Zenith Bank Plc released its 2020 Audited results for the period ended December 31st, 2020.
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The Zenith Bank Group recorded a growth in gross earnings of 5% rising to N696.5 billion from N662.3 billion reported in the previous year. Despite a challenging macro-economic environment exacerbated by the COVID 19 pandemic, the Group recorded 8% growth in non-interest income from NGN232.1 billion in 2019 to NGN251.7 billion in 2020 and a 1% increase in interest income from NGN415.6 billion in 2019 to NGN420.8 billion in 2020.
Profit before tax also increased by 5% growing from N243.3 billion to N255.9 billion in the current year. The increase arose from a combination of growth in the top-line and a significant reduction in interest expense. Interest expense reduced from N148.5 billion in 2019 to N121.1 billion in 2020, significantly increasing our net interest income from NGN267.0 billion in 2019 to NGN299.7 billion in 2020.
Our increased retail activities have translated to an increase in retail deposits and loans. Retail deposits grew by NGN612.7 billion from NGN1.11 trillion to NGN1.72 trillion year-on-year (YoY). Savings balances significantly grew by 88% YoY and closed at NGN1.16 trillion. This retail drive coupled with the low-interest yield environment helped reduce our cost of funding from 3.0% to 2.1% and also reduced our interest expense. However, the low-interest environment also affected net interest margin, which declined from 8.2% to 7.9% in the current year due to the re-pricing of interest-bearing assets. Operating costs grew by 10% YoY but are still tracking well below inflation which at the end of the year stood at 15.75%. Although returns on equity and assets also reduced from 23.8% to 22.4% and from 3.4% to 3.1% respectively, the Group still delivered improved Earnings per Share (EPS) which grew 10% from NGN6.65 to NGN7.34 in the current year.
The Group also increased corporate customer deposits, which alongside the growth in retail deposits delivered total deposit growth of 25%, to close at N5.34 trillion, driving growth in market share. Total assets also increased significantly by 34% 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% from N2.46 trillion to N2.92 trillion. This was achieved while maintaining a stable and low overall NPL ratio of 4.29% (2019: 4.3%) across the entire portfolio and an increase in cost of risk from 1.1% to 1.5%, reflecting the elevated risk environment in 2020. The Group recorded impressive liquidity and capital adequacy ratios of 66.2% and 23.0% and remained above regulatory thresholds of 30% and 15% respectively.
In 2021, the global economy looks set for a recovery with the rollout of vaccines, and growing confidence, driving an increase in economic activities across most economies. This has also driven an increase in crude oil prices, an improvement in interest rates and recovery from recession in Q4 2020 in the domestic economy. The Group is well-positioned to maximise the opportunities these recovering fundamentals represent while leveraging technology and expanding its retail footprints to deliver improved returns to all stakeholders.