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Sunday, March 26, 2023

Zenith Bank Spends N71.26 bn on Fuel, Maintenance in 10 Years

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Higher diesel prices brought on by a rally in crude oil prices since the outbreak of the war in East Europe are choking banks as inflation costs and currency devaluations balloon operating expenses.

For instance, From June 2012 to June 2022, Zenith Bank has spent N71.26 billion on fuel and maintenance, according to data gathered by MoneyCentral.

Since diesel had been deregulated, the price sensitive to movement in crude oil price at the international market.

It is important to note that businesses that rely on diesel to run operations are seeing a rise in cost of production as incessant collapse on the electricity grid has become a major concern.

High operating costs have forced some banks to shorten their operating hours as the price of diesel has soared to more than N800 a liter.

Drilling down the numbers shows Zenith Bank expended N4.37 billion on fuel and maintenance in 2012, and that compares with N13.12 billion it incurred in June 2022.

Analysts have warned that the negative pass-through of rising diesel cost on energy inflation and its negative connotation for lenders cost base means the cost to income ratio will continue to rise, which could wipe out the gains from foreign exchange revaluation gains and higher interest income that benefits from higher interest rate.

“These are costs beyond the control of managers as global geopolitical tensions have exacerbated the already anemic position of developing countries,” said an analyst who doesn’t want his name mentioned.

“So, banks will need to embark on some cost control measures to savage them from operating inefficiencies,” said the analyst.

The largest and most liquid, and capitalised lenders in Nigeria collectively incurred N1.18 trillion in June 2022, which is 24.15 percent higher than 2021’s N956.86 billion, according to data gathered by MoneyCentral.

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