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Why Zenith Bank’s Shares Remain Toast of Investors—Sunny Nwosu

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Zenith Bank's Shares

By Dipo Olowookere

The Chairman Emeritus of the Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, has commended the board and management of Zenith Bank Plc for the payment of dividends to shareholders.

Speaking at the 31st Annual General Meeting (AGM) of the bank held on Wednesday, April 6, 2022, at the Civic Centre, Victoria Island, Lagos, he said investors love to have Zenith Bank’s shares in their portfolios because it never fails to pay dividends to shareholders.

He praised the financial institution for being consistent in the payment of dividends to shareholders, just as it did yesterday by crediting their accounts with N97.33 billion.

At the meeting on Wednesday, the final dividend payment of N2.80 per share proposed by the board was unanimously approved, bringing the total cash reward for the 2021 financial year to N3.10 per share.

Another shareholder of the company at the gathering, Mr Faruk Umar, who is the President of the Association of the Rights of Nigerian Shareholders (AARNS), also applauded the bank for rewarding loyalty.

“The bank is doing very well. All the ratios and indices have gone up. And more importantly, while we were in the meeting, I got my alert of the credit of my dividend. This is very commendable.

“The leadership of the bank has been very effective; we thank Jim Ovia for the leadership he has been giving, he has increased the dividend in spite of the economic hardship in the country, and I believe the GMD is doing very well.

“I commend the management and staff of the bank, including the board, and I am very confident that this year would also be very good for the bank,” he said.

Business Post reports that in spite of a challenging macroeconomic environment aggravated by the COVID-19 pandemic, Zenith Bank grew its gross earnings year-on-year by 10 per cent from N696.5 billion in 2020 to N765.6 billion in 2021.

This was buoyed by a 23 per cent growth in non-interest income from N251.7 billion to N309 billion and a 2 per cent rise in interest income from N420.8 billion to N427.6 billion.

In the year, profit before tax also grew by 10 per cent from N255.9 billion to N280.4 billion as a result of the growth in the top-line and very strong management of the treasury portfolio that increased efficiency, resulting in a drop in interest expense by 12 per cent from N121.1 billion in 2020 to N106.8 billion in the current year. This further led to a 7 per cent increase in net interest income of N320.8 billion in 2021 from N299.7 billion in 2020.

It was observed that last year, the lender increased its customer deposits by 21 per cent to N6.47 trillion from N5.34 trillion, with the growth from both corporate and retail customers.

A breakdown showed that retail deposits grew by N146 billion from N1.72 trillion in 2020 to N1.87 trillion in 2021 on the back of a continuous drive for retail deposits combined with the strategic rebalancing of its funding base helped to reduce the cost of funding from 2.1 per cent to 1.5 per cent in the current year.

Although operating expenses grew by 13 per cent, growth remains below the inflation rate, and the Group improved its Earnings per Share (EPS) by 6 per cent from N7.34 to N7.78.

Also, Zenith Bank expanded its total assets by 11 per cent from N8.48 trillion in 2020 to N9.45 trillion in 2021, mainly driven by growth in customer deposits.

With the steady recovery in economic activities, the Group prudently grew its gross loans by 20 per cent from N2.9 trillion to N3.5 trillion, with a non-performing loan (NPL) ratio at 4.19 per cent compared with 4.29 per cent a year earlier.

Zenith Bank also recorded impressive liquidity and capital adequacy ratios of 71.6 per cent and 21.0 per cent, which remained above regulatory thresholds of 30 per cent and 15 per cent, respectively.

While commenting on the performance of the bank at the AGM, the Group Managing Director/Chief Executive, Mr Ebenezer Onyeagwu, said: “If you look at the bank’s history over the years, Zenith Bank has always grown, and even within the pandemic, we have maintained a reasonable positive growth trajectory.

“Growth is coming from the fact that we are deploying our digital capability to grow more businesses, simplify our service processes, make our processes more efficient, and deal with customers’ complaints.

“Apart from developing new products, we are discovering new business verticals, especially within the retail segment, which have significant revenue.”

He added that: “meeting the expectation of shareholders means we have to work harder. The team is dodged, hardworking, resilient, and above all, we have a very supportive board that comes with superior guidance.”

On his part, the founder and Chairman of Zenith Bank, Mr Jim Ovia, thanked the shareholders for their unflinching loyalty, which has enabled the bank to rise to the pinnacle of the nation’s financial services industry, and assured them of the bank’s commitment to consistently deliver superior value to them.

In recognition of its track record of excellent performance, Zenith Bank was voted as Best Commercial Bank in Nigeria in the World Finance Banking Awards 2021, Best Bank in Nigeria in the Global Finance World’s Best Banks Awards 2020 and 2021, Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020, and Best in Corporate Governance ‘Financial Services’ Africa 2020 and 2021 by the Ethical Boardroom.

Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, Number One Bank in Nigeria by Tier-1 Capital in the “2021 Top 1000 World Banks” Ranking by The Banker Magazine and the Retail Bank of the year at the BusinessDay Banks and Other Financial Institutions (BOFI) Awards 2020 and 2021.

Similarly, Zenith Bank was honoured as Bank of the Decade (People’s Choice) at the ThisDay Awards 2020 and emerged winner in four categories at the Sustainability, Enterprise, and Responsibility (SERAS) Awards 2021, carting home the awards for “Best Company in Reporting and Transparency”, “Best Company in Infrastructure Development”, “Best Company in Gender Equality and Women Empowerment”, and the coveted “Most Responsible Organisation in Africa.

Sir Sunny nwosu

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Banking

Nigeria Can Solve FX Crisis With Adequate Agricultural Financing—Heritage Bank

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George Oko-Oboh adequate agricultural financing

By Modupe Gbadeyanka

The foreign exchange (FX) crisis that is putting pressure on the Nigerian Naira, making the prices of goods and services rise in the country, can be solved if attention is paid to agricultural financing, Heritage Bank Plc has submitted.

The lender, through one of its executive directors, Mr George Oko-Oboh, pointed out that if players in the agricultural sector are supported with funds, they will produce crops that can be exported and generate forex for the country, making the domestic currency stronger at the currency market.

At the 15th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja, he noted that adequate agricultural financing was critical in defining the country’s trade competitiveness, which guarantees sustainable agricultural systems. This critical aspect equips the financial sector to respond to changing market requirements and address critical sector needs for global competitiveness.

He disclosed at the programme tagged Repositioning the Financial Services Industry for an Evolving Global Context that Heritage Bank has been at the forefront of financing agric value chains that have upped its competitiveness in the global market and helped to boost local production, conserve scarce foreign exchange and enhance food security, and ultimately result in the creation of hundreds of new jobs.

According to Mr Oko-Oboh, the bank’s involvement in the sector dates back many years ago. It has always been at the forefront of ensuring the overall growth and development of commodities products in Nigeria. For these feats, Heritage Bank disbursed the N41 billion intervention of the Central Bank of Nigeria (CBN) in wheat production in Nigeria for commodity associations and anchor companies.

“We have continued to create market linkages between smallholders’ farmers and anchors/processors, create an ecosystem that drives value chain financing, improves access to credit by the smallholders’ farmers by developing credit history through the scheme and many more.

“As a bank, we partnered CBN and other stakeholders such as wheat farmers association of Nigeria, wheat farmers, processors and marketers’ association of Nigeria, Lake Chad Research Institute and other development partners, flour mills of Nigeria and several seed companies and others to support over 100,000 farmers in wheat production.

“Also, Heritage Bank further factored consideration of value addition of financial services and products flowing to and/or through value chain participants to address and alleviate constraints to growth that have distorted product financing, receivables financing, physical-asset collateralization, risk mitigation products and financial enhancements,” said the executive director.

Also, the Chairman, Union Bank of Nigeria Plc, Mr Farouk Gumel, has said Nigerian banks must invest in modernising agriculture, helping it to be more resilient, more dynamic and better able to adapt for the banking sector to compete in the evolving global context favourably.

“Modernisation means much more than technology alone; it is also about farming techniques,” he said.

Mr Gumel noted “to reposition the industry for a ‘Glocal context, we also need to look more inwards,” saying repositioning is not an option. It is a necessity that Nigeria has begun an agricultural renaissance over the past seven years. To be truly Glocal, we must commit the same resources and investments to rural-local customers as we have done to urban global clients.”

He agreed that the local players must keep an eye on what global happenings to stay in tune with international best practices while asking that local/rural farmers should never be forgotten.

President/Chairman of the council for CIBN, Dr Ken Opara, said the financial services industry needs to adapt to a much faster pace of change in advancement in technology and innovation, saying services, products, and technologies that were new and useful in the past will not necessarily be so soon.

Mr Opara said advancement in technology and innovation is bringing about another wave of revolution that will change the landscape of the financial services sector more than ever.

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Banking

CBN Grants License to Gabsyn Microfinance Bank

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Gabsyn Microfinance Bank

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) has granted Gabsyn Microfinance Bank the final approval to operate as a microfinance bank in Ikorodu, Lagos State.

With this approval, Gabsyn MFB joins over 876 licensed microfinance banks to operate in that space, to deliver the much-needed financial services to the unbanked, which according to EFInA (2020 survey) shows that about 38 million citizens (35.9 per cent of the adult population), do not have access to financial services in Nigeria.

As a partner in the actualisation of the objectives of the National Financial Inclusion Strategy (NFIS), Gabsyn MFB affirmed its commitment to creating a better everyday life for all stakeholders in line with the financial inclusion agenda of the CBN and Nigeria and expressed excitement at the opportunity to support its fulfilment.

