Zenith Bank plc, Nigeria second largest bank by market value, is preparing to take the retail space by storm with innovative products, as the lender continues to record impressive financial results amid tough regulatory environment.
The Nigerian lender has finally started to play deeper in the retail end of the banking industry, using its high technology and innovative products.
Over the years, using technology as one of its major advantages, Zenith Bank has successfully served customers at the high end of the market and delivered impressive returns to shareholders in the process.
The bank has equally established itself as a leader in corporate and investment banking, with the KPMG’s ‘Nigeria Banking Industry Customer Satisfaction Survey of 2014’ confirming the bank’s position as the most customer focused bank in the country in both the retail and corporate segments.
With the bank’s entry into the retail space, more customers will now be able to access efficient service delivery that hitherto have been available to only high net worth customers and corporate.
The bank’s offering in the retail space include the Aspire account targeting the youth; the eaZySave classic and eaZySave Premium accounts both of which have zero account opening balances; as well as the Zenith Premium Gold and Zenith Premium Platinum, both of which are COT free and interest bearing.
The KPMG survey, which confirmed Zenith Bank’s status as the most customer focused bank, focused on the perceived quality of customer service delivery by banks from the customer’s perspective across the retail, corporate/commercial and small and medium sized enterprises (SME) segments. And for 2013 and 2014, Zenith Bank led as the preferred by customers.
For the second consecutive year in the retail segment, Zenith Bank emerged as the most customer-focused bank closely followed by Diamond Bank who moved to second (from last year’s fourth place) with GTBank in third place.
In the SME segment, Zenith Bank moved from second position in 2013 to become the most customer focused bank, followed by Diamond Bank and Standard Chartered Bank in third place. Corporate banking customers also ranked Zenith Bank as the most customer focused for 2014 year with GTBank and Citibank coming second and third, respectively.
The biggest gains were in the area of convenience however the higher satisfaction levels recorded in this segment were driven more by the performance of the top five banks than for the industry as a whole.
Completeness and accuracy of information provided topped the list of important issues for nearly all corporates surveyed while the biggest area requiring improvement remains knowledge of the customer’s business.
Aside being the most customer focused bank, Zenith Bank’s performance on all parameters has been recognized by other bodies. A survey conducted by PricewaterhouseCoopers (PWC) to determine the most respected companies and chief executives in Nigeria, Zenith Bank emerged first among the banks. In arriving at the conclusion, PWC said a respected company is defined by these enviable parameters:
The bank has been posting impressive financial results over the years, rewarding shareholders with equally impressive dividends.
For instance, five year performance from 2009 to 2013 showed steady growth in profit and returns on investments.
For instance, revenue grew from N277 billion in 2009 to N244 billion in 2010, N307 billion in 2012 and N351 billion in 2013. Profit before tax rose from N35 billion, to N50 billion in 2010, N61 billion in 2011, N101 billion in 2012 and N111 billion in 2013.
Shareholders have been benefitting from the growth witnessed in the profitability over the years. Shareholders got a dividend of N11 billion in 2009, N26 billion in2010, N29 billion in 2011, N50 billion in 2012 and N54 billion in 2013.The 2014 audited financial statement of Zenith Bank showed gross earnings rose by 14.76 per cent to N403.3billion, up from N351 billion. Interest Income grew by 15.9 per cent from N272 billion to N313.4 billion, while non-interest income rose by 39.1 per cent to N90.1billion.
Profit before tax (PBT) increased by 12.8 per cent from N106 billion to N119.8 billion while profit after tax (PAT) for the year rose by 8.6 per cent N91.5 billion to N99.5 billion.
The board has proposed a dividend of N1.75 per share. Return on average equity stood at 18.7 per cent, while return on average asset stood at 2.9 percent. Loan to deposit was 68.2 percent up from 55 percent in 2013.
Cost to income ratio was 55.2 percent, as against 55.7 percent in 2013. Net margin was 24.7 percent compared with 27.1 percent.
Assessing the full results, analysts at FBN Capital Limited, said the bank met its full year PBT target of N120 billion, implying an 8.3 percent growth.
According to them, the fourth quarter (Q4) PBT 2014 PBT worked out as N33.0 billion, up 19.7 percent.
“Q4 2014 PAT growth was less impressive at 6.5 percent because tax more than doubled and other comprehensive income fell 78 percent. While funding income grew by a modest 3.9 per cent to N63 billion, non-interest income more than doubled to N29.7 billion,” they said.
The analysts added that the picture was similar for the most part down to the PBT line: double-digit q/q growth on the revenue lines more than offset cost/loan loss expense increases.
They noted that all in all, the results were ahead of expectations, stressing that “Zenith delivered an ROAE of 19 percent for 2014. We would expect consensus estimates for 2015 to move up slightly.
On the back of the results, we would expect the market to react positively, with the caveat that concerns about the impact of the fallout from the decline in oil prices are likely to linger a bit. Zenith shares have outperformed the index this year, gaining 3.2 percent compared with a loss of 12.4 percent for the All-Share Index (ASI).
