This analysis is based on the financial statement for half year 2021 that was published by one of the foremost Nigerian owned financial institutions, Zenith Bank.
The Bank’s half- year financial results for 2021 indicates clearly that the institution has successfully contended with some projected challenges and it is growing in leaps and bounds. It goes without saying that the first half of 2021 has been a tough year for banks in Nigeria. This is perhaps a consequence of the previous year, badly hit by the deadly coronavirus that ravaged the whole world. While some institutions are yet to recover from the lull in economic activity caused by inflation and the coronavirus pandemic, among other vices Zenith Bank never caved in. Rather, it has showcased more achievements worse off than their 2020 results. The institution has shown beyond reasonable doubt that the apparent limitations faced in the nation’s economy today are not capable of distorting its active growth pattern.
The half-year 2021 audited result of Zenith Bank shows its resilience and marginal growth in top and bottom-line earnings numbers, despite the headwinds caused by the COVID-19 pandemic. The leading financial institution in Nigeria by equity size recorded a significant growth and has increased its leverage ratio in the first half of 2021. However, based on financial metrics of Zenith Bank it is pertinent to applaud the management team led by the Group Managing Director, Mr. Ebenezer Onyeagwu for steering the ship of the bank so well in the period of the storm.Zenith Bank’s half-year 2021 result is a showcase of the financial institution’s culture of resilience. Zenith Bank’s half-year audited results for the financial year ended June 30, 2021, could be described as very impressive, and has attracted praises galore from shareholders and financial analysts who described the bank’s model as a good template for profitable businesses in a recovering economy like ours.Last week, the banking giant released the audited results for the half-year (HI) ended 30 June 2021, which analysts confirmed is dominating discussions in the nation’s capital market, as shareholders count their blessings over the impressive results churned out by the bank despite the current recovery mood of Nigeria’s economy.Zenith Bank has successfully boosted this narrative even further with the release of its Half Year 2021 Financial Report, where it closed with a huge profit. The banking Group result showed growth in profit before tax of three per cent, from N114 billion in H1 2020, to N117 billion in H1 2021. The Group also recorded a nine per cent growth in non-interest income from N116 billion in June 2020 to N127 billion in June 2021.According to an analysis on a National tabloid, “Zenith Bank was able to restrategise by ramping up its retail business in its bid to take a big chunk of the retail market, an exercise that eventually paid off within the period under review”.“Consequently, the Group’s retail journey continued to deliver positive results as retail deposits grew by N38.2 billion from N1.72 trillion to N1.76 trillion year-to-date (YTD).Another feature of the impressive result was the significant reduction in interest expense by 26 per cent and growth in non-interest income by nine per cent culminated in improved profitability.Also, the financial institution’s savings balances grew marginally by two per cent YTD to close at N1.18 trillion, from N1.16 trillion as of December 2020.
The drive for increased retail deposits and a low-interest yield environment helped reduce the cost of funding from 2.2 per cent to 1.3 per cent in the current period. Furthermore, the results showed that operating expenses grew by 10 per cent year-on-year, but growth remained below the inflation rate, while the Group improved its Earnings per Share (EPS), which grew two per cent from N3.30 to N3.38 for the half-year ended June 2021.The Group also increased total customer deposits by eight per cent to close the period at N5.77 trillion, demonstrating growth in its market share, just as total assets grew marginally to N8.52 trillion as of June 30, 2021, from the N8.48 trillion recorded as of December 31, 2020.Despite the COVID-19 pandemic-induced challenges and the challenging operating environment, the Group grew its risk assets as gross loans were up to three per cent year-to-date, from N2.92 trillion to N2.99 trillion. This was conservatively achieved at a low non-performing loans (NPLs) ratio of 4.51 per cent (FYE 2020: 4.29%) and a reduced cost of risk of 1.3 per cent (June 2020: 1.8%)”.This is an attestation to the bank’s readiness and positioning to absorb asset quality challenges, and spur it to do more for its shareholders, as all eyes will be on the second half 2021 results to see how things evolve.
The National Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), Mr. Sunny Nwosu in an interview, said that Zenith Bank shareholders are impressed with the result. The result has brought smiles to the faces of the investors of the bank.Nwosu, who disclosed that the shareholders’ expectations were met, said “Zenith Bank is always a delightful investment to shareholders.”The bank, according to him, is always making a significant difference in quarterly returns. “The bank’s reports and returns always excite shareholders,” he stated.On shareholders’ expectations at the end of the full year, Nwosu said “Though the shareholders won’t give the bank any target if they can hit the N200billion mark as profit after tax at the end of the year, the board, management and the shareholders of the bank will be happy for the feat.”The leading financial institution’s sound financial indices over the years, have made it one of the largest banks in the Nigerian Banking Industry. Little wonder it was recognized as the Most Valuable Banking Brand in Nigeria 2019, in the Global Banker Magazine Top 500 Banking brands; and Best Commercial Bank in Nigeria 2019, by the World Finance. The bank has also received many awards in the year runningGrowing profit position in these trying times speak remarkably of the kind of leadership, steering the ship of an institution, while attesting to the agility and resistance of its workforce.The Zenith Bank brand has leveraged so much on the use of Information and Communication Technology (ICT) in banking and general innovation in the Nigerian banking industry. With these innovations, it has efficiently deployed its competitive edge of excellent customer services, network and stable management as well as motivated workforce, strong capital, and liquidity base to effectively compete in the Nigerian banking landscape.
Olamide Adeniji is a member of the editorial board of TheScript Newspaper