Ebenezer Onyeagwu, Zenith Bank GMD

Okey Onyenweaku

Even in the midst of the presently very challenging operating circumstances in which businesses are enmeshed, Zenith Bank, one of the biggest lenders in Nigeria and Africa has been able to weather the storms to grow its interest income and post double-figure profits in the first six months of 2020.

The audited half-year result of the bank showed Zenith Bank’s pretax profits expanding by two per cent to N114.12 just as its post-tax profit went up 17 per cent (exact sum: N103.82 billion), lifted by a significant drop in income tax expense, which was more than halved from N10.30 billion in H1 2019 to N20.94 billion in the first six months of this year.

Analysts surmise that this double digit profit posting, which has indeed been a consistent streak in the lender’s business life over the years, makes it a clear leader in profitability in Nigeria. Coming behind Zenith Bank, in terms of their profit showing in the same field are GT Bank with N97.27billion, Access Bank withN61.03billion and First Bank with N49.46billion respectively.

Zenith Bank also posted 4 per cent growth in gross revenue to N346billion during this period, driven by a one per cent rise in interest income and non-interest income which in the latter case was up 6 per cent.

This marginal growth in interest income is traceable to revenue from loans and advances to customers which ticked up 11.58 per cent to N128.37 billion; as well as placement with banks and discount houses which increased 41.34 per cent to N16.65 billion. But this was conversely to be counteracted by earnings from treasury bills, which dipped -46.49 per cent to N28.38 billion in H1 2020.

This was also despite impairment charges on bad loans that had risen 74.2 per cent to N23.9 billion, propelled by a 478.95 per cent increase in provision for losses in investment securities, as the bank’s non-performing loans was only 0.3 per cent less than the regulatory 5 per cent set by the Central Bank of Nigeria’s (CBN), and 10 per cent higher than the 4.30 per cent of its total which was bad in the same period last year.

The bank improved total loans by 14 per cent to N2.80 trillion, while customer deposits grew by 15 per cent to N4.9 trillion, with total liabilities growing at a faster pace of 21.9 per cent to N6.59 trillion; much more than total assets which went up by 19 per cent to N7.58 trillion. Shareholders’ funds also strengthened 5 per cent to N988.98 billion between December 2019 and June this year.

Additionally, Zenith Bank is currently still quite liquid, with a liquidity ratio standing at 50.8per cent compared to 57.3 per cent as of December 2019; given that the threshold set by the CBN is 30 per cent. The bank’s loan to deposit ratio was slightly above the 65 per cent regulatory benchmark at 66.1 per cent, while capital adequacy ratio (CAR) was 20 per cent, a marginal dip from the 22 per cent it had in December last year.

The bank’s shareholders will be getting N0.30 interim dividend for the first half of the year.

The dividend expectation had indeed lifted the interest of shareholders as the stock price closed at N17.20 per share as at Friday 11, September 2020.

This sterling performance was achieved in a market that had been demonstrating a bearish outlook hinged on lower global oil prices, devaluation of the local currency amidst foreign exchange scarcity and the need for loans restructuring.

Commenting on the banks’ impressive results, Managing Director of High Cap Securities limited, Mr. David Adonri, told Business Hallmark that the management of Zenith Bank has not only continued to be focused but that it has clearly also utilized the advantages of technology and digital incursions to push its operations especially in this Covid-19 period.

Also seemingly upbeat about the performance is the firm of analysts, Vetiva Capital:

“As expected, income from investments, specifically currency revaluation gains of 180% quarter on quarter drove a 46% quarter on quarter growth in non-Interest income.

“Going forward, whilst we do not anticipate further devaluation of the local currency, we foresee more support from this line item in H2, driving our improved forecast of ₦258.5 billion to offset the decline in Interest Income”, Vetiva Capital explained.

It is also to be noted here that the bank also reported impressive earnings in the first quarter of 2020 following an 8% year on year growth in its top line. The uptick came despite a 7% year on year decline in interest income to ₦114.3 billion.
Analysts said the earnings improvement was driven by a 61% year on year income in non-interest income to ₦52.5 billion. This was however as a result of a 339% spike in revaluation gains to ₦14.7 billion.

