May 4, (THEWILL)- Zenith Bank Plc has released its unaudited financial results for Q1 2024, revealing a pre-tax profit of N320.194 billion.
This represents a notable 269.72% surge compared to the previous year. Additionally, this figure accounts for 40.23 % of the bank’s pre-tax profit in 2023.
This suggests that the bank is on track to surpass its 2023 financial achievements if this growth trend continues throughout the year.
This result is on the back of persistent macroeconomic challenges, including elevated inflation, interest rates, and exchange rate volatility.
These challenges have created a complex scenario, leading to both higher interest income and increased impairment losses.
A cursory review of the results revealed a combination of robust growth in interest income, driven significantly by lending activities and substantial gains from trading income.
These factors collectively contributed to the group’s impressive gross earnings of N780.617 billion and a profit after tax of N258.341 billion in Q1.
The group’s interest income surged by 155% year-on-year to reach N488.546 billion, with interest income from loans and advances to customers, playing a pivotal role, constituting 62% of the total interest income.
In addition, gains on other trading books surged to N186.334 billion from N4.330 billion reported in Q1 2023.
The growth in interest income appears to be driven by a combination of expansion in loan portfolio and a rise in interest rates.
Notably, the group’s loans and advances, a key contributing factor, expanded by 31.94% to reach N8.66 trillion. Moreover, the benchmark interest rate experienced a substantial 600 basis point increase, climbing from 18.75% in Q4 2023 to 24.75% in Q1 2024.
This uptick likely played a role in the noteworthy growth observed in interest income derived from cash and cash equivalents, investment in government bonds and treasury bills as well as loans and advances to customers and banks.
However, it also disclosed an impairment loss of N55.972 billion, with 89% allocated to the allowance for impairment on loans and advances.
Nevertheless, despite this significant impairment, it seems to be contained, given that it accounts for only 18.26% of the bank’s net interest income of N306.450 billion.
This indicates that despite the notable impairment loss, the bank’s net interest income after impairment loss remains robust, standing at N250.478 billion. This figure reflects an impressive year-on-year increase of 122%.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
