Amidst a harsh operating environment, Zenith Bank Plc has announced gross earnings of N696.5 billion in its 2020 operations, against N662.3 billion posted in the corresponding period of 2019.
The bank’s audited result for the year ending December 31, 2020, showed gross earnings of N696.5 billion over N662.3 billion reported in the previous year while profit before tax also increased from N243.3 billion to N255.9 billion in 2020.
According to the bank, the improved performance was due to a combination of growth in the topline and a significant reduction in interest expense.
The group recorded eight per cent growth in non-interest income from N232.1 billion in 2019 to N251.7 billion in 2020. Its increase in retail activities translated to a corresponding rise in retail deposits and loans.
The bank’s retail deposits grew by N612.7 billion from N1.11 trillion to N1.72 trillion, while savings balances significantly grew by 88 per cent N1.16 trillion.
The bank said the retail drive, coupled with the low-interest yield environment, helped reduce its cost of funding from 3.0 per cent to 2.1 per cent and also reduced interest expense.
“However, the low-interest environment also affected the net interest margin, which declined from 8.2 per cent to 7.9 per cent in the current year due to the re-pricing of interest-bearing assets. Operating costs grew by 10 per cent 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 from 23.8 per cent to 22.4 per cent and from 3.4 per cent to 3.1 per cent, respectively, the Group still delivered improved Earnings per Share (EPS), which grew 10 per cent from N6.65 to N7.34 in the current year.”
The group also 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, while total assets also increased significantly by 34 per cent, from N6.35 trillion to N8.48 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, from N2.46 trillion to N2.92 trillion. This was achieved while maintaining a stable and low overall NPL ratio of 4.29 per cent (2019: 4.3 per cent).”