Banking
Zenith Bank’s Earnings Will Remain Broadly Stable, Upgrade Remote—S&P
By Modupe Gbadeyanka
S&P Global Ratings has disclosed that Zenith Bank will continue to display better asset quality indicators than its domestic peers and sound revenue generation over the next 12-18 months despite the generally slow economic recovery in Nigeria.
The rating agency made this observation while affirming its ‘B’ long-term and ‘B’ short-term issuer credit ratings on the Nigeria-based lender with stable outlook. It also affirmed its national scale ratings on the bank at ‘ngA/ngA-1’.
According to S&P, as of June 30, 2018, Zenith Bank had total assets of N5.3 trillion (approximately $15.3 billion), making it the second-largest bank in Nigeria, pointing out that the financial institution has a strong corporate franchise in the country and has displayed both healthy revenue generation and earnings stability, despite the challenging operating conditions in Nigeria over the past couple of years.
“We assess Zenith’s capital and earnings as moderate. The bank’s S&P Global Ratings’ risk-adjusted capital (RAC) ratio before adjustments reached 5.4 percent at end-2017, compared with 5.1 percent a year earlier.
“We expect this ratio will be 5.2 percent to 5.5 percent over the next 12-18 months. We factor into our RAC calculation our expectations that loan growth will be 3 percent in 2018 and 10 percent in 2019, and that interest margins will show a slight increase (balancing our expectation of a reduction in expensive fixed deposits and redemption of its $500 million Eurobond in April 2019).
“We also consider Zenith Bank’s good fees and commission generation, and its dividend payout ratio of about 50 percent,” the rating company said in the statement released last Thursday.
According to the statement, Zenith Bank’s asset quality metrics improved somewhat in the first half of 2018, with credit costs declining to 0.9 percent and coverage by loan loss reserves increasing to 229 percent (following the implementation of International Financial Reporting Standards (IFRS) 9 and including Stage 1 and Stage 2 provisions).
This compares with credit costs of 4.3 percent and a coverage ratio of 143 percent at year-end 2017. In the six months to June 30, 2018, nonperforming loans (NPLs) declined in absolute terms, but increased in relative terms.
It accounted for 4.9 percent of the loan book, compared with 4.7 percent at year-end 2017. Although restructured exposures increased to around 12.6 percent of total loans at mid-2018, compared with 11.8 percent a year earlier, S&P expects asset quality indicators to remain broadly stable, because it does not anticipate material migrations of these exposures to NPLs.
“We therefore believe that the bank’s cost of risk will stabilize at around 1.2 percent in the next 12-18 months,” it said.
The firm pointed out that Zenith Bank is mainly deposit-funded, which has resulted in a stable funding base.
It recorded a stable funding ratio of 151.4 percent on the back of a healthy proportion of deposit funding at mid-2018. Broad liquid assets covered 1.9x of total wholesale funding and net broad liquid assets accounted for 64.2 percent of short-term customer deposits at the same date. “However, given the short-dated nature of the bank’s deposit profile, which is a feature it shares with its domestic peers, Zenith Bank’s deposit base is confidence-sensitive.
“The stable outlook on Zenith reflects that on Nigeria, and our expectation that the bank’s earnings and asset quality metrics will remain broadly stable over the next 12-18 months.
“We would lower the ratings on the bank if we lowered the ratings on Nigeria, or if we see a material deterioration in the bank’s asset quality indicators.
“An upgrade appears remote in the next 12 months, because it would hinge on an upgrade of Nigeria or a material strengthening of the bank’s capitalization, all other factors remaining equal,” the statement said.
By Modupe Gbadeyanka
A bank account targeted at Nigerians who are 50 years and above known as Senior Citizens Account has been introduced by Stanbic IBTC Bank.
Senior Citizens Account is an all-encompassing banking solution designed to meet the immediate and long-term financial needs of individuals approaching retirement or those already in their retirement phase.
The package comprises comprehensive features such as zero account opening balance, zero account maintenance fee, free debit card and chequebook, health insurance and telemedicine, wills service and funds management.
Stanbic IBTC Bank described it as an innovative solution exclusively designed for customers in the age category and is expected to serve over 15 million Nigerians estimated to be within this age range, according to Index Mundi.
Through this very thoughtful banking service for the elderly, the financial institution can provide tailored financial services solutions that meet the special needs of this unique clientele.
According to the chief executive of the lender, Mr Wole Adeniyi, it is an excellent opportunity for people who are nearing retirement to consolidate their banking needs, investment management, and wealth transfer across generations and for retirees who rely on Stanbic IBTC Pension Managers to manage their pension funds, to also use Stanbic IBTC Bank to receive their gratuity payments while enjoying excellent benefits.
He said the Senior Citizens Account aims to provide people in their 50s and older with essential support and services, ensuring their financial well-being and stability.
Senior Citizens Account is not just another banking product; it represents a paradigm shift towards creating a banking experience that significantly enhances its users’ lifestyles.
It is crafted to offer senior citizens a sense of financial security, unparalleled convenience, and an improved sense of well-being.
This commitment to exceeding customers’ expectations is further demonstrated by the bank’s initiative to introduce cutting-edge features aimed at making banking services more accessible and convenient.
The financial institution has substantially improved its technical infrastructure, reducing system downtime from 3 per cent to a mere 0.5 per cent.
This reduction in downtime confirms its dedication to providing reliable and uninterrupted service, ensuring that customers’ banking experiences are smooth and hassle-free.
Through these initiatives, Stanbic IBTC Bank reaffirms its commitment to innovation and customer satisfaction, aiming to bridge the gap between modern banking and the evolving needs of the ageing population.
