What stands as an imposing milestone by an enterprising Nigerian technocrat and financial professional is what we have today as a statement in iconic global banking. Operated with a bold move and open mind to consolidate the interest of financial services consumers in Nigeria and beyond, is this bank whose time came 33 years ago and still counting many more new innovations and wins; Zenith Bank Plc, Nigeria’s serial leading bank. Nik Ogbulie takes a trip to the bank, inside-out.
Nigeria’s iconic commercial bank, Zenith Bank Plc, is one bank in Nigeria that tells you that they are in the financial space to serve you ‘in your best interest’, and means it. Since the last 33 years, the bank has not stepped down the tempo to function in the best interest of the financial community. Nigerians in all their various demographies function as if the bank was designed to accommodate the various interests of all groups based on the uniformity of their choices. This explains the reason why the bank has become the winner of the largest customer size in the industry as well as winning the biggest market share among the biggest five banks in the first Tier. With a trending employee size ranging over seven thousand people and a growing array of indirect money market services providers across the country’s geography, one simply sees the size of the bank in a very simple perspective. To be the biggest financial institution in Africa’s biggest economy is as good as saying that Zenith Bank is largely responsible for a great deal of financial transactions that flow from the Nigerian money market or the economy to the various areas where Nigerian businesses go.
Its pre-eminence as the country’s dominant money market operator was noticed years ago when the bank pioneered the application of high technology for its various services and the entrenchment of information technology into the real banking activities as well as propagation of new technology as the impending new normal in banking activities. The Nigerian banking publics see the bank as occupying the alter ego sequence based on its peculiar market dominance, classical customer relationship and the finesse it hands over to the many investments it has driven from beginning to close. Apart from financial intermediation, it has provided some major policy transmissions through allied agencies and institutions whose functions have some seamless financial synergy with the country’s economy. For instance, its approach to the much anticipated non-oil revenue growth and the training of information technology hands remain largely influential to economic growth in the industry. As a matter of fact, Zenith Bank has become the surest available financial entity that has empowered financial inclusion using its overbearing branch presence and intimidating technological prowess. It is known that the bank is the major bank for a very large population of the conglomerates in the country who also have very large relationship with other banks which are operators that leverage the dominance of Zenith Bank in undertaking major banking functions in Nigeria and abroad. Major institutions in Nigeria that rely on assured financial stability to drive their businesses have been found to have been part of the huge clientele level of the bank. This is why many Nigerians still find it difficult to say if the bank is a retail or an investment bank since it commands the activities in all the segments of the financial market with elegant finish. This is a bank whose fingers have been found in all the major pies of the Nigerian economy. With a very huge customer base, there is every indication that many Nigerians have confidence in the institution which has been known to have harboured a huge population of skilled managers and administrators, some of whom have been found occupying very sensitive government offices after they have been identified as very efficient. The bank has become a hunting ground for efficient hands for both business institutions and government.
The Nigerian banking industry is replete with records of daring innovations that changed the ways and means of intermediation spanning the last three decades when the new generation banks berthed the Nigerian banking space. Records available from that period have created impressions that explained that some of the new banks made marks in their areas of service, corporate governance and performance which have remained largely irrevocable to date. This impression really built the confidence that has persuaded many Nigerian bank customers to begin to look towards the activities of such banks, especially as they have to do with customer satisfaction, quality service delivery, transparency, availability and safety. Zenith Bank Plc has been on that realm of top mark within the Nigerian financial services space all these years. These qualities which were part of the credo put in place by the founders of the bank have remained the guiding principles of their business and service road-map which competition has even endured as the bank expands in leaps and bounds and rose to a level where its activities have become legion, while the industry adopted it as a popular institution to benchmark.
