Zenith Bank’s half-year profit doubles to N578 billion

Zenith Bank reported roughly twice the net profit it earned in the first half of last year in the same period this year, its audited financial records show, helped by sharp increases in lending rate introduced by the country’s central bank earlier in the year in its push to slow down inflation.

Interest and similar income of Nigeria’s second-largest lender by market value raced by 176.7 per cent to N1.1 trillion, and alone accounted for above half of the revenue generated within the period.

Even after interest expense was deducted from that sum, what remained was a great deal for the bank as net interest income stood at N715.1 billion, compared to N261.9 billion a year earlier.

Monetary authorities in Nigeria have aggressively raised borrowing costs so far this year, lifting them by 800 basis points in one of its longest rounds of rate tightening on record in the hope of tempering the inflationary pressures that have fuelled a cost-of-living crisis in Africa’s most populous country.

Zenith Bank’s provision for impairment of financial and non-financial instruments for the period jumped almost by twofold to N415.3 billion, driven by a surge in the cash it set aside to clear delinquent loans that are not likely to be repaid off its books.

The overall impaired loans of the bank constituted 8.4 per cent of its total loans compared to 7.1 per cent at the end of last year.

One major driver of growth was trading gains, which leapt to N795.6 billion from N103 billion on the back of a big increase in the value of its financial instruments.

Foreign exchange revaluation gain, which boosted the revenue of the lender and other banks in the country by a great measure last year, only saw a tepid increase this time around, rising only by 3.3 per cent.

A depreciation in the value of the naira by around 70 per cent between last June and the beginning of the year triggered a spike in the rate of exchanging the dollar for the local currency, consequently creating opportunities for banks with investments in foreign currency assets to earn big after converting such securities into naira.

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