Friday, March 29, 2024

Zenith Bank’s PAT hits N111.4bn despite 17.2% increase in operating expenses

BY BAMIDELE FAMOOFO

The financial performance of Zenith Bank Plc for the half year period ended June 30, 2022, showed that the bank recorded strong earnings growth.

This performance was driven by a combination of core and non-core income growth as the bank benefited from the improved interest rate environment.

Operating expenses expanded by 19.2 percent y/y to N178.60 billion, with the most pressures exerted by regulatory charges – NDIC insurance premium (+21.2% y/y to N9.78 billion), AMCON levy (+16.1% y/y to N44.01 billion) and personnel expenses (+5.7% y/y to N39.74 billion).

Consequent to the OPEX growth relative to operating income, the cost-to-income ratio (ex-LLE) settled higher at 57.9 percent (relative to 56.1 percent in HY-21).

Notwithstanding, profitability was stronger, with profit-before-tax settling 11.1 percent higher year-on-year, while profit-after-tax increased moderately by 5.0 percent y/y to N111.41 billion, given the higher income tax expense (+69.9% y/y to N18.59 billion).

The bank recorded an 18.5 percent y/y growth in interest income, which settled at N241.73 billion. This strong growth was supported by an expansion in income from loans and advances to customers (+20.7% y/y to N163.41 billion), reflective of the bank’s increased risk appetite (+4.3% to N3.50 trillion in H1-22), while strong income from investment securities (+18.5% y/y to N74.45 billion), driven by the higher yields on investment securities, was also supportive.

Consequently, the bank recorded an Earnings per Share ( EPS) growth of 5.0 percent to N3.55 (vs N3.38 in HY-21), while an interim dividend of N0.30/share (same as the corresponding period last year) was proposed, which represents a dividend yield of 1.4 percent based on the last closing price of N22.00 (23 August 2022).

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