What Jim Ovia Said About Rumoured Zenith Bank, Union Bank Merger
By Dipo Olowookere
On Monday, March 16, 2020, Zenith Bank Plc held its 29th Annual General Meeting (AGM) in Abuja, and it was an opportunity for shareholders of the bank to engage the top hierarchy of the company on some issues, including the financial statements and others.
Before the meeting, there were unconfirmed reports that Zenith Bank was planning to acquire Union Bank of Nigeria Plc and the shareholders used the occasion, the AGM, to ask Chairman of the bank, Mr Jim Ovia, if this was true.
However, this question was dodged by Mr Ovia as he said nothing about it, but went ahead to answer other questions asked by shareholders present at the meeting.
“Zenith Bank is committed to consistently deliver superior returns to our highly esteemed shareholders by ensuring that a good chunk of our profit is set aside for you.
“In a clear demonstration of this, we had declared and paid you an interim dividend of 30kobo per share in the course of the 2019 financial year.
“We hereby propose a final dividend of N2.50kobo per share. If approved, this will bring the total dividend for the year ended December 31, 2019, to N2.80kobo per share,” Mr Ovia said at the gathering.
During the AGM, shareholders of Zenith Bank unanimously approved the proposed final dividend of N2.50 per share, bringing the total dividend payment for the 2019 financial year to N2.80 per share with a total value of N87.9 billion.
Zenith Bank reaffirmed its leading position in the Nigerian banking industry posting an impressive pre-tax profit of N243 billion, representing a 5 percent increase over the N231.6 billion recorded in the corresponding period of 2018. Its post-tax profit stood at N208.8 billion over N193 billion, an increase of 8 percent, thus making Zenith Bank the first Nigerian bank to cross the N200 billion mark.
The bank’s result showed an increase in gross earnings from N662 billion to N630 billion, indicating dominance in market share, while its assets grew by 5 percent from the N5.9 trillion to N6.3 trillion, a growth driven by the 29 percent increase in non-interest income from N179.9 billion in 2018 to N231.1 billion in 2019.
The bank’s fees on electronic products continue to grow significantly with a 108 percent year-on-year from N20.4 billion in 2018 to N42.5 billion in 2019.
The drive for cheaper retail deposits coupled with the low-interest yield environment helped reduce the cost of funding from 3.1 percent to 3.0 percent.
However, this also affected net interest margin, which reduced from 8.9 percent to 8.2 percent in the current year due to re-pricing of interest-bearing assets.
Although returns on equity and assets held steady YoY at 23.8 percent and 3.4 percent respectively, the group still delivered an improved earnings per share (EPS) which grew 8 percent from N6.15 to N6.65 in the current year.
The group created new viable risk assets as gross loans grew by 22 percent from N2.016 trillion to N2.462 trillion. This was executed prudently at a low cost of risk of 1.1% and a significant reduction in the non-performing loan ratio from 4.98 percent to 4.30 percent.
Prudential ratios such as liquidity and capital adequacy ratios also remained above regulatory thresholds at 57.3 percent and 22.0 percent respectively.
Financial analysts noted this unprecedented feat by a Nigerian bank as remarkable, and an indication of strong financial leadership and resilience.
As a testament to this superlative performance, the bank emerged as the Most Valuable Banking Brand in Nigeria, for the third consecutive year, in the recently released Banker Magazine Top 500 Banking Brands 2020, the Best Bank in Nigeria 2020 in the Global Finance World’s Best Banks Awards 2020 and the Bank of the Decade (People’s Choice) at the Thisday Awards 2020.
In addition, the Bank was also voted as the Best Commercial Bank in Nigeria 2019 by the World Finance and the Best Digital Bank in Nigeria 2019 by Agusto & Co.