Zenith Bank Plc managed to absorb the shock of a deep plunge from asset trading gains of N1.10 trillion in the previous year to a loss of over N63 billion in 2025. How the bank was able to tide over the revenue loss that big and shield its bottom line from being hit sums up its earnings story in 2025.
Trading gains of N1.10 trillion accounted for 27.7 percent
of the bank’s gross earnings in 2024 and the plunge into a loss position in
2025 depicts the high volatility of earnings to which the bank and the banking
industry as a whole is subject.
Zenith Bank’s audited financial report for the full year
ended December 2025 shows the first trading loss in more than a decade coming
after two preceding years of huge trading gains. In two years to 2024, the bank
raked in more than N2 trillion in asset trading gains – more than the sum of
its trading gains for 10 years to 2022.
The boom reversed in 2025 and the strong growth in
non-interest earnings recorded over the two preceding years overturned to a
drop of 63 percent from N1.10 trillion to close at N405 billion.
The bank’s management had to look elsewhere to make up for
the huge revenue loss and interest earnings came to the rescue. Interest income
from lending and investing activities of the bank rolled in N3.67 trillion,
marking additional inflow of N952 billion in the year.
The figure represents an increase of 35 percent in the year
against single digit increases in loans and advances and investment securities.
This means a significant increase in asset yield, as the average interest
earned per naira of loans and advanced grew from 27 percent to an all-time peak
of over 35 percent over the review period.
Interest income therefore more than compensated for the
disappointing performance of trading activities and accounted for an increase
of 5.6 percent in gross earnings to N4.19 trillion at the end of 2025.
The good performance of interest income reflects some gains
in overall credit quality standard of the bank with write backs on a number of
asset classes during the year. A major slowdown in net impairment charges on
financial assets was recorded in the year from 60.4 percent rise in 2024 to 13
percent increase to N742 billion in 2025.
The same ability to keep up the top line was recorded in
defending the bottom line despite the revenue constraint. The bank applied cost
saving to free earnings good enough to keep profit from losing the height
attained the previous hear.
The biggest cost saving centre in the year is cost of funds,
which slowed down drastically from a rise of 143 percent in 2024 to an increase
of 4 percent in 2025. Customer deposits grew more than two and half times
faster at 10.8 percent to N24.32 trillion, meaning that on the average, cost of
funds declined.
The management of interest income and expense relationship
in the year – stretching out earnings and squeezing cost, provided the room to
dress up the bank’s bottom line performance.
Interest expenses were reined in while interest income grew
close to nine times faster to permit an impressive growth of 52.7 percent in
net interest income. To that was added further cost saving from net loan
impairment expenses that slowed down from 60.4 percent growth in the preceding
financial year to an increase of 13 percent to N742 billion in 2025.
Zenith Bank’s management succeeded in reducing significantly
the proportions of interest earnings claimed by both interest expenses and loan
impairment charges. These two steps powered a surprising growth of 77 percent
in net interest earnings after loan loss expenses, which closed at N1.90
trillion for the year.
The increase represents additional income of N825 billion,
which provided the much needed room to level up the drop in non-interest
earnings and absorb operating expenses without hurting profit volume. However,
cost saving could not be extracted from operating expenses – which grew by over
23 percent to N1.04 trillion, more than four times the increase in gross
earnings.
Operating cost margin therefore increased from 21.3 percent
in 2024 to 24.8 percent in 2025, yet one of the lowest cost margins of the bank
in many years. The increase in operating cost margin lowered profit margin from
26 percent in the previous year to 24.8 percent in 2025, the lowest net profit
margin in three years.
In effect, all the cost savings managed to cover revenue
disappointments and cost increases, leaving after tax profit flat at N1.04
trillion.
Zenith Bank closed the 2025 operations with earnings per
share of N25.32, slightly up from N25.15 per share in 2024. The directors have
announced a final cash dividend of N8.75 kobo per share in addition to an
interim cash dividend of N1.25 paid in the course of the financial year.
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