In our earlier (2020FY Earnings Update) report for Zenith Bank Plc, we noted that the rising yield environment coupled with expected strong growth in earning assets would bode positively for interest income and hence gross earnings. However, although earning assets grew by 4.02% YtD, interest income underperformed our expectation as it fell by 6.00% YoY to NGN203.93bn. This was not peculiar to the bank as we have noted similar results from other banks over the same period. Non-funded income continued to save the day as it increased by 9.67% YoY to keep gross earnings relatively flat (-0.15% YoY) at NGN345.56bn. We still think there is room for improvement in interest income especially from customer loans. Management has guided that loan repricing which commenced in H1:2021 is an ongoing process. Given the early reversal of the uptrend in investment yields, we do not expect significant growth from investment income during H2:2021. This view is shared by Management.
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