Event

Riding on the positive wave in the banking industry, Zenith Bank (“the Group”) reported strong numbers in Q2 2023. According to the released financial report, gross earnings grew by 222% year-on-year to N666.73bn, on the back of a 94% year-on-year growth in interest income to N223.79bn, as well as a 383% year-on-year growth in non-interest income to N442.94bn. The interest income line benefitted from the impact of loan book expansion, repricing of loan terms leading to higher lending rates, and improved yield from investment securities.

Owing to the current inflationary pressures, salary reviews, higher regulatory cost (Amcon Levy) and personnel expenses, operating expenses rose by 26% year-on-year to N120.06bn. Nonetheless, the Group’s cost-to-income ratio improved to 31% in Q2 2023 (Q2 2022: 61%).  Additionally, the bank recognized a significant impairment charge of N200.20bn on its loans in response to the deteriorating macroeconomic conditions.

Outlook

We anticipate that growth on loan portfolio and improved yields on investment securities will prompt an uptick in interest income. Furthermore, we expect the non-interest income to rise on the back of improved transaction volumes across the Group’s digital platforms, higher trading income, and FX revaluation gains to mask the noticeable weakness in net fee and commission income. As a result, we forecast a 71% year-on-year growth in gross earnings to N1.62trn for FY 2023.

Please follow the link “Zenith Bank Q2 2023 – Growth in Non-Interest Income Line Boost Earnings” to view the whole report.

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