Why Zenith Bank shareholders should expect more returns
Zenith International Bank Plc shareholders approved the final dividend payment of N2.80 per share, which brings the total dividend payout for the 2021 financial year to N3.10 per share with a total value of N97.33 billion.
The Zenith Bank Group achieved year-on-year (YoY) growth in gross earnings of 10 percent from N696.5 billion reported in the previous year to N765.6billion. This was on the back of 23 percent YoY growth in non-interest income from N251.7 billion to N309 billion and a 2 percent YoY growth in interest income from N420.8 billion to N427.6 billion.
Having achieved this height, the bank’s already excited shareholders, ‘like Oliver Twists’ are expecting more returns as the Group said, in 2022, it intends to consolidate on the gains achieved in the previous year in all business segments and combine leadership in the industry, innovation and technology to drive improved performance and deliver enhanced returns to all stakeholders.
The shareholders gave the approval at the bank’s 31st Annual General Meeting (AGM) held in Lagos recently.
In his excitement over the dividend pay-out, Sunny Nwosu, chairman emeritus of the Independent Shareholders Association of Nigeria (ISAN), said, the bank’s shares remain the toast of investors because the bank has never failed to pay dividends to shareholders.
He noted with gladness, the bank’s consistent payment of dividends to its shareholders. Faruk Umar, president of the Association of the Rights of Nigerian Shareholders (AARNS), who spoke on behalf of other shareholders, said the bank is doing very well as all the ratios and indices have gone up. “While we were in the meeting, I got my alert of the credit of my dividend. This is very commendable,” he said.
Umar noted that 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 group managing director 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 gave his commendation to Ebenezer Onyeagwu, group managing director/CEO, over the numerous awards the bank received in 2021, especially the sustainability awards.
At the annual general meeting, Jim Ovia, chairman, who was pleased with shareholders for their unflinching loyalty, which has enabled the bank to rise to the pinnacle of the nation’s financial services industry, assured them of the bank’s commitment to consistently deliver superior value to them.
Onyeagwu, who took the stakeholders through the bank’s financial performance, said Zenith Bank has always grown, and that even within the pandemic, it had maintained a reasonably positive growth trajectory.
According to him, growth was coming from the fact that it is deploying digital capability to grow more businesses, simplify its service processes, make its 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.
“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,” he said.
The Onyeagwu led Zenith Bank recorded Profit before tax of N280.4 billion in the current year of 2021, representing a 10 percent growth from N255.9 billion in the previous year.
“The increase was due to growth in the top-line and very strong management of our treasury portfolio that increased efficiency, resulting in a drop in interest expense by 12 percent from N121.1 billion in 2020 to N106.8 billion in the current year. This further led to a 7 percent increase in net interest income of N320.8 billion in 2021 from N299.7 billion in 2020, the bank said.
The bank’s customer deposits increased by 21 percent, growing from N5.34 trillion in the previous year to N6.47 trillion in the current year. The growth in customer deposits came from both its corporate and retail customers, with retail deposits continuing to grow, up by N146 billion from N1.72 trillion in 2020 to N1.87 trillion in 2021.
The Group’s continuous drive for retail deposits combined with the strategic rebalancing of its funding base helped to reduce cost of funding from 2.1 percent to 1.5 percent in the current year. However, net interest margin declined from 7.9 percent to 6.7 percent in the current year due to lower yields on held-to-maturity (HTM) investment securities.
Operating expenses of the bank grew by 13 percent YoY but growth remains below the inflation rate. The Group improved its Earnings per Share (EPS) which grew by 6 percent from N7.34 to N7.78, however, returns on equity and assets reduced from 22.4 percent to 20.4 percent and from 3.1 percent to 2.7 percent respectively due to the significant growth in the balance sheet.
The bank’s total assets increased by 11 percent, growing from N8.48 trillion in 2020 to N9.45 trillion in 2021, mainly driven by growth in customers’ deposits.
With the steady recovery in economic activities, the Group prudently grew its gross loans by 20 percent, from N2.9 trillion in 2020 to N3.5 trillion in 2021 with a moderate Non-Performing Loan (NPL) ratio from 4.29 percent to 4.19 percent YoY.
The capital adequacy ratio reduced from 23 percent to 21 percent while liquidity grew from 66.2 percent to 71.6 percent. Both prudential ratios are still well above regulatory thresholds.
Zenith Bank has continued to distinguish itself in the Nigerian financial services industry through superior service offerings, unique customer experience and sound financial indices. The bank remains a clear leader in the digital space with several firsts in deploying innovative products, solutions and an assortment of alternative channels that ensure convenience, speed and safety of transactions.
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.