Zenith Bank Plc Annual Report 2021

Plain-text annual report

2021 Group Annual Report  &  Financial Statements 2021 Group Annual Report  &  Financial Statements 1.Directors, Oﬃcers and Professional Advisers42.Results at a Glance/Key Performance Indices53.Group Financial Highlights64.Corporate Proﬁle and Strategy95.Notice of Annual General Meeting206.Founder and Chairman’s Statement227.Chief Executive Oﬃcer’s Review278.Board of Directors329.Directors’ Report4010.Statement of Corporate Responsibility4701Contents11.Corporate Governance Report5012.Report of the Independent Consultant to the Board of Directors on their Appraisal6713.Corporate Responsibility and Sustainable Banking Practices6802Governance & Sustainability14.Statement of Directors’ Responsibilities in Relation to the Financial Statements8415.Report of the Audit Committee8516.Independent Auditor’s Report8617.Consolidated and Separate Statement of Proﬁt or Loss and Other Comprehensive Income9218.Consolidated and Separate Statements of Financial Position9319.Consolidated and Separate Statement of Changes in Equity9420.Consolidated and Separate Statements of Cash Flows9621.Notes to the Consolidated and Separate Financial Statements10003Financials22.Value Added Statement24223.Five Year Financial Summary24424.Share Capital History24825.Forms24904Other National Disclosures201COMPANY SECRETARY Michael Osilama OtuREGISTERED OFFICE Zenith Bank Plc Zenith Heights Plot 84/87, Ajose Adeogun Street, Victoria Island, LagosAUDITOR PricewaterhouseCoopers (PwC) Chartered Accountants Landmark Towers, 5B Water Corporation Road Victoria Island, LagosREGISTRAR AND TRANSFER OFFICE Veritas Registrars Limited (formerly Zenith Registrars Limited) Plot 89 A, Ajose Adeogun Street, Victoria Island, LagosDirectorsJim Ovia, CON.ChairmanProf. Chukuka Enwemeka Non-Executive DirectorMr. Jeﬀrey EfeyiniNon-Executive DirectorProf. Oyewusi Ibidapo-Obe*Non-Executive Director/ IndependentMr. Gabriel UkpehNon-Executive Director/ IndependentEngr. Mustafa BelloNon-Executive Director/ IndependentDr. Al-Mujtaba Abubakar Non-Executive Director/ IndependentDr. Omobola Ibidapo-Obe Ogunfowora** Non-Executive Director/ IndependentMr. Ebenezer Onyeagwu Group Managing Director/CEODame (Dr.) Adaora UmeojiDeputy Managing DirectorMr. Ahmed Umar Shuaib Executive DirectorDr. Temitope Fasoranti Executive DirectorMr. Dennis Olisa Executive DirectorMr. Henry OrohExecutive Director* Deceased on 3 January 2021** Appointed to the Board eﬀective 30 June 20214Directors, Oﬃcers and Professional AdvisersFinancial HighlightsResults at a Glance/ Key