By developing products like the Senior Citizens Account, the Bank addresses a previously overlooked market segment and sets new standards in offering tailored financial solutions that contribute to their overall quality of life.
For individuals interested in discovering more about Vitality Plus and the enrollment process, information is readily available at www.stanbicibtcbank.com or at any Stanbic IBTC Bank branch nationwide. This initiative is part of Stanbic IBTC Bank’s ongoing efforts to refine and adapt its services to meet the evolving needs of its customers better, ensuring that every client, regardless of age, has access to top-tier banking solutions that reflect their lifestyle and aspirations.
By Modupe Gbadeyanka
Nigeria’s Vice President, Mr Kashim Shettima, has expressed his delight over the unicorn status attained by Moniepoint Incorporated in October 2024 after it secured a $110 million funding package from Google.
Speaking when the company paid a courtesy visit to him at the Presidential Villa recently, the VP said he was happy with the growth trajectory of the financial technology (fintech) company, charging the team not to rest on its oars.
He promised to be the “chief promoter” of Moniepoint because the firm has become the pride of the country and must be supported by all.
Mr Shettima urged the company to continue expanding its global footprint, referencing his ongoing support for similar initiatives such as Amal Hassan’s Outsource to Nigeria project.
The Vice President described Moniepoint as a “kaleidoscope of colours” because of the diversity of its team, saying it reflects the beauty of Nigeria’s multicultural and multi-regional identity.
He was particularly pleased with the inclusion of individuals from various regions and backgrounds, including a notable representation of women in leadership and operational roles.
However, he charged the organisation and others to ensure stronger auditing measures to prevent misuse of the platform, especially by fraudsters and criminal elements, tasking them to remain vigilant and proactive in addressing these challenges.
Earlier, the chief executive of Moniepoint, Mr Tosin Eniolorunda, thanked the federal government for its dedication to digital innovation and financial inclusion.
He emphasized Moniepoint’s commitment to Nigeria’s financial ecosystem, stating that the fintech giant has grown into Africa’s latest unicorn this year, a testament to its resilience and innovation.
“At Moniepoint, we are big believers in driving collaborations across the entire eco-system and this is premised on collaboration being the cornerstone of progress.
“Our engagement here underscores our intentionality to enhance government business relationships in a way that powers the dreams of millions of many more Nigerians.
“Together, we can unlock opportunities, transform lives, and build a more inclusive economy for all,” Mr Eniolorunda, who led the team comprising the Managing Director of Moniepoint Microfinance Bank, Mr Babatunde Olofin; the Vice President for Corporate Affairs at Moniepoint, Didi Uwemakpan; the SVP for Investor Relations and M&A, Ross Strike; the Head of Partnerships, Efemena Ogie; the Regional Manager for North West, Abdulmumin Tijjani; and the Partner at Lightrock Global, Ravi Sharma, said.
By Adedapo Adesanya
The Central Bank of Nigeria has set a minimum trade value of $100,000 for interbank foreign exchange trading via the Electronic Foreign Exchange Matching System (EFEMS), which is set to go live on December 2.
This was contained in a new directive dated November 25, 2024, and signed by CBN’s Director of the Financial Markets Department, Mrs Omolara Duke.
The circular also noted that the development is part of efforts to ensure transparency, efficiency, and compliance within Nigeria’s FX market.
The EFEMS is designed to streamline interbank FX trading, reduce counterparty risks, and ensure adherence to CBN regulations.
The statement also said CBN has designated Bloomberg’s BMatch as the official order-matching platform for interbank transactions, with trading hours set between 9:00 am and 4:00 pm West Africa Time on business days.
The apex bank also said the $100,000 minimum tradable amount comes with incremental clip sizes of $50,000.
The EFEMS is also limited to spot FX transactions involving the Nigerian Naira and the United States Dollar. This means transactions occur “on the spot” or close to the trade date.
The CBN, however, retained the discretion to introduce other currency pairs when deemed necessary.
The guidelines document read, “All trades consummated on EFEMS are binding unless cancelled by mutual agreement of both parties with written approval from the CBN.
“The minimum tradable amount is US$100,000.00, with incremental clip sizes of US$50,000.00.
“Participants must set credit and settlement limits for other counterparties in the system. Transactions exceeding these limits will not be executed.
“Participants must have adequate credit and settlement limits set for the CBN as its counterparty bank.
“Participants are required to comply with the Nigerian Foreign Exchange Code and other CBN regulations.”
The apex bank noted that participation in the EFEMS is limited to authorised dealer banks while other institutions wishing to join the platform must first obtain prior approval.
These entities are also required to execute agreements with the CBN-approved platform provider, maintain accurate profiles, and operate within prescribed credit and settlement limits.
Withdrawal from the platform must be preceded by a 30-day notice, along with the resolution of any outstanding obligations.
Also, trades conducted via the platform will remain anonymous until matched. Counterparty details will only be revealed once transactions are concluded and are in line with settlement protocols.
Transactions exceeding set limits or conducted outside EFEMS parameters must be reported promptly and logged onto the FX blotter within 10 minutes.
The CBN emphasised that it will closely monitor all transactions on EFEMS to ensure market integrity and transparency.
Participants are also required to submit daily reports detailing trade volumes, settlement statuses, and counterparties.
The CBN discloses that it also reserves the right to publish aggregated or disaggregated trade data for market analysis, subject to confidentiality agreements.
Any violations of the EFEMS guidelines or related regulations will attract strict penalties, including the suspension or revocation of access rights.
The CBN further stated that it will periodically review the platform’s operations to ensure efficiency and compliance with its directives.
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