Since it commenced business in May 1990, Zenith Bank Plc has built and sustained a respectable technology-driven brand that is recognised globally. In this report, CHIMA NWOKOJI examines how the bank’s management has sustained a corporate culture that aligns with post-COVID-19 new normal/digital economy.
Zenith Bank, in the eyes of most experts, blazes the trail in digital banking in Nigeria; scoring several firsts in the deployment of Information and Communication Technology (ICT) infrastructure and creating innovative products that meet the needs of its teeming customers.
Today, the world is talking about the new normal, which revolves around digital economy. Incidentally, institutions that built their product deliveries around technology have found transition to the digital economy quite seamless; and indeed the digital economy is seen as a coming boom after COVID-19, of which only the digitised will excel.
Zenith Bank seems to have envisioned the world of today and set out as a technology-driven financial institution.
The bank is verifiably strong in the deployment of various channels of banking technology and the Zenith brand has become synonymous with the deployment of state-of-the-art technologies in banking.
Zenith Bank which set out with the vision of becoming the leading Nigerian, technology-driven, global financial institution that provides distinctive range of financial services has lived up to the expectations of its founder, Mr Jim Ovia. After producing an astute banker who became Nigeria’s Central Bank governor, the lender has won numerous awards especially in the past two years under the leadership of Mr Ebenezer Onyeagwu.
Driven by a culture of excellence and strict adherence to global best practices, the bank has combined vision, skillful banking expertise, and cutting-edge technology to create products and services that anticipate and meet customers’ expectations; enable businesses to thrive and grow wealth for customers.
According to analysts, Zenith Bank has clearly distinguished itself in the banking industry through superior service quality, unique customer experience, and sound financial indices. These have translated to better returns to shareholders, improved customer services and enhanced value to shareholders.
Leadership
On June 1, 2019, Onyeagwu assumed the leadership of the bank in line with the bank’s tradition and succession strategy of grooming leaders from within.
Assessing the achievements of Onyeagwu after two years shows how he has maintained his commitment towards ensuring that the bank retained its leadership in the industry.
Most industry watchers believe that after two years of strategic thinking and inspirational leadership, Ebenezer Onyeagwu, group managing director/CEO of Zenith Bank has demonstrated that he is a right peg in a right hole as reflected in the bank’s growth and recognition locally and internationally.
Financials
Zenith Bank’s financial performance for the year was underpinned by an 8 percent growth in non-interest income, with an improved market share in both retail and corporate sectors despite a very challenging macroeconomic environment exacerbated by the COVID-19 pandemic.
In a clear demonstration of its resilience, Zenith Bank recorded a five per cent growth in its Profit After Tax (PAT) to N53.1 billion in the first quarter of 2021 from N50.5 billion recorded in March 2020. This was despite a very challenging macroeconomic environment aggravated by the COVID-19 pandemic.
From the unaudited statement of account presented to the Nigerian Stock Exchange (NSE) on Friday, April 30, 2021, the Group’s Profit Before Tax (PBT) also grew by four per cent, from N58.8 billion to N61.0 billion in the same period.
The profitability was driven by the optimisation of the cost of funds and improvement in non-interest income. The bank’s cost of funds reduced significantly from 2.6 per cent in March 2020 to 1.1 percent in March 2021. This was also reflected in interest expense which dropped by 45 per cent from N32.8 billion to N18.0 billion over the same period. Non-interest income increased by 10 per cent from N46.6 billion to N51.2 billion, driven by growth in credit-related fees and fees on electronic products.
Non-interest income was boosted by the increase in fees and commission income, which resulted from the increased volume of transactions across all the bank’s channels. Cost of risk dropped from 0.6 per cent in March 2020 to 0.5 per cent in March 2021, which affirms the bank’s prudent risk management, even as gross loans increased by 2 percent from N2.92 trillion to N2.98 trillion in Q1 2021.
The bank’s robust customer acquisition strategy and the effectiveness of its electronic platforms and digital channels enabled it to deliver a N54 billion increment in the savings account balance, which is solely retail.
Customer deposits grew by 6 per cent from N5.34 trillion in December 2020 to N5.68 trillion in March 2021. Transactions on electronic channels also grew astoundingly as new customers continue to be attracted to the Bank’s various user-friendly digital platforms.