The level of comfort it exhibited during the banking sector reforms about 18 years ago made watchers of banking sector equities to over-subscribe its shares while the daily trading record on the floor of the then Nigerian Stock Exchange (NSE) was all about how much shares of the bank was on the floor for intending investors. From the beginning of the life of the bank, when the sector had 89 commercial and merchant banks to today, where only about 33 banks exist, Zenith Bank has exhibited some leadership roles which have predominantly blossomed, as its quality features become more encompassing, dominating and illuminating. This dominance which has been recognised by the various regulators in the financial system in Nigeria is a function of the availability of an appropriate board of directors, management and well structured staff selection procedures which have emphasized proper attitude to financial services and relevance to global standards.
What has been properly observed across the Nigerian financial sector is the fact that Zenith has been founded with a predetermined professional character that could be sustainable over time, to the extent that at every point in time its activities will be positive for favourable result to be earned. As a service-driven financial institution, her gains also are driven by the favourable results from good services delivered. The implication has been that, as long as the bank keeps its age-long character intact, it will keep on winning, because customers need characters that do not regularly change, especially in the financial sector.
A close look at its performance chart presents a very disarming picture to its peers and a gratifying comfort to its major stakeholders, to the extent that the graphic position it has kept in the industry in terms of leadership, looks somewhat indelible; that may have been the reason why its customer position has remained high as it boasts of a good chunk of the over 200 million Nigerians as ardent followers. A peep into the financial records of the bank in the last twenty years creates a good posture as it has maintained a leader in all the indices where the about 250 quoted companies and banks have operated. Current data indicate that Zenith leads all the quoted companies in Nigeria including the financial institutions with a total asset of over N8 trillion and yet there are strong indications within the bank that that record will change when the full financial records of 2023 would have been fully released. All these are expected to change with the much energised 2023 prospects due to improved and expedited information technology investments by the bank and very high skills applied in its various activities generated by its highly skilled manpower. In all the basic growth parameters; assets, revenue and profit, Zenith Bank has remained consistently clear and has afforded the industry the impetus to strongly believe that the financial institution has all it takes to remain resolute in the face of growing distortions in the economy and the global financial system. When the 2023 financial reports are fully published, the bank will obviously stamp its feet with much strength as it did with the six months report of the same year which sent a record of its sustained industry dominance across the economy. From what is on ground, the report clearly demonstrates its market dominance and leadership.
Zenith Bank, Listed on the Premium Board of the Nigeria Exchange (NGX), financial services, has market capitalization of N1,036,084,294,938.00 trillion at the end of trade on September 22,2023 with 31,396,493,786.00 billion outstanding shares, reflecting robust shareholdings. The bank has attained 52 week high equity pricing of N37.8 per share and also N19.00 per share, 52 week’s low equity pricing, reflecting grounds for growth at the N33.00 per share closing price on September 22, 2023. As of last trade Zenith Bank PLC traded at N33.00per share, indicating grounds for price growth. The bank has been growing earnings at an average annual rate of 9.3%, while the banking industry saw earnings growth at 18% annually. Revenues have been growing at an average rate of 10.7% per year. The bank’s return on equity is 22.7%, and it has net margins of 45.7%. The bank has a consistent dividend payment policy. As at its last Annual General Meeting (AGM), shareholders of the bank approved the proposed final dividend payment of N2.90 per share. This brings the total dividend for the 2022 financial year to N3.20 per share, with a total value of N100.47billion paid out to shareholders.
For its sustained year on year increasing performance in profitability, returns on investment, sustainability initiatives, and high value proposition and, creating shared values (CSV), Investors not only in Nigeria, but globally through tested partnerships, have demonstrated the need to support a credible and winning organization with tested, proven global standards of operation. Remarkably, just like in the 2022 financial year, the bank in H1 2023, ballooned its overall, profitability which came in significantly higher, as the profit-before-tax grew by 169.5% y/y to NGN350.36 billion. Likewise, PAT grew by 161.8% y/y to NGN291.73 billion despite the higher income tax expense which rose by 215.3 per cent y/y to NGN58.63 billion. The sound signal for expected rewards for 2023 financial year, has lifted investors’ demand for its shares on the NGX Exchange. Zenith Bank has sustained remarkable upbeat in turnover, liquidity gauge. For instance, over a week’s period, 14-22 September 2023 a total of 73,976,194 million shares of the bank were transacted by investors. This performance reflects that an average of 10,568,028 million shares of the bank’s shares are transacted on a daily bases. Meanwhile, the 2023 top 1000 World Banks Ranking , published in the July 2023 edition of The Banker Magazine of the Financial Times Group, United Kingdom, were based on the 2022 year-end Tier-1 capital of banks globally. The rankings continue to be the primary source for global bank financials and are used by most international organizations in their assessments of banks. Zenith Bank’s financial performance for the year under consideration, it will be recalled, was bolstered by an impressive double-digit growth of 24% in gross earnings, leading to an improved market share in both the retail and corporate segments of the market. This occurred despite a persistently challenging macroeconomic environment and headwinds.
