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

The bank, also, increased the volume and value of transactions across its electronic and digital platforms, as it continues to grow due to new customers.

“Our balance sheet continues to strengthen as liquidity ratio is at 66.7 per cent, loan to deposit ratio closed at 43 per cent, and capital adequacy ratio ended the period at 25 per cent respectively and remain above the relevant regulatory thresholds as at 31 March 2019”, the bank stated.