Mr. Godwin Emefiele, MD, Zenith Bank
The recent rating of Zenith Bank as the number one bank in West Africa and seventh in Africa is a manifestation of the rising profile of Nigerian banks, reports Goddy Egene
Zenith Bank Plc has emerged the number one bank in Nigeria, according to different ratings of banks and companies operating in the financial system in particular and the African economy in general.
The Banker magazine, for instance, which is published by the influential Financial Times of London in its Top 1000 World Bank ranking for 2011, rated Zenith Bank number one in Nigeria, seventh in Africa and 332nd in the world.
The Banker magazine ranks global banks every year based on Tier1 capital, which is the core measure of a bank’s financial strength from a regulator’s point of view. It is composed of core capital, which consists primarily of common stock and disclosed reserves (or retained earnings).
In the 2011 ranking, Zenith Bank emerged number one in Nigeria with $2.398 billion, followed by First Bank of Nigeria Plc with $2.262billion. Guaranty Trust Bank Plc was ranked third having $1.478 billion, while Access Bank Plc and United Bank for Africa Plc occupied the fourth and fifth positions with $1.054 billion and $1.003 billion respectively.
On the African continent, Zenith Bank occupied the seventh position and the 322nd bank in the world. First Bank, which was ranked second in Nigeria and 8th in Africa, occupied the 338 position in the world ranking.
GTBank closed at the 11th position in Africa and 455th in the world, just as Access Bank was ranked 15th in Africa and 541st in the world. United Bank for Africa closed on the 16th position in Africa and 563rd in the world. Further analysis showed that, in all, eight banks were among the top 25 banks in Africa
In a similar positive rating, Forbes Africa, which is a licensed affiliate of Forbes, an American leading business magazine, classified Zenith Bank as number one bank and the number three company in West Africa in an extensive study of the Top 25 listed companies in the sub region.
According to Forbes Africa, the study is in recognition of the economic might of West African region in the continent. The magazine explained that the ranking of the companies was determined by a weighted average of four criteria, including market capitalisation; turnover, net profit and assets.
Market capitalisation was given the largest weighting of 50 per cent. This was followed by turnover (30 per cent); net profit (15 per cent) and assets (five per cent).
Zenith Bank got a weighted average of 2,647.58 and market capitalisation of $2.848 billion to lead other banks. But Dangote Cement Plc emerged the number one firm with a weighted average of 6,744.68 and market capitalisation of $12 billion.
Nigerian Breweries Plc occupied the second place with 3,109.85 and a market capitalisation of N5.127 billion, while Zenith Bank occupied the third position.
First Bank of Nigeria Plc placed fourth with weighted average of 2,429.39 and market capitalisation of $2.360 billion, while Guaranty Trust Bank Plc was the fifth largest firm and third bank with 2,323.82 and capitalisation of $2.838 billion.
Other Nigerian firms that made the top 25 included: United Bank for Africa Plc (1,504.08 ); Guinness Nigeria Plc (1,327.41 );Nestle Nigeria Plc (1,285.84 ); Access Bank Plc (1,285.84);Flour Mills of Nigeria Plc (883.88 ); Union Bank of Nigeria Plc (858.38 ); Stanbic IBTC Bank Plc (660.04 ); First City Monument Bank Plc ($655.26 ); Lafarge Cement WAPCO Nigeria Plc (563.70 ); Total Nigeria Plc (493.95 ); Unilever Nigeria Plc (464.95); PZ Cussons Nigeria Plc (443.99 ); UAC of Nigeria Plc (343.11 ); and Cadbury Nigeria Plc (230.08 ).
Speaking at the unveiling ceremony and presentation of awards the companies, recently in Lagos, the Managing Editor, Forbes Africa, Mr. Chris Bishop, said it was a signal to African companies everywhere that their time has come. He noted that all too often the lists of the world have overlooked the success of African companies.
Also, Vice-Chairman, ABN 360 Group, which is the parent company of CNBC Africa,Forbes Africa and ABN Productions, Rakesh Wahi, said:”We have a five -year history of analysing and reporting economic and commercial data on the continent, and now believe we are in a unique position to begin celebrating the success of African companies and business leaders who have performed exceedingly well despite the economic crisis.”
However, the emergence of Zenith Bank as a leading firm in the Nigerian financial landscape is not a surprise to many analysts given its performance trend over the years.
The managing director/chief executive officer of the bank, Mr. Godwin Emefiele, last April told shareholders that the success story partly came from its customers.
According to him, customers remain the bank’s enthusiastic emphasis and as such the commitment to building nurturing value for them remained the bank’s strong focus.
“While helping them unlock the real value of their businesses, our success or performance hinges principally on satisfying them better than competition. The unflinching loyalty of our customers and our knowledge of the market place coupled with creativity with which we deploy products and services has made the union a tremendous success,” he said.
Emefiele noted that Zenith Bank was on a solid growth trajectory and very well positioned for the future.
“The bank’s core values which is an indelible part of our corporate culture and includes an obligation to build a better, stronger and more durable bank for future generations shall continue to evolve,” he said.
The Zenith Bank boss added that they shall persistently leverage on their heritage of excellent people, sound business model and experienced management team to create pioneering solutions that surpass their stakeholders’ expectations.
The bank has been very profitable over the years, riding on the back of expansive incomes from core banking operations and non-core banking incomes as well as improving internal cost management to consolidate its profitability.
For instant, gross earnings rose by 27 per cent to N244.07 billion in 2011 as against N192.49 billion in 2010. The gross top-line performance was driven by growths in interest income, which grew 26 per cent from N127.27 billion to N160.52 billion while non-interest income grew by 28 per cent from N65.22 billion to N83.55 billion. Profit before tax stood at N60.7 billion in 2011 as against N50 billion in 2010, representing an increase of 21 per cent. In the same vein, profit after tax rose by 18 per cent from N37.41 billion to N44.19 billion.
Further analysis showed basic earnings per share of N1.40 in 2011 compared with N1.19 in 2010. As the fortunes of the bank grow, the board has equally been ensuring adequate compensation for shareholders also in that regard, cash dividends increased from 85 kobo in 2010 to 95 kobo in 2011.