Despite weak economic tailwinds, Zenith Bank Plc is fashioning a path to stronger corporate earnings in the year 2018. The bank’s management has recently struck a pact with lower operating expenses relative income while putting a spear through the heart of nonperforming loans (NPLs) as the banks half year (H1) 2018 results portray the reworking of the bank’s operational performance.

Zenith Bank Plc

Zenith, arguably Nigeria’s largest financial lender by assets, has pleasantly surprised market pundits by announcing an interim dividend of N9.42billion or what amounts to a 30kobo per share payout.

The bank, in its half year results for the period ending June 2018 posted a profit before tax of N107.3 billion, representing a 16.5 per cent rise above the N92.1 billion achieved in the corresponding period of 2017.

While its top line fell by 15.3 per cent from N380.4billion in 2017 to N322.2 billion in 2018, the tier 1 bank’s profit after tax grew 8.2 per cent from N75.194billion to N81.737billion in 2018.

The bank’s management attributed its improved performance to keen and creative reduction in its expenses by 25 per cent.

Despite, the spike in the industry’s non-performing loans (NPL) in the first quarter through the second quarter which hovered between 8 and 10 per cent, the bank was able to keep its NPL below the regulatory bench mark of 5 per cent. This was despite the fact that the banks NPL surged ahead by 13 per cent from 4.3 per cent in 2017 to 4.9 per cent in 2018, the lenders NPL appears to be amongst the lowest in the sector.

However, Business Hallmark investigations show that whereas the bank reduced its investment in oil and gas in the last six months, the sector recorded the highest NPL of N47.019billion from the gross loans for the period. Details also show that of the gross loans of N2.109 trillion, the oil and gas received the highest proportion of about N631.973 billion, representing 30 per cent of the total loans for the period and 46 per cent NPL’s of the total(NPL 103billion).

Zenith Bank’s management team gave more attention to the Agricultural sector by increasing its credit by about 40 per cent from N63.223 billion in December 2017 to N103.185billion in June 2018. This came with a lower NPL of N854 million from the sectors NPL of N956million in December, almost balancing out the Agric sectors NPL.

Further details show that the Manufacturing sector trailed the oil and gas sector in terms of the amount of credit allotted to it by the bank with N497billion while the government and general commerce followed in that order with N337.2 billion and N228 billion respectively.

According to Zenith Bank’s half year financial statement, its management team also creatively reduced its impairment loss on financial assets by 77 percent from N42,398 billion in 2017 to N9.720 in 2018.

Net interest income surged 10 per cent from N138.9billion to N158.9 billion, fee and commission income also grew 2.3 per cent. At the close of the half year, its earnings per share also jerked up from 240 kobo to 260 kobo. But its deposits from customers shrank by 8 per cent from N3.4 trillion in 2017 to N3.1 trillion in 2018, revealing that urban banking is beginning to suffer the impact of financial squeeze.

As investors pour through the bank’s books, it is clear that Zenith like other financial institutions, made heavy investments in Treasury bills, taking advantage double digit coupon rates with heavy trading at the short end of the market resulting in a negative yield curve. Of the bank’s total investment of N1.84 trillion in the half year, investment in TB took about 50 per cent (N936.817 billion). This enabled the lender to sail above water in the harsh operating environment with high country risk.

Definitely a mirror image of the parlous state of the economy, but equally an area of major concern for depositors, investors and even management. Analysts agree that the bank needs to haul in some of its loans and engage in a series of work out arrangements and loan restructurings to relieve the perverse pressure the delinquent commercial credits appear to be having on the banks profit and loss account.

With the economy still locked in a feeble disposition, financial institutions appear uncomfortable thatthe future will remain smooth that the fragile bank could continue to have sustainable profitability.

Despite the challenging operating environment, Zenith Bank is determined to carry on with its cardinal values of excellent customer service, highly professional and competent workforce, as well as the optimal use of technology continue to be the driving forces behind the outstanding performance.

