Zenith Bank Nigeria Plc is arguably one of the best stocks on the NGXASI index and the cream of the crop as the lender continues to lead the pack on different financial metrics.
It is interesting to note that the lender’s third quarter earnings have significantly exceeded Full Year (FY) 2023 numbers, which validates consistent solid growth at the top lines (revenue) and bottom lines (profit) while curtailing operating costs in the face of a challenging environment.
Zenith Bank’s gross earnings spiked by 112.70 percent to N1.23 trillion in the first nine months of 2023, which is higher than N945.55 billion recorded as at December 2022.
Interest income was up 71.70 percent to N670.93 billion as at September 2023, vs N540.16 billion as at December 2022.
Similarly, net income otherwise known as profit after (PAT) was up 149.05 percent to N434.34 billion in September 2023, which compares with N223.91 billion recorded as at December 2022.
Aside from stable earnings, the lender has maintained a robust balance sheet whose size is partly attributed to revaluation of foreign currency assets.
Zenith Bank’s total asset stood at N18.16 billion as at September 2023, which is higher than N12.85 trillion as at December 2023 as it clings to its market dominance as evidenced in a strong liquid asset base and funding mix.
A strong growth in both interest and non-interest income reflected in the Bank’s operating income with a remarkable 2.1 times yoy increase to N1.02 trillion as at September 2023, outpacing operating expense growth of 20.4 percent year on year (yoy).
This impressive record led to the significant reduction in cost-to-income ratio (CIR) to 30.1 percent in September 2023, from 63.4% in September 2022.
Data from MoneyCentral Intelligence that Zenith has the second smallest CIR among the tier 1 banks; GTCO (25.9 percent), UBA (36.4 percent), FBNH (50.0 percent) and Access (59.3 percent).
The lender is efficient at turning shareholders’ investment into profit as return on average equity (ROAE) increased to 35.10 percent in September 2023 from 17.50 percent the previous year.
It is worth noting that the Zenith Bank has a healthy risk asset portfolio as it adopts a holistic and integrated approach to risk management and therefore, brings all risks together under one or a limited number of oversight functions.
“We attribute this to management’s disciplined stance towards lending to strategic and thriving sectors not adversely affected by FX devaluation as well as active monitoring of existing loans,” said analysts at Chapel Hill Denham Limited.
Non-performing loans (NPLs) reduced to 3.80 percent in September 2023 from 4.30 percent the previous year.
The Bank’s shares have gained 38.12 percent so far this year.