Ebenezer Onyeagwu: Steering Zenith Bank to Stronger Profitability Amid Economic Headwinds

Dike Onwuamaeze

Financial stability risks have increased rapidly across the world as the resilience of the global financial system has been tested by higher inflation and other macroeconomic challenges.

The concerns of emerging headwinds in the global banking industry was heightened by the collapse of Silicon Valley Bank and Signature Bank, prompting regulators to strengthen their supervisory roles in order to guard against failures of financial institutions in their jurisdictions.
Even in Nigeria, the banking sector regulator has taken measures to improve its supervisory roles in order to forestall any run on financial institutions in the country.

However, despite the harsh operating and regulatory headwinds hurting the profits of lenders across the globe, financial institutions such as Zenith Bank Plc with strong fundamentals have continued to churn out positive results.
Its recently released full year 2022 financial results released recently reflected the leadership direction Zenith Bank has been enjoying under the leadership of its Chief Executive Officer/Managing Director, Ebenezer Onyeagwu.

Specifically, in its audited results for the year ending December 31, 2022, Zenith Bank achieved an impressive double-digit growth of 24 per cent in gross earnings, from N765.6 billion reported in the previous year to N945.5 billion in 2022.

This was despite the persistent challenging macroeconomic environment and headwinds. According to the audited financial results for the 2022 financial year presented to the Nigerian Exchange (NGX), the double-digit growth in gross earnings was driven by a 26 per cent year-on-year (YoY) growth in interest income from N427.6 billion to N540.2 billion and a 23 per cent year-on-year (YoY) growth in non-interest income from N309 billion to N381 billion.
Profit before tax also grew by two per cent from N280.4 billion to N284.7 billion in the current year. The increase in profit before tax was due to the significant growth in all the income lines.

It also showed that impairments grew by 107 per cent from N59.9 billion to N124.2 billion, while interest expense grew 63 per cent year-on-year from N106.8 billion to N173.5 billion, respectively.
The bank explained that the impairment growth, which also resulted in an increase in the cost of risk (from 1.9% in 2021 to 3.3 per cent in the current year), was due to the impact of Ghana’s sovereign debt restructuring programme.

The growth in interest expense increased the cost of funds from 1.5 per cent in 2021, to 1.9 per cent in 2022, due to hikes in interest rates globally.
Zenith Bank’s customer deposits increased by 39 per cent, growing from N6.47 trillion in the previous year to N8.98 trillion in the current year.
The growth in customer deposits came from all products and deposit segments (corporate and retail), thus consolidating the bank’s market leadership and indicating customers’ trust.

The continued elevated yield environment positively impacted the bank’s Net-Interest-Margin (NIM), which grew from 6.7 per cent to 7.2 per cent due to an effective repricing of interest-bearing assets.
Its operating expenses grew by 17 per cent year-on-year, but growth remains below the inflation rate. Its total assets increased by 30 per cent, growing from N9.45 trillion in 2021 to N12.29 trillion, mainly driven by growth in customer deposits.

With the steady and continued recovery in economic activities, the Group prudently grew its gross loans by 20 per cent, from N3.5 trillion in 2021 to N4.1 trillion in 2022, which increased its non-performing loan (NPL) ratio modestly from 4.2 per cent to 4.3 per cent year-on-year.
The capital adequacy ratio decreased from 21 per cent to 19 per cent, while the liquidity ratio improved from 71.2 per cent to 75 per cent. Both prudential ratios are well above regulatory thresholds.

“In 2023, the Group intends to expand its frontiers as it also reorganises into a holding company structure, adding new verticals to its businesses and growing in all its chosen markets, both locally and internationally.
“As a testament to its commitment to shareholders, the bank has announced a proposed final dividend payout of N2.90 per share, bringing the total dividend to N3.20 per share,” the bank revealed.

