Nigeria’s most profitable bank, Zenith Bank Plc, has released its unaudited financial statement for the first quarter ended 31st March 2021. The report showed Profit After Tax (PAT) rising by 5% to N53.1 billion, up from N50.5 billion recorded in March 2020. The company noted that the slight increase is despite the challenging macroeconomic environment in which it operated during the period.
The unaudited financial statement was presented to the Nigerian Stock Exchange (NSE) on Friday, 30th April 2021, and it showed the Group’s Profit Before Tax (PBT) also growing by 4%, from N58.8 billion to N61.0 billion in the same period.
Business Elites Africa understands that profitability was driven by the optimisation of the cost of funds and improvement in non-interest income. Zenith Bank’s cost of funds had reduced significantly from 2.6% in March 2020 to 1.1% in March 2021. This was also reflected in interest expense which dropped by 45% from N32.8 billion to N18.0 billion over the same period. Non-interest income increased by 10% from N46.6 billion to N51.2 billion, driven by growth in credit-related fees and fees on electronic products.
Note that the bank’s non-interest income was boosted by the increase in fees and commission income, which resulted from the increased volume of transactions across all the Bank’s channels. Cost of risk dropped from 0.6% in March 2020 to 0.5% in March 2021, which affirms the Bank’s prudent risk management, even as gross loans increased by 2% from N2.92 trillion to N2.98 trillion in Q1 2021.
Zenith Bank’s strong effort at customer acquisition and the effectiveness of its electronic platforms and digital channels enabled it to deliver a N54 billion increment in the savings account balance, which is solely retail. Customer deposits grew by 6% from N5.34 trillion in December 2020 to N5.68 trillion in March 2021. Transactions on electronic channels also grew astoundingly as new customers continue to be attracted to the Bank’s various user-friendly digital platforms.
For the rest of the year, the tier-1 bank said it expects that the ongoing economic recovery and improvements in the yield environment will translate into improved numbers for the Group. This is expected to be supported by local and international COVID-19 vaccination campaigns, rising commodity prices, and global economic growth of up to 6%, as estimated by the International Monetary Fund (IMF). The Group will continue to position itself to take advantage of positive developments in the domestic and global economy to deliver improved financial performance and returns to all its stakeholders.
EDITOR’S NOTE: For further details, you may download Zenith Bank’s Q1 2021 financial statement by clicking here.