In the first quarter of the year which ended in March, Zenith Bank has posted pre-tax profit of N57 billion, representing a 6 per cent growth over the 54 billion achieved in the corresponding period of 2018.
The Group’s on-going commitment to cost optimisation on the income statement and statement of financial position ensured earnings per share increased by 7 per cent to N1.60 compared to Q1 2018.
The bank explained in a statement that growth in net interest income and operating income by 23 per cent and 1 per cent respectively mitigated the decline in gross earnings. The effective management of cost-to-income ratio, cost of funds and cost of risk offset top-line declines to deliver an enhanced operating income in the period.
“Our risk and asset quality continues to improve as cost of risk dropped significantly by 52 per cent from 0.9 per cent in the prior year to 0.4 per cent for the period. This was achieved as impairment charges declined by 54 per cent (N2.5 billion year on year reduction). Our cost of funds also improved, declining by 25 per cent from 4 per cent in Q1 2018 to 3 per cent at quarter-end. This was supported by a 22 per cent 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 per cent decline in our cost-to-income ratio by 5 per cent from 53.3 per cent in 2018 to 50.9 per cent in the period with an absolute reduction in operating expenses by N2.3 billion year-on-year.
The Group’s retail franchise continues to increase as retail deposits grew by N80 billion between December 2018 and March 2019 representing a 9 per cent growth notwithstanding the fact that total customer deposits dropped marginally by 3 per cent.
The drop in customer deposits was as a result of rebalancing of the 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.
Going into the rest of the year and with improving economic fundamentals, we are confident of delivering value to all our stakeholders on our commitments even as we create more opportunities for businesses by supporting them through selective risk asset creation. We shall continue our investments in the retail segment of the market as we consolidate our leadership position in the corporate segment while maintaining a strong balance sheet.