- By Emeka Anaeto, Business Editor
Mr Peter Amangbo is the Group Man-aging Director/CEO of Zenith Bank Plc, and he is Vanguard Newspaper’s Banker Of The Year, 2018.
The Board of Editors of Vanguard Newspapers were faced with the task of picking from topmost impressive five banks in terms of some selected key performance indicators including earnings, profitability and asset quality, as well as the consistency of the performance over the last three years. Zenith Bbank stood out, and the man in the saddle took the lead in our rating scale.
Coupled with his outstanding performance, we reckon with the fact that with a relatively unknown name in the industry, he stepped into the big shoes of the two previous CEOs of the great institution, Godwin Emefiele, who handed over to him to assume the position of the Governor of Central Bank of Nigeria, CBN; and the founding CEO, Jim Ovia, Nigeria’s leading light in banking and finance. Amangbo has so far sustained the impressive trend. He has stayed the course, and the figures speak volume of his capability so far.
Today’s Zenith Bank
Strong earnings capacity and growth, solid and liquid capital base, strengthened enterprise risk management practices, good returns on investment and excellent customer service are some of the hallmarks of today’s Zenith Bank under the stewardship of Mr. Amangbo. Zenith Bank remains a dominant player in the Nigerian banking industry, indeed a leader amongst tier-1 category of banks. It remains a net placer of fund in the industry with most banks running on Zenith Bank’s liquidity.
In fact, Amangbo told us in a chat that Zenith Bank has never taken fund from any bank in the Nigerian banking environment with prevalence of inter-bank lending. Our check reveals that Zenith Bank still controls a significant share of the high end corporate clients in strategic sectors of the economy. The bank uses its strong balance sheet and liquidity as well as efficient trade finance processes and services, to continuously grow and support businesses.
Risk Management: Under Amangbo, Zenith Bank maintains a strong focus on superior ERM practices. Consequently, despite the tough operating environment, the bank’s Non-Performing Loan (NPL) ratio came in at 4.9 per cent with a coverage ratio of 238.4 per cent.
Impressive Dividend Payout: The investors in Zenith Bank have good returns as the bank under Mr. Amangbo continued to upscale dividend payout year after year despite the recessionary circumstance under which he assumed leadership of the bank. The bank paid a dividend of N1.75 per share for both FY2013 and FY2014. One year after he took over, the bank paid N1.80 per share for FY2015 and N2.02 per share for FY2016. A final dividend of N2.45 per share was paid for FY2017, which in addition to the N0.25 per share earlier paid as interim dividend amounted to N2.70 per share.
An interim dividend of N9.42 billion, being N0.30 per share from the retained earnings account was paid in H1 2018. Amangbo told us he was optimistic that the shareholders of Zenith Bank would smile further at end of the 2018 financial audit and dividend season.
Consolidating Earnings/ Profitability: In spite of the macroeconomic backdrop, Zenith Bank has delivered an attractive earnings profile, supported by improving operating efficiency. Profit Before Tax, PBT, increased Year-on-Year (YoY) by 9.7 per cent from N152.5 billion in the third quarter 2017 to N167.3 billion in the corresponding period of 2018. The 13.4 per cent YoY growth in net interest income and 69.5 per cent reduction in impairment loss accounted for the PBT growth.
Net Interest Margin – NIM (Adjusted) increased YoY by 14.3 per cent (from 8.4 per cent in Q3 2017 to 9.6 per cent in Q3 2018), demonstrating the Group’s ability in delivering optimal pricing for its interest-bearing assets and liabilities even in a declining yield environment. The bank’s Cost of Funds (CoF) decreased from 5.4 per cent recorded in Q3 2017 to 3.3 per cent in Q3 2018 as the bank continues to focus on its drive for low cost deposit mix.
Consequently, the Cost-to-Income Ratio decreased by 1.0 per cent YoY, from 52.9 per cent in Q3 2017 to 52.2 per cent in Q3 2018. Amangbo said he expects a further improved ratio for the full year, as the full year AMCON charge was taken in the first half 2018, accounts. Fees on electronics products grew by over 100 per cent as the bank continues to improve on its electronic platforms and increase its share of the retail business.
Further on efficiency
Funding cost optimimisation continues to be central to Zenith Bank’s operations. A massive 31 per cent drop in interest expense was achieved in the 9-months to September 2018 accounts as it continues its drive towards cost optimisation. Despite the significant increase in AMCON charge, the Zenith Bank was able to contain its operating expenses growth at 6 per cent YoY. Mr. Amangbo said he expect a further moderation in operating expenses for the full year end 2018 results as the bank continued to improve on operational efficiency.
Balance Sheet, Assets Quality
In addition to the efficiency and risk management for superior performance, one of the fundamentals of Zenith Bank brand is Building A Shock-Proof Balance Sheet. Thus, the bank thrives on strong and liquid balance sheet led by securities portfolio and interbank placements.
Zenith Bank’s assets are well funded by a significant deposit base and the balance sheet remains robustly capitalised, providing a buffer for further growth. The bank also leverages a deposit-funded loan portfolio, with largely term loans to top-rated corporates. Moreover, the deposit base is predominantly current accounts which supports attractive net interest margin extraction with increasing savings account balance.
The Zenith Bank Group adopts a complete and integrated approach to risk management that is driven from the Board level to the operational activities of the bank. Risk management is practised as a collective responsibility coordinated by the risk control units and is properly segregated from the market facing units to assure independence. The process is governed by well defined policies and procedures that are subjected to continuous review and are clearly communicated across the group.
The leadership of the bank ensures a regular scan of the environment for threats and opportunities to improve industry knowledge and information that drives decision-making in Zenith Bank. Group maintains a proactive approach to business and ensures an appropriate balance in its risk and reward objectives. Risk culture is continuously being entrenched through appropriate training and acculturation. Amangbo and his team strive to maintain a well diversified loan portfolio across sectors to support and sustain the impressive asset quality.
Mr. Peter Olisamedua Amangbo holds a B.Eng. Degree (Electrical and Electronics Engineering) from University of Benin and an MBA from the University of Warwick, Coventry in the United Kingdom. He is a Fellow of the Institute of Chartered Accountants of Nigeria, FCA. He joined Zenith Bank from PriceWaterHouse (now PriceWaterHouseCoopers) as a Senior Consultant in the Financial Services Group.
Prior to this appointment to the position of MD/CEO of Zenith in 2014, Amangbo has been an Executive Director of the bank since 2005 and has over 24 years cognate banking experience all of which has been with Zenith Bank. He was a pioneer Non-Executive Director of Zenith Bank UK.
He has attended the Advanced Management Programme at INSEAD, France and Wharton Graduate School of Business, USA. He took courses on Strategic IQ Programme, Strategic Thinking and Management for Competitive Advantage, and Execution in Action – The Art of Turning Strategy into Action at the Harvard Business School, Wharton School of Business and HSM – New York respectively.