Zenith Bank Records Profit of 4% In First Quarter Of 2021

Top Nigerian bank Zenith Bank, released its unaudited results for the first quarter of 2021 which ended on March 31. It recorded a rise in profit before tax of 4 percent to N61 billion, which is over N2 billion higher than the N58.8 billion recorded in the corresponding period of 2020.

Profit after tax also went up by 5 percent to N53.1 billion in Q1 '21 from the N50.5 billion recorded in the corresponding period of 2020, according to the unaudited report submitted to the Nigerian Stock Exchange on April 30th.

One of the factors driving this increase in profits is the optimization of operational costs and improvement in non-interest income. Zenith Bank's cost of funds went down by over half, from 2.6 percent in Q1 '20 to 1.1 percent in 2021.

This was also reflected in interest expense which dropped by 45 percent from N32.8 billion to N18.billion over the same period. Non-interest income increased by 10 percent from N46.6 billion to N51.2 billion, driven by growth in credit-related fees and fees on electronic products.

Non-interest income was boosted by the increase in fees and commission income, which resulted from the increased volume of transactions across all the Bank’s channels.

Cost of risk also went down from 0.6 percent in March 2020 to 0.5 percent in March 2021, which highlights the bank’s risk management efforts, even as gross loans increased by 2 percent from N2.92 trillion to N2.98 trillion in Q1 '21.

The bank’s customer acquisition strategy and the effectiveness of its electronic platforms and digital channels enabled it to deliver an N54 billion increment in the savings account balance, which is solely retail. Customer deposits grew by 6 percent from N5.34 trillion in December 2020 to N5.68 trillion in March 2021.

Transactions on electronic channels also improved significantly as new customers are using the bank's digital platforms at an increased rate.

According to the bank, higher profits are to be expected with the ongoing economic recovery and improvements in the yield environment.

Zenith Bank's stock, ZENITHBANK, is currently trading on the Nigerian Stock Exchange at N22 per share. This is a decline of 1.12% from the previous price of N22.25.

From the beginning of 2021, till now, Zenith's shares have lost 11.29% of its value, from N24.8 in January to the N22.0 it currently is at. This puts it at the 138th position on the stock exchange in terms of year-to-date performance.