Zenith Bank’s quarterly profit hits N66 billion

Nigeria’s second-largest private lender, Zenith Bank, grew its profit for the first three months of this year by double digits to N66 billion, according to its earnings report issued on Friday.

The bank recorded the growth after interest income and similar income, which often provide the most revenue for banks, increased by more than half.

Lenders in Africa’s biggest economy are reaping record profits from an interest rate hike that began in 2022. The rate has shown no sign of ending soon following six straight hikes in the benchmark lending rate by the central bank, allowing banks to charge more for loans.

Godwin Emefiele, the apex bank’s chief, has stated that the said rate, now at its peak level ever, will continue to be raised until Nigeria’s galloping inflation slows to the desired point.

Central banks sometimes use monetary policy rates as a tool to control inflation.

The gross earnings of Zenith Bank rose for the review period to N270 billion, drawing strength from interest and similar income for over 70 per cent of that figure.

The bank expanded net income on fees and commission only marginally by 2 per cent to N34.1 billion after fees on electronic products (the biggest contributor to that pool) dropped 18.2 per cent.

No explanation was provided in the document as to why e-banking income fell.

That slide bucked the expectation that traditional banks and, more importantly, neobanks would earn more from e-banking services after a cash crunch drove many Nigerians to embrace banking apps and shot transaction volume sharply up.

To help broaden its income streams, Zenith Bank early March received a provisional approval to operate a holding company structure like many other big competitors such as Access Holdings, GTCO and FBN Holdings.

Jim Ovia, its founder and former CEO, will chair the group when the new model is completed as he presently does.

Profit before tax jumped by 27.4 per cent, while after-tax profit advanced to N66 billion from N58.2 billion.

However, profit margin – a profitability metric which measures how much of revenue that has turned into profit – fell to 24.4 per cent, from 30.4 per cent.

Zenith Bank, also Nigeria’s second-biggest bank by assets, grew assets from N10.3 trillion to N13.4 trillion year-on-year within the period.