The Group Managing Director/CEO of Zenith Bank, Dr Ebenezer Onyeagwu, noted that, “Being ranked as the Number One Bank in Nigeria by Tier-1 Capital for the fourteenth consecutive year attests to our resilience as an institution despite a very challenging macroeconomic environment and global headwinds. It is also an affirmation of our best-in-class service and commitment to value creation for our highly esteemed customers.” He thanked the Founder and Chairman of Zenith Bank Plc., Jim Ovia, CFR, for his foundational role in building the structures and setting the institution on the path to continued success; the Board for their vision and outstanding leadership; the staff for their unwavering commitment and dedication; and the Bank’s customers for their unflinching loyal support of the Zenith brand. Tier 1 Capital describes capital adequacy, which is the core measure of a bank’s financial strength from a regulator’s point of view. According to the ranking, Tier 1 Capital, as defined by the latest Bank for International Settlements (BIS) guidelines, includes loss-absorbing capital, i.e., common stock, disclosed reserves, retained earnings, and minority interests in the equity of subsidiaries that are less than wholly owned.
As at the time of filling this report Zenith Bank dividend yield at 10.30 per cent ranked highest among other competing banks, making it the delight of investors. The growth supportive numbers, were re-enacted by Zenith Bank in its H1-23 interim financial results, which shows the bank’s traditional hyper performance with Profit After Tax (PAT) soaring by 161.8 per cent to N291.73 billion, against N111.41 billion penned in H1 2022. The substantial growth in the bank’s earnings was supported by the broad-based expansion across its funded income line which rose by 71.9 percent y/y, and also non-funded income which advanced by 246.1 per cent y/y. To reward shareholders, the bank’s management proposed an interim dividend of NGN0.50/share which also towers against N0.30 per share interim dividend paid in H1-2022, translating to a dividend yield of 1.4 per cent based on the last closing price of NGN36.95/share on 11 September 2023.The bank recorded a 71.9% y/y growth in funded income to NGN415.43 billion, driven by higher yields in the fixed income market and (2) growth in its earning assets increased by 22.5 percent YTD to NGN12.25 trillion. Across the contributory lines, the bank generated higher income from loans and advances to banks which advanced by 457.8 per cent y/y to NGN21.54 billion, loans and advances to customers, which is one of the strong income lines, increased by 55.4 per cent y/y to NGN253.95 billion,, while investment securities grew by 88.0 per cent y/y to NGN139.94 billion) in the review period. Interest expense advanced by 169.5 per cent y/y to NGN153.56 billion, as the elevated interest rate pushed the bank’s funding costs higher.
Meanwhile, a prominent Nigerian firm of market analytics, Cordros Research, in its comment on the Zenith Bank’s H1 2023 results noted, “ZENITHBANK’s H1-23 results aligns with our expectations, with the group’s earnings positively impacted by revaluation gains following the FX devaluation in the period. We expect the bank to close the year positively, driven by the underlying impact of higher interest rates and revaluation gains in the period….'”
