Zesty Zenith

By Ebenezer Onyeagwu, MD and CEO at Zenith Bank

Zenith Bank has become one of the strongest and most profitable banks in Nigeria since its launch by Jim Ovia in 1990. It is the largest bank in Nigeria by total assets size and Tier 1 capital and is the tenth largest bank in Africa as measured by Tier 1 capital.

Headquartered in Nigeria’s largest city of Lagos but with operations in the UK, United Arab Emirates and three other West African countries – Ghana, Sierra Leone and Gambia – the bank has distinguished itself in the financial services industry through unique customer experience and sound financial indices.

Corporate social responsibility

Zenith Bank is committed to building a more sustainable and inclusive economy. As such, we have continued to integrate sustainability principles in our business operations and investment decisions in line with global best practices. During the last year, we made considerable progress in this regard, bearing in mind our role in accelerating the achievement of the United Nations Sustainable Development Goals (SDGs). 

The bank’s sustainability and corporate social responsibility (CSR) initiatives are hinged on the belief that today’s business performance is not all about the financial numbers – the bank believes that an institution’s social investments, contributions to inclusive economic growth and development as well as improvements in the condition of the physical environment, all constitute a balanced scorecard.

Through its CSR initiatives, Zenith Bank has embodied the overarching objective of the 17 SDGs, which provide a framework for addressing the major challenges confronting our society. Its social investments are targeted at health, education, women and youth empowerment, sports development and public infrastructure enhancement. 

To demonstrate its commitment to creating and expanding opportunities, the bank regularly makes donations towards the setting up of ultramodern ICT centres in several educational institutions across the country. It also supports various developmental projects and healthcare delivery causes in Nigeria. Zenith Bank equally contributes to the development of sports in Nigeria through its sponsorship of the Nigeria Football Federation (NFF), the Zenith Women Basketball League, and the Zenith Bank Delta Principals’ Cup, to name a few. In response to the Covid-19 pandemic, the bank donated NGN1billion as part of the Coalition Against Covid-19 (CACOVID), a private sector-led initiative to support the Nigerian Government to combat the Covid-19 crisis.

Apart from its healthcare sector interventions, the bank expanded its support for women-owned businesses in the year under review. As a testament to its achievements in these areas, Zenith Bank won the awards for Best Company in Promotion of Good Health and Wellbeing and Best Company in Promotion of Gender Equality and Women Empowerment in Africa at the 2020 Sustainability, Enterprise and Responsibility Awards (SERAs). 

Corporate governance

Zenith Bank prides itself as one of the banks in the country with a truly independent board. The remuneration policies of the board of directors is in line with laid-down principles and policies. These have ensured that issues of conflict of interests hardly have a place on the board, leading to increased value creation for all stakeholders.

The bank has also institutionalised corporate governance, setting an industry-wide example of best practices in that field. As a testament to its adherence to global best practices and standards, the bank was recognised as Best Corporate Governance – Financial Services – Africa 2020 by Ethical Boardroom magazine. This, no doubt, is borne out of its commitment to quality in all its dealings with various stakeholders.

Digital banking

Zenith Bank is also a pioneer in the digital space with several firsts in deploying innovative products and solutions that ensure convenience, speed and safety of transactions. Its commitment to world-class service standards, products and solutions has also ensured its market dominance through the various electronic/digital payment channels including *966# Eazy Banking, Zenith Mobile App and Zenith Internet Banking Portal, among others.

Clearly, the fact that the bank’s digital platforms and channels have been the main enablers of the massive growth in its non-interest income in the last few years reflects the ease of adoption of the digital platforms by its teeming customers, and demonstrates the giant strides being made by the bank in the retail segment of the market. 

The bank is recognised as one of the most innovative financial institutions in Nigeria and was voted as the Best Digital Bank in Nigeria in the 2019 Consumer Digital Banking Satisfaction Index Report released by Agusto and Co.

Financial success

Despite the pandemic, Zenith Bank’s profit and dividend payout continue to soar. The 2020 audited financial results of Zenith Bank Plc reflects the bank’s ability to grow its earnings on a yearly basis, while sustaining its risk management efforts, containing impairment charges over the years, and maintaining high assets quality and a robust balance sheet that supports its outstanding performance. This has culminated in increased profit and dividend payment, despite the very excruciating macroeconomic environment, which was exacerbated by the Covid-19 pandemic.

