…Profit up 5% to N255.9bn
By Peter Egwautu
Shareholders of Zenith Bank Plc, yesterday, endorsed the N94.19 billion dividend proposed by its board of directors for the financial year ended December 31, 2020, translating to a dividend per share of N3.00 after paying 50 kobo per share interim dividend.
The shareholders at the at the 30th Annual General Meeting of the Bank held at the Civic Centre, Victoria Island, Lagos, unanimously approved the audited financial statement for the year 2020 as well as all the resolutions proposed at the meeting.
According to the audited financial results, profit before tax (PBT) rose by five per cent to N255.9 billion from N243.3 billion reported in the previous year despite a challenging macro-economic environment exacerbated by the COVID-19 pandemic.
The increase arose from a mixture of growth in the topline 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 to N299.7 billion in 2020 from N267.0 billion in 2019.
The group recorded a growth in gross earnings of five per cent to N696.5 billion from N662.3 billion in the previous year. It also recorded eight per cent growth in non-interest income to N251.7 billion and a one per cent increase in interest income to N420.8 billion in 2020 from N232.1 billion and N415.6 billion in 2019 respectively.
Its retail deposits grew by N612.7 billion to N1.72 trillion Year-on-Year (YoY), from N1.11 trillion while savings balances significantly grew by 88 per cent YoY and closed at N1.16 trillion. This retail drive, coupled with the low-interest yield environment, helped reduce the cost of funding to 2.1 per cent from 3.0 per cent reduced interest expense.
However, the low-interest environment also affected the net interest margin, which declined to 7.9 per cent from 8.2 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 to 22.4 per cent from 23.8 per cent and to 3.1 per cent from 3.4 per cent respectively, the Group still delivered improved Earnings per Share (EPS), which grew 10 per cent to N7.34 in the current year from N6.65.
Other performance indices show that the Group equally 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, to N8.48 trillion from N6.35 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 , to N2.92 trillion from N2.46 trillion. This was achieved while maintaining a stable and low overall Non Performing Loan, NPL ratio of 4.29 per cent (2019: 4.3 per cent) across the entire portfolio and an increase in the cost of risk to 1.5 per cent from 1.1 per cent, reflecting the elevated risk environment in 2020. The Group recorded impressive liquidity and capital adequacy ratios of 66.2 per cent and 23.0 per cent and remained above regulatory thresholds of 30 per cent and 15 per cent , respectively.