THOMAS IMONIKHE
Shareholders of Zenith Bank Plc have several reasons to cheer as the Dame Dr Adaora Umeoji-led management of the foremost financial institution declared a whopping N1.0trillion in pretax profit in the third quarter of the current financial year despite challenging macroeconomic environment even as citizens continue to grapple with escalating cost of living in the country.
The impressive performance contained in the bank’s unaudited results for the third quarter ended 30 September also recorded an astonishing triple-digit growth of 118percent from N1.33 trillion reported in Q3 2023 to N2.9 trillion in Q3 2024, which further highlights the Group’s market leadership and consolidation on the solid financial foundation laid by its founder and chairman, Dr Jim Ovia.
Coming barely five months after Dr. Umeoji, the bank’s first female Group Managing Director, GMD assumed duty in June, after what had been adjudged as a remarkable tenure of Dr Ebenezer Onyeagwu, the results recently presented to the Nigerian Exchange (NGX), revealed that the triple-digit growth in the topline engendered an increase in the bottom line, as the Group posted a scintillating 99% Year on Year (YoY) increase in profit before tax, from N505 billion in Q3 2023 to N1.0 trn in Q3 2024 even as profit after tax grew by 91% from N434.2 bn to N827 bn during the period under review.
But financial analysts attributed the growth trajectory of Nigeria’s largest and Africa’s 6th largest financial institution on the focused and dogged pursuance of its vision and strategic objective –“To become the leading Nigerian technology-driven, global financial institution that provides distinctive range of financial services by the current board, management and staff. Strict adherence to the bank’s core values of integrity, professionalism, corporate governance, loyalty and excellent service were also identified as other enablers.
But according to the results, the topline was clearly driven by the expansion of both interest income and non-interest income with the former witnessing a 190percent rise to N1.95 trn, attributed to the high-yield environment. On the hand, non-interest income grew by 41percent to N856 bn, enhanced by substantial growth in fees and commissions, revealing the strength of the brand’s retail growth and good performance of its digital channels between January and September.
“The robust increase in profitability reflects the bank’s focus on operational efficiency and strong risk management practices. Earnings per share (EPS) nearly doubled, rising to N26.34 from N13.82 in Q3 2023, underscoring Zenith Bank’s strong value creation for shareholders.The Bank’s balance sheet grew significantly, with total assets growing by 49% to N30.4 trillion, largely supported by customer deposits, which rose by 42% to N21.6 trillion.
Continuing, the bank disclosed that, “This growth in deposits was broad-based across corporate and retail segments, highlighting the Bank’s deepening reach and customer loyalty. Gross loans increased by 46% to N10.3 trillion, underscoring the commitment to supporting strategic sectors in the economy” while Capital adequacy ratio remained strong, improving to 21.9%, well above regulatory requirements.
“The return on average equity (ROAE) stood at 37.8%, up from 35.1%, while return on average assets (ROAA) also improved to 4.3% as Zenith Bank maximized its asset base. Cost of funds increased to 4.3%, reflecting the broader market trend of rising interest rates, while the cost of risk was maintained at 7.3%, underscoring the Bank’s proactive approach in provisioning for credit risk. The Bank’s cost-to-income ratio rose to 39.5%, reflecting the impact of strategic investments in technology and capacity building aimed at supporting long-term growth, even as it continues to strive for greater operational efficiency”.
The results further indicate that the bank’s asset quality “remains a cornerstone of its strength, with a non-performing loan (NPL) ratio of 4.5percent, within regulatory limits in addition to a high coverage ratio of 198.4percent which “underscores the Bank’s disciplined approach to risk management, positioning it for resilience in the face of market volatility while supporting stable loan growth”, promising that it remains steadfast in its commitment to sustainable growth and value creation.
Recall too, that the Bank launched a capital raise programme on August 1, 2024, consisting of a combined Rights Issue and Public Offer in compliance with the Central Bank of Nigeria (CBN)’s recapitalization directive for commercial banks issued in March 2024. As the the Bank awaits final capital verification approvals from authorities, strong indications have emerged that the fundraising exercise was successful thereby reflecting strong confidence of the banking public in the brand.
The additional capital, the financial institution explained, will enhance its ability to expand its “product offerings, deepen its penetration in strategic sectors, boost lending to the real sector and pursue its African and global expansion plan. To this end also, the Bank in September 2024 received regulatory approval for the establishment of a Zenith Bank branch in Paris, France, which is now fully operational as well as enhance the institution’s product offerings in global markets.
“With a strengthened capital base, Zenith Bank is well-positioned to navigate the evolving economic landscape, while putting best-practice sustainability standards at the heart of its business. The Bank will also continue to prioritize opportunities that enhance stakeholder value and a strong compliance and corporate governance culture, which will reinforce its leadership position within Nigeria’s financial sector and drive long-term growth”, the bank noted in a statement.
Besides, the recent upgrade of its information technology infrastructure which temporarily disrupted banking channels but had been addressed and normal banking services fully restored, was clearly in furtherance of the bank’s innovative approach to improving on its cutting edge services to all customers, deliver superior performance and create premium value for all stakeholders. Indeed, the growth trajectory of the financial institution established in May 1990 with Dr. Ovia as the pioneer Managing Director is a testament to the vision, resilience, integrity, tenacity of purpose and visionary leadership of the founder.
Happy birthday to Dr. Jim Ovia, CFR, founder and chairman of Zenith Bank Plc and the Chairman, Board of the Nigerian Education Loan Fund (NELFUND) as he clocks 73 years today November 4th.
