Nigeria’s largest lender by market value Zenith Bank built its biggest half-year profit in history on an unusual surge in foreign currency revaluation gain.
The growth was so huge that it also helped save the bank from a deep drop in earnings that would have resulted from deteriorating credit quality.
Like most lenders that have some of their assets denominated in foreign currency, the bank earned big from a slide of 40 per cent in the exchange rate of the dollar to the naira in June, which drove up the value of such assets in local currency.
The lender reported gross earnings in the sum of N967.3 billion for the six months to June compared to N404.8 billion a year earlier, according to its audited financials released on Monday.
Zenith Bank has footprints in at least five markets outside its base in Nigeria and generated 93.4 per cent of its revenue from the country during the period under review.
Net interest income, a major performance metric that accounts for the difference between interest generated and the cash a bank pays savers for keeping their deposits, rose 41.7 per cent to N261.9 billion.
The bulk of that was eroded by a sharp drop in credit quality, which saw the bank’s impairment charge on financial & non-financial instruments leap to N207.9 billion from N25.1 billion.
Independent auditor PricewaterhouseCoopers raised similar concerns in a report accompanying the document.
The bank earned N355.6 billion in foreign currency revaluation gain in contrast to a N6.2 billion loss a year earlier.
Profit before tax climbed from N130 billion to N350.4 billion, while profit for the period stood at N291.7 billion compared to N111.4 billion a year ago.
Zenith Bank’s shares are also listed on the London Stock Exchange, where $850 million worth of its stock was listed in 2013 at $6.80 each.
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