By John Manning, International Banker
When Zenith Bank delivered its financial results for the first quarter (Q1) ending March 31, 2023—including a phenomenal 41-percent growth in gross earnings to ₦270 billion from Q1 2022—few were surprised at the strong performance registered. Given the near-endless stream of unparalleled achievements that the bank has notched up in recent years (mostly across digital and sustainable banking) and with these Q1 figures following a succession of equally stellar quarterly results, Nigeria’s leading financial institution has done more than perhaps any other to transform local banking into a thriving, innovative and responsible sector. For the undisputed leader of digital banking and sustainable banking in the region, these two pillars, in particular, are set to drive much of Zenith Bank’s success over the coming years.
Today, the bank is globally celebrated as a relentlessly forward-thinking institution, consistently setting the benchmark for digital banking across the Nigerian and African banking sectors. But the COVID-19 pandemic, more than any other recent event, prompted crucial and necessary modifications to the bank’s business strategy to ensure it could continue generating value for its customers, shareholders and employees amidst challenging operating conditions. Specifically, the acceleration and deepening of the bank’s digital strategy, the first pillar driving its success, were approved across operations and service-delivery processes to not only meet the jump in customer demand for advanced digital channels but also minimise customers’ and employees’ exposure to the virus.
Built upon the three principles of people, technology and service, the optimisation of experience and satisfaction across its vast customer base inspires Zenith Bank’s digitalisation strategy, which delivers innovative solutions that are consistently ahead of the local competition. The bank can proudly boast of having deployed several firsts in cutting-edge offerings that continuously satisfy evolving customer preferences and are thus pioneering the digital-banking revolution transpiring across the country—and, indeed, the continent—at present.
These innovations include the deployment of the first offsite automated teller machine (establishing an ATM in a location outside the bank’s premises in 2003), real-time online banking across its entire branch network, transaction notifications via SMS (Short Message Service) and email, an online payment gateway and QR (quick-response) code payment system. It is no wonder, then, that a significant surge in the volume of online and contactless transactions processed via USSD (Unstructured Supplementary Service Data), QR code, and mobile and web platforms was recorded amongst the bank’s customer base when citywide lockdowns were in place at the height of the pandemic.
And that dedication to the customer can be especially observed across Nigeria’s small and medium-sized enterprises (SMEs) and indigenous industries, whereby Zenith plays a fundamental role in helping to maximise the value of numerous businesses. Again, the pandemic was pivotal in prompting the bank to reorganise its priorities and focus more on the health of its SME clients, namely through improving their access to credit and creating more opportunities for their growth. Among the most popular solutions in this regard have been the bank’s business-loan offerings and electronic business solutions, which have experienced substantial uptake by Zenith’s business customers.
Sustainable banking has also come to the fore as the other major pillar of Zenith Bank’s business philosophy, today representing a concept that the bank seeks to wholly integrate into its daily operations. With that in mind, a key focus of the sustainability strategy is the triple bottom line (TBL) principle (people, planet and profit), asserting that companies should focus as much on social and environmental concerns as on profits. And while profitability undoubtedly remains the primary purpose for establishing businesses, the bank insists that vitally important social and environmental issues should not be relegated to the back whilst pursuing those profits. Guided further by the United Nations’ Sustainable Development Goals (SDGs)—especially those that relate to health, education, poverty elimination, zero hunger, decent work and economic growth, and responsible consumption and production—Zenith Bank remains deeply committed to environmental, social and governance (ESG) values via the TBL principle.
Such a strategy also clearly signals Zenith Bank’s unwavering commitment—as evidenced through its practices, operations and investments—to create value for shareholders, customers, clients, investors, communities and the environment. Indeed, the bank’s sustainability platform and corporate social responsibility (CSR) initiatives increasingly demonstrate that today’s business performance should not solely be about financial numbers. Rather, it is the bank’s unshakeable belief that institutions’ social investments, contributions to inclusive economic growth and development, and improvements in the condition of the physical environment all constitute what it calls “a balanced scorecard”. Projects focused on economic development and healthcare-delivery causes across the country underscore this belief, with the bank investing approximately NGN54 million (US$69,000) toward medical interventions for low-income individuals faced with various life-threatening conditions, as well as NGN171 million toward educational initiatives.
But none of these lofty ambitions have been achieved without the robust operational foundation within the bank. And this solidity, more than any other single factor, has set Zenith apart from its local peers over the years. Indeed, one need only glance at the capital adequacy ratio (CAR) and liquidity ratio (LR) reported in the bank’s Q1 results to realise this; at 19.5 percent and 72 percent, respectively, both prudential ratios not only comfortably exceed regulatory thresholds, but they also stand amongst the absolute best in Nigeria. Such robust prudential ratios can be credited to the bank’s strong risk-management strategy, which it regards as the bedrock upon which effective and successful businesses are built.
