Zenith Bank Plc has announced an impressive result for the year ended December 31, 2020, with profit before tax (PBT) rising by five per cent to N255.9 billion from N243.3 billion reported in the previous year.
This is in spite of a challenging macro-economic environment exacerbated by the COVID 19 pandemic. This increase arose from a combination of growth in the top line and a significant reduction in interest expense from N148.5 billion in 2019 to N121.1 billion in 2020, significantly increasing the net interest income from N267.0 billion in 2019 to NGN299.7 billion in 2020.
In demonstration of its commitment to its shareholders, the bank has announced a proposed final dividend payout of N2.70 per share, bringing the total dividend to N3.00 per share.
According to the bank’s audited financial results for the 2020 financial year presented to the Nigeria Stock Exchange (NSE) on Tuesday, the Group recorded a growth in gross earnings of five per cent from N662.3 billion in the previous year to N696.5 billion.
The Group recorded eight per cent growth in non-interest income from NGN232.1 billion in 2019 to NGN251.7 billion in 2020 and a one per cent increase in interest income from N415.6 billion in 2019 to NGN420.8 billion in 2020.
The Group’s increased retail activities translated to a corresponding increase in retail deposits and loans. Thus, retail deposits grew by NGN612.7 billion from NGN1.11 trillion to NGN1.72 trillion year-on-year (YoY), while savings balances significantly grew by 88% YoY and closed at NGN1.16 trillion.
This retail drive, coupled with the low-interest yield environment, helped reduce the cost of funding from three per cent to 2.1 per cent and also reduced interest expense. However, the low-interest environment also affected the net interest margin, which declined from 8.2 per cent to 7.9 per cent in the current year due to the re-pricing of interest-bearing assets.
Operating costs grew by 10 per cent YoY but are still tracking well below inflation which at the end of the year stood at 15.75 per cent. Although returns on equity and assets also reduced from 23.8 per cent to 22.4 per cent and from 3.4 per cent to 3.1 per cent, respectively, the Group still delivered improved Earnings per Share (EPS), which grew 10 per cent from N6.65 to N7.34 in the current year.
The Group also increased corporate customer deposits, which alongside the growth in retail deposits, delivered total deposit growth of 25 per cent, to close at N5.34 trillion, driving growth in market share.
Total assets also increased significantly by 34 per cent, from N6.35 trillion to N8.48 trillion. Despite the COVID-19 pandemic and its associated challenges, the Group managed to create new viable risk assets as gross loans grew by 19 per cent, from N2.46 trillion to N2.92 trillion.
This was achieved while maintaining a stable and low overall NPL ratio of 4.29 per cent (2019: 4.3 per cent) across the entire portfolio and an increase in the cost of risk from 1.1 per cent to 1.5 per cent, reflecting the elevated risk environment in 2020.
The Group recorded impressive liquidity and capital adequacy ratios of 66.2 per cent and 23 per cent and remained above regulatory thresholds of 30 per cent and 15 per cent, respectively.
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