Zenith Bank Deputy Managing Director Retires Following New Tenure Limits by CBN
Dr. Adaora Umeoji, the Deputy Managing Director of Zenith Bank Plc, has retired from the bank following the new tenure limits.
The Nigerian financial industry has been thrown into a buzz as the Central Bank of Nigeria (CBN) releases new regulatory requirements for the tenure of Executive Management and Non-executive Directors of deposit money banks (DMB) and financial holding companies (HoldCos).
This move has already had a tangible impact on the industry as Dr. Adaora Umeoji, the Deputy Managing Director of Zenith Bank Plc, has retired from the bank following the new tenure limits.
The CBN released a circular to all banks on February 24, 2023, stating the new regulations for the tenure of Executive Directors (EDs), Deputy Managing Directors (DMDs), and Managing Directors (MDs) of banks. According to the circular, the tenure of these executives shall be in accordance with the terms of their engagement approved by the board of directors of banks, subject to a maximum tenure of 10 years. Additionally, where an executive becomes the MD/CEO of a bank or any other DMB before the end of his or her maximum tenure, the cumulative tenure of such executive shall not exceed 12 years.
The new regulation has led to the retirement of Dr. Adaora Umeoji from the board of Zenith Bank Plc, effective February 24, 2023. Zenith Bank disclosed this in a notification to the Nigerian Exchange Limited that was signed by its Company Secretary/General Counsel, Michael Otu. The bank explained that her retirement followed the expiration of her tenure of office as Deputy Managing Director in line with the CBN circular.
The CBN’s regulatory requirement also stipulates that Non-Executive Directors (NEDs), with the exception of Independent Non-executive Directors (INEDs), shall serve for a maximum period of 12 years in a bank broken into three terms of four years each. Additionally, EDs, DMDs, and MDs who exit from the board of a bank either upon or prior to the expiration of his or her maximum tenure shall serve out a cooling off period of one year before being eligible for appointment as a NED to the board of directors.
The CBN’s move is aimed at strengthening governance practices in the banking industry, and the cumulative tenure limits of EDs/DMDs/MDs and NEDs across the banking industry are 20 years. The banking industry will be keen to see how these new regulations play out in practice and how they will impact the industry’s overall governance structure.
Demola Sogunle Increases Stake in Stanbic IBTC
Dr. Demola Sogunle, the Chief Executive Officer of Stanbic IBTC Holdings Plc has expanded his stake in the bank by 1,521,117 shares.
This was made known in a statement signed by Chidi Okezie, Company Secretary, Stanbic IBTC and made available to investing public.
The bank chief acquired the shares between 21 March and 24 March 2023 at N37.05 a unit. Meaning, he paid a total sum of N56.357 million for the acquisition.
Sogunle held 3.41 million indirect shares before acquiring more shares in Stanbic IBTC as of December 31, 2022. In 2021, he held 2.41 million indirect shares, which he increased to 3.41 million last year.
Sogunle remained the second-largest shareholder in Stanbic IBTC after Ifeoma Esiri, who holds 40.38 million direct shares and 3.11 million indirect shares valued at N1.63 billion as of December 2022.
During the financial period of 2022, Stanbic IBTC reported a gross turnover of N287.53 million, surpassing the N206.64 million generated in the previous year. The financial institution also recorded growth in its net interest income, which increased to N113.11 billion in 2022 from N75.37 billion in 2021.
In addition, Stanbic IBTC closed the year with N80.81 billion in net profit, an improvement on the N56.96 billion profit after tax earned in the corresponding period of 2021.
Stanbic IBTC Holdings’ Gross Earnings Reach a Decade High in 2022 With 131% Growth in Trading Revenue
Stanbic IBTC Holdings reported its highest gross earnings in a decade, aided by a 131% growth in trading revenue in 2022, according to data released by the Nigerian Exchange Group (NGX).
Gross earnings grew by 39.15% to N287.54 billion in 2022 compared to N206.64 billion in 2021, while trading revenue for the period surged to N34.69 billion in 2022 from N13.29 billion in 2021.
The growth in interest income was driven by an increase in the volume of risk assets and growth in average yield due to a higher interest rate environment, analysts at CSL Stockbrokers Limited said in a note.
The bank declared earnings per share of N603 per share in 2022 from N420 per share in 2021, and proposed a final dividend of N2.00 per ordinary share.
Further checks by Investors King showed that the bank’s interest expense rose by 34.62 percent to N39.55 billion in 2022 compared to N29.38 billion in 2021. This was driven by a significant increase of 124 percent in interest generated from savings accounts and a 62.36 percent increase in interest from borrowed funds.
The bank’s fees and commission revenue also grew by 8.77 percent to N96.07 billion in 2022, up from N88.32 billion in 2021. However, its fees and commission expenses decreased by 8.05 percent from N5.44 billion in 2021 to N5.01 billion in 2022.
Despite the profit growth, the bank’s activities are not generating cash as net cash flow from operating activities amounted to N-84.23 billion in 2022.
The bank’s return on equity for the full year period of 2022 increased by 470 basis points to 19.82 percent compared to 15.12 percent in 2021.
Nigeria Raises Interest Rate by 50 Basis Points to 18%
The Central Bank of Nigeria (CBN) led monetary policy committee has raised the nation’s borrowing cost by another 50 basis points following a 500 basis points increase in 2022 to 18%.
The committee attributed its decision to the rising inflation rate and the need to contain price development around expectations of subsidy removal and other energy sources.
“These in the view of members, provides a compelling argument for an upward adjustment of the policy rate, albeit, less aggressively. The Committee, however, noted that the naira redesign and cash withdrawal limit policies have resulted in a sizeable reduction in Currency-Outside-Banks, indicating an expected improvement in the potency of monetary policy tools,” the minutes stated.
Another factor considered was the drop in capital importation and the impact of exchange rate pressure on domestic price levels.
The committee, therefore, called for policies to attract both portfolio and foreign direct investment to Nigeria.
It maintained optimism that, the continued progress made with the RT200 FX programme, Naira-4-dollar and
other policies targeted at attracting diaspora remittances, would continue to help improve accretion to the external reserves and improve liquidity in the foreign exchange market.
Members, however, remained aware of the ongoing challenges associated with the limits imposed on cash withdrawals in the face of frequent downtime in bank electronic transaction channels. The Committee thus called on Other Depository Corporations, online payment platforms, and other stakeholders to ensure that the prevailing incidence of network failures is overcome in the immediate and short term.
This would ensure that the Naira Redesign and Cash Withdrawal Limit Policies lead to an improved in-road of the CBN Cashless program and efficiency of the transmission mechanism of monetary policy.
Members, therefore, agreed to raise Monetary Policy Rate by 50 basis points, with ten members voting to raise the MPR by 50 basis points while one member voted to raise the MPR by 25 basis points and one member voted to hold the MPR. All members voted to keep all other parameters constant.
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