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May 4, 2022/FSDH Research

Key Performance Highlights:

• Zenith Bank reported a solid topline for 1Q22, with the gross earnings recording a 21.7% YoY jump and the net profit growing by 9.7% YoY to N58.2 billion in 1Q22. The gross earnings rose 21.7% YoY to N191.5 billion in 1Q22, powered by a 159.2% YoY spurt in Trading Income, supported by a 24.9% YoY jump in interest income, partially offset by N8.9 billion other operating loss in 1Q22 (1Q21:N9.9 billion other income).
   
• The Group’s Interest and similar income vaulted 24.9% YoY to N126.4 billion, partially offset by a 43.5% YoY rise in Interest and similar expenses. The rise in interest income was primarily driven by a 35.7% growth in interest income from loans and advances on the back of a 5.8% YoY increase in gross loans, supported by a 21.5% YoY jump in income from government and other bonds, partially offset by almost nil income from Placement with banks and discount houses (1Q21:N3.4 billion in 1Q21). The earnings from treasury bills also rose 11.6%YoY to N11.3 billion in 1Q22. The Group reported a 43.5%YoY increase in interest expense to N25.8 billion, primarily due to an 82.5% spurt in time deposits in 1Q22. Consequently, the net interest income rose 20.9% YoY to N100.5 billion in 1Q22, up from N83.2 billion in 1Q21. The impairment charge for the period was up 75.3% YoY basis to N6.8 billion in 1Q22.
   
• The Group reported an 11.8% YoY rise in non-interest income to N57.2 billion in 1Q22. The Bank’s personnel expenses grew by 16.1% YoY to N21.5 billion in 1Q22, while the operating expenses vaulted 22.7% YoY. Consequently, the profit before tax was up 11.4% YoY to N68.0 billion in 1Q22. The company reported a 9.7% YoY rise in after-tax profit to N58.2 billion compared to N53.1 billion in the prior year, resulting from an increased effective tax rate to 14.4% (1Q21:13.0%). The Group Earnings per Share grew from N1.69/share in 1Q21 to N1.85/share in 1Q22.
   
• The Group recorded a rise in the cost of funds by 30 bps to 1.3% from 1.1%. Customers’ deposits grew by 12.1% YoY to close at N7.3 trillion in 1Q22 from N6.5 trillion in 4Q21. Savings account balance, which is solely retail grew by over N68 billion and is a validation of the company’s robust customer acquisition strategy and versatile electronic platforms and digital channels. Loans and advances also climbed by 6% from N3.5 trillion in 4Q21 to N3.7 trillion in 1Q22, boosting the Group’s interest income and displaying its cautious appetite for high-yielding risk assets creation. This development has also helped boost the net interest margin as it improved by 130 bps from 6.0% in 1Q21 to 7.3% in the current period. Total assets have also increased by 9.3% to N10.3 trillion in the current period, mainly driven by growth in customer deposits.
   
• Zenith Bank has announced the appointments of Mrs. Adobi Stella Nwapa and Mr. Anthony Akindele Ogunranti as Executive Directors. Also, the Bank approved the appointments of Mr. Peter Olatunde Bamkole as an Independent Non-Executive Director and Mr. Chuks Emma Okoh as a Non-Executive Director.

Market Reaction: The investor reaction to the 1Q22 results was muted as the stock closed 0.20% lower at N24.50 versus a marginal 0.17% gain for the NGX banking index and a 1.64% gain for the All-Share Index (29/4).

Zenith Bank Earnings Highlight 1Q22

Source: Company Financials, FSDH