Mr Peter Amangbo is the Group Man-aging Director/CEO of
Zenith Bank Plc, and he is Vanguard Newspaper’s Banker Of The Year, 2018. The
Board of Editors of Vanguard Newspapers were faced with the task of picking
from topmost impressive five banks in terms of some selected key performance
indicators including earnings, profitability and asset quality, as well as the
consistency of the performance over the last three years. Zenith Bbank stood
out, and the man in the saddle took the lead in our rating scale. Peter Amangbo
Coupled with his outstanding performance, we reckon with the fact that with a
relatively unknown name in the industry, he stepped into the big shoes of the
two previous CEOs of the great institution, Godwin Emefiele, who handed over to
him to assume the position of the Governor of Central Bank of Nigeria, CBN; and
the founding CEO, Jim Ovia, Nigeria’s leading light in banking and finance.
Amangbo has so far sustained the impressive trend. He has stayed the course,
and the figures speak volume of his capability so far.
Today’s Zenith Bank
Strong earnings capacity and growth, solid and liquid
capital base, strengthened enterprise risk management practices, good returns
on investment and excellent customer service are some of the hallmarks of
today’s Zenith Bank under the stewardship of Mr. Amangbo. Zenith Bank remains a
dominant player in the Nigerian banking industry, indeed a leader amongst
tier-1 category of banks. It remains a net placer of fund in the industry with
most banks running on Zenith Bank’s liquidity. In fact, Amangbo told us in a
chat that Zenith Bank has never taken fund from any bank in the Nigerian
banking environment with prevalence of inter-bank lending. Our check reveals
that Zenith Bank still controls a significant share of the high end corporate
clients in strategic sectors of the economy. The bank uses its strong balance
sheet and liquidity as well as efficient trade finance processes and services,
to continuously grow and support businesses.
Risk Management: Under Amangbo, Zenith Bank maintains a
strong focus on superior ERM practices. Consequently, despite the tough
operating environment, the bank’s Non-Performing Loan (NPL) ratio came in at
4.9 per cent with a coverage ratio of 238.4 per cent.
Impressive Dividend Payout: The investors in Zenith Bank
have good returns as the bank under Mr. Amangbo continued to upscale dividend
payout year after year despite the recessionary circumstance under which he
assumed leadership of the bank. The bank paid a dividend of N1.75 per share for
both FY2013 and FY2014. One year after he took over, the bank paid N1.80 per
share for FY2015 and N2.02 per share for FY2016. A final dividend of N2.45 per
share was paid for FY2017, which in addition to the N0.25 per share earlier
paid as interim dividend amounted to N2.70 per share. An interim dividend of
N9.42 billion, being N0.30 per share from the retained earnings account was
paid in H1 2018. Amangbo told us he was optimistic that the shareholders of
Zenith Bank would smile further at end of the 2018 financial audit and dividend
season.
Consolidating Earnings/ Profitability: In spite of the
macroeconomic backdrop, Zenith Bank has delivered an attractive earnings
profile, supported by improving operating efficiency. Profit Before Tax, PBT, increased
Year-on-Year (YoY) by 9.7 per cent from N152.5 billion in the third quarter
2017 to N167.3 billion in the corresponding period of 2018. The 13.4 per
cent YoY growth in net interest income
and 69.5 per cent reduction in impairment loss accounted for the PBT growth.
Net Interest Margin – NIM (Adjusted) increased YoY by 14.3 per cent (from 8.4 per cent in Q3 2017 to 9.6 per cent in Q3 2018), demonstrating the Group’s
ability in delivering optimal pricing for its interest-bearing assets and
liabilities even in a declining yield environment. The bank’s Cost of Funds
(CoF) decreased from 5.4 per cent recorded in Q3 2017 to 3.3 per cent in Q3
2018 as the bank continues to focus on its drive for low cost deposit mix.
Consequently, the Cost-to-Income Ratio decreased by 1.0 per cent YoY, from 52.9
per cent in Q3 2017 to 52.2 per cent in Q3 2018. Amangbo said he expects a
further improved ratio for the full year, as the full year AMCON charge was
taken in the first half 2018, accounts. Fees on electronics products grew by
over 100 per cent as the bank continues to improve on its electronic platforms
and increase its share of the retail business.
Further on efficiency
Funding cost optimimisation continues to be central to
Zenith Bank’s operations. A massive 31 per cent drop in interest expense was
achieved in the 9-months to September 2018 accounts as it continues its drive
towards cost optimisation. Despite the significant increase in AMCON charge,
the Zenith Bank was able to contain its operating expenses growth at 6 per cent
YoY. Mr. Amangbo said he expect a further moderation in operating expenses for
the full year end 2018 results as the bank continued to improve on operational
efficiency.
Balance Sheet, Assets Quality
In addition to the efficiency and risk management for
superior performance, one of the fundamentals of Zenith Bank brand is Building
A Shock-Proof Balance Sheet. Thus, the bank thrives on strong and liquid
balance sheet led by securities portfolio and interbank placements. Zenith
Bank’s assets are well funded by a significant deposit base and the balance
sheet remains robustly capitalised, providing a buffer for further growth. The
bank also leverages a deposit-funded loan portfolio, with largely term loans to
top-rated corporates. Moreover, the deposit base is predominantly current
accounts which supports attractive net interest margin extraction with
increasing savings account balance. The Zenith Bank Group adopts a complete and
integrated approach to risk management that is driven from the Board level to
the operational activities of the bank. Risk management is practised as a
collective responsibility coordinated by the risk control units and is properly
segregated from the market facing units to assure independence. The process is
governed by well defined policies and procedures that are subjected to
continuous review and are clearly communicated across the group. The leadership
of the bank ensures a regular scan of the environment for threats and
opportunities to improve industry knowledge and information that drives
decision-making in Zenith Bank. Group maintains a proactive approach to
business and ensures an appropriate balance in its risk and reward objectives.
Risk culture is continuously being entrenched through appropriate training and
acculturation. Amangbo and his team strive to maintain a well diversified loan
portfolio across sectors to support and sustain the impressive asset quality.
About Amangbo
Mr. Peter Olisamedua Amangbo holds a B.Eng. Degree
(Electrical and Electronics Engineering) from University of Benin and an MBA
from the University of Warwick, Coventry in the United Kingdom. He is a Fellow
of the Institute of Chartered Accountants of Nigeria, FCA. He joined Zenith
Bank from PriceWaterHouse (now PriceWaterHouseCoopers) as a Senior Consultant
in the Financial Services Group. Prior to this appointment to the position of
MD/CEO of Zenith in 2014, Amangbo has been an Executive Director of the bank
since 2005 and has over 24 years cognate banking experience all of which has
been with Zenith Bank. He was a pioneer Non-Executive Director of Zenith Bank UK.
He has attended the Advanced Management Programme at INSEAD, France and Wharton
Graduate School of Business, USA. He took courses on Strategic IQ Programme,
Strategic Thinking and Management for Competitive Advantage, and Execution in
Action – The Art of Turning Strategy into Action at the Harvard Business
School, Wharton School of Business and HSM – New York respectively.
