By Babajide Komolafe

The importance of improving efficiency of retail banking services through efficient electronic products is reflected in the performance of Zenith Bank in the nine month period ended September 2021. 

 At a time when domestic and global challenges including rising inflation and supply gap problems are making the business environment more hostile amidst heightened competition, the Zenith Bank Group was able to grow its revenue and profitability due to significant increases in electronic banking income and lower cost of funds.

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According to the financial statement of the bank for the nine months period ending September 2021, Zenith Bank Group  recorded a Profit before Tax (PBT) of N180 billion, representing  a 1% growth over N177 billion in the corresponding period of 2020.

The growth in profitability was consequent upon a 2% growth in Gross Earnings to N518.67 billion in 2021 from N508.97 billion in 2020.  

According to the bank, the growth in earnings and profitability were largely due to growth in current account maintenance fees as well as fees from electronic products during the period. Also contributing to the growth in bottom and top lines is a significant reduction in interest expense, which compensated for reduction in interest income. 

The Group financial statement for the nine months period ended September 2021 showed that interest income dropped by 3% to N309 billion from N319 billion in the corresponding period of 2020 due to a decline in yield on assets, reflecting current money market realities. 

The decline in interest income was largely caused by a drop in earnings from treasury bills of 22%. This was mitigated by growth in interest income from loans and advances of 9% on the back of an increase in gross loans of 9% year to date. 

During the nine months ended September 2021, Zenith Bank Group increased loans and advances to N3.18 trillion from N2.92 trillion at the end of Q3’2020, reflecting increased support to corporate and individual customers. 

The Group also reduced the impact of the drop in interest income by enhancing its efficiency which saw interest expense drop by 21% to N74 billion from N94 billion. Consequently, net interest income rose by 4% to N235 billion at the end of Q3 2021 from N225 billion at the end of Q3 2020. 

Also reflecting the improved efficiency of Zenith Bank Group, driven by its focused drive to increase retail deposits for the past three years, Cost of Funds fell sharply by 35% to 1.4% at the end of Q3 2021 from 2.2% at the end of Q3’2020. 

Highlighting the significant progress recorded by Zenith Bank in its retail banking drive, which resulted to remarkable growth in transaction volumes and value across our digital platforms and strong growth in customer acquisitions,  the financial statement showed 13% growth  in total deposit to  N6.0 trillion at the end of Q3 2021 from  N5.3 trillion at 31 December 2020, with a substantial contribution from retail deposits.

Reflecting the growth in customer acquisition, Demand deposit also known as Current Account, rose by 22 per cent or N600 billion to N3.27 trillion at the end of Q3 2021 from N2.67 trillion at the end of Q3 2020.

Following the same pattern, Savings Deposits rose by 9% or N93 billion to N1.18 trillion from N1.08 trillion. 

As a result of the  strong growth in customer acquisition and increased retail deposit, income from current account maintenance fees rose by 41 per cent to N24.19 billion at the end of Q3 2021 from N17.05 billion at the end of Q3 2020. 

Also reflecting the impact of the increased customer acquisition as well as the efficiency of its  digital platforms, the Group recorded 26 per cent growth in Fees on electronic products, which rose to N23.99 billion at the end of Q3 2021 from N18.46 billion in Q3 2020. 

Outlook

Commenting on the performance of the bank, Managing Director/Chief Executive, Zenith Bank, Mr. Ebenezer Onyeagwu, assured  stakeholders that the bank will sustain its growth trajectory in the fourth quarter of the year (Q4 2021).

He said: “As we go into the final quarter of the year, management’s outlook remains positive, buoyed by a declining inflationary trend, expected increase in foreign exchange inflows, and improving oil production. 

“The Group remains focused on increasing its retail market share, consolidating its leadership position in the corporate segment and maintaining a robust balance sheet.”

Since his appointment two years ago, Onyeagwu has ensured that Zenith Bank remains committed to sustaining the legacy of its visionary Founder and Chairman, Mr. Jim Ovia, whose pioneering and foundational role in building the structures and laying the foundation ensured an enduring and very successful institution.

 The leadership position of Zenith Bank is also confirmed by the latest banking report released by Coronation Merchant Bank. According to the report, Zenith Bank’s track record in the last five years has been impressive based on key parameters such as asset quality, profitability and return to investors.

“The bank is a clear market leader, growing its Total Assets and Net Income by an annual average of 15.7% and 15.5%, respectively, over the last five years. Over the last five years, ZENITHBANK is the only bank among its peers that has kept its NPL ratio below the statutory limit of 5.0% (FY20: 4.3%) consistently.”, the report stated.

 This impressive growth is driven by sound corporate governance, which is a vital ingredient in ensuring the sustainability of any institution.  The commitment of the Zenith Bank to sound corporate governance under  Onyeagwu is reflected in the  recent assessment by the Nigerian Exchange Limited (NGX)  which led to its  listing on the Premium Board of the Exchange.

In addition to sound corporate governance practices, Zenith Bank under Onyeagwu  continues to place a premium on its core business strategy anchored on people, technology and service, to create value for its numerous clientele. With a team of dedicated professionals, the bank leverages its robust Information and Communication Technology (ICT) infrastructure to provide cutting-edge solutions and products through its network of branches and electronic/digital channels.

Recognitions

 The commitment of the Zenith Bank to sound corporate governance under  Onyeagwu is reflected in the  recent assessment by the Nigerian Exchange Limited (NGX)  which led to its  listing on the Premium Board of the Exchange.

The sound corporate governance tradition of Zenith Bank has also helped the bank to retain its ranking by The Banker Magazine as  the number one tier-1 bank in Nigeria for the third consecutive year and the only Nigerian bank in the top 500 global banks. The ranking which was published in the July 2021 edition of the magazine was based on the 2020 year-end tier-1 capital of banks globally.

Furthermore, Zenith Bank under Onyeagwu’s leadership was also  voted as Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020; Best Bank in Nigeria in the Global Finance World’s Best Banks Awards 2020 and 2021; and Best Corporate Governance ‘Financial Services’ Africa 2020 and 2021 by the Ethical Boardroom.