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HOW Zenith Bank Expands Profit From Slow Earnings

Zenith Bank Shows Resilience As Gross Earnings Rises By 4% In Q3 2020 

Zenith Bank, Nigeria’s biggest bank by profitability, had gross earnings slowing in the  3rd quarter of 2020 but wrenched up bottom line with a deft application of management’s experience beginning from leveraging net interest income. 

 Zenith Bank Plc has announced its unaudited results for the third quarter ended 30 September 2020 with gross earnings rising by 4% to N509 billion from N491 billion posted in the same period in the previous year. This performance demonstrates the Group’s resilience against the backdrop of a challenging macro-economic environment brought about by the Coronavirus (COVID-19) pandemic.


 The result also demonstrates the Group’s ability to deliver optimal pricing for its interest-bearing assets and liabilities in a declining yield environment,

Despite the drop in total interest income from N322 billion to N319 billion the bank  hauled up net interest income grew by 5% Year-on-Year (y-o-y) to N225 billion

 . Interest expense and cost of funds were down 13% and 27% to close at N94 billion and 2.2% respectively, reflecting the Group’s robust treasury and liquidity management.  Zenith Bank showed that it’s not what you get but what you make out of it that matters.

 Revenue had had  grown marginally  by  3.6  percent  from   N491.268 billion to  N508,975 billion, a potential spoiler. But after suppressing interest expenses while at the same time guiding the growth of interest income by 5 percent to       net interest income, which is a guide to how well a bank manages the interest rates it pays for borrowing and lending, jumped many paces to give a positive outlook to pre-tax profit.

According to the unaudited account which was presented to the Nigerian Stock Exchange (NSE), this growth was driven by non-interest income which grew by 11% to N173 billion from N157 billion recorded at the end of Q3 2019, reflecting the Group’s increasingly diversified business model

Pre-tax profit of the leading bank, buoyed  marginally to N177 billion at the end of Q3 2020, representing a 1% growth over the N176 billion posted in the corresponding period last year. However, its net profit rose better by 5.7 percent from N150 ,723b to N159,315 b  .

The  third quarter result is the beginning of another attempt to wring good profit as was done in the last financial year, in its attempt to reaffirm leadership of the sector. Its earning power as indicated earning per share jumped by 5.6   percent N4.80 TO N5.07   

 Total deposits closed at N5.2 trillion at the end of Q3 2020 up from N4.3 trillion in December 2019, dominated by low-cost deposits. Retail deposits grew impressively by 58% to N1.7 trillion at the end of Q3 2020 up from N1.1 trillion as at December 2019, underpinned by the continuous expansion and improvement of the Group’s digital platforms.

 In terms of asset quality, the Group’s Non-Performing Loan (NPL) ratio improved to 4.80% (FYE 2019: 4.95%), despite growing loans and advances by 17 % from N2.5 trillion as at December 2019 to N2.9 trillion at the end of Q3 2020, affirming the Group’s prudent credit risk management. The liquidity and capital adequacy ratios (CAR), at 67.4% (Bank: 52.5%) and 21.5% respectively at the end of Q3 2020, remain above regulatory thresholds of 30.0% and 15.0%. 

Zenith Bank Plc has continued to demonstrate resilience and industry leadership. In recognition of its track record of excellent performance, Zenith Bank was voted as the Best Commercial Bank in Nigeria 2019 by the World Finance and the Best Digital Bank in Nigeria 2019 by Agusto and Co. The Bank was also recognised as Bank of the Year and Best in Retail Banking at the 2019 BusinessDay Banks and Other Financial Institutions (BOFI) Awards. More recently, the Bank emerged as the Most Valuable Banking Brand in Nigeria, for the third consecutive year, in the Banker Magazine “Top 500 Banking Brands 2020”, Number One Bank in Nigeria by Tier-1 Capital in the “2020 Top 1000 World Banks” Ranking published by The Banker Magazine, Best Bank in Nigeria 2020 in the Global Finance World’s Best Banks Awards 2020, and Bank of the Decade (People’s Choice) at the ThisDay Awards 2020.

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