Zenith shows Nigeria the way forward

Despite Nigeria’s myriad economic challenges, Zenith Bank has successfully implemented several innovative strategies to navigate the landscape and remains the country’s leading bank


Zenith Bank has always demonstrated the agility and resilience of a powerhouse financial institution with a special pedigree. Today, this tenacity and grit are being tested more than ever due to persistent macroeconomic headwinds in the home market. Despite these challenges, the bank is defying the odds and soaring to greater heights.

In 2022, Nigeria was Africa’s largest economy, boasting a gross domestic product (GDP) of $472.6bn. However, the devaluation of the Naira in 2023, prompted by the floating exchange rate policy, resulted in the country relinquishing its top spot. However, Nigeria has demonstrated astuteness in navigating through turbulent economic waters, intensifying efforts to reclaim its status as Africa’s leading economy.

The government is proactively addressing key issues such as inflation and the complexity of multiple exchange rates. Notably, these efforts have started to bear fruit, with the Naira appreciating significantly against the dollar – from NGN1,525 in early February to NGN1,136 in mid-April, marking a significant recovery.

This resurgence underscores a growing confidence among investors, buoyed by the Central Bank of Nigeria’s (CBN) adept handling of the foreign exchange market.

Recent policy changes, such as the elimination of fuel subsidies and the unification of exchange rates, complement these efforts. These measures have allowed market forces to play a more decisive role in determining the exchange rate, enhancing transparency and addressing previous market distortions. The appreciating value of the Naira is clear evidence of the positive impact of granting greater autonomy to market mechanisms within the foreign exchange sector.

Zenith Bank recognises the importance of SMEs and their significant untapped growth potential

Additionally, recognising the need for comprehensive economic recovery, the government is tackling deeply rooted challenges, particularly in revenue generation. President Bola Tinubu has established a panel to reform Nigeria’s tax laws and fiscal policies to enhance revenue generation while curbing excessive borrowing. The committee’s objective aligns with the administration’s Renewed Hope Agenda, striving to foster sustainable development and achieve a minimum tax-to-GDP ratio of 18 percent within the next three years without impeding investment or economic growth. This vision is pivotal in Nigeria’s journey towards building a trillion-dollar economy within the coming decade.

The recent recapitalisation programme of the banking sector by the CBN further complements these efforts, ensuring that the financial services sector is robust enough to support the nation’s economic ambitions. This initiative will strengthen the banking infrastructure, providing a solid foundation for Nigeria’s aspirations to become a trillion-dollar economy.

A challenging environment
Nigeria’s economic challenges in recent years have significantly impacted the banking sector. Rating agencies, including S&P Global, have raised concerns that high inflation and interest rate hikes could exert pressure on asset quality and operations. Furthermore, the depreciation of the Naira has necessitated an increase in gross loans, potentially elevating the risk of non-performing loans, especially for smaller banks.

Zenith Bank remains unshaken in its pursuit of growth

For Zenith Bank, the challenging macroeconomic environment has been a test of resilience. The bank has excelled, maintaining and strengthening its position as the most profitable bank in the Nigerian banking industry in 2023. This achievement is reflected in the bank’s 2023 financial results, which highlight Zenith Bank reaching new heights as Nigeria’s most profitable financial institution with triple-digit growth in profitability. This impressive performance came after the bank sustained its net interest margin at 7.3 percent.

Over the year, Zenith Bank achieved a 180 percent increase in pre-tax profits, reaching NGN796bn ($693m), up from NGN284.7bn ($248m) in 2022. This feat marks a record-breaking growth in profits, realised under challenging conditions. Importantly, it has solidified its leadership in Nigeria’s highly competitive banking sector, with a robust balance sheet that expanded by 66 percent to NGN20.4trn ($17.7bn).

Bucking the trend
The remarkable feat was achieved through precise implementation and execution of strategies that saw Zenith Bank post 112 percent growth in interest income and a 141 percent increase in non-interest income. During the year, interest income stood at NGN1.1trn ($957.7m) compared to NGN540bn ($470.2m) in 2022. Non-interest income, on the other hand, stood at NGN918.9bn ($800m) compared to NGN381bn ($331.7m) in the same period in 2022.

There is no doubt that Zenith Bank has thrived and achieved astronomic growth over a generation through bespoke financial products and services, superior customer service, digital transformation, innovation, and unparalleled investment in technology. The past months have proven the bank’s supremacy in strategy execution and its ability to navigate challenges and turn them into opportunities.

Two scenarios stand out. First is the bank’s exposure to the public sector. Given that Nigeria’s economy is heavily dependent on oil revenues, low crude oil production coupled with volatile crude prices in the international markets has led to a slump in earnings.

