Zenith Bank Plc released its 2016 Q1 results showing pre-tax profits dropped 4% to N26.5 billion (N27.68 billion). The bank also reported that top line revenue also referred to as its gross earnings dropped by 12.2% to N99 billion.
A look at the results reveals that the bank suffered a dip in non interest income as revenue from commission and feeds, and trading income all saw a massive dip.
Commission and Fees
The bank reported that commission and fees for the period was N15.6 billion a 9% drop from the N17.2 billion reported a year earlier.The bank reported that credit related fees dropped a massive 31% t0 N2.9 billion (2015 Q1 N4.2 billion). This was a major factor in the drop in commission and fees for the period. Credit related fees refers to fees earned when the bank lends money to borrowers.
In addition, the bank’s C.O.T fees was zero for the quarter compared to N6.7 billion in the same period last year. The CBN had reintroduced C.O.T in January 2016 just weeks after implementing the no C.O.T charge rule in 2016. However, in place of the C.O.T was the current account maintenance fee which the bank reported as N5.4 billion about N1.3 billion lower than the C.O.T reported in 2015.
Trading and other Income
The bank also reported a foreign exchange trading loss of about N2.3 billion during the year compared to N4.8 billion in the same period last year. The bank did not explain how it was able to lose this much in forex trading,
Another major revenue dip was its foreign currency revaluation which reported dropped lower during the period under review. The bank reported a revaluation gain of about N1.3 billion compared to N9.1 billion same period last year representing a massive 85% drop. Most banks reported revaluation gains in 2015 when the exchange rate was devalued making the value of their dollar holdings rise by fiat. However, without a further devaluation the bank’s value may have taken a massive hit.