Zenith Bank Plc has declared N94.19 billion total dividend value for the 2020 financial year. At the bank’s 30th Annual General Meeting (AGM) held on Tuesday in Lagos, the shareholders approved the proposed final dividend of N2.70 per share, bringing the total dividend payment for the 2020 financial year to N3 per share with a total value of N94.19 billion. This followed the recent release of the bank’s audited financial results for the 2020 financial year.
According to the audited financial results, profit before tax (PBT) rose by five per cent to N255.9 billion from N243.3 billion reported in the previous year despite a challenging macro-economic environment exacerbated by the COVID-19 pandemic.
The increase arose from a mixture of growth in the top line and a significant reduction in interest expense from N148.5 billion in 2019 to N121.1 billion in 2020, raised the net interest income from N267 billion in 2019 to N299.7 billion in 2020.
The group recorded a growth in gross earnings of five per cent from N662.3 billion in the previous year to N696.5 billion, eight per cent growth in non-interest income from N232.1 billion in 2019 to N251.7 billion in 2020 and one per cent rise in interest income from N415.6 billion in 2019 to N420.8 billion in 2020.
The group’s increased retail activities translated to a corresponding increase in retail deposits and loans. Thus, retail deposits grew by N612.7 billion from N1.11 trillion to N1.72 trillion year-on-year (YoY), while savings balances significantly grew by 88 per cent YoY and closed at N1.16 trillion.
This retail drive, coupled with the low-interest yield environment, helped reduce the cost of funding from three per cent to 2.1 per cent and reduced interest expense. However, the low-interest environment also affected the net interest margin, which declined from 8.2 per cent to 7.9 per cent in the current year due to the re-pricing of interest-bearing assets.
Operating costs grew by 10 per cent year-over-year (YoY) but are still tracking well below inflation which at the end of the year stood at 15.75 per cent. Although returns on equity and assets also reduced from 23.8 per cent to 22.4 per cent and from 3.4 per cent to 3.1 per cent, respectively, the group still delivered improved Earnings per Share (EPS), which grew 10 per cent from N6.65 to N7.34 in the current year.
The group equally increased corporate customer deposits, which alongside the growth in retail deposits, delivered total deposit growth of 25 per cent, to close at N5.34 trillion, driving growth in market share. Total assets also increased significantly by 34 per cent, from N6.35 trillion to N8.48 trillion.
Despite the COVID-19 pandemic and its associated challenges, the group managed to create new viable risk assets as gross loans grew by 19 per cent, from N2.46 trillion to N2.92 trillion. This was achieved while maintaining a stable and low overall NPL ratio of 4.29 per cent (2019: 4.3 per cent) across the entire portfolio and an increase in the cost of risk from 1.1 per cent to 1.5 per cent, reflecting the elevated risk environment in 2020. The group recorded impressive liquidity and capital adequacy ratios of 66.2 per cent and 23 per cent and remained above regulatory thresholds of 30 per cent and 15 per cent, respectively.