Zenith Bank reported a 5% increase in gross profit for the fiscal year ended Dec.31, 2020, to end the period at Naira 696.5 billion from Naira 662.3 billion the previous year.
The bank’s 2020 profit figures show that pre-tax profit also rose 5%, from N243.3 billion to N255.9 billion in the current year. The increase stems from a combination of revenue growth and a significant reduction in interest expense.
The bank declared a final dividend of N 2.70 for every 50,000 share, bringing the total dividend for the year to N 3.00, amounting to N 94.18 billion against N 87.91 billion in 2019. This is, however, subject to shareholder approval at the bank’s annual general meeting on March 16.
Building on income from loans and advances to customers which jumped 7.7% to 250.81 billion naira, the bank recorded a 1.3% increase in interest income to end 2020 to 420.81 billion naira against 232.94 in the same period of 2019.
Interest expense was reduced by 18.4% to 121.1 billion naira in 2020, significantly increasing the bank’s net interest income from 267.0 billion naira in 2019 to 299.7 billion naira in 2020.
The increase in the bank’s retail activities translated into an increase in retail deposits and loans. Personal deposits increased by 612.7 billion naira, from 1.11 trillion naira to 1.722 billion naira year-on-year.
Savings balances rose significantly by 88 percent to close at 1.16 trillion naira. This retail sales dynamic, combined with the low interest rate environment, reduced the bank’s financing cost from 3% to 2.1% and also reduced its interest costs.
The low interest rate environment during the period also affected the net interest margin, which fell from 8.2% to 7.9% in the current year due to the revaluation interest-bearing assets.
Operating expense growth (Opex) was moderate as the bank focused on cost management in the face of moderate gross profit growth. Operating expenses rose 10.4% year-on-year to naira 256.03 billion, with the highest pressure from other operating expenses rising 16.9% to n $ 102.76 billion naira, such as IT and maintenance costs.
Zenith Bank shares traded at N26.00 on the Nigerian stock exchange on Tuesday, gaining 4.84% – the highest gain of the year to date. The share gained 4.84 percent this year.