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Banking Sector

50% of UBA Earnings Comes from African Operations

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UBA House Marina

One of the largest banks in Nigeria and Africa, United Bank for Africa (UBA) Plc has said about 50% of its earnings come from African operations.

Abiola Bawuah, the Executive Director/Chief Executive Officer of UBA Africa, who disclosed this said it was made possible because of the bank’s digital offerings and products that help gain large market shares in key markets in Africa.

Speaking to the press during a hybrid media parley on Thursday, Bawuah explained that while devaluations and rising inflation in Nigeria and other African nations where the bank operates impacted overall performance, subsidiaries remained strong and continue to contribute significantly to the growth and development of trade, infrastructure and finance.

She said, “As of last month, none of our African subsidiaries is making a loss. They have all been turning in profits, this is a testament to the fact that they have navigated successfully and have all found their footing.

Bawuah, a Ghanaian national, who was appointed earlier this year became the first female CEO of UBA Africa, to take the group’s total female directors to eight.

She said, “We need the government to regulate the private sector because the sector is struggling. However, the private sector needs to be strong, and that is where UBA comes in. There have been numerous facility programmes we have come up with for consumers in the corporate sector like the Small and Medium Enterprises, Micro, Small, and Medium Enterprises that are being supported by us.

“It is only in UBA that I know of that you can be an MSME, and once you are faithful to us and you have run the enterprise very well, we are ready to support you, even when you do not have collateral.

“However, Africa must develop the private sector, and when you talk of the private sector, 60 per cent of the private sector in Africa are either SMEs or MSMEs, which would not be able to be developed by the foreign banks, because what they classify as SMEs monetarily is high, and most SMEs in Africa are far below that range.”

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.

Banking Sector

CBN Rate Hikes Raise Borrowing Costs for Banks Seeking FX

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Retail banking

The Central Bank of Nigeria (CBN) has implemented a significant adjustment to its borrowing rates.

The move, which follows the CBN’s recent decision to adjust the asymmetric corridor around the Monetary Policy Rate (MPR), has led to an increase in the cost of borrowing for banks seeking foreign exchange (FX).

This decision comes amid heightened concerns over the Naira’s performance and inflation rates.

According to Bismarck Rewane, Managing Director/CEO of Financial Derivatives Company Limited, the adjustment means that banks now face borrowing costs of nearly 32% from the CBN, a sharp increase from the previous rate of approximately 26%.

This change in borrowing costs is intended to deter banks from relying on the CBN for FX purchases, thereby reducing pressure on the Naira.

Data reveals that in the first five days of July 2024, banks borrowed an unprecedented N5.38 trillion from the CBN, marking a record high.

The increased borrowing costs are expected to reduce this practice, thereby alleviating some of the strain on the Naira.

Despite these efforts, the Naira has continued to struggle. On Tuesday, the Naira depreciated by 3.13% against the US dollar, with the exchange rate falling to N1,548.76.

This decline is attributed to reduced dollar supply and ongoing uncertainty surrounding Nigeria’s foreign reserves.

The black market saw an even sharper drop, with the Naira falling to 1,687 per dollar, reflecting broader concerns about currency stability.

Rewane highlighted that the recent rate hikes are part of a broader strategy by the CBN to manage inflation and stabilize the Naira.

“The increase in borrowing costs is a necessary step to address the carry trade practices where banks use cheap funds from the CBN to buy FX and sell it at higher rates,” he explained.

The CBN’s decision to raise borrowing costs comes amid a backdrop of persistent inflation and rising interest rates.

Over the past three years, the CBN has raised interest rates 12 times, with recent adjustments aimed at managing liquidity and curbing inflation.

As of June 2024, Nigeria’s headline Consumer Price Index (CPI) reached 34.19%, up from 33.95% in May.

The central bank’s policy changes are expected to have mixed effects.

Analysts at FBNQuest anticipate that banks will continue to benefit from the high-interest rate environment, potentially leading to a shift of assets from equities to fixed-income securities as investors seek higher yields.

The CBN remains committed to navigating Nigeria through these challenging economic conditions.

By adjusting borrowing costs and implementing tighter monetary policies, the central bank aims to strike a balance between managing inflation, stabilizing the Naira, and supporting overall economic growth.

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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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