| Ebenezer Onyeagwu
Managing Director/CEO Zenith Bank Plc Zenith Bank released its H1-21 interim financial report recently showing that operating expenses grew at a faster pace (+10.3% to NGN149.85 billion), as all major contributory line items, save for personnel expenses (-3.3% y/y to NGN37.58 billion), recorded growth. According to Cordros Capital, interest income declined by 6.0% y/y to NGN203.93 billion, following declines in income from investment securities (-12.6% y/y to NGN62.84 billion) and loans and advances to banks (-66.0% y/y to NGN5.66 billion). “Both declining contributory lines masked the growth in income from loans and advances to customers (+5.5% y/y to NGN135.43 billion) as risk asset creation edged up by 2.1% to NGN2.84 trillion in H1-21. Particularly, the respective 22.5% and 16.8% y/y growth in AMCON levy and NDIC premium drove costs higher. Consequent to the higher opex growth relative to operating income, the bank’s cost-to-income ratio (ex-LLE) settled higher at 56.1% (HY-20: 54.3%). Likewise, interest expense declined significantly by 26.1% y/y to NGN43.99 billion, reflecting the lower cost on deposits from customers (-38.5% y/y to NGN26.16 billion) and despite the higher interest cost on borrowings (+4.9% y/y to NGN17.83 billion). Consequent to the larger decline in interest expense, net interest income settled marginally higher by 1.6% y/y at NGN159.94 billion. After accounting for credit impairment charges (-17.2% y/y to NGN19.80 billion), net interest income (ex-LLE) settled 5.0% higher year-on-year. The impressive NII expansion, alongside the growth in net interest income, led to a 6.8% y/y increase in operating income to NGN266.91 billion.
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