Since Zenith Bank Plc, one of Nigeria’s largest deposit bank, emerged on the banking landscape as a major player, it has not wavered. It has advertised one of the largest bank balance sheets consistently for two decades.

Analysts have fingered a number of strong points about the bank. They note that It is the only bank in the financial industry that has continued to grow organically in spite of the induced mergers and acquisitions by an industry-wide and Central Bank of Nigeria-sponsored Consolidation programme in 2005. This means that the bank has continued to maintain a consistent and undiluted corporate culture since its founding. With a vision to play in the big league, Zenith Bank’s management had decided to grow up its capital when most of its contemporaries lacked the capacity. The bank had gone public before the 2005 banking consolidation policy of the CBN which was visionary and put it ahead of competition.

From that vantage point, the bank has maintained not only a steady growth, but also a leadership position in the industry over the years.

Among the few top performers, what distinguishes Zenith Bank is not just the mega size balance sheets but the high degree of innovation and quality of ideas which forms the bedrock of operations.

Zenith bank recognized very early the critical role technology would play in the industry and exploited it.

The bank’s service delivery has won numerous international endorsements and awards, including Best Bank in Corporate Governance in Nigeria by Global Banking and Finance (2015), Best Customer Service Bank in Nigeria by Global Banking and Finance (2014) and the Most Customer-Focused Bank in Nigeria by KPMG (2014).

Commendably, Zenith was one of the first Nigerian financial institutions certified by the British Standards Institution (BSI) on three key ISO (International Standards Organisation) standards namely; ISO 22301 (Business Continuity Management), 27001 (Information Security Management) and 20000 (IT Service Management). Zenith is the first Nigerian institution to win the three standards at ago.

By this feat, the bank already reputed for its culture of service delivery, joins other global brands with the highly-rated ISO certification.

In his remarks, the GMD/CEO of Zenith Bank PLC, Peter Amangbo had stated that the solid financial performance, Zenith’s industry leadership, resilience and consistency in achieving its strategic objectives despite the challenging business environment.

“Our commitment to these standards stems from a resolve to deepen the customer experience through greater information security and an IT management system that emphasises the protection of the customer and his investments in an increasingly unpredictable business environment; via subscription to internationally-accepted principles”, Amangbo had said.

Zenith bank, the biggest in Nigeria by Tier-1 capital, was also the first to adopt a new financial reporting policy of publishing audited half-yearly results, a development hailed by market analysts as representing a major boost for the financial brand. The bank, which has a history of exceeding peoples’ expectations, has also had a history of impressive and qualitative performance. But it is hard to ignore its determination deliver superior services. Before, competing institutions knew what was happening, the bank had warmed its way to the hearts of high net-worth clients.


Zenith Bank is still a high -flying financial institution. Its response time to inquiries is swift and Peter Amangbo has made a point of duty to maintain good and qualitative service delivery in the bank. High net-worth customers still hold their banks dearly. But, low income persons seem not to be pleasant with the Financial Institution which seems to have excluded them as customers. Zenith Bank was rated positively by Fitch Rating agency last year as a strong and stable bank.

With the weak economic structure of the country, Zenith Bank has a hard slog ahead as it continues to keep its noise ahead of its competition in a keen race for profitability and survival. Whether the bank succeeds or not will be critically based on how tightly it contains cost and how smartly it is able to grow deposits while containing delinquent assets.

That Zenith Bank’s results for the half year looks impressive has not had a corresponding impact on its stock price. However, this development could be blamed on the Bearish market trend caused by the increase in the interest rates of the developed economies which has pulled investors from the weaker economies. Whereas the lenders stock price has gained 8.2 percent year on year, it has dropped by 8.2 per cent when it opened at N25.93 to N23.60 per share as at Thursday 9, 2018.

Nevertheless, analysts are bullish on the stock given its performance and the P.E ratio which stood at 4.2 against the market average of 10.

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