Zenith Bank Plc on Tuesday posted gross earnings of N696.5 billion for the financial year ended Dec. 31, 2020, in spite of the COVID-19 pandemic.
The bank’s audited financial result for the 2020 financial year presented to the Nigerian Stock Exchange showed that the gross earnings grew by five per cent from N662.3 billion recorded in 2019.
The group’s non-interest income rose by eight per cent to N251.7 billion from N232.1 billion achieved in the preceding period of 2019.
The company’s interest income grew by one per cent to N420.8 billion in contrast with N415.6 billion posted in 2019.
Profit before tax also increased by five per cent to N255.9 billion from N243.3 billion recorded in the comparative period of 2019.
The increase arose from a combination of growth in the topline and a significant reduction in interest expense.
The bank’s profit after tax stood at N230.57 billion compared with N208.8 billion posted in the comparative period of 2019, an increase of 10.43 per cent.
Interest expense reduced from N148.5 billion in 2019 to N121.1 billion in 2020, significantly increasing the net interest income from N267 billion in 2019 to N299.7 billion in 2020.
Thus, retail deposits grew by N612.7 billion from N1.11 trillion to N1.72 trillion year-on-year (YoY), while savings balances significantly grew by 88 per cent YoY and closed at N1.16 trillion.
In a demonstration of its commitment to its shareholders, the bank announced a proposed final dividend payout of N2.70 per share, bringing the total dividend to N3 per share.
This retail drive, coupled with the low-interest yield environment, helped reduce the 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.
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, driving growth in market share.
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) across the entire portfolio and an increase in the cost of risk from 1.1 per cent to 1.5 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.