At a glance ZENITH BANK
* Makes N491.7m daily to net N89bn in first half of 2019
* Staff, external fraudsters steal N1.03bn
* Interest income fell from N228.8bn in 2018 to N214.6bn in 2019
* Spends N18.8bn to settle charges arising from customers’ complaints
* Makes N546.9m daily to net 99.13bn in first half of 2019
* Interest income fell from N117.93bn in 2018 to 116.4bn in 2019
* Customers’ deposit portfolio increased from N2.3tn in 2018 to N2.4tn in 2019
* Asset base increased from N3.3tn in 2018 to N3.6tn in 2019
Banking was redefined some 29 years ago in Nigeria when some three daring young bankers, Mr. Jim Ovia and the duo of Fola Adeola and Tayo Aderinokun, decided to take the bull by the horns to establish Zenith Bank Plc and Guaranty Trust Bank (GTBank) Plc respectively.
The entrance of both banks into the banking space in Nigeria gave birth to what then was christened ‘The New Generation Banks.’ These two banks and others licensed by Nigeria’s Central Bank (CBN) in the same period have continued to challenge the older banks, giving them a run for their money.
Needless to say, both banks now rank among top three Tier-1 banks in the country both in terms of profitability and Asset base as they continue in their battle for supremacy in their industry.
Zenith Bank Plc established by Mr.Jim Ovia, was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on May 30, 1990. It was granted a banking licence in June 1990, to carry on the business of commercial banking and commenced business on June 16, 1990. The Bank was converted into a Public Limited Liability Company on May 20, 2004. The Bank’s shares were listed on October 21, 2004 on the Nigerian Stock Exchange (NSE). In August 2015, the Bank was admitted into the Premium Board of the Nigerian Stock Exchange. The principal activity of the bank is the provision of banking and other financial services to corporate and individual customers. Such services include granting of loans and advances, corporate finance and money market activities.
The Bank has six subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pensions Custodian Limited, Zenith Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited, Zenith Bank (Gambia) Limited and Zenith Nominees Limited. The Bank also has a representative office in China in addition to operating a branch of Zenith Bank (UK) Limited in the United Arab Emirates.
Mr.Fola Adeola and late Tayo Aderinokun’s Guaranty Trust Bank Plc remains a going concern even after the exit of its pioneer founders. The bank now popularly called GTBank Plc, was incorporated as a private limited liability company on July 20, 1990, and obtained a licence to operate as a commercial bank on August 1, 1990. The bank commenced operations on February 11, 1991. It became a public limited company on April 2, 1996, with the listing of its shares on The Nigerian Stock Exchange on September 9, 1996.
The bank was issued a Universal Banking licence by the CBN on February 5, 2001. It was issued a Commercial Banking Licence with International Scope on December 20, 2012, by the CBN following the divestment from all its non-banking subsidiaries in compliance with the apex bank’s Regulation on Scope of Banking Activities and other Ancillary Matters. The bank’s principal activity remains the provision of commercial banking services to its customers, such as retail banking, granting of loans and advances, corporate finance, money market activities and related services, as well as foreign exchange operations. GTBank hasoverseas subsidiaries in Gambia, Sierra Leone, Ghana, United Kingdom, Liberia, Ivory Coast, Kenya, Rwanda, Uganda, Tanzania, and the Netherlands.
First Half Financial Performance
A peer-to-peer review of the audited half year financial performance of both banks for the period ended June 30, 2019 shows that most performance measuring indices grew appreciably. But GTBank was ahead of its biggest competitor (Zenith Bank) with a Profit after Tax (PAT) of N99.13 billion as at June 30, 2019, an increase of 3.7 percent over N95.6 billion in half year of 2018. The bank however recorded a shortfall of -2.1 percent in Gross Earnings in half year 2019 at N221.9 billion compared to N226.63 billion in the same period of 2018. On the other hand, Zenith Bank grew Gross Earnings by 2.9 percent from N322.2 billion in H1, 2018 to N331.6billion in H1, 2019. Zenith Bank in spite of its ability to generate fatter revenue compared with GTBank, recorded lower profit. Zenith Bank’s PAT in H1, 2019 stood at N88.9billion though 8.8 percent higher than N81.7billion declared in H1, 2018.
