Given the uneven developments that pervaded the business environment last year, there was little expectation that any business entity, banks inclusive, would surprise pundits in declaring any appreciable profit, or Return On Investment. Zenith Bank, in the face of obvious macro-economic challenges, outshone its peers in its just-released 2018 audited results. Group Business Editor SIMEON EBULU reports.
Zenith Bank’s success story, exemplified in its just released 2018 audited result, has clearly marked the banking conglomerate as being in the big league and in a class of its own.
The result, which clearly demonstrated the bank’s resilience and strong market share for the year ended December 31, 2018, showed that it made a profit before tax (PBT) of N232 billion.
To demonstrate its commitment to shareholders, the bank has announced a proposed final dividend pay-out of N2.50 per share, bringing the total dividend to N2.80 per share, representing a yield of 11.2 per cent.
The dividend payout, the highest so far published by any bank in the country’s Banking Industry in the current reporting period, represents an increase of 16.6 per cent over the N199 billion recorded for the same period in 2017.
Also, the results in the review period, showed that profit after tax (PAT) witnessed an impressive growth of 11 per cent year-on-year to N193 billion from N174 billion.
This exemplary PBT was achieved through the Group’s cost of funds’ optimisation, cost-to-income ratio and cost of risk, ensuring that earnings per share strengthened by 11 per cent to N6.15.
Notwithstanding the challenging macro-environment, the Group mitigated the knock-on effects through growth of its net interest income and operating income by 15 per cent and 8 per cent respectively as it was able to ensure improved cost efficiencies across the business. This focus on cost efficiency is yielding benefits as the Group recorded its lowest ever cost-to-income ratio at 49.3 per cent from 52.8 per cent in 2017.
The bank’s balance sheet remains shockproof as loan to deposit ratio, liquidity ratio and capital adequacy ratio were 44.2 per cent, 72.0 per cent and 25 per cent respectively, all registering above the regulatory threshold.
Also, the bank’s risk-centric approach ensured that cost of risk reduced significantly by 79 per cent from 4.3 per cent in the prior year to 0.9 per cent in 2018. This was reflected through the drop-off in impairment charges by 81 per cent (N80 billion) compared to 2017, re-affirming the Group’s enhanced asset quality.
In the same breadth, coverage ratio increased by 34.2 per cent from 143.4 per cent to 192.4 per cent over the same period, reflecting a prudent disposition consistent with the Lender’s history of credit risk management. Likewise, cost of funds also moved in the positive direction, declining by 41 per cent from 5.2 per cent in 2017 to 3.1 per cent for the year, supported by a 33 per cent decrease in interest expense (N72 billion) over the same period, demonstrating a robust treasury and liquidity management.
Customer deposits grew by seven per cent led by an increase of N109 billion in savings and an increase of N122billion in current accounts, providing it with a platform to rebalance its deposits mix.
In 2018, expensively purchased deposits were foregone in favour of cheaper and more stable deposits resulting in a reduction of expensive and shorter dated deposits by N110 billion. On the asset front, this increased by six per cent to close the year at N6 trillion.
The Group’s efforts to deepen its roots in the retail segment have started yielding results. This has led, in the main, to a remarkable increase in the volume of transactions across various electronic platforms as well as significant customer acquisitions. This growth in transactions on its digital channels, continues to support its retail push as fees from e-products increased by 44 per cent over 2017 with retail deposit balances also growing by 25 per cent.
Management’s outlook is positive for 2019, supported by a fairly stable inflation rate, converging foreign exchange market and near target oil production. The Group will continue its investment in the retail segment of the market to consolidate its leadership position in both the retail and corporate segments, while it maintains its shock proof balance sheet.
Consistent with this superlative performance and in recognition of its track record of excellent performance, the bank was ranked as the Most Valuable Banking Brand in Nigeria in 2018 by The Banker Magazine.
Similarly, Zenith Bank was adjudged the Best Corporate Governance Bank in Nigeria by The World Finance for the sixth time, the same way Ethical Boardroom, a Europe-based Boardroom watchdog, reaffirmed this feat by naming the bank as the Best Bank in Corporate Governance in 2018.
Recognition has also come the way of the bank, as it was named as the Best Institution in Sustainability Reporting in Africa 2018 (SERAS Awards) and the Bank of the Year 2018 by BusinessDay.
The *966*911# Account Control Code
Continuing on its pioneering turf, Zenith Bank has become the first Nigerian bank to launch its Unstructured Supplementary Service Data (USSD) account control code: *966*911#.
This unique code stops unauthorised transactions and protects the account holder’s funds in the event of mobile phone, ATM Card or hardware token loss as well as account details compromise.
Speaking at the launch of the new *966# Eazy Banking account protection code, the Group Managing Director/CEO, Zenith Bank Plc, Peter Amangbo, said the bank has always been at the forefront of innovating products that enhance customers’ comfort and safety at all times, pointing out that all debit transactions on an account would be prevented once the account holder dials *966*911# from any phone and follows the text prompts. He said such a restriction can only be lifted when the customer visits a Zenith Bank branch in person.
Amangbo said the *966*911# account control code is a flagship code aimed at further enhancing account security.
POS collections without payment cards via *966# Eazy Banking
Another pioneering addition of Zenith Bank to the industry is the successful integration and launch of the Unstructured Supplementary Service Data (USSD) payments on Point of Sales (USSD on POS), enabling customers to pay for goods and services via POS terminals in merchant locations, or on e-commerce websites without the use of cards.
The innovative payment solution, which is powered by CoralPay, allows Zenith Bank customers to use the *966# Eazy Banking (USSD) to pay for goods and services on POS terminals in merchant locations or on e-commerce websites through the generation of a payment code on the POS terminal which is then confirmed by the customer using their USSD pin.
Amangbo said at the launch of the new payment solution that the bank has always been at the vanguard of technological innovations geared towards creating value for its customers.
He said: “This solution is an exciting and highly innovative initiative in promoting financial inclusion, facilitating payments by customers, either remotely in the comfort of their homes/offices, or at merchant locations without the use of a payment card,” adding that with this solution, “customers in remote locations plagued with challenges of poor Internet access can now carry out transactions easily using their feature phones”.
Amangbo said Zenith Bank’s *966# Eazy Banking on POS will further drive financial inclusion through agency banking, allowing bank customers, irrespective of their bank, to carry out withdrawals from their accounts or wallets without cards on the POS terminals at agent locations, creating broader coverage and penetration to areas with limited technology infrastructure.
The solution has been successfully connected to all existing POS terminals through integration with leading Payment Terminal Service Providers (PTSPs) and directly to e-commerce sites (Websites) of Zenith Bank merchants/customers. It also supports wallet-to-wallet transactions across provider banks and Mobile Money Operators (MMOs), enabling interoperability across platforms, financial institutions and payment service providers (PSPs) in the payment industry.
Built with convenience, accessibility and safety in mind for all customers, USSD on POS enables users complete financial transactions regardless of their location and type of mobile phone, as it does not require data or internet connection to process transactions.