Zenith Bank’s track record of excellent performances has continued to earn the brand numerous awards including being recognized as the Number One Bank in Nigeria by Tier-1 Capital, for the 13th consecutive year, in the 2022 Top 1000 World Banks Ranking published by The Banker Magazine; Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020 and 2022; Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best Commercial Bank, Nigeria 2021 and 2022 in the World Finance Banking Awards; Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022; Best in Corporate Governance’ Financial Services’ Africa, for three consecutive years from 2020 to 2022, by the Ethical Boardroom; Best Commercial Bank, Nigeria and Best Innovation In Retail Banking, Nigeria in the International Banker 2022 Banking Awards, amongst others.
Zenith Bank has unofficially been referred to as Nigeria’s Export bank considering its very deep forays into export trade activities, especially non-oil. The bank has been the most visible financial institution pioneering trade in the country. One of the many visible efforts of the bank in growing the Nigerian economy using a non-bank application is her optimization of the non-oil export end of the country’s revenue, using her very robust, credible and overwhelming skills. Against the backdrop of the need to transform the Nigerian economy from a mono to diversified economy, Zenith Bank is taking the bull by the horns to make the country’s economy depend less on oil and gas export as major source of revenue generation. The move by the bank becomes necessary because, over dependence on fossil export, as the main source of revenue, has exposed the country’s economy to the vagaries of the international trade with the adverse consequences that the country no longer generates enough revenue from the sector to fund its budgets in addition to other myriad of socio-economic problems currently assailing the country. The management of the bank was rather worried that if nothing was done to arrest the mono-economic trend the development will stretch the foreign exchange capacity of the economy as its foreign reserve will be brazenly affected.
The bank’s effort becomes more entrenched as its management revealed that by the year 2000, oil accounted for about 98% of total exports and about 83% of federal government revenue as it became the main sources of foreign exchange for the country. As analysts have pointed out in many occasions , on account of the shift of focus from non-oil revenue to oil revenue, Nigeria’s growth and development has continued to decline with little hope of recovery. The country’s economy has been exposed to the instability of the international oil market. This seismic situation has seriously impacted on the country’s annual budget as the government, now, resorts to borrowings to finance budget deficits. Twice, the country’s economy has suffered recession as exemplified in 2016 and 2020. This development has been one special focus Zenith Bank has continued to optimize to a great extent. Therefore, this unfortunate situation has provided the country another opportunity to look inward by diversifying into other sources of revenue that would catapult the country into quick economic development. This indeed, is the essence of the Economic Recovery and Growth Plan (ERGP) established by the out-going administration of Muhammadu Buhari. Essentially, ERGP is a medium term plan for the purpose of restoring economic growth while leveraging the ingenuity and resilience of the Nigerian people.
It is on this score that the current effort by the Zenith Bank to elevate the non-oil sector can be appreciated. It is in sync with the government objective. In the last seven years or there about, Zenith Bank has remained committed to promoting the non-oil export sector by identifying emerging opportunities that can help stimulate the sector and develop robust financial products and incentives for operators in the sector. As part of the effort, the bank launched the Non-Oil Export Seminar in 2017 as an initiative to help galvanize discussions around various opportunities in Nigeria’s non-oil export business. Significantly, the Zenith Bank’s effort coincides with the Central Bank of Nigeria (CBN) initiatives to grow the country’s non-oil export sector. The CBN had in February 2022 introduced the initiative entitled : RT200 FX programme. The “RT200 FX Programme”, which stands for the “Race to US$200 billion in FX Repatriation,” is aimed at getting $200 billion in Foreign Exchange (FX) repatriation over the next 3-5 years, based on stipulated guidelines. According to CBN, “The RT200 FX Programme is a set of policies, plans and programmes for non-oil exports that will enable the country to attain its lofty yet attainable goal of US$200 billion in FX repatriation, exclusively from non-oil exports, over the next 3-5 years”.
