Zenith Bank will soon unveil its plan to raise N230 billion from the financial markets, making it perhaps the least pressured among the Tier-One banks which are mandated by the Central Bank of Nigeria to shore up their capital base to N500 billion in less than two years from now.
Background
Zenith Bank Plc was established in May 1990, and commenced operations in July of the same year as a commercial bank. The Bank became a public limited company on June 17, 2004 and was listed on the Nigerian Stock Exchange on October 21, 2004 following a highly successful Initial Public Offering.
Zenith Bank Plc currently has a shareholder base of more than half a million and is Nigeria’s biggest bank by tier-1 capital. In 2013, the Bank listed $850 million worth of its shares at $6.80 each on the London Stock Exchange.
Headquartered in Lagos, Nigeria, Zenith Bank Plc has 393 branches and business offices in prime commercial centres in all states of the federation and the Federal Capital Territory.
In March 2007, Zenith Bank was licensed by the Financial Services Authority of the United Kingdom to establish Zenith Bank Limited as the United Kingdom subsidiary of Zenith Bank Plc.
Zenith Bank also has subsidiaries in: Ghana, Zenith Bank (Ghana) Limited; Sierra Leone, Zenith Bank (Sierra Leone) Limited; Gambia, Zenith Bank (Gambia) Limited.
The bank also has a representative office in The People’s Republic of China. The Bank plans to take the Zenith brand to other African countries as well as the European and Asian markets.
Zenith Bank Plc blazed the trail in digital banking in Nigeria; scoring several firsts in the deployment of Information and Communication Technology infrastructure to create innovative products that meet the needs of its teeming customers.
“Gross loans, which are largely funded by customer deposits, grew by 30 percent from N7.1 trillion in December 2023 to N9.2 trillion in March 2024. Customer deposits also grew by 11 percent from N15.2 trillion in December 2023 to N16.8 trillion in March 2024, underpinning continued customer confidence in the Zenith brand. Total assets increased by 19 percent to N24 trillion within the same period”
Board & Management
Jim Ovia is the founder and chairman of Zenith Bank Plc, and Dame (Dr.) Adaora Umeoji, is the Group Managing Director/CEO of Zenith Bank Plc.
With nearly three decades of cognate banking experience and over 20 years of extensive executive management expertise in Zenith Bank, she has established herself as one of the leading figures within the banking sector.
She is the Chairperson of Zenith Nominees Limited and she sits on the board of Zenith Bank (Ghana) Plc as a non-executive director. On the board of the Bank are other 12 directors that decide its affairs.
Value offer for investors
The bank is also preparing to complete its transition to a holding company structure.
These initiatives, according to the bank, are expected to position it to explore emerging market opportunities, enhance its digital and retail banking initiatives, and deliver superior value to stakeholders.
The bank hosted an event with capital market stakeholders and investors to outline its strengths as it embarks on its recapitalisation efforts.
Umeoji highlighted the bank’s robust financials, including tier-1 capital of N1.8 trillion, shareholders’ funds of N2.3 trillion, market capitalisation of N1.3 trillion, and a profit after tax of N796 billion for the year ending December 2023.
Umeoji expressed confidence in the bank’s ability to deliver superior value to investors, owing to a high-quality board, strong management, and a solid corporate culture. She said, “Our future plan is to promote financial inclusion, expand corporate and retail banking through advanced technology, and establish a fintech subsidiary, ZenPay, to drive profitability. Additionally, the bank aims to expand into France and the Francophone African region.”
Umeoji stated, “Zenith Bank is set to raise capital from the market, targeting N230 billion, with N270.7 billion already secured, making it the least amount to raise among peers. We possess the capacity, network, balance sheet, human capital, and track record to achieve this. Our advanced technology will ensure seamless processes and integration.”
Chief Financial Officer/General Manager, Mukhtar Adam noted that the bank’s Compound Annual Growth Rate (CAGR) in revenue has exceeded 27 per cent over the past five years.
“This growth continues annually. Despite Nigeria’s recession during this period, we maintained growth. Over the past five years, our profit before tax has grown by about 28 per cent.”
Financials
Zenith Bank Plc has announced its unaudited results for the first quarter ended 31st March 2024, with an impressive triple-digit growth of 189 percent in Gross Earnings, from N270 billion reported in Q1 2023 to N781 billion in Q1 2024. This is despite the challenging operating environment and tightening monetary policy stance.
From the unaudited statement of account submitted to the Nigerian Exchange on Friday, May 3, 2024, this impressive growth in the topline also enhanced the bottom line, as profit before tax (PBT) rose to N320 billion in Q1 2024, representing an increase of 270 percent from the N87 billion reported in Q1 2023. Profit after tax (PAT) equally grew significantly by 291 percent from the N66 billion reported in Q1 2023 to N258 billion in the current period.
Interest and non-interest income contributed significantly to the growth in gross earnings. Interest income grew by 155 percent from the N192 billion reported in the quarter ended March 2023 to N489 billion in the period to 31 March 2024.
The growth in interest income is due to the repricing of risk assets, owing to the increase in the central bank’s Monetary Policy Rate (MPR), which currently stands at 24.75 percent. The growth in net interest income is primarily due to the increase in fees and commissions as well as trading grains.
The Group reported an impairment charge of N56 billion for Q1 2024, up from N8 billion recorded in Q1 2023. This is attributable to significant growth in risk assets, primarily driven by the revaluation of its USD loans, which necessitated additional impairment on the bank’s foreign currency-denominated loans.
The cost of funds grew by 48 percent from 2.7 percent in Q1 2023 to 4 percent in Q1 2024 due to the high-interest rate environment, while interest expense increased by 157 percent from N71 billion reported in Q1 2023 to N182 billion in the period to March 2024. Notwithstanding the year-on-year (YoY) increase in interest expense, net interest margin (NIM) grew by 20 percent from 6.9 percent in the 3 months ended March 2023 to 8.3 percent in the current period ending 31 March 2024.
Return on Average Equity (ROAE) and Return on Average Assets (ROAA) increased year-on-year (YoY) by 114 percent and 119 percent, respectively, due to improved profitability.
Gross loans, which are largely funded by customer deposits, grew by 30 percent from N7.1 trillion in December 2023 to N9.2 trillion in March 2024. Customer deposits also grew by 11 percent from N15.2 trillion in December 2023 to N16.8 trillion in March 2024, underpinning continued customer confidence in the Zenith brand. Total assets increased by 19 percent to N24 trillion within the same period.
The Group has consistently maintained all prudential ratios well above the minimum regulatory requirement. At the end of Q1 2024, Capital Adequacy Ratio (CAR) and Liquidity Ratio stood at 20 percent and 67 percent, respectively, demonstrating the Group’s ability to maintain a strong and liquid balance sheet.
