…Zenith Bank Board proposed an interim dividend of N1.00/share for H1-24 (H1-23: N0.50/share), translating to a dividend yield of 2.6% based on the last closing price of N38.25/share
MON SEPT 02 2024-theGBJournal| Zenith Bank Plc once again beat analysts expectations when it reported HI-24 earnings on Friday. Impressed analysts now expect the bank to close the year positively with trading gains from financial instruments over H2-24.
The group recorded a 176.7% y/y growth in funded income to N1.15 trillion, supported by the high-interest rate environment and elevated yields in the fixed income market amid utilization of FX revaluation gains to grow its earning assets (+48.9% YTD to N22.32 trillion).
Across the contributory lines, the group generated higher income from loans and advances to customers (+140.3% y/y to N610.36 billion), investment securities (+234.7% y/y to N468.32 billion), and loans and advances to banks (+228.5% y/y to N70.76 billion), in the review period.
Interest expense advanced by 182.9% y/y to N434.36 billion, as the elevated interest rate pushed the group’s funding costs higher.
Specifically, the bank incurred higher costs on customers’ deposits (+116.1% y/y to N259.98 billion) despite improving CASA mix to 86.3% (2023FY: 78.6%).
Similarly, the bank’s borrowing cost increased significantly by 429.0% to NGN172.97 billion following the increase in interest-bearing borrowings (+81.5% YTD to N3.04 trillion).
After accounting for credit impairment charges (+99.7% y/y to N415.29 billion), net interest income (ex-LLE) settled at N299.78 billion (+455.8% y/y).
Elsewhere, non-interest income (NII) surged by 74.4% y/y to N899.33 billion, as the gains from trading investment securities (+672.2% y/y to N795.57 billion) and higher net fees and commission income (+149.6% y/y to N109.62 billion) were sufficient to offset the foreign exchange revaluation loss of N2.65 billion in H1-24, relative to the revaluation gain of N355.59 billion recorded in H1-23.
Consequently, the expansion in non-interest income and net-interest income led to the growth of operating income (+110.5% y/y to N1.20 trillion).
Operating expenses expanded by 115.3% y/y to N472.08 billion, triggered by the increased costs incurred on personnel expenses (+106.0% y/y to N115. billion) and NDIC insurance premium (+88.9% y/y to N22.65 billion) in the review period.
Consequent to the faster OPEX growth relative to operating income, the cost-to-income ratio (ex-LLE) deteriorated, settling at 39.4% (relative to 38.5% in H1-23).
Overall, profitability came in significantly higher, as the profit-before-tax grew by 107.5% y/y to N727.03 billion. Likewise, PAT grew by 98.1% y/y to N578.00 billion, despite a higher income tax expense (+154.2% y/y to 149.03 billion).
Meanwhile, Zenith Bank reported a 98.2% y/y expansion in EPS to N18.41 (H1-23: N9.29).
The stellar growth across the bank’s core (+176.7% y/y) and non-core (+74.4% y/y) income lines supported the significant increase in the group’s earnings.
Zenith Bank Board proposed an interim dividend of N1.00/share for H1-24 (H1-23: N0.50/share), translating to a dividend yield of 2.6% based on the last closing price of N38.25/share.
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