Naira devaluation boosts Zenith’s profit with $472m gains
Zenith Bank Plc, Nigeria’s biggest lender by market value, said first-half profit more than doubled after the country’s currency devaluation boosted income.
Africa’s most populous nation allowed its currency to weaken 40% against the dollar in June in reforms aimed at attracting overseas inflows to help revive the struggling economy.
While the move boosted the income of banks holding overseas assets, manufacturers with foreign-currency loans have reported losses arising from converting a weak naira to make dollar interest payments.
The Lagos-based lender booked 355.6 billion naira ($471.6 million) of foreign-exchange gains in the six months through June, when profit jumped to 291.6 billion naira from 111.3 billion naira, it said in a regulatory filing.
The gains resulted from the “revaluation of foreign currency-denominated assets and liabilities held in the non-trading books,” it said.
Zenith’s performance is similar to that of peer Guaranty Trust Holding Co., which nearly tripled income following a $468 million gain from revaluing its overseas assets.
Zenith increased provisions by almost eight times to 207.9 billion naira during the half year to reflect the challenging lending environment for manufacturers.
Its shares have gained 45% this year, catapulting it past the market value of rival Guaranty Trust, whose shares have risen 57% so far.