Performance Indices5Zenith Bank Plc Annual Report December 31, 2021Strategic ReportIn millions of Naira 31-Dec-2131-Dec-20% Change Income statement HighlightsInterest and similar income 427,597 420,813 2%Net Interest income 320,804 299,682 7%Operating Income 629,839 551,427 14%Operating expenses(289,533)(256,032)13%Profit before tax 280,374 255,861 10%Profit after tax 244,558 230,565 6%Earnings Per Share (N) 7.78 7.34 6%Balance sheet HighlightsGross loans and advances 3,501,878 2,919,342 20%Customers' deposits 6,472,054 5,339,911 21%Total assets 9,447,843 8,481,273 11%Shareholders' fund 1,279,662 1,117,473 15%Key ratios Return on average equity (ROAE)20.4%22.4%-9%Return on average assets (ROAA)2.7%3.1%-12%Net Interest Margin (NIM)6.7%7.9%-15%Cost of funds1.5%2.1%-28%Cost of risk1.9%1.5%29%Cost-to-income50.8%50.0%2%Liquidity ratio71.6%66.2%8%Loan to deposit ratio54.1%54.7%-1%Capital adequacy ratio (CAR)21%23%-9%Non-performing loans4.19%4.29%-2%(cid:10)(cid:15)(cid:10)(cid:11)(cid:10)(cid:10)(cid:11)(cid:15)(cid:10)(cid:12)(cid:10)(cid:10)(cid:12)(cid:15)(cid:10)(cid:13)(cid:10)(cid:10)(cid:12)(cid:10)(cid:11)(cid:17)(cid:12)(cid:10)(cid:11)(cid:18)(cid:12)(cid:10)(cid:11)(cid:19)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:11)(cid:20)(cid:28)(cid:28)(cid:12)(cid:13)(cid:12)(cid:12)(cid:14)(cid:13)(cid:12)(cid:15)(cid:16)(cid:12)(cid:18)(cid:10)(cid:31)(cid:53)(cid:51)(cid:43)(cid:46)(cid:55)(cid:1)(cid:39)(cid:42)(cid:43)(cid:51)(cid:53)(cid:42)(cid:1)(cid:55)(cid:38)(cid:58)(cid:1)(cid:7)(cid:25)(cid:53)(cid:51)(cid:56)(cid:52)(cid:1)(cid:4)(cid:29)(cid:3)(cid:39)(cid:50)(cid:5)(cid:31)(cid:53)(cid:51)(cid:43)(cid:46)(cid:55)(cid:1)(cid:39)(cid:10)(cid:11)(cid:6)(cid:10)(cid:10)(cid:10)(cid:12)(cid:6)(cid:10)(cid:10)(cid:10)(cid:13)(cid:6)(cid:10)(cid:10)(cid:10)(cid:14)(cid:6)(cid:10)(cid:10)(cid:10)(cid:15)(cid:6)(cid:10)(cid:10)(cid:10)(cid:16)(cid:6)(cid:10)(cid:10)(cid:10)(cid:17)(cid:6)(cid:10)(cid:10)(cid:10)(cid:12)(cid:10)(cid:11)(cid:17)(cid:12)(cid:10)(cid:11)(cid:18)(cid:12)(cid:10)(cid:11)(cid:19)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:11)(cid:13)(cid:6)(cid:14)(cid:13)(cid:18)(cid:13)(cid:6)(cid:16)(cid:19)(cid:10)(cid:14)(cid:6)(cid:12)(cid:16)(cid:12)(cid:15)(cid:6)(cid:13)(cid:14)(cid:10)(cid:16)(cid:6)(cid:14)(cid:17)(cid:12)(cid:34)(cid:51)(cid:55)(cid:38)(cid:48)(cid:1)(cid:41)(cid:42)(cid:52)(cid:51)(cid:54)(cid:46)(cid:55)(cid:54)(cid:1)(cid:7)(cid:25)(cid:53)(cid:51)(cid:56)(cid:52)(cid:1)(cid:4)(cid:29)(cid:3)(cid:39)(cid:50)(cid:5)(cid:10)(cid:11)(cid:6)(cid:10)(cid:10)(cid:10)(cid:12)(cid:6)(cid:10)(cid:10)(cid:10)(cid:13)(cid:6)(cid:10)(cid:10)(cid:10)(cid:14)(cid:6)(cid:10)(cid:10)(cid:10)(cid:15)(cid:6)(cid:10)(cid:10)(cid:10)(cid:16)(cid:6)(cid:10)(cid:10)(cid:10)(cid:12)(cid:10)(cid:11)(cid:16)(cid:12)(cid:10)(cid:11)(cid:17)(cid:12)(cid:10)(cid:11)(cid:18)(cid:12)(cid:10)(cid:11)(cid:19)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:6)(cid:19)(cid:18)(cid:14)(cid:13)(cid:6)(cid:14)(cid:13)(cid:18)(cid:13)(cid:6)(cid:16)(cid:19)(cid:10)(cid:14)(cid:6)(cid:12)(cid:16)(cid:12)(cid:15)(cid:6)(cid:13)(cid:14)(cid:10)(cid:34)(cid:51)(cid:55)(cid:38)(cid:48)(cid:1)(cid:41)(cid:42)(cid:52)(cid:51)(cid:54)(cid:46)(cid:55)(cid:54)(cid:1)(cid:7)(cid:25)(cid:53)(cid:51)(cid:56)(cid:52)(cid:1)(cid:4)(cid:29)(cid:3)(cid:39)(cid:50)(cid:5)(cid:10)(cid:12)(cid:6)(cid:10)(cid:10)(cid:10)(cid:14)(cid:6)(cid:10)(cid:10)(cid:10)(cid:16)(cid:6)(cid:10)(cid:10)(cid:10)(cid:18)(cid:6)(cid:10)(cid:10)(cid:10)(cid:11)(cid:10)(cid:6)(cid:10)(cid:10)(cid:10)(cid:12)(cid:10)(cid:11)(cid:17)(cid:12)(cid:10)(cid:11)(cid:18)(cid:12)(cid:10)(cid:11)(cid:19)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:11)(cid:15)(cid:6)(cid:15)(cid:19)(cid:15)(cid:15)(cid:6)(cid:19)(cid:15)(cid:16)(cid:16)(cid:6)(cid:13)(cid:14)(cid:17)(cid:18)(cid:6)(cid:14)(cid:18)(cid:11)(cid:19)(cid:6)(cid:14)(cid:14)(cid:18)(cid:8)(cid:14)(cid:18)(cid:9)(cid:12)(cid:1)(cid:9)(cid:17)(cid:17)(cid:11)(cid:18)(cid:17)(cid:1)(cid:22)(cid:4)(cid:16)(cid:14)(cid:19)(cid:15)(cid:1)(cid:23)(cid:5)(cid:25)(cid:10)(cid:13)(cid:24)(cid:30)(cid:46)(cid:51)(cid:33)(cid:43)(cid:1)(cid:36)(cid:37)(cid:47)(cid:46)(cid:50)(cid:41)(cid:51)(cid:50)(cid:1)(cid:39)(cid:49)(cid:37)(cid:54)(cid:1)(cid:34)(cid:56)(cid:1)(cid:10)(cid:9)(cid:2)(cid:1)(cid:3)(cid:25)(cid:9)(cid:5)(cid:9)(cid:11)(cid:10)(cid:34)(cid:45)(cid:4)(cid:1)(cid:49)(cid:37)(cid:38)(cid:43)(cid:37)(cid:35)(cid:51)(cid:41)(cid:45)(cid:39)(cid:1)(cid:47)(cid:52)(cid:34)(cid:43)(cid:41)(cid:35)(cid:1)(cid:35)(cid:46)(cid:45)(cid:38)(cid:41)(cid:36)(cid:37)(cid:45)(cid:35)(cid:37)(cid:1)(cid:41)(cid:45)(cid:1)(cid:51)(cid:40)(cid:37)(cid:1)(cid:32)(cid:37)(cid:45)(cid:41)(cid:51)(cid:40)(cid:1)(cid:34)(cid:49)(cid:33)(cid:45)(cid:36)(cid:7)(cid:1)(cid:30)(cid:40)(cid:37)(cid:1)(cid:38)(cid:52)(cid:45)(cid:36)(cid:41)(cid:45)(cid:39)(cid:1)(cid:44)(cid:41)(cid:55)(cid:1)(cid:54)(cid:33)(cid:50)(cid:1)(cid:33)(cid:43)(cid:50)(cid:46)(cid:1)(cid:49)(cid:37)(cid:34)(cid:33)(cid:43)(cid:33)(cid:45)(cid:35)(cid:37)(cid:36)(cid:1)(cid:51)(cid:46)(cid:54)(cid:33)(cid:49)(cid:36)(cid:50)(cid:1)(cid:35)(cid:40)(cid:37)(cid:33)(cid:47)(cid:37)(cid:49)(cid