Amid transaction hitches that hit several banks at the height of the cash crisis, one of Nigeria’s biggest banks, Zenith Bank has begun the process of installing a brand-new IT infrastructure to cope with teaming customer demand.
This follows the Central Bank of Nigeria (CBN)’s swift move
towards cashless transactions that exposed the infrastructure capability of
some traditional commercial banks.
Recall that the Nigerian banking public is expressing
disappointment over their inability to perform normal transactions on
electronic channels in real time due to what they describe as weak Information
Technology infrastructure in banks that are unable to withstand increased
customer transactions.
Mobile app transactions that
normally take less than a second now takes between 30 minutes and four
hours depending on how lucky the user is and
many have taken to social media
to vent their anger on banks.
All banks need to do is to upgrade their IT infrastructures
to accommodate the sudden surge in online transactions.
An insider who does not want his name in the print said that
Zenith Bank is making frantic effort to address the address the problem through
IT infrastructure upgrade.
Currently, Zenith Bank is Nigeria’s largest bank by profitability
and a member of the Tier 1 Banks (FUGAZ).
Recently, the bank announced its audited results for the
year ending December 31, 2022, achieving an impressive double-digit growth of
24% in gross earnings from NGN765.6 billion reported in the previous year to
NGN945.5 billion in 2022. This is despite excruciating the 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% year-on-year (YoY) growth in interest
income from NGN427.6 billion to N540.2 billion and a 23% year-on-year (YoY)
growth in non-interest income from NGN309 billion to NGN381 billion. Profit
before tax also grew by 2% from NGN280.4 billion to NGN284.7 billion in the
current year. The increase in profit before tax was due to the significant
growth in all the income lines.
Impairments grew by 107% from NGN59.9 billion to NGN124.2
billion, while interest expense grew 63% YoY from N106.8 billion to N173.5
billion, respectively.
The impairment growth, which also resulted in an increase in
the cost of risk (from 1.9% in 2021 to 3.3% 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% in 2021 to 1.9% in 2022
due to hikes in interest rates globally.
Customer deposits increased by 39%, growing from NGN6.47
trillion in the previous year to NGN8.98 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% to 7.2% due to an
effective reprising of interest-bearing assets.
Operating expenses grew by 17% YoY, but growth remains below
the inflation rate. Total assets increased by 30%, growing from NGN9.45 trillion
in 2021 to NGN12.29 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%, from NGN3.5
trillion in 2021 to NGN4.1 trillion in 2022, which increased the Non-Performing
Loan (NPL) ratio modestly from 4.2% to 4.3% YoY.
The capital adequacy ratio decreased from 21% to 19%, while
the liquidity ratio improved from 71.2% to 75%. 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 pay-out of N2.90 per share, bringing
the total dividend to N3.20 per share.