EBENEZER ONYEAGWU: Taking Zenith Bank to the Zenith

  EBENEZER ONYEAGWU: Taking Zenith Bank to the Zenith

Regardless of the challenging macroeconomic environment brought about by the COVID-19 pandemic among others, Zenith Bank under the leadership of its Group Managing Director, Ebenezer Onyeagwu, has maintained its leadership position, writes Oluchi Chibuzor

Last month made it two years since Mr. Ebenezer Onyeagwu assumed the position of Group Managing Director/CEO of Zenith Bank Plc.

Despite the very challenging macroeconomic environment brought about by the COVID-19 pandemic, which had a significant deleterious impact on businesses globally, Onyeagwu has demonstrated that he has a midas touch considering the strong financial performance the bank continues to churn out.

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, according to the latest banking report released by Coronation Merchant Bank.

Obviously, those who doubted his competence when he was appointed now have a rethink as his performance in the last two years has shown clearly that he is a square peg in a square hole.

This has continued to reflect in the performance of the bank which has maintained its leadership position. Also, in the area of corporate governance which is a vital ingredient in ensuring the sustainability of any institution, Zenith Bank under Onyeagwu has maintained a positive rating as can be seen from the recent assessment by the Nigerian Exchange Limited (NGX) hence the financial institution’s listing on the Premium Board of the Exchange.

The bank places 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.

Zenith Bank under Onyeagwu’s watch has remained 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.

As a testament to the aforementioned and in recognition of its track record of excellent performance, Zenith Bank was last week ranked the number one bank in Nigeria by tier-1 capital in the 2021 Top 1000 World Banks’ Ranking published by The Banker Magazine, a publication of the Financial Times Group of the United Kingdom.

The bank, with a tier-1 capital of $2.64 billion, retained its ranking as the number one tier-1 bank in Nigeria for the third consecutive year.

It, however, emerged as the 454th bank globally and the only Nigerian bank in the top 500.

The ranking which was published in July 2021 edition of the magazine, was based on the 2020 year-end tier-1 capital of banks globally.

Zenith Bank’s financial performance for the year was underpinned by an eight per cent growth in non-interest income, with an improved market share in both retail and corporate sectors despite a challenging macroeconomic environment exacerbated by the COVID-19 pandemic.

Tier-1 capital describes capital adequacy, and it is the core measure of a bank’s financial strength from a regulator’s point of view.

According to the ranking, tier-1 capital, as defined by the latest Bank for International Settlements (BIS) guidelines, includes loss-absorbing capital, i.e. common stock, disclosed reserves, retained earnings and minority interests in the equity of subsidiaries that are less than wholly owned.

Speaking on the ranking, 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 pandemic, which had a significant deleterious impact on businesses globally.

He said it was also an affirmation of Zenith Bank’s 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 thanked the bank’s customers for making Zenith Bank their choice.

This award was the latest amongst many awards and recognitions that the bank has received in recent times for its track record of excellent performance and commitment to global best practices.

For instance, Zenith Bank under Onyeagwu’s leadership had also been 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.

In a clear demonstration of its resilience, the bank’s recently announced 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.

Also, in its audited results for the full year ended December 31, 2020, it recorded significant earnings’ growth. For instance, the bank’s net interest stood at N299.682 billion, up from N267.031 billion in 2019, while net fee and commission income was N79.332 billion as against N100.106 billion in 2019. Its profit before tax grew from N243.294 billion to N255.861 billion, just as profit after tax (PAT) rose by 10.4 per cent to N230.565 billion from N208.843 billion in 2019.

Loans and advances improved from N2.306 trillion to N2.779 trillion, while customers’ deposits rose from N4.262 trillion to N5.339 trillion. Total assets rose from N6.347 trillion to N8.481 trillion in 2020.

The chief executive officer has continued to assure investors and stakeholders that the commercial bank will continue to accelerate its retail and digital banking initiatives in order to sustain its positive performance.

He also pointed out that even though the tier-1 bank has over the years grown organically, it might go into a business combination deal whenever it sees value.

Providing insights into the bank’s 2020 financial results, Onyeagwu had explained that Zenith is the biggest bank in the country and given its size, it is important to maintain certain optimal level of cash balances to meet the transactions and the needs of its customers.

“Again, you need to understand that the cash balance you see today is not what you will see tomorrow. You may end with N55 billion at the reporting time and you move in the next day, that balance may come down to N20 billion or even N10 billion, depending on the transaction flow.

“So, essentially, as a big bank, with our asset size and huge liquidity position, we need to keep a level of cash holding to meet our daily needs.”

Responding to a question on the likely drivers of the bank’s operating expenses, Onyeagwu said it was a combination of so many things.

“Of course, we are scaling up in terms of our cyber-security initiative because as we continue to grow in our digital expansion programme.

“It is also important that we make adequate provision to deal with the downside effect of implementing a digital banking regime, which has also seen a rising case of cybercrime.

“So, we are also up scaling our investment in terms of what we have, to contend with the ever-increasing risks we see in the environment. That in a nutshell explains the rise in our digital banking initiative,” added.

While highlighting the effects of high cost of doing business in Nigeria on Zenith Bank, he also pointed out that regulatory costs, such as the Nigeria Deposit Insurance Corporation (NDIC) premium as well as the Asset Management Corporation of Nigeria (AMCON) charge, place heavy burden on financial institutions.

“When you are looking at cost of doing business, you also need to look at in total, how businesses are being conducted. If I set up a branch today, I would need to provide my infrastructure, I need to provide power, water and in some cases we even construct road to provide access to the branch location.

“We also have things like regulatory cost. A bank like Zenith, given our size, the burden of regulatory cost on us is heavy. By regulatory cost here, I am referring to NDIC premium and AMCON charge.

“So, because of our size, if you look at the numbers, you will see that this regulatory cost accounts for a whopping 28 per cent of our overhead. So, all of them come together to add to the cost of doing business for us as a banking institution in the country,” he added.

He urged Nigerians, especial operators of SMEs to take advantage of the various intervention funds that had been created by the Central Bank of Nigeria.

Responding to a question on the bank’s acquisition plan, Onyeagwu said: “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, with Onyeagwu still on the driving seat, it is expected that Zenith Bank will maintain its industry leadership position while also remaining as one of the healthiest financial institution in the continent.