March 06, (THEWILL) – Zenith Bank Plc defied a challenging macroeconomic environment that witnessed the worst recession in a quarter of a century and exacerbated by the Coronavirus (COVID-19) pandemic, to grow its assets 60 percent within five years. A review of the bank’s performance between 2017 and 2021, when it emerged from the economic uncertainties of 2016 recession and deepening effects of the COVID-19 pandemic, revealed a culture of resilience that confirms its market leadership.
This unusual posture resulted in a significant assets growth that hit almost a trillion Naira in 2021, supported by continued impressive performance in virtually all the key parameters in the lender’s balance sheet. Analysts note that the performance did not reflect the general downturn in the economy when inflation, GDP growth and unemployment rates hit their worst points. This they attribute to the bank’s ability to carve out a niche for itself in the financial service industry.
A glean into the results showed that Zenith Bank’s Assets base rose 6.5 percent from N5.59 trillion in 2017 to N5.95 trillion in 2018. Evidently, this reflected the post-recession recovery environment that also impacted on the total Loans and Advances, which recorded a drop of 13.4 percent — from N2.10 trillion to N1.83 trillion in 2017 and 2018 respectively. Significantly, Gross Loans rose to N3.51 trillion within the five year period or 67.15 percent from N2.10 trillion in 2017.
Expanding credit in an economy that was described as surviving on a life support is a measure of the bank’s confidence to achieve organic growth that is devoid of “soft” incomes common with seasonal investments. “It is bank credits that really grow the economy; many banks are not too willing to advance credits to the real sector because of the risks involved. Few financial service institutions behave differently and such lenders are marked for high performance. This is where Zenith Bank stands out,” said Anthony Okunnuga, a financial analyst.
Zenith Bank’s reports showed a steady growth in Gross Loans to N2.30 trillion in 2019 from N1.82 trillion in 2018, a 26.38 percent. Apparently, in a bid to support the economy to wriggle out of COVID-19 pandemic, the bank grew its Gross Loans to N2.91 trillion in 2020 reflecting 26.5 percent rise from N2.30 trillion recorded in the preceding year. Gross Loans hit N3.51 trillion in 2021.
Net Interest Income, which largely derives from banks’ core activity of lending, rose steadily to N295.6 billion in 2018 from N258 billion; then N267 billion in 2019 and N299.7 billion in 2020 when COVID-19 pandemic ravaged the economy and created severe health challenges. The N320.8 billion Net Interest Income recorded in 2021 was a significant growth of 24.35 percent during the review period.
As a result of the focused drive to increase retail deposits in the past three years, the bank’s Customer Deposits jumped 51.8 percent between 2019 and 2021, hitting all time high of N6.47 trillion in 2021 against N4.26 trillion in 2019. Zenith Bank recorded Customer Deposit rise of 88.63 percent between 2017 and 2021.
Supporting the emergence of its strong asset base is the surge in Gross Earnings which hit N765.55 billion in 2021 against N696.45 billion in the preceding year, reflecting a 10 percent rise. Again, the pandemic year of 2020 did not witness a drop in Gross Earnings. Instead, it was a 5.17 percent rise against N662.25 billion in 2019. The figure for 2018 was N630.34 billion which is 5 percent lower than the 2019 record. Overall, the bank’s Gross Earnings rose 2.74 percent.
There is a steady rise in the bank’s profit during the five-year period. Profit before tax (PBT) rose to N280.37 in 2021 from N199.31 in 2017, a jump of 40.68 percent. Profit after tax (PAT) also reflected an upward trajectory hitting N244.6 billion in 2021 from N173.79 in 2017, a 40.8 percent improvement. As in the bank’s performance trend, PAT performance in 2020 was not decelerated by COVID-19. It rose to N230.56 billion from N208.84 billion in 2019 or 10.4 percent. Earnings Per Share increased steadily from 5.53 in 2017 to 7.78 in 2021, reflecting a 40.6 percent.
At the Conference Call held on March 3, 2022, to present the 2021 Financial Year Earnings (FYE), the Group Managing Director/CEO, Mr Ebenezer Onyeagwu, said that Zenith Bank beat market expectations with double-digit growth in Gross Earnings and impressive performance in other parameters. He added that the growth was achieved in the face of growing macroeconomic instability which saw the bank sustain strong earnings growth and improved liquidity.
Commenting on the significant of assets growth, Professor of Finance and Accounts at the Nasarawa State University, Keffi, Muhammad Mainoma said, “It signifies that they take advantage of the environment. They act strategically. In business you will continue to study the environment and take advantage. You invest in areas that thrive. For a bank there is no period that people will not need money. So once a business is focused and invests in areas that people always need, you will not lose at all. This explains the continuous growth despite different circumstances for the past five years”.
Commenting on the bank’s continued impressive performance, the Chairman, Trusted Shareholders Association of Nigeria, Alhaji Mukhtar Mukhtar said that Zenith Bank has lived true to its name, adding that the financial institution has become ‘investors’ pal’ due to its surging growth over the years across virtually in all parameter.
“As an investor, the bank’s consistent profit and dividend pay-out even in harsh economic situation is unbeatable. They have continued to make investors smile. Investors are happy with the bank’s performance. Zenith Bank does serious banking because the people in charge are passionate about success and excellence. Therefore, the name ‘Zenith’ has continued to reverberate in our memories. Almost a trillion Naira record in Total Assets and over N240 billion in profit after tax – in just one year, is truly a spectacular performance,” Mukhtar told THEWILL in a note.
He added that the founders of the bank had a vision and that the current board, management and staff have embraced the vision which leads to greater landmarks every year. “I must single out the bank’s management and staff for their hard work, commitment and resilience over the years. We (the investors) truly appreciate them and we will continue to give them maximum support.”
The Chairperson, Pragmatic Shareholders Association of Nigeria (PSAN), Mrs Bisi Bakare, commended Zenith Bank for the impressive performance despite the tough times occasioned by the COVID-19 pandemic.
“I am particularly happy about this report; Zenith has always made us proud. Remember they paid an interim dividend in the year and now they are paying us a final dividend. It is always joyful when shareholders receive dividends on their investments,” Bakare told THEWILL in a telephone conversation.
Zenith Bank through its resilience in a challenging environment had outranked Guaranty Trust Holding Company to become Nigeria’s biggest bank by market value. The bank also belongs to the exclusive ‘Premium Board’ league of the Nigerian Exchange Limited, a platform that separates the ‘men from the boys’.
For over three decades, Zenith Bank has distinguished itself in the Nigerian financial services industry through superior service offerings, unique customer experience, and sound economic indices. The Bank remains a clear leader in the digital space with several firsts in deploying innovative products, solutions, and an assortment of alternative channels that ensure convenience, speed, and safety of transactions.
However, the lender’s operating expenses shot up by as much as 22.1 percent to N180.6 billion, heaping pressure on profit, with spending on IT mostly responsible for this, which contributes to the sustained robust Asset base. In accordance with extant regulations, Zenith Bank made a provision of N59.9 billion for credit facilities that may go bad relative to the N39.5 billion it devoted to the same purpose in 2020, which weakens earnings.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
