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Banking Sector

Ukraine Bucks Trend as it Ponders Implications of CBDC, Solid Signal of Private Sector Investment

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Central Bank Digital Currency (CBDC)

Recently, the National Bank of Ukraine published its study, “Survey results on the possibility of e-hryvnia implementation.” Perhaps among its most notable elements, it found that a CBDC would be most welcome as a way to better facilitate cashless retail payments, in contrast to many other entities which are looking at the innovation as a way to blunt the disappearance of cash or as a primary method to facilitate cross-border payments.

“In this case, where a number of the respondents came from the retail sector, it makes sense that there is interest, as a CBDC could provide relief from the high cost of payments. Particularly intriguing is that the majority of market participants surveyed said that they would be potentially willing to invest in CBDC infrastructure and, once launched, promotions,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

“This is notable because one of the biggest barriers to a transition toward a CBDC will be the education factor. Getting the populace onboard and utilizing the technology may prove challenging for certain subsections of the population. The fact that private sector participants are willing to step up and offer assistance with promoting the new method is promising,” said Gardner.

In the survey, 73% of respondents believe that e-hryvnia should be implemented using blockchain technology. Also, the survey noted that the most convenient means for retail cashless payments using e-hryvnia would be a bank/company mobile application and a single national mobile application.

“One of the great things about what Ukraine is doing is found in their process. They’re actively engaging with stakeholders from across a wide spectrum of sectors. Bringing in innovators and market leaders to decide how your country can best benefit from a CBDC is something that more bureaucrats should consider. There needs to be open communication between the folks that understand industry, those that understand the technology, and those in charge with regulation and implementation on the government side,” opined Gardner.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

“Beyond the intersection of the public and private sectors, the importance of which can’t be overstated, it is positive to see those surveyed have come to agree that the future of payments is found within the blockchain. Blockchain technologies are really a game changer in finance. They aren’t going away, and those who embrace them will come to excel over the next decade,” Gardner offered.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Zenith Bank Retains Position As Nigeria’s Number One Bank By Tier-1 Capital For Fifteen Consecutive Years In The 2024 Top 1000 World Banks’ Ranking

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For the fifteenth consecutive year, Zenith Bank Plc has retained its position as the Number One Bank in Nigeria by Tier-1 Capital in the 2024 Top 1000 World Banks’ Rankings, published by The Banker Magazine.

This ranking places Zenith Bank Plc as the 565th Bank globally with a Tier-1 Capital of $2.01 billion. The rankings, published in the July 2024 edition of The Banker Magazine of the Financial Times Group, United Kingdom, recognise Zenith Bank’s continued financial strength and stability.

They are based on the 2023 year-end Tier-1 capital of banks globally and remain the primary source for global bank financials used by most international organisations in their assessments of banks.

Tier-1 Capital describes capital adequacy, the core measure of a bank’s financial strength from a regulator’s perspective.

According to the ranking, Tier-1 Capital, as defined by the latest Bank for International Settlements (BIS) guidelines, includes loss-absorbing capital, i.e., common stock, disclosed reserves, retained earnings, and minority interests in the equity of subsidiaries that are less than wholly owned.

A strong Tier-1 capital ratio boosts investor and depositor confidence, indicating the Bank is well-capitalised and financially stable.

Commenting on this achievement, the Group Managing Director/CEO of Zenith Bank Plc, Dame (Dr.) Adaora Umeoji, OON, said, “We are deeply honoured to be recognised as the Number One Bank in Nigeria by Tier-1 Capital for the fifteenth consecutive year. This recognition is a testament to our strategic focus on sustainable growth, innovation, and customer satisfaction. It also emphasises our resilience and strength in navigating the ever-evolving financial landscape. Our dedicated team of professionals has remained steadfast in ensuring that we maintain our position at the forefront of the banking industry.”

She extended her profound and sincere appreciation to the Founder and Chairman, Dr. Jim Ovia, CFR, whose visionary and transformative leadership has played a pivotal role in cultivating a resilient and thriving establishment.

She also expressed her deep appreciation for the board’s insightful governance, the staff’s relentless dedication, and the unwavering loyalty of the bank’s esteemed customers to the Zenith brand.

Zenith Bank’s financial performance for the year was driven by a remarkable triple-digit growth of 125% in gross earnings, from N945.6 billion reported in 2022 to N2.132 trillion in 2023. This growth led to an improved market share in both the retail and corporate segments despite a persistently challenging macroeconomic environment.

The increase in gross earnings was primarily due to growth in interest and non-interest income. Interest income growth was attributed to the increase in the size of risk assets and their effective repricing, while non-interest income was driven by significant trading gains and gains from the revaluation of foreign currencies.

Zenith Bank recently commenced recapitalisation efforts with the conclusion of its Capital Markets Day held on 11th July 2024. It aims to raise the least amount of capital amongst its peers at N230 billion, considering it already maintains a robust capital base of N270.7 billion.