To ensure seamless implementation towards target deliverables, the RT200 FX Programme has the following five key anchors: Value-Adding Exports Facility, Non-Oil Commodities Expansion Facility, Non-Oil FX Rebate Scheme, Dedicated Non-Oil Export Terminal and Biannual Non-Oil Export Summit. Each of these anchors represents a channel of implementation that tackles every applicable aspect and the signs have started showing. Zenith Bank is among the deposit money banks in the country that have keyed into the initiative to promote awareness of the scheme and organise their own programmes patterned after the CBN’s 5th anchor of the scheme which includes conducting non-oil forums and workshops with appropriate themes to address the subject-matter. Therefore, the 7th Annual Edition of the Zenith Bank International Trade Seminar themed “Unlocking Opportunities in Nigeria’s Non-Oil Export Business” was considered apt as it addressed bottlenecks affecting non-oil exports. Stakeholders unanimously called for support of Nigeria’s Non-Oil Export at the Seminar which was held on July 20, 2022, at the Civic Centre, Victoria Island, Lagos and virtually.
The Chairman of the bank who advised the Federal Government on the need to deep-dive into non-oil exports, noted that intellectual capital and other aspects of products manufacturing, telecommunications, information technology are very valuable to the growth of Nigerian economy but grossly underexploited. He buttressed this with the fact that the GDP contribution from oil wells was only about 11% and the balance came from services and other aspects of the economy. “Perhaps we need to deep-dive into non-oil exports” he said at the event.
Further on the enormous potential in Nigeria’s non-oil sector, the Chairman of the bank highlighted the phenomenal growth of Nigeria’s emerging financial technology (Fintech) companies such as Flutherwave, OPay, Interswitch, Kuda and Paystack, with market valuations of $3 billion, $2 billion, $1 billion, $500 million, $200 million, respectively. According to him, this underscores the enormous opportunity in the Fintech space. He also noted that the most capitalized companies in the world, such as Apple, Microsoft, Alphabet (Google), Amazon, Tesla, Visa, etc., are not oil companies but are in the technological innovation space.
For the bank’s CEO, Ebenezer Onyeagwu, the annual Zenith Bank collaborations in the economy have served as platforms to deepen the conversation on promoting non-oil export in Nigeria, bringing together non-oil export practitioners and relevant government agencies to interact and explore the opportunities and proffer solutions to the challenges of non-oil export in the country.
According to the bank, relevant statistics indicate that, Nigeria’s non-oil sector contribution to GDP growth has averaged 3.61 % from 2011 until 2022, reaching an all-time high of 8.92% in the fourth quarter of 2011 and a record low of -6.05% in the second quarter of 2020. Recent reports show that Nigeria’s third quarter 2022 GDP figures showed that the non-oil sector dominated economic performance by contributing 94.34 per cent to the nation’s GDP, while the oil sector contributed 5.66% in the preceding quarter is something to cheer about as it underscored the increasing importance of the non-oil sector.
Apart from its classical contributions as a deposit money bank, the bank has been known as one of the country’s economic development and growth enablers, considering the fact that it has been called upon to play leading roles in times of difficulties or when issues that need deep insight arise. Its efforts in times of distress like the COVID-19 pandemic and contributions to displaced and deprived citizens arise. It has significantly positioned itself as one institution conscious of economic and social assistance to the Nigerian publics as well as pioneering economic roles as a very rich and responsible financial institution. Its corporate social responsibility (CSR) network is strongly knitted within the length and breadth of the Nigerian space. Its’ very strong position as an indigenous Nigerian financial institution has conferred a lot of confidence to the now consolidated Nigerian banking sub-sector as its consistency of purpose and the confidence it brings to bear on the financial sector has awakened the strong spirit of enterprise among the five biggest banks in the country. By the time the Central Bank of Nigeria (CBN) muted the idea of consolidation of the then 89 banks in 2005, Zenith already had an overflowing capital base that surpassed what was being considered for regulation by the apex bank. This further explains its focus and purpose in the Nigerian economy. It must be mentioned here that the now trending Dangote Petrochemical Plant, which is considered as the largest industrial super-structure in African, has a lot of leveraging from Zenith Bank for it to achieve the capacity it has now. It is generally instructive among many Nigerians that Zenith Bank remains one very important institution with which a great deal of Nigeria’s economic fortunes are being realized.
