On assumption of office as new chairman of Zenith Bank plc, last week, Jim Ovia was greeted with N57.85 billion profit before tax (PBT) in the first half year result of the bank. The PBT of the bank rose by 11.1 percent when compared with N52.09 billion in the corresponding period last year.
The second coming of Ovia to the bank he founded after managing it for over 10 years, analysts say last week, will enrich the operations of the bank. Besides, as an astute banker, who nurtured the bank into great heights as its chief executive, his second coming as the chairman, analysts note, will move the bank to greater heights and endear it to the hearts of its shareholders and stakeholders.
Some analysts say last week that Ovia’s second coming will make the bank play more prominent role at both the regional and internal levels more than it is playing presently. This is so because they argue that expectations are high considering the wide knowledge and experience of Ovia, and his wealth of experience in management of both human and material resources.
Ovia retired from the bank three years ago following the Central Bank of Nigeria’s (CBN) policy that limits the tenor of banks’ chief executives to a maximum of 10 years.
In 2010, the CBN had enforced a guideline that stipulated a 10-year limit for banks’ chief executive officers and explained that the decision was intended to enhance corporate governance in the nation’s banking system.
Taking over from Steve Omojafor, who resigned June, Ovia is expected to consolidate on the profit of the bank and even bring his expertise to play on the bank for greater performance.
Ovia founded Zenith Bank in 1990, which has since grown astronomically to become one of the leading financial institutions in Africa, currently ranking as the sixth biggest bank in the continent. The bank grew its shareholders’ fund of N20 million in 1990 to N509.25 billion, at year end 2013.
Today, the bank continues to thrive on strong values, brand equity, corporate culture of professionalism and service excellence, which are the foundations upon which it was built.
He is also the founder of Visafone Communications Limited, chairman of Nigerian Software Development Initiative (NSDI), and chairman, National Information Technology Advisory Council (NITAC).
The bank last week, released its half-year (H1) financial for the six months to June 30, 2014, which shows it assets grew by 15.2 percent, from N2.78 trillion to N3.20 trillion.
The result released at the Nigerian Stock Exchange, signed by Peter Amangbo, its group managing director/CEO, and Ebenezer Onyeagwu, an executive director, shows N47.45 billion profit after tax for the period under review, against N43.826 billion.
The share price of Zenith Bank declined by N0.05 or 0.20 percent, from a high of N25 at the beginning of last week trading at the Exchange to N24.95 at the close of deals.
Earnings per share (EPS) rose to 151 kobo from 144 kobo the corresponding period of 2013.
Details of the half-year result show all-round improvements, with gross earnings also up by 7.8 percent from N171.02 billion in 2013, to N184.43 billion.
Shareholders’ fund rose by 7.43 percent from N458.31 billion at the end of June last year to 492.38 billion.
The bank, with network that includes subsidiaries in the UK, Ghana, the Gambia, Sierra Leone, and Liberia, currently has a shareholder base of about 1 million.
Aside listing $850 million worth of its shares on the London Stock Exchange (LSE), via a technical Global Depository Receipt (GDR) programme, the bank, in April 2014, recorded a massive over-subscription of about 200 percent in its $500 million Eurobond issue under a $1 billion Global Medium Term Note (GMTN) programme announced on April 1, 2014.
The bank, also in June, was declared the Most Customer Focused Bank 2014 by KPMG; where it won in all three categories – Corporate, Retail and SME.
Also, this year, the bank was rated the Biggest Bank in Nigeria by tier-1 capital by the FT of London and Best Nigerian Bank in Corporate Governance by the World Finance.
Analysts at Renaissance Capital are delighted with the bank’s resilient net interest revenue NIR (up 29% YoY), which continues to be supported by strong forex trading income. This line now, they say, represents 38 percent of NIR compared with 28 percent in 1H13 and FY13, respectively.
Other things that are of interest to the analysts in the bank’s H1’14 result are credit growth still coming through, with net loans up 11 percent YtD, 6 percent QoQ, NPL ratio of 2.8 percent, coverage of 96 percent (68% ex regulatory reserves) and benign cost of risk at 0.4 percent (1Q14: 0.6%), and cost control still in play – up 7 percent YoY with CIR held steady at 55 percent vs. 1Q14 (FY13 and 1H13: 56%).
Of more concern, however, to the analysts are the margin compression and lack of deposit growth. According to them, YtD, NIM down 90bpts to 7.4 percent, which they attribute to the lower yield environment for liquid assets and the impact of the increase in public and private sector cash reserve ratios to 75 percent and 15 percent, respectively in 1H14.
They think management continued to work on re-pricing its deposit book, which translated to improved funding costs during the quarter, though not sufficient enough to offset the YtD impact of its lower asset yield on margins.
“Clearly, this was another challenging quarter to deliver earnings growth, but in the context of the tougher banking environment, we think Zenith’s performance was decent. Key positive for us is how the bank has managed to offset the impact of the regulations by growing forex trading revenues. We concede this could be a potentially fickle line but it serves as a short term fix in a stabilising environment for Zenith,” the analysts say.
Zenith Bank was established in May 1990, and commenced operations in July of the same year as a commercial bank. The bank became a public limited company on June 17, 2004, and was listed on the Nigerian Stock Exchange (NSE) on October 21, 2004, following a highly successful Initial Public Offering (IPO).
Headquartered in Lagos, Nigeria, Zenith Bank has over 500 branches and business offices in prime commercial centres in all states of the federation and the Federal Capital Territory. In March 2007, it was licensed by the Financial Services Authority (FSA) of the United Kingdom to establish Zenith Bank (UK) Limited, as the UK subsidiary of Zenith Bank plc. Apart from subsidiaries in Ghana, Zenith Bank (Ghana) Limited; Sierra Leone, Zenith Bank (Sierra Leone) Limited; Gambia, Zenith Bank (Gambia) Limited, the bank also has representative offices in South Africa and the People’s Republic of China. The bank plans to take the Zenith brand to other African countries as well as the European and Asian markets.