Nigeria has made tangible progress in driving financial inclusion

The impact has been a painful squeeze on state coffers. The public sector exposure, together with significant impairments from Ghana’s $13bn Eurobond restructuring, had a material negative impact on Zenith Bank’s bottom line. In 2022, the segment posted a loss of NGN11.8bn ($10.2m). Last year, however, it was the standout performer, posting an astounding 884 percent increase in pre-tax profit to NGN92.6bn ($80.5m).

Another highlight is the stellar performance and rapid growth of the retail market segment. Although individuals and households may have experienced reduced disposable income due to inflation, this has not shaken the confidence of customers in the Zenith brand. As part of its strategic objectives, Zenith Bank aims to become the leading retail bank in Nigeria. Last year, it made a significant leap, with retail customer numbers increasing to 36.4 million from 29.5 million in 2022. Retail deposits have also risen, now constituting 46 percent of total deposits compared to 44 percent in 2022, having increased by 77 percent to NGN7.04trn ($6bn) from NGN3.97trn ($3.3bn) in 2022.

Placing the retail segment at the centre of long-term growth, Zenith Bank prioritises customer engagement and value innovation. The bank understands that due to intense competition, attracting and retaining retail clients demands creative thinking. Part of Zenith Bank’s strategy includes developing customer value propositions unique to each customer sub-segment. For effective delivery, the bank has built an extensive network of over 500 branches and deployed an ever-expanding array of digital channels driven by cutting-edge technology.

Finance for all
Zenith Bank is also aware that it is imprudent to think of retail customers without considering the unbanked and underbanked. Nigeria has made tangible progress in driving financial inclusion. Nevertheless, the percentage of adults with formal financial services only stands at 65 percent, according to EFInA, a financial sector deepening organisation. Of this, only 52 percent have a bank account. This falls significantly below the CBN target of 95 percent. To integrate the 28.8 million Nigerians excluded from the formal banking system, Zenith Bank has deployed extensive agency banking services. Currently, the bank boasts over 94,000 agents spread across 36 states and 774 local government areas. This vast reach ensures that the bank has a touchpoint in every location.

Physical touchpoints characterised by human interactions remain a fundamental aspect of banking today and even into the future. However, digitalisation has brought about inevitable disruptions. Zenith Bank was the first to acknowledge the transformative power of digitalisation in the Nigerian market. This explains why technology remains one of the bank’s major pillars, alongside ‘people’ and ‘service.’

For Zenith Bank, investing in information and communication technology (ICT) infrastructure to create innovative products and solutions has been essential. Becoming a trailblazer in digital banking has been central to transforming customer experiences and building a solid brand. The bank leverages different channels, including Mobile App, Unstructured Supplementary Service Data (USSD), WhatsApp (ZIVA – Zenith Intelligent Virtual Assistant), internet banking, automated teller machines, and points of sale. Throughout its operations, the bank continually re-engineers its digital platforms to effectively meet the needs of its numerous customers in terms of ease of use, safety, and convenience, thereby making transactions more seamless.

Today, the bank is reaping the benefits of its ICT investments. Digital onboarding, robotics, and enhanced cybersecurity measures have played key roles in facilitating growth in new accounts from 1.2 million in 2018 to the current 36.4 million. Apart from facilitating increased customer acquisition and loyalty, the bank is respected as an industry leader in customer experience. Internally, processes are characterised by speed and efficiency. The bank’s uninterrupted operation during the Covid-19 lockdowns is a testament to its prevailing digital culture.

Driving digital
Embracing and embedding an unrivalled digital culture means that Zenith Bank is always ahead of its peers in terms of innovation. In an industry with about 30 banks, Zenith Bank has demonstrated a strong track record of versatility in launching new products to cater to an ever-evolving market. Z-Woman, a product specifically targeted at women-led businesses across all sectors, is a clear example. This unique loan product offers the most competitive interest rates in the market and is available to businesses that are majority-owned by women. Through this product, Zenith Bank has extended about NGN50bn ($43.5m) in loans to five million Z-Woman customers. Tabul is another innovative solution designed to transform the customer experience at restaurants with simplified ordering and payment processing.

Dr. Adaora Umeoji, Group Managing Director/CEO, Zenith Bank

While Zenith Bank is responsive to changing market needs and ready to innovate, it has not lost focus on two other key market segments – small and medium enterprises (SMEs) and corporates. SMEs, in particular, are critical. Data shows that in Nigeria, there are over 36.9 million SMEs, constituting approximately 97 percent of businesses and contributing 48 percent of the GDP. Despite their large numbers and importance to the economy, particularly in terms of job creation, SMEs have not received the desired attention. Studies show that approximately 80 percent of SMEs in Nigeria face significant challenges that hinder their survival and progress. Limited access to capital and poor business practices have been identified as key causes of mortality before reaching their fifth anniversary.