What in fact, has powered this year’s stability was the solid foundation of its 2019 annual performance when profit margins slimmed due to headwinds.

At the increased rate of 8%, Zenith’s group profit after tax also hit N208.8 billion in the audited financial statement for 2019 as against N193.4 billion in the corresponding year in 2018

Group Managing Director of Zenith Bank, Ebenezer Onyeagwu, who was picked to fill a position he had long merited may have proved to the lender’s board and shareholders that they did not make any mistake in leaving their huge investments in his hands.

From 2019 when he assumed office as the bank’s helmsman, he has always pulled unusual surprise which is reflected in his highly impressive scorecards.

In just a year from June 2019 to June 2020, the bank’s profit after tax came in double digit numbers of 17 per cent; even as total assets also rose 19.4 per cent.

Onyeagwu’s scorecard leaves no one in doubt of where he is taking the lender in the next few years.

However, in the last five years from June 2016 to June 2020, Zenith Bank has grown its total asset by 60 per cent; profit after tax has jumped by 176.6 per cent and shareholders’ funds by 31.2 per cent.

In a related development, the bank once again emerged as the Number One Bank in Nigeria by Tier-1 Capital in the 2020 Top 1000 World Banks Ranking published by The Banker Magazine.

Climbing a whopping 29 spots from 415 in 2019 to 386 in the 2020 global ranking of banks, Zenith Bank retained its position as the number one Tier-1 bank in Nigeria with Tier-1 Capital of $2.79 billion, an increase of 16.1% on the $2.40 billion recorded in the 2019 rankings.

The ranking which was published in the July 2020 edition of The Banker Magazine of the Financial Times Group, United Kingdom, was based on the 2019 year-end Tier-1 capital of banks globally.

According to the Ranking Report, Zenith Bank extended its lead over the second-placed bank in Nigeria. Zenith’s financial performance for the year was underpinned by a 29% increase in non-interest income, with an improved market share in both retail and corporate sectors.

Speaking on the latest rankings, the Group Managing Director/Chief Executive, Mr. Ebenezer Onyeagwu said: “this ranking, which further attests to our market leadership, is the outcome of a well-thought-out strategy of always delighting and creating value for our teeming customers through a broad range of superior product offerings, best-in-class service and top-of-the-range technology”.

As a testament to its resilience and market leadership, Zenith Bank had announced an impressive result for the year ended December 31, 2019, with profit after tax (PAT) of N208.8 billion, achieving the feat as the first Nigerian Bank to cross the N200 billion mark. In the recently released Q1 2020 unaudited financial results, the bank also recorded an improved result over the corresponding period in 2019, with gross earnings rising by 6% to N166.8 billion and profit before tax (PBT) growing 3% to N58.8 billion.

Consistent with this performance and in recognition of its track record of exceptional performance, the bank was equally ranked as the Best Commercial Bank in Nigeria 2019 by the World Finance and the Best Digital Bank in Nigeria 2019 by Agusto & Co. The bank was also voted as Bank of the Year and Best Bank in Retail Banking at the 2019 BusinessDay Banks and other Financial Institutions (BAFI) Awards. Most recently, the bank was recognized as the Most Valuable Banking Brand in Nigeria, for the third consecutive year, in the Banker Magazine “Top 500 Banking Brands 2020”, Best Bank in Nigeria in the Global Finance “World’s Best Banks Awards 2020” and the Bank of the Decade (People’s Choice) at the ThisDay Awards 2020.

Analysts have fingered a number of strong points about the bank.

Above all others however, they note that it is the one of the banks in the financial industry that has continued to grow organically in spite of the induced mergers and acquisitions by an industry-wide and Central Bank of Nigeria-sponsored Consolidation programme in 2005.

This means that the bank has continued to maintain a consistent and undiluted corporate culture since its founding. With a vision to play in the big league, Zenith Bank’s management had decided to grow up its capital when most of its contemporaries lacked the capacity. The bank had gone public before the 2005 banking consolidation policy of the CBN which was visionary and put it ahead of competition.

From that vantage point, the bank has maintained not only a steady growth, but also a leadership position in the industry over the years.

With grand scores like these, it sure looks good to be at the zenith.