Nigerian banking giant Zenith Bank reported stellar financial results for the first quarter of 2024, defying a challenging economic climate. In a filing with the Nigerian Exchange (NGX) on Friday, May 3rd, the bank announced a staggering 189% year-on-year increase in gross earnings, reaching ₦781 billion ($1.8 billion USD) compared to ₦270 billion ($0.6 billion USD) in Q1 2023.
This impressive top-line growth translated to a significant boost in profitability. Zenith Bank’s profit before tax (PBT) skyrocketed by 270% to ₦320 billion ($0.7 billion USD) in Q1 2024, compared to ₦87 billion ($0.2 billion USD) in the same period last year. Similarly, profit after tax (PAT) witnessed a surge of 291%, reaching ₦258 billion ($0.6 billion USD) from ₦66 billion ($0.1 billion USD) in Q1 2023.
Interest and non-interest income contributed significantly to the growth in gross earnings. Interest income grew by 155% from the ₦192 billion reported in the quarter ended March 2023 to ₦489 billion in the period to 31 March 2024. The growth in interest income is due to the repricing of risk assets, owing to the increase in the central bank’s Monetary Policy Rate (MPR), which currently stands at 24.75%. The growth in net interest income is primarily due to the increase in fees and commissions as well as trading grains.
The Group reported an impairment charge of ₦56 billion for Q1 2024, up from ₦8 billion recorded in Q1 2023. This is attributable to significant growth in risk assets, primarily driven by the revaluation of its USD loans, which necessitated additional impairment on the bank’s foreign currency-denominated loans.
The cost of funds grew by 48% from 2.7% in Q1 2023 to 4% in Q1 2024 due to the high-interest rate environment, while interest expense increased by 157% from ₦71 billion reported in Q1 2023 to ₦182 billion in the period to March 2024. Notwithstanding the year-on-year (YoY) increase in interest expense, net interest margin (NIM) grew by 20% from 6.9% in the 3 months ended March 2023 to 8.3% in the current period ending 31 March 2024. Return on Average Equity (ROAE) and Return on Average Assets (ROAA) increased year-on-year (YoY) by 114% and 119%, respectively, due to improved profitability.
Gross loans, which are largely funded by customer deposits, grew by 30% from ₦7.1 trillion in December 2023 to ₦9.2 trillion in March 2024. Customer deposits also grew by 11% from ₦15.2 trillion in December 2023 to ₦16.8 trillion in March 2024, underpinning continued customer confidence in the Zenith brand. Total assets increased by 19% to ₦24 trillion within the same period.
The Group has consistently maintained all prudential ratios well above the minimum regulatory requirement. At the end of Q1 2024, Capital Adequacy Ratio (CAR) and Liquidity Ratio stood at 20% and 67%, respectively, demonstrating the Group’s ability to maintain a strong and liquid balance sheet.
The Group is making progress on the planned capital raise to support future growth and is very optimistic about meeting the new minimum capital requirements in line with the CBN’s recapitalisation directive. As the Group accelerates migration to its new technology architecture and also transitions into a holding company, it remains poised to maximise value for all stakeholders.
The bank’s performance is particularly noteworthy given the current economic headwinds in Nigeria, including a challenging operating environment and a tightening monetary policy stance. Zenith Bank’s ability to navigate these difficulties and deliver exceptional growth underscores its financial strength and strategic acumen.