With the post-COVID global economy requiring banks to address a new range of heightened risks to ensure long-term business performance and success, Zenith Bank has adopted an integrated approach to risk management, consolidating all key risk events under limited oversight functions. Bolstered by impeccable leadership, a culture of risk awareness permeates the entire organisation, with risk challenges addressed through the bank’s enterprise risk management (ERM) framework and supported by a governance structure that comprises both board-level and executive-management committees. The bank also formally maintains a conservative stance on risk-taking, thus enabling its risk appetite to be set at a level that minimises the potential erosion of earnings or capital due to avoidable losses, fraud or operational inefficiencies.
Having proven itself as Nigeria’s digital and sustainable banking leader and achieved so much success whilst maintaining a decidedly prudent risk-management regime, the post-COVID future is set to shine brightly for Zenith Bank.
Dr. Ebenezer Onyeagwu, Chief Executive Officer, Zenith Bank
The bank’s chief executive officer, Dr. Ebenezer Onyeagwu, recently met with International Banker to discuss that success in more depth.
Thank you for speaking with us, Dr. Onyeagwu….
Let’s start with that hugely impressive 41-percent growth in gross earnings from ₦191.5 billion in Q1 2022 to ₦270 billion in Q1 2023. To what main factors do you attribute this stellar performance?
The significant double-digit growth in the top line was underpinned by substantial increases in both interest and non-interest incomes; interest income grew by 52 percent, while non-interest income also expanded by 27 percent. The growth in interest income can be attributed to the impact of risk-asset repricing, whilst the increase in non-interest income primarily resulted from loan recoveries and foreign-currency revaluation gains.
I imagine the bank’s business-banking segment fuelled much of this growth. Indeed, the disproportionate impact of the COVID-19 pandemic on small businesses meant that Zenith Bank had to shift focus and prioritise the SME segment of its client base. What were some of the most important measures you took to support these businesses during this time? And do you believe that business customers have resolved most of their problems caused by the pandemic?
As a dynamic brand, one of the first things we did during the pandemic was to improve the capacity of our officers across various business units to work remotely. This was to continue creating value for our customers and clients and ensure they continued enjoying uninterrupted banking services.
Similarly, we activated our business continuity plan (BCP), optimising and deploying our broad spectrum of enhanced digital channels and payment platforms to handle the increased volume of electronic transactions during the lockdown period. This was done to serve our customers adequately.
We also granted a moratorium on loan repayments and restructured some for longer tenures. This was in addition to making available several Central Bank of Nigeria (CBN)-backed loans at single-digit interest rates to qualifying customers. Furthermore, in response to the COVID-19 pandemic and its inherent impacts on financial institutions, the International Finance Corporation (IFC) offered Zenith Bank an emergency-relief working-capital loan of $100 million. This loan was intended to support the bank’s trade financing for customers, including pre-export, post-shipment and importation of critical goods and commodities. We deployed this loan to meet our customers’ trade and financing needs.
We strongly believe these efforts have repositioned SMEs for increased visibility and market reach, seamless digital collection, accountability and discounts for essential business services.
You mentioned the “broad spectrum of enhanced digital channels”. The bank’s SME Grow My Business (SME-GMB) offering seems particularly popular among your business customers. What specific features of this product explain its popularity?
Our SME-GMB initiative offers several value propositions to the SME customers who bank with us. Through our partnership with Google, we introduce SMEs to the digital world through free Google listings, and we help them enhance their management capabilities with our quarterly capacity-building training. Our SME-GMB comprises several value propositions aimed at addressing the significant challenges and pain points of SMEs, including support for capital growth, provision of low-interest loans, assistance in reducing marketing costs, offering valuable business advice through training, and providing essential accounting and collection solutions.
SME-GMB also promotes the widespread adoption of digital payment and collection solutions for business customers. This includes using QR codes, USSD merchant strings, direct transfers and GlobalPay for seamless online money collection. These secure platforms allow SMEs to grow their deposit and income bases free of charge. By adopting our payment and collection solutions, which assist them in digitising transactions and showcasing their business capacities, SMEs can create transparency that facilitates easier decision-making, particularly for financiers such as banks.
Furthermore, SME-GMB offers SMEs discounted prices for essential products and services, such as insurance, logistics, learning and productivity services. Our strategic partner in this regard is Visa. With our customised Visa commercial card, businesses can access various discounted services, including Google Ads, Microsoft Office products, learning modules, virtual assistants and more.
So, what do you consider the most exciting digital-banking product or service Zenith Bank has either launched recently or is set to launch this year? And what are some of the key features of this offering that make it so special?
Recently, we introduced an exciting digital solution: an artificial intelligence (AI)-powered chatbot, ZiVA (Zenith Intelligent Virtual Assistant). This virtual assistant enables us to offer banking services on WhatsApp and, subsequently, on other social-media platforms. Leveraging artificial intelligence, ZiVA provides transactional services, such as bill payments, fund transfers, account openings, balance checks, dispute logging and other value-added services.