According to the bank’s audited financial results for the 2020 financial year, presented to the Nigeria Stock Exchange (NSE), the bank recorded eight per cent growth in non-interest income from NGN232.1billion in 2019 to NGN251.7billion in 2020 and a one per cent increase in interest income from NGN415.6billion in 2019 to NGN420.8billion in 2020. Profit before tax also increased by five per cent, growing from N243.3billion to N255.9billion in the current year. The increase arose from a combination of growth in the topline and a significant reduction in interest expense. Interest expense reduced from N148.5billion in 2019 to N121.1billion in 2020, significantly increasing the net interest income from NGN267.0billion in 2019 to NGN299.7billion in 2020. 

The Zenith Bank group’s increased retail activities translated to a corresponding increase in retail deposits and loans. Thus, retail deposits grew by NGN612.7billion from NGN1.11trillion to NGN1.72trillion year-on-year, while savings balances significantly grew by 88 per cent YoY and closed at NGN1.16trillion. This retail drive, coupled with the low-interest yield environment, helped reduce the cost of funding from 3.0 per cent to 2.1 per cent and also reduced interest expense. However, the low-interest environment also affected the net interest margin, which declined from 8.2 per cent to 7.9 per cent in the current year, due to the re-pricing of interest-bearing assets. Operating costs grew by 10 per cent YoY but are still tracking well below inflation, which, at the end of the year, stood at 15.75 per cent. Although returns on equity and assets also reduced from 23.8 per cent to 22.4 per cent and from 3.4 per cent to 3.1 per cent, respectively, the group still delivered improved earnings per share (EPS), which grew 10 per cent from NGN6.65 to NGN7.34 in the current year.

The group also increased corporate customer deposits, which alongside the growth in retail deposits, delivered total deposit growth of 25 per cent, to close at N5.34trillion, driving growth in market share. Total assets also increased significantly by 34 per cent, from N6.35trillion to N8.48trillion. Despite the Covid-19 pandemic and its associated challenges, Zenith Bank group managed to create new viable risk assets as gross loans grew by 19 per cent, from N2.46trillion to N2.92trillion.

This was achieved while maintaining a stable and low overall NPL ratio of 4.29 per cent (2019: 4.3 per cent) across the entire portfolio and an increase in the cost of risk from 1.1 per cent to 1.5 per cent, reflecting the elevated risk environment in 2020. The Group recorded impressive liquidity and capital adequacy ratios of 66.2 per cent and 23.0 per cent and remained above regulatory thresholds of 30 per cent and 15 per cent, respectively.

In demonstration of its commitment to its shareholders, the bank went ahead to announce a proposed final dividend payout of N2.70 per share, bringing the total dividend to N3.00 per share. In all, the total dividend payment, which received shareholders’ approval at the 30th Annual General Meeting (AGM) held at the Civic Centre, Victoria Island, Lagos on March 16, 2020, translated to N94.19billion.

As a testament to this superlative performance and in recognition of its track record of excellent performance, Zenith Bank was voted, for the second consecutive year, as Best Bank in Nigeria in the Global Finance World’s Best Banks Awards 2021, Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020, and Best Corporate Governance -‘Financial Services – Africa 2020 by Ethical Boardroom. Also, the bank emerged as the Most Valuable Banking Brand in Nigeria, for the fourth consecutive year, in the Banker Magazine’s Top 500 Banking Brands 2021 and Number One Bank in Nigeria by Tier-1 Capital in the 2020 Top 1000 World Banks ranking, published by The Banker Magazine. 

Similarly, the bank was recognised as Bank of the Decade (People’s Choice) at the This Day Awards 2020, Retail Bank of the year at the 2020 Business Day Banks and Other Financial Institutions (BOFI) Awards, and Best Company in Promotion of Good Health and Well-Being as well as Best Company in Promotion of Gender Equality and Women Empowerment at the Sustainability, Enterprise and Responsibility (SERAS) Awards 2020.

About The Author:

Ebenezer Onyeagwu is the Group Managing Director and CEO of Zenith Bank Plc. He is a graduate of accounting from Auchi Polytechnic and Fellow (FCA) of the Institute of Chartered Accountants of Nigeria (ICAN). He’s an alumnus of the University of Oxford, England and Salford Business School, University of Salford, Manchester, UK. At University of Oxford, he obtained a Postgraduate Diploma in Financial Strategy and a certificate in Macroeconomics while he obtained Masters Degree in Financial Services Management from the University of Salford. He’s the Chairman of Zenith Pensions Custodian Limited and Zenith Nominees Limited and on the Board of Zenith Bank (UK) Limited, FMDQ Holdings Plc, Shared Agent Network Expansion Facilities (SANEF) Limited and Lagos State Security Trust Fund (LSSTF).