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In its remarks, the management of the Zenith Bank Group stated: “The audited performance for the half year ended 30th June, 2017 re-affirms Zenith’s continued leadership of the Nigerian financial services industry.
The Group recorded Gross Earnings of ₦380 billion, a 77% increase over the prior period. Given the backdrop of the macro environment and current policy direction, the Group achieved Profit Before Tax (PBT) and Profit After Tax (PAT) of ₦92 billion and ₦75 billion respectively representing a stellar growth of 71% and 112% over the same period of 2016.
While Net Interest Margins (NIM) tightened by 5.0% (y-o-y) due to the elevation in interest expense, the growth in both interest income and interest expense was an outcome of the current high yield environment. However, due to the currency devaluation, attendant inflationary pressures and AMCON charges, operating expense increased by 32.8% resulting in a cost-to-income ratio of 57.1%.
Gross loans outstanding as at the half year declined marginally by 2.6% owing to the emphasis on quality risk-asset creation. The increase in impairment charge in the period was a result of the Group's prudent approach to impairment charges for certain sectors, such as telecoms and power. This resulted in an increased NPL ratio of 4.3% and coverage ratio of 117% with the Non-Performing Loan (NPL) ratio still below the statutory guideline of 5%.
The liquidity ratio of the Group as at the half year was 61%, thus, maintaining a highly liquid balance sheet which is in line with its operating strategy and higher than the regulatory minimum of 30%. Furthermore, the Group’s strong fundamentals are further exhibited through its Capital Adequacy Ratio (CAR) of 21% which provides ample buffer from the regulatory minimum of 15%. The Group also retains the capacity for risk asset creation given its Loan to Deposit ratio of 66%.
Given the improving economic indicators, management’s positive outlook in the second half of the year is re-inforced as the Group is strategically positioned to explore opportunities to grow its customer base and risk assets that evolve. Emphasis will remain on agriculture, the real sector and emerging opportunities in select economic segment while providing support towards the expansion of local production and manufacturing capacity.