By Amechi Ogbonna
With sustained technological disruptions over the last two decades, there are strong evidences to believe that the Nigerian financial services industry has become one of the most dynamic on the African continent.
Free from the limitations of the brick and mortar legacies of traditional banking practices, the stage appears set for an inevitable global service revolution that has kept operators on their heels and not waiting to be displaced.
The target of this banking innovation is the customer be they individuals or corporate entities.
In recent times one major strategy adopted by some banks in the retail space to strengthen customer loyalty and financial inclusion is the practice of regular rewards to customers who have been there for the banks especially in difficult times of economic recession and declining saving culture.
While savings promos cannot be tagged as wholly a corporate social responsibility of the bank’s executing them, they have been known to have the capacity to endear customers more to their bankers especially where the reward systems appear a bit attractive.
The celebration is usually electrifying when suddenly a customer with less than N20000 in his account balances is informed he has now become a millionaire courtesy of a bank’s savings promotion.
Another intrinsic value that a savings promotion creates in the Nigerian banking industry is that capacity to build the savings culture among retail depositors.
Indeed for many retail customers, winning a million naira by merely depositing N5,000- N10000 in a savings account over 90 days could be a life changing experience.
It is on the basis on such experiences that one can better appreciate some of the savings promotions running in the banking industry in recent times.
For instance, Zenith Bank in the year returned with its Beta Life Promo Season 2 to reward customers for cultivating a saving culture.
In the latest promo according to the bank, 20 customers will win N150,000 each every two weeks between this year and January 31, 2023. This means that on a monthly basis, the bank would be rewarding its customers with a whopping N3million over a period about 12 calendar months.
At a time that savings culture is low among economic actors in the country, such incentives can help many start small businesses that can be nurtured to greatness at a future date.
According to the bank, to stand a chance of winning, an individual must open a Zenith Bank account and maintain a minimum balance of N5,000 and start to save in its Beta Life Promo Season 2.
The Zenith Bank Beta Life Promo Season 2 is a bi-weekly raffle promo wherein the Bank will give gifts worth N150,000 each to 20 customers from February 1, 2022 to January 31, 2023.
The raffle draws hold on the second and fourth Friday of each month. As a business entity, Zenith Bank has over the last three decades, set several industry records that have left competition doing only the catch up race in the Nigerian banking industry.
Little wonder why both organisation and management have continued to scoop various industry award within and outside the country.
At the last World Finance Banking Awards 2022, Zenith Bank Plc was awarded the Best Commercial Bank, Nigeria for a second consecutive year. The bank was also named the Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022.
The awards, which were presented to the Group Managing Director/Chief Executive of Zenith Bank Plc, Mr. EbenenerOnyeagwu, at the London Stock Exchange on Monday, July were in recognition of the bank’s ability to embrace digital transformation and best-in-class sustainability and corporate governance practices, leading to a stellar business performance in a difficult post COVID-19 economic climate.
Commenting on the double recognition, an excited Onyeagwu said: “These awards reflect our strong business fundamentals, resilience and ability to adapt to the ever-changing dynamics of the market through our innovative solutions, as well as our commitment to global best practices. As a member and signatory to various domestic and international sustainability frameworks including the United Nations Global Compact (UNGC) and the Central Bank of Nigeria Sustainable Banking Principles, we continue to support the achievement of the Sustainable Development Goals (SDGs) by creating value for our shareholders, customers, clients, investors, communities and the environment through our practices, operations and investments.”
The Zenith Bank dedicated the awards to the Founder and Group Chairman of the bank Mr Jim Ovia, for his pioneering role in building the structures and laying the foundation for an enduring and very successful institution. He also acknowledged outstanding leadership of the Zenith Bank Board in setting the pace for sustainable banking practices to set the institution on consistent winning ways.
Onyeagwu also recognised the bank’s staff for their commitment and dedication in addition to its ever supportive customers for making Zenith Bank their preferred financial Institution.
The World Finance is a leading international magazine providing comprehensive coverage and analysis of the financial industry, international business and the global economy. The editorial combines award-winning reportage, covering a broad range of topics from banking and insurance to wealth management and infrastructure investment, with contributions from some of the world’s most well-respected economists and theorists as well as consultants in government think tanks and the World Economic Forum.
Zenith Bank’s track record of excellent performance has continued to earn it varying awards, with two latest accolades coming on the heels of several other recognitions including being voted as Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best in Corporate Governance ‘Financial Services’ Africa, for three consecutive years from 2020 to 2022, by the Ethical Boardroom; Best Commercial Bank, Nigeria and Best Innovation In Retail Banking, Nigeria in the International Banker 2022 Banking Awards; and Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020. 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.
