Zenith Bank Plc has posted a Profit Before Tax (PBT) of N57.3 billion in its first quarter (Q1) operations, against N54 billion recorded in the corresponding period in 2018, or a 6.1 per cent rise from N54 billion.
Specifically, the bank's unaudited Q1 result for the period ended March 31, 2019, also showed a 6.7 per cent increase in profit after tax (PAT) from N47.1 billion to N50.2 billion during the period under review.
According to the bank, the group's on-going commitment to cost optimisation on the income statement, and statement of financial position ensured earnings per share increased by seven per cent to ₦1.60 compared to Q1 2018.
The bank explained that net interest income and operating income grew by 23 per cent and one per cent respectively, mitigating the decline in gross earnings, while effective management of cost-to-income ratio, cost of funds, and cost of risk offset top-line declines to deliver enhanced operating income in the period.
"Our risk and asset quality continues to improve as cost of risk dropped significantly by 52% from 0.9% in the prior year to 0.4% for the period. This was achieved as impairment charges declined by 54% (₦2.5 billion year on year reduction). Our cost of funds also improved, declining by 25% from 4% in Q1 2018 to 3% at quarter-end.
"This was supported by a 22% decrease in interest expense of ₦10 billion over the same period, affirming the Group's robust treasury and liquidity management. Our prudent cost management led to a 5% decline in our cost-to-income ratio by 5% from 53.3% in 2018 to 50.9% in the period with an absolute reduction in operating expenses by ₦2.3 billion year-on-year."
Furthermore, the said the group's retail franchise continues to increase, even as its retail deposits grew by N80 billion between December 2018 and March 2019, representing a nine per cent growth, notwithstanding that total customer deposits dropped marginally by three per cent.
The bank attributed the drop in customer deposits to rebalancing of deposit mix, as expensive purchased deposits were forgone in favour of cheaper and stickier retail deposits.
"The volume and value of transactions across our electronic and digital platforms continue to grow as new customers are being acquired.
"Our balance sheet continues to strengthen as liquidity ratio is at 66.7 per cent, loan to deposit ratio closed at 43 per cent, and capital adequacy ratio ended the period at 25 per cent respectively and remain above the relevant regulatory thresholds as at 31 March 2019."