“The bank is well positioned in a strategic location in Ikorodu where it can use its well-trained, motivated, young and dynamic staff as well as its experienced management team to design and offer flexible, value-adding and sustainable financial services to the communities. There are millions of Nigerians who are yet to tap into the immense benefits available in the financial sector because they are currently excluded.

“Gabsyn MFB will open a viable avenue for all to access a broad range of financial and social services such as loans, savings, alternate payment services, money transfers, improve financial literacy, etc, some directly and others through strategic partnerships,” a statement from the small lender said.

Microfinance Banks (MFBs) are critical to Nigeria’s financial inclusion goals, particularly because of their role in providing financial services to the underserved segments of the Nigerian economy.

In a demonstration of its acknowledgement of the importance of the sector, the Nigerian government launched the National Financial Inclusion Strategy in 2012 (NFIS 2012), to achieve 80 per cent inclusion by 2020. The NFIS was reviewed in 2012, and the CBN and its stakeholders came up with the Revised NFIS document which targets a 95 per cent financial inclusion threshold in Nigeria by 2024. This is ambitious given that the financial inclusion index moved from 57.3 per cent in 2010 to 60.3 per cent in 2012 and 63.2 per cent in 2020, a growth of about 5.9 per cent in 10 years. Achieving a 31.8 per cent increment in 4 years is indeed ambitious, but not impossible.

According to the Managing Director of Gabsyn MFB, Mr Waheed Odekale, “Our mission is to use simple financial solutions, strategic alliances and partnerships to improve the socio-economic status of our stakeholders.

“Our services will empower low-income households, enhance their productive capacity and consolidate their economic base.

“We are very excited by the opportunity to be practically and productively driving the financial inclusion agenda of the Central Bank of Nigeria.”

While leveraging the use of technology to improve customers’ experience, on the one hand, the bank said it will be going the extra mile with the introduction of Saturday banking services.

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Banking

CBN Advocates Collaboration to Grow Payments Ecosystem

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ePayments Ecosystem

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) is moving to strengthen the digital payments ecosystem and position Nigeria firmly on the global payments landscape with more collaboration.

This is in line with its commitment to deepen and stimulate the growth of digital payment in Nigeria and beyond.

This was the crux of a two-day event tagged Collaborating for Industry Growth and Profitability held by integrated digital payments and e-commerce company, Interswitch Group, where industry players gathered to discuss how to strengthen the ecosystem.

The industry leaders, drawn from banks, fintechs, micro-finance banks, telcos and other financial institutions, reached the resolve that designing innovative financial products which speak to the needs of customers will spur growth and economic prosperity.

The experts also noted that players in the financial space need to synergize to explore avenues for mutual growth, which will in turn create a robust payment ecosystem.

Speaking at the event, Mr Jimoh Musa, Director, Payment System Management Department, CBN, said the lender’s responsibility as a regulator is to create an enabling environment where all the entrants can thrive and compete healthily.

“We understudy all the interoperable operations of each technology company, and all the participants generally. And from time to time, we bring all these entities together to dialogue to enable us to decide what the best industry practice is in relation to Nigeria’s payment ecosystem.”

During the two-day event, Interswitch officially unveiled eight new products designed to address prevailing issues within the payments ecosystem, enhance business development and boost customer experience.

The products include Fintech-in-a-box; Fraud Solution-as-a-Service (FSAAS); Banking-as-a-Service; Payment-as-a-Service; Interswitch Security-as-a-Service; Mobile Banking-as -a-Service, and Biometrics on POS and Value financing.

These products are tailored to provide seamless payment solutions to banks, fintechs, micro-finance banks, other financial institutions and their customers. Essentially, these products will help to improve the digital payment solutions that financial institutions offer to their customers.

Critical points the products will be solving include protecting customers against digital payment fraud, effective value financing tools for lenders, seamless integration to payment channels, enhanced customer experience etc.

Speaking during the panel session, Mr Akeem Lawal, Managing Director, Interswitch Purepay, said players in the payment industry must collaborate to provide opportunities to co-create solutions that make digital payment safer and further drive profitability.

He said “Interswitch is committed to partnering with stakeholders to drive financial inclusion through its innovative products and solutions continuously. These products reaffirm the company’s continued drive to improving Nigeria’s digital payments landscape through innovation and the development of first-rate solutions and infrastructure that address pressing needs in the payments ecosystem”.

Mr Lawal further said Interswitch would continue to enter partnerships that will not only simplify payments but also drive prosperity across the continent.

The panellists noted that partnerships would allow players to increase revenue and grow faster, avail them opportunities to leverage one another’s infrastructure, drive financial inclusion and build a robust ecosystem, urging players to collaborate more to provide quality service for the end users to enhance growth and more opportunities.

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