Zenith Bank Plc reports 24% growth in Gross Earnings for 2022

Despite facing ongoing challenges from the macroeconomic environment and headwinds, the bank’s gross earnings surged to ₦945.5billion (US$2.05billion) for the 2022 financial year from ₦765.6billion in the previous year, showcasing its resilience and strong performance.

Commenting on the bank’s financial performance during an earnings call with stakeholders, the Group Managing Director/Chief Executive Officer (CEO) of Zenith Bank, Ebenezer Onyeagwu stated: “We are pleased with the bank’s performance in 2022, which reflects our resilience and ability to adapt to the evolving business landscape. Despite the challenges posed by the macroeconomic environment, we were able to achieve significant growth in our gross earnings driven by increases in both interest income and non-interest income,” he added.

The growth in gross earnings was primarily driven by a 26 percent year-on-year (YoY) growth in interest income, which rose from ₦427.6billion to ₦540.2billion, and a 23 percent annual growth in non-interest income, which increased from ₦309billion to ₦381billion. As a result of this impressive growth, Zenith Bank has announced a proposed final dividend payout of ₦2.90 per share, which will bring the total dividend per share to ₦3.20.

Other numbers

The bank also recorded a two percent growth in profit before tax (PBT), from ₦280.4billion in the previous year to ₦284.7billion in 2022. The increase in pre-tax profit was attributed to the significant growth in all income lines.

However, the bank also experienced some challenges, including a 106 percent increase in impairments from ₦59.9billion to ₦123.4billion and a 63 percent YoY growth in interest expense, which rose from ₦106.8billion to ₦173.5billion.

The increase in impairments and interest expense resulted in a higher cost of risk, which rose from 1.9 percent in 2021 to 3.2 percent in 2022. The bank attributed the increase in impairments to the impact of Ghana’s sovereign debt restructuring programme. However, Mr. Onyeagwu offered reassurance that the bank’s Ghanaian operations maintain a substantial capital and liquidity buffer to operate optimally.

Despite these challenges, Zenith Bank posted a 39 percent increase in customer deposits – which grew from ₦6.47trillion in the previous year to ₦8.98trillion in 2022. The growth in customer deposits was observed across all products and deposit segments, reflecting the market leadership and customer confidence in the bank.

Furthermore, the bank’s net-interest-margin (NIM) also improved; growing from 6.7 percent to 7.3 percent due to the effective repricing of its interest-bearing assets in the continued elevated yield environment. However, operating expenses increased by 17 percent YoY, though cost-growth remained below the inflation rate.

The bank’s profit after tax (PAT) decreased by 8 percent, from ₦244.6billion to ₦223.9billion, primarily due to the increase in effective tax rate from 12.7 percent in 2021 to 21.3 percent in 2022 as a result of effectively implementing the Finance Act.

Mr. Onyeagwu clarified that this significant increase in the effective tax rate is a one-off event and not expected to recur in subsequent years. The decrease in PAT also resulted in a decline of return on equity, which reduced from 20.4 percent to 16.8 percent; and return on assets, which decreased from 2.7 percent to 2.1 percent due to significant growth in the balance sheet.

Looking ahead

He added that the Group, in 2023, intends to reorganise into a holding company as a key expansionary strategy, adding that the model will bring in new verticals to its businesses and growth in all its markets, both locally and internationally.

This comes as Zenith Bank’s consistent track record of excellent performance earned it the prestigious title of Number One Bank in Nigeria by Tier-1 Capital for the 13th consecutive year, as published in the 2022 Top 1000 World Banks Ranking by The Banker Magazine.