In March 2021 Shareholders of Zenith Bank unanimously approved the proposed final dividend of N2.70 per share, bringing the total dividend payment for the 2020 financial year to N3.00 per share with a total value of N94.19 billion.
The shareholders made the approval at the 30th Annual General Meeting of the Bank held in Lagos. This followed the recent release of the Bank’s audited financial results for the 2020 financial year.
According to the audited financial results, profit before tax (PBT) rose by five per cent to N255.9 billion from N243.3 billion reported in the previous year despite a challenging macro-economic environment exacerbated by the COVID-19 pandemic.
The increase arose from a mixture of growth in the top line and a significant reduction in interest expense from N148.5 billion in 2019 to N121.1 billion in 2020, significantly increasing the net interest income from NGN267.0 billion in 2019 to N299.7 billion in 2020.
The Group recorded a growth in gross earnings of five per cent from N662.3 billion in the previous year to N696.5 billion. The Group recorded 8 percent growth in non-interest income from N232.1 billion in 2019 to N251.7 billion in 2020 and a 1per cent increase in interest income from N415.6 billion in 2019 to N420.8 billion in 2020.
Going forward in 2021, the bank expects that the ongoing economic recovery and improvements in the yield environment will translate into improved numbers for the Group. This is expected to be supported by local and international COVID-19 vaccination campaigns, rising commodity prices, and global economic growth of up to six per cent, as estimated by the International Monetary Fund (IMF).
Awards and recognitions
Recently, the bank was rated on key parameters such as asset quality, profitability and return to investors, by Coronation Asset Management, which found Zenith Bank’s track record impressive.
“The bank is a clear market leader, growing its total assets and Net Income by an annual average of 15.7 per cent and 15.5 per cent, respectively, over the last five years,” said Ope Ani and Guy Czartoryski of Coronation Research, in a recent report.
Since Onyeagwu was appointed its Chief Executive Officer, the bank has won a total of 25 awards bestowed on it both from local and international reputable institutions and agencies.
For instance, in 2019, it was named the Best Commercial Bank in Nigeria by World Finance; the Biggest Bank in Nigeria by Tier-1 capital by The Banker; the Most Valuable Banking Brand in Nigeria, by The Banker; Best Digital Bank in Nigeria, by Augusto & Co; Bank of the Year by BusinessDay Newspaper; Best Bank in Retail Banking, BusinessDay Newspaper, Most Innovative Bank of the Year, Nigerian Tribune Newspaper; and Best Company in Promotion of Good Health and Well-Being, SERAS Awards.
Also, in 2020, Zenith Bank was named Bank of the Year (Nigeria) by The Banker; Best Bank in Nigeria, by Global Finance Magazine; Best Bank in Retail Banking by BusinessDay Newspaper among others for that year.
Speaking on the various awards won by the bank, Onyeagwu said it was a demonstration of the bank’s resilience and doggedness as an institution given the very challenging macroeconomic environment brought about by the COVID-19, which had a significant deleterious impact on businesses globally.
“It is also an affirmation of our commitment to delighting and creating value for our customers through a broad range of superior product offerings, best-in-class service and top-of-the-range technology,” he added.
Onyeagwu also thanked the lenders’ numerous customers for their loyalty over the years.
“First is to say that Zenith Bank has grown organically, we are disciplined, we are focused and we look for where to extract value.
“However, we would not do a deal or a corporate action just for the sake of doing it. If we find a deal that fits into our profile, of course we would do a deal. It has to be something that fits into our profile.
“Until we find such, we would continue to grow organically. We are already in Ghana, we are in Sierra Leone, Gambia and UK and by no means that is not to say that we cannot expand beyond this location. It depends on what we see as events continue to unfold.”
In 2021, the bank has been recognised as the Best Bank in Nigeria by Global Finance Magazine; Best Commercial Bank, Nigeria, by World Finance; Biggest Bank in Nigeria by Tier-1 Capital, The Banker; Most Valuable Banking Brand in Nigeria, by The Banker; Best Corporate Governance ‘Financial Services’ Africa by Ethical Boardroom.
On his part, Onyeagwu has also been recognised specially for the visionary leadership he has displayed at the bank with awards which included Bank CEO of the Year by Champion Newspaper in 2019; Bank CEO of the Year by Business Day Newspaper in 2020 and CEO of the Year by SERAS Awards.
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