Nigeria’s second biggest lender posted a feeble growth in both revenue and profit for the nine months to September on account of increasing cost of business, according to its unaudited financials obtained from the Nigerian Exchange on Monday.
Zenith Bank’s gross earnings rose by just 1.9 per cent at N518.7 billion as the lender’s interest and similar income slid.
From N115.2 billion, operating expenses soared to N137 billion, essentially triggered by a 23.2 per cent rise in the bank’s payment to the Asset Management Company of Nigeria resolution fund as regulation demands.
Unlike last year, lenders in Nigeria are facing pressure from a higher interest rate environment, which has spurred higher costs of fund and made borrowing less attractive.
“Most banks have also struggled to grow their interest income this year,” Damilola Olupona, analyst at investment bank Chapel Hill Denham, told Arise TV in September.
“That is also coming on the flattish loan growth, coming from a year when most banks have to grapple with Covid-19. Most of them are cautious of growing their loan books and that impacted interest income.”
Zenith bank was trading down by 0.4 per cent at N25.25 per share on Monday in Lagos at 12.12 WAT.
An expansion of nearly one-third in net fee and commission income to N78.3 billion helped cushion the blow of interest decline on earnings.
The bank made an allowance of N28.9 billion as impaired charges largely for loans whose chances of being recovered at full value have been hampered by defaults. That compares with the N25.1 billion for the same period of last year.
Pre-tax profit inched up 1.4 per cent to N177.3 billion while profit-after-tax stood at N160.6billion compared to the N159.3 billion of last year.
