Following the recent release of Zenith Bank’s audited financial results for the 2020 financial year, shareholders of the bank on Tuesday at the 30th annual general meeting of the bank held at the Civic Centre, Victoria Island, Lagos unanimously approved the proposed final dividend of N2.70 per share, bringing the total dividend payment for the 2020 financial year to N3.00 per share with a total value of N94.19 billion.
Despite a challenging macroeconomic environment exacerbated by the COVID-19 pandemic, the group’s gross earnings rose by 5 per cent to N696.5 billion from N662.3 billion reported in the previous year, with an 8 per cent growth in non-interest income from N232.1 billion in 2019 to N251.7 billion in 2020 and a 1 per cent increase in interest income from N415.6 billion in 2019 to N420.8 billion in 2020.
Similarly, profit before tax (PBT) increased by 5 per cent, growing from N243.3 billion to N255.9 billion in the current year as a result of a blend of growth in the topline and a significant reduction in interest expense. Interest expense reduced from N148.5 billion in 2019 to N121.1 billion in 2020, significantly increasing the net interest income from N267.0 billion in 2019 to N299.7 billion in 2020.
The group’s increased retail activities translated to a corresponding increase in retail deposits and loans. Thus, retail deposits grew by N612.7 billion from N1.11 trillion to N1.72 trillion year-on-year (YoY), while savings balances significantly grew by 88% YoY and closed at N1.16 trillion. This retail drive, coupled with the low-interest yield environment, helped reduce the cost of funding from 3.0 per cent to 2.1 per cent and reduced interest expense. However, the low-interest environment also affected the net interest margin, which declined from 8.2 per cent to 7.9 per cent in the current year due to the re-pricing of interest-bearing assets. Operating costs grew by 10 per centt YoY but are still tracking well below inflation which at the end of the year stood at 15.75 per cent.
Although returns on equity and assets also reduced from 23.8 per cent to 22.4 per cent and from 3.4 per cent to 3.1 per cent, respectively, the group still delivered improved earnings per share (EPS), which grew 10 per cent from N6.65 to N7.34 in the current year.
The group also increased corporate customer deposits, which alongside the growth in retail deposits, delivered total deposit growth of 25 per cent, close at N5.34 trillion, and drove growth in market share. Total assets also increased significantly by 34 per cent, from N6.35 trillion to N8.48 trillion.
Despite the COVID-19 pandemic and its associated challenges, the group managed to create new viable risk assets as gross loans grew by 19 per cent, from N2.46 trillion to N2.92 trillion. This was achieved while maintaining a stable and low overall NPL ratio of 4.29 per cent (2019: 4.3 per cent) across the entire portfolio and an increase in the cost of risk from 1.1 per cent to 1.5 per cent, reflecting the elevated risk environment in 2020. The group recorded impressive liquidity and capital adequacy ratios of 66.2 per cent and 23.0 per cent and remained above regulatory thresholds of 30 per cent and 15 per cent respectively.