In recognition of its track record of excellent performances under Onyeagwu, Zenith Bank had been recognised as the Number One Bank in Nigeria by Tier-1 Capital, for the 13th consecutive year, in the 2022 Top 1000 World Banks Ranking published by The Banker Magazine; Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020 and 2022; Best Bank in Nigeria, for three consecutive years from 2020 to 2022, in the Global Finance World’s Best Banks Awards; Best Commercial Bank, Nigeria 2021 and 2022 in the World Finance Banking Awards; Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022; 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.

Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, and Retail Bank of the year, for three consecutive years from 2020 to 2022, at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards.
Similarly, Zenith Bank was named as Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Most Innovative Bank of the Year 2019 by Tribune Newspaper, Bank of the Year 2020 by Independent Newspaper, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.
In recognition of his sterling contribution towards ensuring the stability of Zenith Bank, Onyeagwu was recently conferred with a doctorate by the University of Nigeria, Nsukka (UNN).

Inspiring in silence and action, Onyeagwu is a sure-footed leader of men with a sense of corporate clairvoyance.
He makes today’s Zenith Bank thick, illustrated by the bank’s  agile organisation, enduring conducive corporate culture and cordial stakeholders’ relations.
Futuristic in thought and approach, Onyeagwu, as a transformational leader, is committed to Zenith Bank’s vision that promotes re-engineering and innovation.
Since assuming the Zenith Bank’s mantle of leader on June 1, 2019, Onyeagwu’s myriad exploits have solidified his sterling leadership qualities.
The award, which was in recognition of his immense achievements as the GMD and CEO of Zenith Bank and his contributions to the growth of the financial services sector in Nigeria and the African continent, was conferred on him during the 50th convocation ceremony of the university.

Speaking during the ceremony, the UNN Vice-Chancellor, Prof Charles Igwe, had congratulated Onyeagwu for distinguishing himself in his career and for his service to humanity, which made him worthy to receive the prestigious Doctorate Degree from Nigeria’s first indigenous university.
In his acceptance speech, Onyeagwu expressed his gratitude to UNN for finding him a worthy recipient of the honorary doctoral degree in Business Administration of one of the leading universities in Nigeria, considering the rigorous selection process of awardees by the institution.

Noting that the award represented a validation of the outstanding corporate governance, ethical leadership, and overall outstanding performance that Zenith Bank was recording, Onyeagwu dedicated the award to the board and management of Zenith, especially the founder and chairman, Jim Ovia, “who has remained a mentor, a leader and a source of inspiration to everyone at the bank and beyond; the staff, for being the shoulder and proverbial base of the pyramid upon which his achievements and success as CEO of the leading financial institution in Nigeria rest; the bank’s customers for their unflinching loyalty to the brand; and to his family for their unceasing love and support.”
Onyeagwu is an alumnus of Auchi Polytechnic, the University of Oxford, England and Salford Business School, University of Salford, Manchester, United Kingdom, Delta State University, Abraka.

Also, he is an alumnus of Wharton Business School of the University of Pennsylvania, Columbia Business School of Columbia University, and the Harvard Business School of Harvard University in the United States.

In 2023, the Zenith Bank Group intends to expand its frontiers as it also reorganises into a holding company structure, adding new verticals to its businesses and growing in all its chosen markets, both locally and internationally. In order to realise this, the bank recently received approval-in-principle from the Central Bank of Nigeria to convert its present operational structure to a holding company. Once substantive authorisation is received, the bank would get a licence to transit into other businesses within financial services including pensions, insurance, asset management and fintech.

“The CBN approved Mr. Jim Ovia as the chairman of Zenith Holdco Plc (in-formation) and for Mr. Jim Ovia to also continue as the chairman of Zenith Bank Plc until the commencement of Zenith Holdco Plc,” the lender explained.

Zenith Holdco will run in a non-operating capacity only overseeing the subsidiaries under it without getting actively involved in their everyday operations.
Clearly, with Onyeagwu still on the driving seat, it is expected that Zenith Bank will maintain its industry leadership position while also remaining as one of the healthiest financial institution in the continent.