Tier-1 banks’ assets, brands define financial sector’s growth

Nigerian banking industry is a highly competitive one where lenders taking strategic steps to stay ahead of competition.

The success in the sector is determined largely by quality of services provided by banks as well as their ability to meet customers’ business needs.

Findings showed that a bank’s commitment to these goals and seamlessly achieving them determines how the market perceives such brand.

Since it commenced business in May 1990, Zenith Bank Plc has built a respectable brand that is globally recognised.

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, Jim Ovia with the numerous awards the bank has won in the past two years under the leadership of Ebenezer Onyeagwu.

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.

All these have added to the bank’s performance and profitability.

For instance, the bank’s unaudited results for the first quarter ended 31st March 2021, showed that its profit after tax (PAT) rose to N53.1 billion, from N50.5 billion recorded in March 2020. This was despite a very challenging macroeconomic environment aggravated by the COVID-19 pandemic.

According to the bank’s unaudited statement of account for the first quarter of 2021, the group’s profit before tax also grew from N58.8 billion to N61 billion in the same period.

The profitability was driven by the optimisation of the cost of funds and improvement in non-interest income.

In addition, the bank’s cost of funds reduced significantly from 2.6 per cent in March 2020, to 1.1 per cent in March 2021. This also reflected in interest expense which dropped by 45 per cent from N32.8 billion to N18 billion over the same period.

Considering its performance over the years, Zenith Bank has been predicted to continue to retain its position as Nigeria’s leading tier-1 lender, according to a report by Coronation Asset Management Limited.

In its 2021 Bank Report on Nigerian lenders titled, “Nigerian Banks, Resilience Built In,” released recently, the Lagos-based research and financial advisory firm forecasts that the total assets of the country’s five Tier 1 lenders will increase from N37.49 trillion in 2020, to N43.93 trillion and N48.31 trillion in 2021 and 2022 respectively, projects that Zenith Bank will lead its peers with total assets of N10.11 trillion and N11.21 trillion in 2021 and 2022 respectively.

It stated: “Rated on key parameters such as asset quality, profitability and return to investors, Zenith Bank’s track record has been 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.

“Funded income has been the largest and most stable source of income for Zenith Bank over the last five years (as a share of revenue: 57 per cent). Although Net Interest Margin (NIM) compressed significantly last year, the reversal in market yields is likely to drive a strong recovery in interest income in 2021.

“According to management, the bank has already re-priced most of its loans upwards by one per cent -three per cent. We expect cost of funds to remain downwardly sticky as the bank aggressively grows its retail deposits.

“We look for a 30 basis points net interest margin (NIM) expansion in 2021 ending. The preceding is likely to offset cost growth and lead to profit before tax growth of 18.2 per cent, with RoAE settling at 21.7 per cent.

“Beyond this year, other profitability metrics look healthy, fee income growth has been consistent, and the bank has kept a lid on operating expenses. We expect operating expenses to be well controlled during our forecast period.

“We expect the cost-to-income ratio to settle within the 43 per cent – 45 per cent range, well below the industry average,” the report stated.

It stated that over the last five years, Zenith Bank is the only bank among its peers that has kept its non-performing loans ratio below the statutory limit of five per cent (Full year 2020: 4.3 per cent) consistently.

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. He added: “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, 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.”

Clearly, Zenith Bank under the leadership of Onyeagwu has been increasing in brand strength and this has translated to better returns to shareholders, improved customer services and enhanced value to shareholders.

Local, global recognitions

For instance, in 2019, Zenith Bank was named the Best Commercial Bank, 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, 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; Biggest Bank in Nigeria by Tier-1 capital by The Banker; Most Valuable Banking Brand in Nigeria by The Banker; Best Corporate Governance ‘Financial Services’ Africa Ethical Boardroom; Bank of the Decade (People’s Choice), Thisday Newspaper; Bank of the Year by Independent Newspaper; Best Bank in Retail Banking by BusinessDay Newspaper; Best Company in Promotion of Good Health and Well-Being, SERAS Awards and Best Company in Promotion of Gender Equality and Women Empowerment by SERAS Awards.

In 2021, so far 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 BusinessDay Newspaper in 2020 and CEO of the Year by SERAS Awards.

Indeed, Zenith Bank blazes the trail in digital banking in Nigeria; scoring several firsts in the deployment of Information and Communication Technology (ICT) infrastructure to create innovative products that meet the needs of its teeming customers.

The bank is verifiably a leader 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.

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.

In the same vein, Zenith Bank has clearly distinguished itself in the banking industry through superior service quality, unique customer experience, and sound financial indices. These have become part of its corporate culture to the extent that the bank is easily associated with the following attributes: Best-in-class customer experience, creativity, excellent financial performance, good asset quality, stable management, dedicated and highly skilled work-force, cutting-edge Information and Communication Technology, efficient and effective distribution channels.

The strategic objective of Zenith Bank also includes a continuous improvement of its capacity to meet customers’ increasing and dynamic financial needs as well as sustain high quality growth through investments that impact the quality of service to its existing and potential customers, constant upgrade of its ICT infrastructure, unwavering investment in training and re-training of its people and regular reinforcing of its customer services delivery charter with regards to continually changing customer needs.

Additionally, Zenith Bank places high premium on the pivotal role of exceptional service delivery in its drive to consistently exceed stakeholders’ expectations. The bank has in place a well-articulated strategy to not only meet and surpass customer expectations, but also ensure that plans are fine-tuned to address the changing taste and sophistication of the customer.

Its underlying philosophy is to remain at all times, a customer-centric institution with a clear understanding of its market and environment.

Also, the bank remains committed to promoting good corporate governance and best practices in the conduct of its business. This is because it believes that good corporate governance engenders public trust and ultimately ensures that the company meets the expectation of all stakeholders.

Zenith Bank’s business continuity policy is to maintain the continuity of its activities, facilities, systems and processes and where these are disrupted by any event, to enable it to return to ‘normal’ operations as soon as possible.

Its Information Security Policy is to provide a security framework that will ensure the protection of information from un-authorised access, loss or damage while supporting the open, information-sharing needs of the bank.

The CEO of Financial Derivatives Company Limited, Bismark Rewane, said most Tier-1 banks did well in 2020 because they made profit from revaluation despite the challenging year.

State of the local, global economy

The Central Bank of Nigeria (CBN)-led Monetary Policy Committee said that while there has been reasonable gains in subduing the pandemic, lowering of restrictions and reopening of several economies, the fast pace of mutation of new and deadlier strains of the virus is posing a downside risk to the full recovery of the global economy.

Despite the Covid-19 challenge, the CBN Governor, Godwin Emefiele said Nigeria’s Real Gross Domestic Product (GDP) grew by 0.51 per cent in the first quarter of 2021, compared with 0.11 per cent in the preceding quarter and will continue to do better with the support of the banking sector.