The Bank remains dedicated to supporting the growth of the Nigerian economy and providing its numerous customers with innovative and efficient banking solutions.

Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards, with these latest accolades coming on the heels of several recognitions. These include being recognised as the Number One Bank in Nigeria by Tier-1 Capital for the fourteenth consecutive year in the 2023 Top 1000 World Banks Ranking, published by The Banker Magazine.

The Bank was also awarded the Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards for 2020 and 2022; and Most Sustainable Bank, Nigeria in the International Banker 2024 Banking Awards.
Further recognitions include Best Bank in Nigeria for three consecutive years from 2020 to 2022 in the Global Finance World’s Best Banks Awards and Best Commercial Bank, Nigeria for three consecutive years from 2021 to 2023 in the World Finance Banking Awards.

Additionally, Zenith Bank has been acknowledged as the Best Corporate Governance Bank, Nigeria, in the World Finance Corporate Governance Awards for 2022 and 2023, and ‘Best in Corporate Governance’ Financial Services’ Africa for four consecutive years from 2020 to 2023 by the Ethical Boardroom.

The Bank’s commitment to excellence saw it being named the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands for 2020 and 2021, and Retail Bank of the Year for three consecutive years from 2020 to 2022 at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards.

The Bank also received the accolades of Most Sustainable Bank, Nigeria, in the International Banker 2023 Banking Awards, Best Commercial Bank, Nigeria and Best Innovation in Retail Banking, Nigeria, in the International Banker 2022 Banking Awards. Zenith Bank was named Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.

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Banking Sector

Jaiz Bank Boosts Chairman’s Income to N24m Amidst Strategic Expansion

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Jaiz Bank

Jaiz Bank has announced a 20% increase in its chairman’s annual income to N24 million.

This decision was unveiled in a recent statement filed with the Nigeria Exchange Limited, highlighting the bank’s commitment to rewarding leadership amidst its expansion plans.

The bank, renowned for its pioneering role in non-interest banking in Nigeria since 2012, also approved a remuneration package of N20 million for each non-executive director.

The announcement was made by the bank’s secretary, Mohammed Shehu, highlighting the importance of competitive compensation for board members who provide crucial oversight and strategic guidance.

Shareholders at the Annual General Meeting (AGM) expressed confidence in the board’s leadership by approving the resolution on directors’ fees.

This move aligns with Jaiz Bank’s ongoing efforts to enhance its capital base to N70 billion by the end of 2024.

The bank also announced a dividend of 4 kobo per share, which will be distributed to shareholders on July 16, 2024.

This dividend declaration was welcomed as a testament to the bank’s operational success in a challenging economic climate.

Also, the AGM saw the re-election of Muhammadu Indimi and Muhammad Abdulmutallab as non-executive directors, reaffirming shareholder trust in their leadership capabilities.

Jaiz Bank’s financial performance has been impressive, with a 67% increase in profit before tax, reaching N11.1 billion in 2023.

Gross earnings also rose by 42% to N47.2 billion from the previous year, showcasing the bank’s successful growth strategy.

As Jaiz Bank continues to expand its services, the enhanced remuneration package signals a commitment to maintaining strong governance and leadership, paving the way for future achievements in ethical banking.

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Banking Sector

Nigeria Plans 50% Windfall Tax on Banks’ Currency Profits

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Central Bank of Nigeria (CBN)

Nigerian President Bola Tinubu has announced a one-time 50% tax on windfall profits that banks reaped from currency gains following last year’s naira devaluation.

This decision was part of the government’s strategy to navigate the ongoing cost-of-living crisis.

The naira, which has depreciated by about 70% against the dollar since foreign exchange rules were relaxed in June 2023, allowed banks holding dollar assets to significantly boost their income.

However, the Central Bank of Nigeria had advised lenders to retain these profits as a buffer against potential future losses.

The proposed tax will apply to the 2023 financial year, with non-compliance resulting in hefty fines.

The move has already impacted the NGX Banking Index, which fell by 1.3% as of midday trading in Lagos. Notable declines were seen in FBN Holdings Plc and Zenith Bank Plc, dropping 3.2% and 2.5% respectively.

This initiative mirrors similar actions in Europe, where countries like Italy and Hungary have imposed taxes on banks to address what they view as excessive profits during periods of high inflation and interest rates.

European banks have criticized these measures, warning of potential impacts on economic growth due to constrained lending capabilities.

President Tinubu’s administration believes this tax will help manage Nigeria’s fiscal challenges while addressing social needs.

Lawmakers are expected to support the measure, alongside a proposal to increase government spending by 6.2 trillion naira ($3.8 billion).

While banks have benefited from currency revaluations, many customers, particularly manufacturers with dollar-denominated loans, faced significant losses as they struggled with the weaker naira.

The new tax policy highlights the government’s broader efforts to stabilize the economy and attract foreign investment, aiming to ensure a more equitable distribution of financial gains.

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