GTBank’s Retained Earnings grew by 20.3 percent Year on Year (YoY) from N106.6 billion in H1, 2018 to N128.2 billion in 2019. GTBank would appear shrewder than Zenith Bank with its more robust earnings reservoir. Zenith Bank only increased its retained earnings by 6.5 percent from N67.8 billion in H1, 2018 to N72.2 billion in H1, 2019. GTBank’s retained earnings of N128 billion represents almost twice the size of the portfolio of Zenith Bank’s retained earnings in first half of 2019.
Zenith Bank in its usual characteristics generated more income than GTBank Plc through interest charges on transactions in the review period. But comparatively, Interest Income dropped appreciably by -6.2 percent from N228.8 billion in half year 2018 to N214.6billion in the comparable period of 2019 while GTBank also recorded a marginal drop of -1.3 percent from N117.93 billion in H1, 2018 to N116.4billion in H1, 2019.
Both banks however recorded growth in their ability to reward their shareholders with Earnings per Share (EPS) moving up 3.6 percent and 8.9 percent respectively in H1, 2019. As it is their custom, GTBank amassed more wealth for shareholders with EPS increasing to 350kobo per share in H1, 2019 from 338 kobo per share in the preceding half year in 2018. Zenith Bank jumped from 260 kobo per share in 2018 to 283kobo per share in H1, 2019.
The audited half year report of Zenith Bank for the period ended June 30, 2019 showed that the group is liable to spending about N18.8billion to settle charges due from complaints lodged by its customers and other stakeholders. The figure dropped by -9.6 percent from N20.8 billion liability incurred in the same of 2018. Meanwhile, GTBank allegedly has been ordered by a court to pay about N14 billion to one its major customer over a transaction that went awry.
Zenith Bank also reported that it lost about N1.03 billion to fraud perpetrated by both staff and external fraudsters in just six months in 2019 compared to only N3million reported in half year of 2018.
With a total Assets N5.9 trillion as at June 30, 2019, Zenith Bank is almost twice bigger in size by Assets base compared with GTBank in the review period. Zenith Bank however recorded a marginal drop in Assets base to the tune of -1.7 percent between H1, 2018 (N6.0tn) and H1, 2019. Meanwhile, GTBank with a total Assets base of N3.6 trillion in H1, 2019 remains one the biggest banks by Assets in the banking industry. The bank recorded a growth of 9.1 percent in Asset base, from N3.3 trillion in H1, 2018 to N3.6 trillion in the review half year period ended June 30, 2019. Total Liability on the other hand increased at GTBank by 11 percent while Zenith Bank reduced its Total Liability by 1.2 percent from N5.14 trillion in H1, 2018 to N5.08 trillion in H1, 2019 while GTBank grew from N2.7 trillion to N3.0 trillion in the review half year 2019.
Analysis of GTBank’s group credit quality of stage 1 loans and advances compared to acceptable risk showed that lending is becoming riskier as percentage of acceptable risk to total loan and advances is growing. As of end of June, 2019, percentage of total loans and advances compared to acceptable risk, rose to 21.2 percent from 11.63 percent at the of the 2018 financial year.
Total loans and advances to customers (individuals and non-individuals) and banks as at end of half year 2019 stood at about N1.11trillion as against N235.25billion classified as acceptable risk by the group.
As at end of December, 2018, the group’s loans and advances under stage 1 stood at N1.10trillion as against acceptable risk which stood at about N128.43billion, representing 11.63 percent
GTBank Plc was more aggressive than Zenith Bank in sourcing deposits from customers as at June 30, 2019 with Customers’ deposit portfolio increasing by 4.4 percent from N2.3 trillion in 2018 to N2.4trillion in H1, 2019 while Zenith Bank’s Customers’ deposit portfolio jumped by 2.7 percent from N3.7 trillion in H1,2018 to N3.8 trillion in H1 ended June 30, 2019.
On the flipside, Zenith Bank gave less money to customers in the form of loans and advances in the review period. The loan and advances portfolio of Zenith Bank dropped by -1.1 percent from N1.82trillion in H1, 2018 to N1.8trillion in H1, 2019. But GTBank raised the bar, though marginally, increasing lending to customers by 0.8 percent from N1.26trillion in FY 2018 to N1.27trillion as at June 30, 2019.