Victor EzejaOne of the leading commercial banks in Nigeria, Zenith Bank Plc recorded triple-digit growth of 125 per cent in gross earnings from N945.6 billion reported in 2022 to N2.132 trillion in 2023.
This was disclosed in the bank’s audited results for the year ended December 31, 2023 presented to the Nigerian Exchange (NGX).
According to the finanicial results, the Tier 1 bank also recorded a Year-on-Year increase in Profit Before Tax (PBT) from N284.7 billion in 2022 to N796 billion in 2023, which represents a 180 per cent surge. Similarly, its Profit After Tax (PAT) also grew by 202 per cent from N223.9 billion to N676.9 billion in the period ended December 31, 2023.
Growth in interest and non-interest income is the main cause of the increase in gross earnings. From N540 billion in 2022 to N1.1 trillion in 2023, interest income climbed by 112%. During the same period, non-interest income increased from N381 billion to N918.9 billion, a 141% growth.
The rise in the yield of various interest-bearing instruments throughout the year, together with the expansion in the size of risk assets and their effective repricing, is what is responsible for the increase in interest income. Significant trading gains and an increase in earnings from the revaluation of foreign currencies drove the growth in non-interest income.
Due to the high interest rate environment, the cost of funds jumped from 1.9 per cent in 2022 to 3.0 per cent in 2023, while interest expense climbed by 135 per cent from N173.5 billion in 2022 to N408.5 billion in 2023. Despite the 32 per cent increase in operational expenses in 2023, the Group’s top-line performance allowed for a significant improvement in the cost-to-income ratio, which went from 54.4 per cent in 2022 to 36.1 per cent in 2023.
As the Group worked to raise shareholder returns, return on average equity (ROAE) rose by 118 per cent, from 16.8 per cent in 2022 to 36.6 per cent in 2023, supported by higher gross earnings. During the same time frame, Return on Average Assets (ROAA) increased by 95per cent, from 2.1 per cent to 4.1 per cent.
Customer deposits rose by 69 per cent from N9.0 trillion to N15.2 trillion in 2023, allowing Zenith Bank to further solidify its market leadership in important corporate and retail deposit categories. Retail deposits soared by 77 per cent from N3.97 trillion in 2022 to N7.04 trillion in 2023, further demonstrating the growing customer confidence in the Zenith brand. As a result, retail deposits now account for 46 per cent of total deposits (up from 44 per cent in 2022).
The revaluation of foreign currency deposits and an increase in total deposits contributed significantly to the 66 per cent increase in total assets from N12.3 trillion in 2022 to N20.4 trillion in 2023. Because of the increase in local currency risk assets and the revaluation of foreign currency loans, gross loans increased by 71 per cent from N4.1 trillion in 2022 to N7.1 trillion in 2023.
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The Non-Performing Loans (NPL) ratio increased slightly from 4.3 per cent to 4.4 per cent despite the elevated risk environment and challenging operating environment, demonstrating the Group’s resilience in the face of obstacles and a difficult macroeconomic environment. This can be attributed to the disciplined and diligent approach to risk asset creation and management.
The Capital Adequacy Ratio (CAR) and liquidity ratio, which were 21.7% and 71.0%, respectively, by the end of 2023, show that the prudential ratios are still below statutory limits.
The proposed final dividend payout of N3.50 per share, bringing the total amount to N4.00 per share, is what the bank has stated as a sign of its dedication to shareholders.
The Group is expected to be in a favorable position to investigate new Fintech opportunities and support its digital and retail banking endeavors once it has finished the shift to a holding company structure in 2024.
In addition, the Group is moving quickly to fulfill the new minimum equity capital requirement of N500 billion in order to maintain its international authorization within the timeframe that the Central Bank of Nigeria (CBN) has set. By doing this, it will increase its visibility in important markets and maintain its positioning for long-term growth and stakeholder value creation.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