ZiVA is tailored for existing and prospective individual account holders who have adopted WhatsApp as their preferred platform for online banking services. It offers a reliable, convenient and more “personal” medium for performing basic banking transactions on mobile devices, demonstrating the bank’s response to social-media banking.
Further underscoring Zenith Bank’s commitment to digital banking are the hackathons regularly hosted by the bank, bringing together much of Nigeria’s budding tech talent. What are the bank’s objectives in hosting such events, and do you believe they have achieved them?
Zenith Bank recognises the growth potential of the tech sector and thus actively fosters collaborations with tech start-ups that offer tailored financial solutions, creating value for customers. The annual hackathon organised by the bank underscores its commitment to supporting budding entrepreneurs and start-ups. It promotes collaboration, innovation, talent development and industry trends and generally contributes to economic growth. By facilitating interactions among professionals, entrepreneurs and enthusiasts in the tech industry, we aim to foster a community spirit and encourage the exchange of ideas and knowledge. This supports the axiom that neither banks nor fintech (financial technology) firms can fully leverage the potential of technology and innovation independently—collaboration is essential. This teamwork can lead to innovative solutions, partnerships and a thriving ecosystem that benefits the tech industry and cultivates a more digital economy for Nigeria.
The previous hackathons, held in 2019 and 2022, featured prizes and business grant funding with a cumulative total of up to NGN81 million, marking it as the highest prize money for any bank-organised hackathon. Additionally, the bank provided grooming and mentorship programmes for the finalists, equipping them with the necessary skills, relevant networks and additional resources to scale their unique solutions and enhance their overall brands.
Let’s turn now to the sustainable-banking efforts being made by Zenith. What role do the United Nations’ Sustainable Development Goals (SDGs) play in influencing and guiding Zenith Bank’s sustainability ambitions? And can you provide an example of how a specific SDG is tied to the bank’s sustainability goals?
Zenith Bank has embraced the broad objectives of the United Nations’ 17 SDGs through its CSR (corporate social responsibility) initiatives, which provide a blueprint for addressing significant societal challenges. We direct our social investments towards health, education, women and youth empowerment, sports development and public-infrastructure improvement. As of 2022, Zenith Bank’s total social investments stood at NGN1.671 billion in CSR, representing 0.75 percent of our profit after tax (PAT).
To ensure best practices, the bank remains committed to various domestic and international sustainability frameworks. These include the United Nations’ Sustainable Development Goals (SDGs), the United Nations Global Compact’s 10 principles, the Central Bank of Nigeria’s Nigerian Sustainable Banking Principles (NSBP) and the International Finance Corporation’s (IFC’s) Performance Standards on Environmental and Social Sustainability. As a founding signatory of the United Nations Environment Programme Finance Initiative (UNEPFI) Principles for Responsible Banking and the Women’s Empowerment Principles (WEPs) for Responsible Banking, the bank manifests its commitment to fostering SDG 5 (gender equality) by empowering women-owned businesses across all sectors.
Speaking of women’s empowerment, the bank has introduced a special loan product called Z-Woman, specifically targeted at women-led businesses. What are some of the key features of this product, and does it have any relevance to the bank’s environmental, social and governance (ESG) aspirations? How popular has it been among the bank’s customer base and prospective customers?
The Z-Woman loan product, specifically targeted at women-led businesses across all sectors, offers the market’s most competitive interest rate. It’s available to businesses with a woman holding a majority share. The initiative allows for a maximum loan amount of between NGN10 million and NGN50 million, based on capacity, and is repayable over 12 to 60 months.
The launch of Z-Woman marks a significant step towards achieving Zenith Bank’s ESG aspirations. By recognising gender disparities, empowering women economically and promoting financial inclusion, we actively contribute to sustainable development, gender equality and social welfare. The impact of this unique product extends beyond financial outcomes, fostering a more inclusive and prosperous society. It also highlights the bank’s commitment to global sustainability goals for women entrepreneurs, positioning Zenith Bank as a significant advocate for women’s empowerment. From June 2022 to June 2023, 216 Z-Woman customers accessed loans, leading to disbursements totalling NGN1,024,050,000 to women-led businesses.
Finally, Dr. Onyeagwu, the bank is restructuring to become a holding company. For what main reasons was this decision taken? And what benefits does the bank hope to realise from this restructuring?
Transitioning into a holding company presents the bank with the opportunity to expand its frontiers, add new verticals to its businesses and grow in all its chosen markets, both locally and internationally. This will undoubtedly ensure that the bank remains a leading financial institution on the African continent and globally. Moreover, it guarantees the continued creation of value for our key stakeholders.
Well, I do not doubt that Zenith Bank will remain a leading African and global financial institution for many years to come. Thank you for your time today.