By Idowu Ibrahim Oluwadamilare (SIWES student, D S Adegbenro ICT Polytechnic)
Zenith Bank’s unaudited financial report for the third quarter ending in September 2023 demonstrates impressive growth.
The bank saw a substantial 149 percent increase in profit before tax, soaring from N202.5 billion in Q3 2022 to an impressive N505 billion in Q3 2023. Profit after tax also surged by 149 percent, moving from N174.3 billion to N434.2 billion during the same period.
This robust performance can be attributed to a combination of factors. Interest income experienced a remarkable 72 percent growth, climbing from N390.8 billion in Q3 2022 to N670.9 billion.
Non-interest income displayed even more remarkable growth, expanding by an astounding 186 percent from N212 billion to N607.2 billion.
The increase in interest income is primarily attributed to the expansion of risk assets and favorable pricing. Non-interest income’s growth is largely driven by revaluation gains resulting from the unification of exchange rates throughout the year.
Furthermore, Zenith Bank managed to reduce its cost-to-income ratio from 55.8 percent in Q3 2022 to a more efficient 37.8 percent in the current period.
However, it is worth noting that impairment levels increased due to prudent provisioning for the heightened risk environment and the creation of a counter-cyclical buffer to address potential exchange rate volatility.
This led to a rise in the cost of risk from 1.3 percent in Q3 2022 to 5.5 percent in Q3 2023, although it represents an improvement from the 8.8 percent reported in Q2 2023.
Looking at the bank’s overall performance in the first nine months of 2023, Zenith Bank experienced substantial growth in total assets, which expanded by 48 percent to reach N18.2 trillion from N12.3 trillion in December 2022.
Customer deposits also increased significantly by 49 percent, surging from N8.98 trillion in December 2022 to N13.38 trillion in September 2023.
This growth was observed in both corporate and retail segments, with savings portfolios across all currencies growing from N2.7 trillion in December 2022 to N4.6 trillion in September 2023.
Additionally, gross loans increased by 48 percent, from N4.1 trillion in December 2022 to N6.1 trillion in September 2023. This growth was driven by the revaluation of foreign currency-denominated loans and the expansion of local currency loans in strategic sectors of the economy.
Notably, Zenith Bank’s non-performing loan ratio improved to 3.8 percent by the end of September 2023, comfortably below prudential limits.
However, the net interest margin decreased slightly from 6.2 percent in September 2022 to 5.6 percent due to lower yields in government securities.
