Following investors’ renewed interest amid the Central Bank of Nigeria’s (CBN) foreign exchange reform, Zenith Bank Plc’s market capitalisation crossed the N1 trillion mark on the Nigerian Exchange Limited (NGX).
So far, investors who invested in Zenith Bank, have gained over N250 billion, when the stock price opened for trading this year at N24 per share.
Zenith Bank has now joined MTN Nigeria Communication (largest company in market capitalisation) , Airtel Africa, Plc, Dangote Cement Plc, BUA Foods Plc, and BUA Cement Plc with a market capitalisation in trillion of naira on the bourse. The six companies contributed 67 per cent or N21.560 trillion to market capitalisation that closed June 23, 2023 at N32.237 trillion.
Commenting on the development, the Vice President, Highcap Securities Limited, Mr. David Adnori, also attributed hike in Zenith Bank performance on banking stocks rally amid unification of the foreign exchange and fuel subsidy removal.
“These two policies have awakened the fundamentals of the macro-economy and it reflected in the Zenith Bank’s stock lately. These policies are masterstroke as market stakeholders have been clamouring for it a long time.
“We have been clamouring for full unification of the foreign exchange so that there will be clear rates for everyone to see.
“With the unification of foreign exchange, we have seen the full value of naira and if the naira is floated, it means foreign direct investors can seamlessly come-in and exit the stock market.”
In its unaudited results for the first quarter (Q1) ending 31st March 2023, Zenith Bank recorded an exceptional double-digit growth of 41 per cent in gross earnings, increasing from N191.5 billion in Q1 2022, to N270 billion in Q1 2023.
The statement of account submitted to the NGX indicated that the significant double-digit growth in the topline also boosted the bottom line, with the Group experiencing an impressive 27 per cent year-on-year (YoY) increase in Profit Before Tax (PBT), which rose from N68 billion in Q1 2022, to N86.6 billion in Q1 2023. It also showed that Zenith Bank’s Profit After Tax (PAT) grew by 13 per cent, from N58.2 billion to N66 billion during the same period.
The growth in the topline was propelled by substantial increases in both interest income and non-interest income. Interest income surged by 52 per cent from N126.4 billion in Q1 2022, to N191.6 billion in Q1 2023, while non-interest income expanded by 27 per cent from N57.2 billion to N72.8 billion.
The growth in interest income was attributed to the impact of risk asset repricing, while the increase in non-interest income primarily resulted from loan recoveries and foreign currency revaluation gains.
Regarding efficiency, the cost-to-income ratio improved from 55 per cent to 53.4 per cent in the current period, supported by a bolstered income line.
The cost of risk also moderated from 0.8 per cent to 0.7 per cent during the same period due to an enlarged loan book. However, Zenith Bank’s cost of funding doubled YoY from 1.3 percent in Q1 2022 to 2.7 percent in Q1 2023, owing to a considerable spike in interest rates between both periods as interest expense grew from N25.8 billion in Q1 2022 to N70.8 billion in Q1 2023.
This impacted the net interest margin (NIM), which reduced from 7.3 per cent to 6.9 per cent over the same period. Total assets expanded by nine per cent from N12.29 trillion in December 2022, to N13.36 trillion in March 2023, primarily driven by growth in customer deposits and other funding sources, such as borrowings.
In addition, the results showed that in the review period, Zenith Bank’s customer deposits increased by two per cent from N8.98 trillion in December 2022, to N9.14 trillion in March 2023. Loans and advances also experienced marginal growth of one per cent from N4.12 trillion in December 2022, to N4.15 trillion in March 2023 as customers continued to adjust to the full impact of higher rates on risk assets
