Following the release of the Zenith Bank audited financial result which reflected a 5 percent rise in Profit Before Tax (PBT) from N243.3 billion to N255.9 billion despite the Covid-19 pandemic, the bank has approved the proposed additional dividend of N2.70 per share, summing the total dividend payment for the year 2020 to N3.00 per share with a total value of N94.19 billion during the 30th annual general meeting of the bank in Lagos.
According to the audited financial result, the increase was owing to a mixture of growth in the topline coupled with a significant decline in interest expense from N148.5 billion in 2019 to N121.1 billion in 2020 thereby causing a surge in the net interest income from N267 billion in 2019 to N299.7 billion in 2020.
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Similarly, the bank saw a 5 percent growth in gross earnings from N662.3 billion which it recorded the previous year to N696.5 billion in the year 2020 as the non-interest income and interest income grew by 8 percent and 1 percent from N232.1 billion and N415.6 billion in 2019 to N251.7 billion and N420.8 billion in 2020 respectively.
In addition, retail activities rose thereby translating to a corresponding increase in retail deposits and loans as retail deposits heightened by N612.7 billion from N1.11 trillion to N1.72 trillion year-on-year while savings jumped significantly by 88 percent closing at N1.16 trillion. The retail drive however, in addition to the low-interest yield environment, led to a reduction in the cost of funding from 3.0 percent to 2.1 percent as well as reduced interest expense.
Meanwhile, net interest margin was also affected by the low-interest environment as the net interest margin fell from 8.2 percent to 7.9 percent in the current year on the back of the re-pricing of interest-bearing assets. Also, operating costs – though still tracking well below inflation which at the end of the year stood at 15.75 percent – increased by 10 percent year on year.
Further inferring from the financial statement, the bank delivered improved Earnings Per Share (EPS), which rose by 10 percent from N6.65 to N7.34 in the current year despite returns on equity and assets dropping from 23.8 percent to 22.4 percent from 3.4 percent to 3.1 percent respectively.
Alongside the growth in retail deposits, Zenith bank equally increased corporate customer deposits by 25 percent at N5.34 trillion, driving growth in market share.
In addition, despite the COVID-19 pandemic and challenges last year, total assets rose by 34 percent, from N6.35 trillion to N8.48 trillion as the bank managed to create new viable risk assets with gross loans improving by 19 percent, from N2.46 trillion to N2.92 trillion due to maintaining a stable and low overall Non Performing Loan (NPL) ratio of 4.29 percent – compared to the 4.3 percent in 2019 – across the entire portfolio alongside an increase in the cost of risk from 1.1 percent to 1.5 percent, which reflects the elevated risk environment in 2020.
Importantly, the Group recorded impressive liquidity and capital adequacy ratios of 66.2 percent and 23.0 percent and remained above regulatory thresholds of 30 percent and 15 percent respectively.