Meanwhile the bank recently released its 2021 full-year audited financial statement reporting a profit after tax of N244.5 billion the highest on record. This reflects a 6.07 percent increase year on year.
Its earnings per share rose N7.79 6 percent higher than the N7.34 reported a year earlier and has grown its earnings per share every year since 2016 and taken it just about 6 years to double its profits after first hitting N124 billion in profits in 2016.
The results also show a 7.05 percent growth in Interest Income from N420.81 billion to N427.60 billion in the current period.
Zenith Bank’s profit performance is on the back of an impressive all margin growth as income from interest and trading income all rose year on year.
Key highlights of its results in the period under review shows that its Net Interest income earned from lending activities rose 7 percent to N320.8 billion.
However, a 51.6 percent spike in loan losses meant net interest after impairments was flat at just N260.8 billion.
The bank also made up for it with income from commission and fees rising 31 per cent to N103.9 billion year on year. It also raked in N167.4 billion in net trading income representing a 37.6 percent increase year on year.
On the other hand, customer deposits grew by 21.2 per cent to N6.4 trillion while total assets rose to N9.4 trillion amid a Net assets growth of 14.4 percent to N1.27 trillion.
The bank had proposed a dividend per share of N2.8 per share up from N2.7 per share a year ago. Based on its current share price, Zenith Bank’s dividend yield is about 10 per cent.
It’s Q1 2022 financial result, also show a profit of N58.20 billion in Q1 2022, reflecting a 9.68 percent rise year on year while earnings per share of N1.85, is a 9.47 percent growth from the N1.69 reported a year earlier in Q1 2021.
The statement further revealed that in Q1 2022, net interest income grew by 20.89 percent from N83.17 billion to N100.54 billion in the current period. Zenith Bank’s profit performance is on the back of margin growth as income from interest, trading income and fees and commission income all grew year on year.
Only recently, an international rating agency, Fitch Rating had affirmed Zenith Bank Plc’s Long-term Issuer Default Rating (IDR) at ‘B’ with a stable outlook as well as its National Long-Term Rating at ‘AA-(nga)’ and Viability Rating (VR) at ‘b’.
Fitch, in that rating report withdrew Zenith’ Bank’s Support Rating and Support Rating Floor stressing they were no longer suitable to its coverage following the publication of an updated Bank Rating Criteria on 12 November 2021.
It stated “In line with the updated criteria, we have assigned a government support rating (GSR) of ‘no support’ (ns). Zenith’s Long-Term IDR is driven by its standalone creditworthiness, as expressed by its VR.
“The VR reflects the constraint of Nigeria’s challenging operating environment and the bank’s high exposure to the Nigerian sovereign (B/Stable). It also reflects the bank’s strong domestic franchise and a solid financial profile by domestic standards. Zenith’s ‘b’ VR is one notch below the ‘b+’ implied VR, reflecting the Operating Environment/Sovereign Rating Constraint.
“Zenith’s National Ratings are driven by its standalone strength. They are at the higher end of the scale, reflecting Zenith’s comparatively strong domestic franchise and financial profile,” it pointed out.
As Nigeria’s second-largest banking group, Fitch said, Zenith holds 15 per cent of domestic banking system assets as at the end-2021 financial year.
“The bank has a strong corporate banking franchise and a retail-focused strategy through digital channels. Revenue diversification is strong, with non-interest income representing 48 per cent of operating income in 2021,” it added.
The rating agency noted that, some of the downside to operating conditions of the bank include rising global risks, Inflation, which stands at 16.8 per cent in April 2022 and “is expected to remain stubbornly high, posing downside risks to real GDP growth forecasts of 3.1 per cent in 2022 and 3.3 per cent in 2023.
“However, downside risks are somewhat mitigated by strong oil prices, which should also underpin growth in non-oil sectors and banks’ asset quality.”
The rating agency noted that Zenith’s single-borrower credit concentration is moderate, “with the 20 largest customer loans representing 68 per cent of Fitch Core Capital (FCC) at end-2021. Oil and gas exposure is material, representing 22 percent of gross loans and 62 per cent of FCC at end-2021. Aggressive loan growth may lead to asset quality weakening as the loan book seasons.
“The Stage 3 loans ratio decreased to 4.2 per cent at end-1Q22 (end-2020: 6.4 per cent) on the back of high loan growth, write-offs and reclassifications. Stage 2 loans (22 per cent of gross loans at end-1Q22) remain high but are concentrated within the oil and gas sector and therefore expected to benefit from high oil prices.
“Our asset quality assessment also considers a substantial amount of non-loan assets, largely comprising government securities and cash reserves at the Central Bank of Nigeria.