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Financial Services

First Bank tops as Nigerian banks record lower E-business income

The FUGAZ generated a sum of N67.3 billion from electronic business during their half-year 2020.

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net interest income, Nigerian Banks, Fitch, Nigerian banks tremble over Cyber attack, Most Nigerian banks are very likely to fail stress tests should the economic downturn persists and deepens, What Banks can do to improve Real Sector Lending in 2021

The tier-1 banks popularly known as the FUGAZ (First Bank, UBA, Access Bank, GT Bank, and Zenith Bank) topped the list of banks with the highest e-business earnings in the first half of 2020.   

Data from their half-year 2020 financials show that the FUGAZ generated a sum of N67.3 billion from electronic business, a drop of 14.2% compared to N78.4 billion recorded in the corresponding period of 2019. 

The recent decline could be attributed to the disruption caused by the COVID-19 pandemic and a CBN policy that implemented a downward review of bank charges for various transactions. This is the first decline since we started tracking as earnings from e-business has consistently witnessed an increase over the years.

Data obtained from Nairametrics Research shows that the tier-1 banks generated a sum of N32.3 billion e-business earnings in the second half of 2017, N45.1 billion (2018), and N78.4 billion (2019) respectively before the decline in H1 2020. 

READ: Nigeria’s tier-1 banks earn N18.4 billion from account maintenance charges in Q1 2020

GT Bank Fifth Position

The most capitalized bank in the stock market generated a sum of N4.8 billion from their electronic businesses to stand in fifth behind Zenith BankGT Bank e-business revenue declined by 32.2% from N7.14 billion generated in H1 2019 to N4.8 billion in H1 2020. Its e-business revenue accounted for 2.1% of its total revenue (N225.1 billion) generated within the period. 

Zenith Bank  – Fourth Position

Zenith Bank generated a total of N8.94 billion from e-business income in H1 2020, a 67.01% decline from N27.1 billion generated in the same period of 2019. Its e-business revenue accounted for 2.6% of the total revenue generated during the period. It should be noted that when compared to other banks, it posted the highest profit after tax of N103.8 billion during the period under review.  

READ: UPDATED: Nigeria’s GDP contracts by 6.10% in Q2 2020, as critical sectors plunge

Access Bank  – Third Position

The largest bank in Nigeria by total assets doubled its e-business revenue from N5.5 billion recorded in H1 2019 to N13.9 billion in 2020. Access Bank recorded the highest year-on-year growth in e-business income as its N13.91 billion was 151.3% higher than the corresponding 2019 earnings.  E-business revenue generated by the bank includes fees and commissions from online purchases and bills payments. 

UBASecond Position

With total e-business income of N17.93 billion, UBA moves to second place. The multinational grew its E-business revenue by 6.35% from N16.86 billion generated in the first half of 2019. E-business revenue accounted for 6% of the total revenue generated during the period (N300.6 billion). 

Apart from the UBA Mobile Banking app, the banking giant boasts of a number of electronic products such as U-Pay which allows customers to make payments at the click of a button in countries where UBA has a presence in Africa, U-Collect, on the other hand, is a consolidated internet payment gateway solution which integrates multiple payment solutions available in Nigeria such as VISA, Verve, Master Card and e-Tranzact. 

READ: Union Bank’s profits increase by 3.6% in nine months  

First Bank – First Position

 First Bank toppled Zenith Bank to the first position, having earned N21.7 billion from e-business between January and June 2020, a marginal decrease of 0.53% compared N21.83 billion recorded in the corresponding period of 2019. Meanwhile, the bank’s e-business revenue had enjoyed consistent growth in the past years, growing by 40.8% between 2018 and 2017, and a 46.3% growth between 2019 and 2018. 

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Despite being one of the oldest banks in the country, First Bank has been at the forefront of the mobile banking revolution. The bank was one of the pioneers of the USSD platform which is used to transfer money via a text messaging application of a mobile phone. 

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The bank also has two mobile banking apps, the FirstMobile which is like other banking apps, and FirstMonie which does not require its customers to have bank accounts to transfer money or make transactions. It also makes use of FirstBank mVisa, which allows consumers to pay for goods and services through FirstMobile by scanning a QR code or by dialing a USSD number. Other apps include; Qr Merchant and First Bank Paypal.  

READ: GTBank revenue for H1, 2020 rises to N225.14 billion

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Stiff Fintech competition 

As earlier stated, the decline could also be attributed to the economic downturn witnessed in the country as a result of the COVID-19 pandemic and the new CBN mandated downward review of bank charges for various transactions.

Commercial banks also face stiff competition from startups are entering into the Fintech space to compete for market share with backing from venture capital and private equity firms. The influx of tech-oriented banks continues to pose a threat to revenue earned by the traditional banks from e-businesses. 

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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.

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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.

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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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Nairametrics | Company Earnings