January 18, 2022


Accounting + Finance Blog

Zenith Bank Quarter 2 (Q2) Earnings Report 2021 loud Efficiency

Zenith Bank Quarter 2 (Q2) Earnings Report 2021 loud Efficiency

Zenith bank is the first of the FUGAZ banks in Nigeria to release its second-quarter earnings report. The Half-year financial statements made available to the NGX this Friday show efficiency on the part of the Group’s directors and management. These are despite the high inflation rate experienced in Nigeria and the volatile foreign exchange rate.

Although its core revenue fell compared to the first half of 2020. There was a sharp drop in expenses as well. The core revenue falls to 203 billion from 216 billion Naira. That’s a 6.4 percent fall in interest income. However, its core expenses fell to 43 billion from 59 billion Naira. This is a 37.2 percent sharp drop in interest expense.

Another cost that falls more than expected is impairment. Since banks deal mostly with loans. The risk of the client not paying is high which can lead to impairments. However, Zenith’s bank impairment cost fell. The impairment cost was 19.7 billion Naira for the first half of 2021 compared to 23.9 billion Naira in 2020. In percentage, this is a 21.3 percent fall in impairment value.

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As a result, Zenith bank earnings report showed a profit after tax of 106 billion in the half-year of 2021. This is compared to 103 billion in 2020 of the same period. The company’s earnings per share (EPS) were also favorable. EPS was 3.38 Naira per share. This is 8 Kobo higher than the previous half-year report of 3.30 Naira per share.

Why Efficiency on the part of Zenith Bank

The first reason why I believe Zenith bank was efficient is the fall in the interest expense. The value for interest expenses falls by 37.2 percent HoH. This is a huge fall and unexpected. Especially coming from Nigeria. Where inflation rate keeps soaring and the country’s foreign exchange rate continues to receive a huge blow despite government efforts to curb it. The company must have found a better way to deal with inflation and hedge against FX. Furthermore, Zenith bank must be enjoying the advantages of large-scale business.

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The second reason here is impairment. There was also a drop in it by 21.3 percent. One may reason that Zenith bank does not accept more loan applications in the period under consideration. But, a look at the statement of financial position for the period proves that wrong. The loans and advances for the 2021 half-year were 2.8 trillion Naira. But the 2020 figure was 2.7 trillion Naira. Therefore, higher loans cannot reduce impairments. So, the company gives out more good loans than bad ones. Also, the recovering team may have performed wonders. Whatever the case, the bank’s directors prove they have what it takes to run a profitable business.


Zenith bank’s half-year report for 2021 shows lower interest income and lower interest expense. The effect was higher earnings in terms of profit after tax and earnings per share which was up by 106 billion and 3.38 Naira per share respectively. The company’s lower cost compared to income is proof that the management team has what it takes to run a banking business.