Zenith Bank recognises the importance of SMEs and their significant untapped growth potential. For this reason, the bank has been at the forefront of providing them with the necessary support. This includes bespoke offerings, access to loans, and sector-based training. A standout product specifically designed for the needs of SMEs is SME-Grow My Business.

Zenith Bank believes in shared growth with SMEs. The bank has built partnerships that enable it to provide low-interest rate loans to SMEs. These partnerships also help build capacity and deepen knowledge. A case in point is the bank’s partnership with Google, which helps expose SMEs to the digital world via free Google listings. It also helps improve their management capabilities through quarterly capacity-building training.

Restoring confidence
To restore full confidence in the economy, reforms are expedient. Policies are required to enhance forex inflows by diversifying and promoting non-oil exports. This should run concurrently with efforts to revitalise crude and refined oil production. More importantly, addressing systemic challenges and improving governance is imperative for fostering long-term stability and sustainable prosperity. By taking bold and decisive actions, Nigeria can navigate through turbulent economic times and pave the way for a brighter future.

As Nigeria’s leading bank, Zenith Bank aims to be the heartbeat of the country’s long-term sustainable development. By tradition, the bank has been a pioneer in sustainability since beginning its journey a decade and a half ago. Zenith Bank continues to show leadership in addressing society’s challenges in line with the United Nations Sustainable Development Goals (SDGs) and the Paris Agreement. In line with these global pacts, operations and investment decisions are anchored on environmental, social, and governance (ESG) values.

The bank has been a pioneer in sustainability since beginning its journey a decade and a half ago

Last year, about 96 percent of total credit transactions valued at over $22.6bn were screened and assessed for environmental and social risks. By the end of next year, the bank envisages covering up to 100 percent of its credit transactions. Apart from sustainable-linked lending, the bank is also proactive in delivering positive impacts in the communities where it operates. Total social investments that stood at NGN5.673bn ($4.9m) last year speak to this commitment. The amount represented an increase of 240 percent from the previous year.

For Zenith Bank, becoming an acclaimed, responsible corporate entity is closely intertwined with a strong governance culture. Accountability and ethical conduct are cardinal principles of the bank. Corporate governance also extends to fostering a gender-inclusive environment. The bank stands tall among the few that have achieved gender inclusivity in its workforce. The bank’s total active force stood at 10,014 as of December 2023, of which 5,628 (56.2 percent) were female, while 4,386 (43.8 percent) were male.

Failsafe finance
Strong governance is the hallmark of Zenith Bank, which is deeply rooted in all its operations. It sets the tone for risk management and building safe systems. Evidently, the Nigerian banking industry remains vulnerable to infrastructure deficit. Early this year, banking operations were among many that were impacted by a widespread broadband internet connectivity disruption caused by damage to an undersea submarine cable. Services on electronic and digital platforms were the worst hit.

However, this cut had little to no negative impact on Zenith Bank’s services. This was because the bank has invested in robust systems and established strategic partnerships with leading internet service providers who helped reroute traffic via alternative internet circuits. This ensured that services remained available even at the peak of the disruption.

Retrospectively, the cable cut was a red alert reinforcing the bank’s approach to investing in reliable and scalable IT infrastructure that can handle a high volume of transactions and withstand technological failures. A clear example is the ongoing IT overhaul programme dubbed ‘Project Tiger,’ designed to deepen the overall digital payments suite and offerings, creating multiple channels for digital service delivery.

Zenith Bank has made risk management the bedrock of its operations. A culture of risk awareness permeates the entire organisation, underpinned by impeccable leadership and strong governance structures. This has resulted in comprehensive risk management mechanisms. These include a risk appetite statement that serves as the cornerstone tool to align overall corporate strategy, capital allocation, and risk. Part of the tool’s watchlist includes the nature of the threat, controls/mitigants, residual impact, and early warning mechanisms for each risk. Ultimately, the bank deploys a hybrid and holistic approach to protect the safety of customers’ assets and the integrity of its systems.

As a responsible corporate citizen, Zenith Bank remains committed to improving the social, economic, and environmental well-being of its stakeholders. This commitment is demonstrated through an elaborate corporate social responsibility strategy focused predominantly on healthcare, education, skill development, and other initiatives with maximum positive impacts.