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Banking Industry: Zenith Bank pays highest income tax in five years

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Zenith Bank delivers record Q1 2024 performance 

OKEY ONYENWEAKU

Zenith Bank, the largest bank by profit has paid income tax to the tune of N159bn in the last five years from 2017 to 2021.

As a good corporate citizen of Nigeria, Zenith Bank has remained not only consistent in remitting its income tax to the government, but this has always been done in good time.
Income tax refers to a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. ‘’By law, taxpayers must file an income tax return annually to determine their tax obligations.

Income taxes are a source of revenue for governments. They are used to fund public services, pay government obligations, and provide goods for citizens’’, an expert explained.

Every bank which operates in Nigeria is by law obligated to file an income tax return annually to state and federal government agencies where they have branches. Despite paying the statutory rate of 30 per cent of total profits as company’s income tax, banks are meant to also pay Education Tax, National Information Technology Development Agency (NITDA) Tax and Nigeria Police Trust Fund levy.

Whereas the tax each bank pays depends on the size of her income, the Federal government enjoys huge tax from the financial institutions annually.

Details show that Zenith Bank paid income tax of N25.528billion in 2017, N38.261billion in 2018, N34.451billion in 2019, N25.296billion in 2020 and N35.816billion in 2021. Research also shows that with an aggregated income tax of N159billion in these years, Zenith Bank pays the highest tax in the banking industry. This is followed by GTCO Plc whose income tax stood at N143.7billion in the same five years.

Meanwhile, Zenith Bank’s unaudited results for the first quarter ended 31st March 2022 showed an impressive 22 percent growth in Gross Earnings from N157.3 billion reported in Q1 2021 to N191.5 billion in Q1 2022.

From the unaudited statement of account presented to the Nigerian Exchange (NGX) on Thursday, 28th April 2022, the strong double-digit growth in the topline culminated in an increase in the bottom line, as the Group recorded an 11% Year-on-Year (YoY) increase in profit before tax, growing from N61.02 billion in Q1 2021 to N67.99 billion in Q1 2022.

Profit after tax also grew by 10%, from N53.06 billion to N58.19 billion over the same period. The growth in the topline arose from both interest income and non-interest income.

Interest income grew by 25%, from N101.12 billion in Q1 2021 to N126.38 billion in Q1 2022, while non-interest income grew by 12%, from N51.20 billion to N57.23 billion. The growth in interest income and non-interest income arose from the combined effects of an improvement in interest income on loans and advances (as risk assets continue to grow and pricing is gradually improving) and an improvement in non-interest income as the Bank continues to deploy its retail strategy, thereby acquiring more customers and expanding its electronic banking income from the increased volume of transactions across all its channels.

Total assets grew by 9% from N9.45 trillion to N10.32 trillion in 2022, mainly driven by growth in customers’ deposits. Customer deposits grew by 12%, from N6.47 trillion in December 2021 to N7.25 trillion in March 2022. Savings account balance, which is solely retail grew by over N68 billion and is a validation of the robust customer acquisition strategy and versatile electronic platforms and digital channels.

Loans and advances also grew by 6%, from N3.5 trillion in December 2021 to N3.7 trillion in March 2022, boosting the Group’s interest income and displaying the Group’s appetite for high-yielding risk assets creation. This development also helped to boost the net interest margin (NIM), as it improved from 6.0% in March 2021 to 7.3% in the current period, while the capital adequacy ratio improved slightly from 21.1% to 22.1%.

Going into the remainder of 2022, the Group is pledging that it will continue to focus on sustainable growth across all its business segments and deploy technology platforms and digital assets intuitively to serve its various customers’ needs to deliver enhanced returns to its stakeholders.

Zenith Bank’s track record of excellent performance has earned the brand numerous awards, including being voted as Best Bank in Nigeria in the Global Finance World’s Best Banks Awards, for three consecutive years from 2020 to 2022, Best Commercial Bank in Nigeria in the World Finance Banking Awards 2021, Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020, and Best in Corporate Governance’ Financial Services’ Africa 2020 and 2021 by the Ethical Boardroom. Also, the Bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, Number One Bank in Nigeria by Tier-1 Capital in the “2021 Top 1000 World Banks” Ranking by The Banker Magazine and the Retail Bank of the year at the BusinessDay Banks and Other Financial Institutions (BOFI) Awards 2020 and 2021.

Similarly, Zenith Bank was honoured as Bank of the Decade (People’s Choice) at the ThisDay Awards 2020 and emerged winner in four categories at the Sustainability, Enterprise, and Responsibility (SERAS) Awards 2021, carting home the awards for “Best Company in Reporting and Transparency”, “Best Company in Infrastructure Development”, “Best Company in Gender Equality and Women Empowerment”, and the coveted “Most Responsible Organisation in Africa.”

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