Zenith Bank last week released its FY 2017 results and they showed a huge improvement from the prior year. Trading gains played a key role in the superlative results recorded by the firm. Derivatives income increased from ₦20.7 billion in 2016 to a whopping ₦68 billion in 2017.
A derivative according to Investopedia, is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (like a security) or set of assets (like an index). Common underlying instruments include bonds, commodities, currencies, interestrates, market indexes, and stocks. It is also a financial instrument whose value is derived from an underlying instrument or product such as a security (e.g. stock index) or commodity (e.g. cocoa).
The bank has also signified its intentions to maintain its focus on derivatives going by its 2017 results conference call.
Zenith currently has N57 billion in derivative assets comprising N42. 2 billion worth of forwards and N14.9 billion worth of futures. Futures are traded on a standardized exchange while forwards are tailored to meet the requirements of the seller and are not traded on an exchange.
Simply put, the bank has entered into agreements to buy and sell currencies at a specified price and date.
Who heads the derivative desk?
The derivatives desk of the bank is headed by Michael Anyimah. He is a 1997 graduate of Actuarial Science from the University of Lagos. He also obtained an MBA from the same institution in 2003. In addition, he is a CFA charter holder.
From July 2005 to March 2008, he was an FX trader with Citigroup Nigeria. While there, he was responsible for developing foreign exchange risk hedges for clients. He was also responsible for the active foreign currency balance sheet management.
He joined Zenith Bank in March 2008, as the Head of Foreign Exchange trading and Derivatives Sales and Trading. At Zenith, he manages the FX Trading Unit which trades the G7 currencies and the Naira against the G7 currencies. G7 currencies comprise currencies of the 7 industrialized countries namely the United States, Germany, France, Canada, Italy, Japan, and the United Kingdom.
He also heads the unit in charge of Derivative sales and trading, taking proprietary positions and providing hedging solutions to clients foreign exchange and interest rate risks.
At the recently concluded conference call of the bank, he was actively taking on questions and was by far the person of interest for most investors.