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Financial Services

World Bank says Nigerian banks are at risk of being destabilised by COVID-19

Capital erosion and a possible resurgence in banks’ non-performing loans are just some of the risks.



Nigeria, others raise over $17bn from bonds, says World Bank


The World Bank disclosed in its latest World Bank Nigeria Development Update that Nigerian banks are now faced with serious risks of destabilisation, no thanks to what was aptly described as “the COVID-19 shock”.

Information contained in page 21 of the 88-paged report noted that the pandemic could erode the generally positive performance recorded by the banks in 2019. As a matter of fact, there is a high possibility that the relative stability witnessed in the sector could be eroded.

In specific terms, there is the risk of a resurgence in banks’ non-performing loans (NPLs), especially as it pertains to loan exposure to the country’s and gas sector.

There is also the risk that Nigerian banks may become confronted with a problem of capital erosion. Part of the report said:

“The COVID-19 shock poses serious risks to the financial sector, as mounting pressures in Nigeria’s external sector and the intensifying stress in global financial markets threaten its stability. The economic downturn and the collapse of global oil prices will likely reverse the declining trend in banking sector NPLs, starting with loans to the oil sector, which represent almost 30 percent of private-sector credit, and progressing through the remaining sectors as demand weakens. On-balance-sheet dollar-denominated exposures, which represented 38 percent of banks’ loan portfolio and 55 percent of their liabilities at end-2019, will also be a source of strain. The credit to private sector has severely declined in April 2020 as effects of the lockdown and constrained economic activity as it sharply dropped by 65.7 percent in April 2020 (Figure 1.19).”

READ MORE: CBN discloses how much has been disbursed from N50 billion COVID-19 intervention fund

The report then explained how the pandemic has mounted pressure on Nigeria’s external reserves, a situation that is further complicated by the current stress in the global financial markets.

The situation could get even more complicated for the Nigerian economy and its financial services sector. And the extent of the envisaged damage will depend on two factors:

  • How quickly the pandemic can be brought under control.
  • Whether global oil prices will remain stable.

READ MORE: FSD Africa invests $3.2 million in two African fintech firms operating in Nigeria 

According to the World Bank, if the pandemic can be contained sooner, then the Nigerian economy might just contract by 3.2% this year. Afterwards, the country would embark on a slow recovery phase. However, if the pandemic does not ease off anytime soon, the Nigerian economy might as well shrink by 7.4%, with the recession extended into next year.

In the meantime, the reality is already harsh for some of the banks. As Nairametrics reported earlier today, about 17 banks have approached the Central Bank of Nigeria (CBN) seeking to restructure their loan books amid the pandemic and its economic fallouts.

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On its part, the CBN has taken steps to unify it’s key exchange rates, whilst giving out stimulus packages in the form of loans to farmers and SMEs. However, the World Bank report emphasised that more needs to be done.


You may download the report “Nigeria in Times of COVID-19: Laying Foundations for a Strong Recovery” by clicking here.

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Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

1 Comment

1 Comment

  1. Chigozie Innocent Obioha

    June 25, 2020 at 4:46 pm

    I just believe that all these world leaders and international organisations are trying to cause panic in the minds of foreign investors that have Nigeria as a viable economy to invest into.
    Should I remind readers that it is the same manner we were told that Nigeria death rate would sky rocket when hit his the corona virus,status check we are not dying as fast as anticipated or predicted.This panic should end,NIGERIA will definitely come out stronger from this downturn if and,if only the government and other leaders channel adequate resources to what will keep the economy afloat,and destroy corruption,because it is corruption that would make these panic predictions come to reality.

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Financial Services

Jim Ovia is set to earn N9.58 billion in dividend for FY 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock.



Jim Ovia: From a clerk to founder of Nigeria's most profitable bank

The founder and Chairman of Zenith Bank Plc, Mr. Jim Ovia is expected to earn a massive sum of N9.575 billion in dividend for the financial year ended December 2020

The highly revered banker is the single majority shareholder of Zenith Bank as he directly owns 3,546,199,395 units of the fast-rising bank stock out of the 31,396,493,787 ordinary shares available. This gives him an 11.29% direct interest in the Tier -1 bank.

It’s however important to note that such dividend is subject to a 10% withholding tax in Nigeria.

READ: Is Zenith Bank thriving on the strength of sound financial indices?

Recall that about a day ago, the Board of Directors of the bank in a statement released via the Nigerian Stock Exchange proposed a final dividend of N2.70, amounting to a total payout of N3.00 per share for the financial year 2020 (interim: N0.30).

This proposal reflects the past year’s robust performance and appears to signal that Zenith bank remains well-positioned to perform in the current financial year. However, there was a lower payout ratio at 40.9% compared to FY’19 (42.1%).

  • Key earnings drivers to the financial year performance under review were a 90 basis points drop in the cost of funds to 2.1%, which propelled net interest income (+12.2% YoY) and a 3.8x jump in revaluation gains to N43.4 billion.
  • These offset pressures from operating costs (the cost to income ratio rose 1.2ppts to 50.0%) and impairment charges (cost of risk rose 40basis points to 1.5%)

READ: Jim Ovia: From a clerk to founder of Nigeria’s most profitable bank

Described as the ‘Godfather of banking in Nigeria’ by Forbes Africa, Jim Ovia is quite popular for his business dexterity and leadership skills, especially in the banking sector.

His early interest in technology was the reason Zenith Bank became the first Nigerian company to have a functional website in 1995 and was able to smoothly migrate its operations from analog times to a digital era.

From a single branch in a residential building, Zenith Bank now has hundreds of branches all over Nigeria and several subsidiaries in other countries. The bank became a Public Limited Company in 2001 and was listed on the Nigeria Stock Exchange (NSE), and later on the London Stock Exchange (LSE).

On the 27th of April 2007, Zenith Bank Plc became the first Nigerian bank in 25 years to be licensed by the UK Financial Services Authority (FSA), giving rise to Zenith Bank UK Limited.

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Financial Services

Zenith Bank declares final dividend of N84.8 billion for shareholders

Zenith Bank declares final dividend of N84.8 billion for shareholders for 2020.



Zenith Bank Plc

The Board of Directors of Zenith Bank Plc has announced the payment of a final dividend of N2.70 for every share of 50k held by shareholders, amounting to a total of N84.8 billion for the year ended 2020.

This is according to a disclosure signed by the company’s secretary, Michael Osilama Etu and sent to the Nigerian Stock Exchange.

According to the notification, the final dividend will be paid electronically to shareholders on the 16th of March, 2021, subject to appropriate withholding tax and approval from the Company’s Annual General Meeting. Other pre-requisite conditions for payment are;

  • Only shareholders whose names appear in the registrar of members as at the close of business on 8th of March, 2021 will be considered.
  • Shareholders must have completed the e-dividend registration and must have mandated the Registrar (Veritas Registrar Limited) to pay their dividends directly into their bank accounts.
  • In lieu of this, it is pertinent to note that the register of shareholders will be closed on 9th of March, 2021.

Zenith Bank Plc had earlier paid an interim dividend of 30k to its qualified shareholders on 22nd of September, 2020, thereby raising the total dividend declared by the financial giant in 2020 to N3.00, indicating an increase of about 7.1% when compared to the total dividend of N2.80 declared in 2019.

What you should know

  • Zenith Bank reported a profit before tax of N255.9 billion for FY 2020, indicating a growth of 5.2% YoY
  • It also posted a Profit After Tax figures of N230.6 billion for the period under review, indicating a growth of 10.4% YoY.
  • It has total shares outstanding of 31,396,493,787 and officially closed trading today with a share price of N26.

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