Zenith Bank Experiences Modest Growth Amidst Challenging Market Conditions
Zenith Bank reported only a modest increase in both net profit and revenue for the year 2025. The primary driver of income, interest income, saw its slowest growth since 2021, while trading profits, which contributed around N1.1 trillion to last year’s profits, turned negative.
Financial Performance Overview
An audited financial report released on Tuesday revealed that Nigeria’s second-largest financial institution experienced a flat growth of 0.7% in profit after tax, which rose from N1.3 trillion to N1.04 trillion. Revenue exhibited a similar trend, with a single-digit increase from N4 trillion to N4.2 trillion.
Industry Trends Indicate Overall Weakness
This trend of subdued growth in interest income was mirrored by the financial results of Tier 1 competitor Guaranty Trust Holdings (GTCO), which reported the weakest interest income growth in four years, with a 15% decrease in net profit to N865.7 billion.
Impact of Monetary Policy on Financial Institutions
These developments may mark the conclusion of a profitable era for Nigeria’s financial institutions, which benefitted significantly from the series of interest rate hikes implemented by the central bank between May 2022 and November 2024. The central bank adopted a hawkish stance to combat soaring inflation in Africa’s most populous nation.
Interest Income and Provisions for Impairment
Regulatory measures have led to interest rates being held steady on four occasions this year, with a minor reduction of 50 basis points when inflation appeared to be stabilizing. During this period, Zenith Bank reported a 35% increase in interest and similar income, rising to N3.7 trillion. In addition, net interest income, which reflects earnings from interest-bearing assets after deducting associated costs, surged by 52.7% to N2.6 trillion.
Changes in Financial Instrument Impairments
The institution allocated N742.2 billion for impairments on financial instruments, an increase from N657 billion in the previous year. However, it reported impairment credits on non-financial instruments amounting to N578 million, a significant improvement compared to an impairment charge of N1.8 billion from the previous year. Other operating income was recorded at N176.3 billion, yet there was a notable decline in foreign currency revaluation gains, culminating in a loss of N206.8 billion.
Strategic Expansion Plans and Dividend Announcement
In March, Zenith Bank announced its intention to list shares on the London Stock Exchange, following the precedent set by GTCO, which completed its secondary listing in London in July of the previous year. Additionally, the bank expanded its global presence by opening a new branch in Manchester, UK, alongside its existing operations in Ghana, Sierra Leone, and Gambia. Pre-tax profit showed a slight decline from N1.33 trillion to N1.26 trillion, while total assets grew from N30 trillion to N31.5 trillion.
On Tuesday, the bank also revealed plans to pay a final dividend of N8.75 per share, totaling N359.4 billion, on top of an interim dividend of N1.25 distributed earlier. This brings the potential total dividend per share to 10 Naira, compared to just 5 cents in 2024. Following this announcement, Zenith Bank’s share price experienced a minor uptick of 0.2% as of 10:26 West African Time.