:1)(cid:49)(cid:37)(cid:51)(cid:33)(cid:41)(cid:43)(cid:1)(cid:9)(cid:8)(cid:2)(cid:1)(cid:39)(cid:49)(cid:46)(cid:54)(cid:51)(cid:40)(cid:1)(cid:41)(cid:45)(cid:1)(cid:27)(cid:20)(cid:30)(cid:1)(cid:41)(cid:50)(cid:1)(cid:33)(cid:51)(cid:51)(cid:49)(cid:41)(cid:34)(cid:52)(cid:51)(cid:33)(cid:34)(cid:43)(cid:37)(cid:1)(cid:51)(cid:46)(cid:1)(cid:51)(cid:40)(cid:37)(cid:1)(cid:39)(cid:49)(cid:46)(cid:54)(cid:51)(cid:40)(cid:1)(cid:41)(cid:45)(cid:1)(cid:34)(cid:46)(cid:51)(cid:40)(cid:1)(cid:41)(cid:45)(cid:51)(cid:37)(cid:49)(cid:37)(cid:50)(cid:51)(cid:1)(cid:33)(cid:45)(cid:36)(cid:1)(cid:45)(cid:46)(cid:45)(cid:6)(cid:41)(cid:45)(cid:51)(cid:37)(cid:49)(cid:37)(cid:50)(cid:51)(cid:1)(cid:41)(cid:45)(cid:35)(cid:46)(cid:44)(cid:37)(cid:1)(cid:33)(cid:50)(cid:1)(cid:54)(cid:37)(cid:43)(cid:43)(cid:1)(cid:33)(cid:50)(cid:1)(cid:49)(cid:37)(cid:36)(cid:52)(cid:35)(cid:51)(cid:41)(cid:46)(cid:45)(cid:1)(cid:41)(cid:45)(cid:1)(cid:38)(cid:52)(cid:45)(cid:36)(cid:41)(cid:45)(cid:39)(cid:1)(cid:35)(cid:46)(cid:50)(cid:51)(cid:50)(cid:7)(cid:1)(cid:30)(cid:46)(cid:51)(cid:33)(cid:43)(cid:1)(cid:33)(cid:50)(cid:50)(cid:37)(cid:51)(cid:50)(cid:1)(cid:39)(cid:49)(cid:37)(cid:54)(cid:1)(cid:34)(cid:56)(cid:1)(cid:9)(cid:9)(cid:2)(cid:1)(cid:3)(cid:25)(cid:17)(cid:14)(cid:15)(cid:34)(cid:45)(cid:4)(cid:1)(cid:51)(cid:46)(cid:1)(cid:35)(cid:43)(cid:46)(cid:50)(cid:37)(cid:1)(cid:33)(cid:51)(cid:1)(cid:25)(cid:17)(cid:7)(cid:12)(cid:51)(cid:49)(cid:45)(cid:1)(cid:37)(cid:45)(cid:40)(cid:33)(cid:45)(cid:35)(cid:41)(cid:45)(cid:39)(cid:1)(cid:46)(cid:52)(cid:49)(cid:1)(cid:34)(cid:33)(cid:43)(cid:33)(cid:45)(cid:35)(cid:37)(cid:1)(cid:50)(cid:40)(cid:37)(cid:37)(cid:51)(cid:7)(cid:1)(cid:10)(cid:15)(cid:10)(cid:11)(cid:10)(cid:10)(cid:11)(cid:15)(cid:10)(cid:12)(cid:10)(cid:10)(cid:12)(cid:15)(cid:10)(cid:12)(cid:10)(cid:11)(cid:17)(cid:12)(cid:10)(cid:11)(cid:18)(cid:12)(cid:10)(cid:11)(cid:19)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:11)(cid:11)(cid:17)(cid:14)(cid:11)(cid:19)(cid:13)(cid:12)(cid:10)(cid:19)(cid:12)(cid:13)(cid:11)(cid:12)(cid:14)(cid:15)(cid:31)(cid:53)(cid:51)(cid:43)(cid:46)(cid:55)(cid:1)(cid:38)(cid:43)(cid:55)(cid:42)(cid:53)(cid:1)(cid:55)(cid:38)(cid:58)(cid:1)(cid:7)(cid:25)(cid:53)(cid:51)(cid:56)(cid:52)(cid:1)(cid:4)(cid:29)(cid:3)(cid:39)(cid:50)(cid:5)(cid:31)(cid:53)(cid:51)(cid:43)(cid:46)(cid:55)(cid:1)(cid:38)(cid:43)(cid:27)(cid:49)(cid:46)(cid:38)(cid:41)(cid:51)(cid:1)(cid:33)(cid:38)(cid:51)(cid:37)(cid:49)(cid:1)(cid:51)(cid:33)(cid:55)(cid:1)(cid:41)(cid:45)(cid:35)(cid:49)(cid:37)(cid:33)(cid:50)(cid:37)(cid:36)(cid:1)(cid:34)(cid:56)(cid:1)(cid:14)(cid:2)(cid:1)(cid:3)(cid:25)(cid:9)(cid:12)(cid:34)(cid:45)(cid:4)(cid:1)(cid:36)(cid:49)(cid:41)(cid:53)(cid:37)(cid:45)(cid:1)(cid:34)(cid:56)(cid:1)(cid:41)(cid:44)(cid:47)(cid:49)(cid:46)(cid:53)(cid:37)(cid:36)(cid:1)(cid:47)(cid:49)(cid:46)(cid:38)(cid:41)(cid:51)(cid:1)(cid:34)(cid:37)(cid:38)(cid:46)(cid:49)(cid:37)(cid:1)(cid:51)(cid:33)(cid:55)(cid:1)(cid:36)(cid:37)(cid:50)(cid:47)(cid:41)(cid:51)(cid:37)(cid:1)(cid:39)(cid:49)(cid:46)(cid:54)(cid:51)(cid:40)(cid:1)(cid:41)(cid:45)(cid:1)(cid:41)(cid:45)(cid:35)(cid:46)(cid:44)(cid:37)(cid:1)(cid:51)(cid:33)(cid:55)(cid:1)(cid:37)(cid:55)(cid:47)(cid:37)(cid:45)(cid:50)(cid:37)(cid:1)(cid:44)(cid:33)(cid:45)(cid:33)(cid:39)(cid:37)(cid:44)(cid:37)(cid:45)(cid:51)(cid:1)(cid:50)(cid:51)(cid:49)(cid:33)(cid:51)(cid:37)(cid:39)(cid:56)(cid:7)(cid:1)6Group Financial Highlights(cid:1)(cid:8)(cid:6)(cid:8)(cid:8)(cid:9)(cid:6)(cid:8)(cid:8)(cid:10)(cid:6)(cid:8)(cid:8)(cid:12)(cid:10)(cid:11)(cid:15)(cid:12)(cid:10)(cid:11)(cid:16)(cid:12)(cid:10)(cid:11)(cid:17)(cid:12)(cid:10)(cid:11)(cid:18)(cid:12)(cid:10)(cid:11)(cid:19)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:11)(cid:11)(cid:8)(cid:18)(cid:10)(cid:12)(cid:8)(cid:10)(cid:12)(cid:12)(cid:8)(cid:17)(cid:10)(cid:12)(cid:8)(cid:18)(cid:10)(cid:12)(cid:8)(cid:18)(cid:10)(cid:13)(cid:8)(cid:10)(cid:10)(cid:13)(cid:8)(cid:11)(cid:10)(cid:21)(cid:35)(cid:44)(cid:35)(cid:31)(cid:32)(cid:37)(cid:31)(cid:1)(cid:4)(cid:25)(cid:5)(cid:21)(cid:1)(cid:10)(cid:12)(cid:10)(cid:10)(cid:14)(cid:10)(cid:10)(cid:16)(cid:10)(cid:10)(cid:18)(cid:10)(cid:10)(cid:11)(cid:10)(cid:10)(cid:10)(cid:11)(cid:12)(cid:10)(cid:10)(cid:11)(cid:14)(cid:10)(cid:10)(cid:12)(cid:10)(cid:11)(cid:17)(cid:12)(cid:10)(cid:11)(cid:18)(cid:12)(cid:10)(cid:11)(cid:19)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:10)(cid:12)(cid:11)(cid:18)(cid:11)(cid:12)(cid:18)(cid:11)(cid:16)(cid:19)(cid:14)(cid:12)(cid:11)(cid:6)(cid:11)(cid:11)(cid:17)(cid:11)(cid:6)(cid:12)(cid:18)(cid:10)(cid:28)(cid:38)(cid:42)(cid:29)(cid:36)(cid:1)(cid:41)(cid:34)(cid:29)(cid:40)(cid:32)(cid:34)(cid:38)(cid:36)(cid:31)(cid:32)(cid:40)(cid:41)(cid:3)(cid:1)(cid:33)(cid:43)(cid:37)(cid:31)(cid:1)(cid:7)(cid:23)(cid:40)(cid:38)(cid:43)(cid:39)(cid:1)(cid:4)(cid:25)(cid:3)(cid:30)(cid:37)(cid:5)(cid:28)(cid:38)(cid:42)(cid:29)(cid:36)(cid:1)(cid:41)(cid:34)(cid:29)(cid:40)(cid:32)(cid:34)(cid:38)(cid:36)(cid:31)(cid:32)(cid:40)(cid:41)(cid:3)(cid:1)(cid:33)(cid:43)(cid:37)(cid:31)(cid:1)(cid:7)(cid:23)(cid:40)(cid:38)(cid:43)(cid:39)(cid:1)(cid:4)(cid:25)(cid:3)(cid:30)(cid:37)(cid:5)(cid:1)(cid:27)(cid:37)(cid:30)(cid:46)(cid:34)(cid:37)(cid:43)(cid:40)(cid:33)(cid:34)(cid:46)(cid:47)(cid:54)(cid:1)(cid:35)(cid:49)(cid:42)(cid:33)(cid:47)(cid:1)(cid:36)(cid:46)(cid:34)(cid:51)(cid:1)(cid:53)(cid:34)(cid:30)(cid:46)(cid:6)(cid:43)(cid:42)(cid:6)(cid:53)(cid:34)(cid:30)(cid:46)(cid:1)(cid:31)(cid:53)(cid:1)(cid:9)(cid:13)(cid:2)(cid:1)(cid:48)(cid:43)(cid:1)(cid:25)(cid:9)(cid:5)(cid:10)(cid:16)(cid:8)(cid:31)(cid:42)(cid:1)(cid:44)(cid:46)(cid:43)(cid:50)(cid:38)(cid:33)(cid:38)(cid:42)(cid:36)(cid:1)(cid:30)(cid:33)(cid:34)(cid:45)(cid:49)(cid:30)(cid:48)(cid:34)(cid:1)(cid:31)(cid:49)(cid:35)(cid:35)(cid:34)(cid:46)(cid:1)(cid:35)(cid:43)(cid:46)(cid:1)(cid:31)(cid:49)(cid:47)(cid:38)(cid:42)(cid:34)(cid:47)(cid:47)(cid:1)(cid:34)(cid:52)(cid:44)(cid:30)(cid:42)(cid:47)(cid:38)(cid:43)(cid:42)(cid:7)(cid:1)(cid:21)(cid:43)(cid:42)(cid:47)(cid:38)(cid:47)(cid:48)(cid:34)(cid:42)(cid:48)(cid:1)(cid:30)(cid:42)(cid:33)(cid:1)(cid:36)(cid:46)(cid:43)(cid:51)(cid:38)(cid:42)(cid:36)(cid:1)(cid:33)(cid:38)(cid:50)(cid:38)(cid:33)(cid:34)(cid:42)(cid:33)(cid:1)(cid:44)(cid:30)(cid:53)(cid:43)(cid:49)(cid:48)(cid:1)(cid:38)(cid:42)(cid:1)(cid:48)(cid:37)(cid:34)(cid:1)(cid:40)(cid:30)(cid:47)(cid:48)(cid:1)(cid:15)(cid:1)(cid:53)(cid:34)(cid:30)(cid:46)(cid:47)(cid:7)(cid:1)(cid:28)(cid:37)(cid:34)(cid:1)(cid:44)(cid:30)(cid:53)(cid:43)(cid:49)(cid:48)(cid:1)(cid:38)(cid:42)(cid:32)(cid:46)(cid:34)(cid:30)(cid:47)(cid:34)(cid:33)(cid:1)(cid:31)(cid:53)(cid:1)(cid:10)(cid:7)(cid:13)(cid:2)(cid:1)(cid:53)(cid:34)(cid:30)(cid:46)(cid:6)(cid:43)(cid:42)(cid:6)(cid:53)(cid:34)(cid:30)(cid:46)(cid:7)(cid:1)(cid:29)(cid:38)(cid:48)(cid:37)(cid:1)(cid:48)(cid:37)(cid:38)(cid:47)(cid:1)(cid:44)(cid:46)(cid:43)(cid:44)(cid:43)(cid:47)(cid:34)(cid:33)(cid:1)(cid:33)(cid:38)(cid:50)(cid:38)(cid:33)(cid:34)(cid:42)(cid:33)(cid:1)(cid:51)(cid:34)(cid:1)(cid:30)(cid:46)(cid:34)(cid:1)(cid:46)(cid:34)(cid:32)(cid:43)(cid:46)(cid:33)(cid:38)(cid:42)(cid:36)(cid:1)(cid:30)(cid:1)(cid:33)(cid:38)(cid:50)(cid:38)(cid:33)(cid:34)(cid:42)(cid:33)(cid:1)(cid:53)(cid:38)(cid:34)(cid:40)(cid:33)(cid:1)(cid:43)(cid:35)(cid:1)(cid:9)(cid:10)(cid:7)(cid:12)(cid:2)(cid:1)(cid:3)(cid:10)(cid:8)(cid:10)(cid:8)(cid:18)(cid:1)(cid:9)(cid:10)(cid:7)(cid:9)(cid:2)(cid:4)(cid:7)(cid:1)(cid:26)(cid:34)(cid:48)(cid:49)(cid:46)(cid:42)(cid:1)(cid:43)(cid:42)(cid:1)(cid:19)(cid:50)(cid:34)(cid:46)(cid:30)(cid:36)(cid:34)(cid:1)(cid:22)(cid:45)(cid:49)(cid:38)(cid:48)(cid:53)(cid:1)(cid:3)(cid:26)(cid:43)(cid:19)(cid:22)(cid:4)(cid:1)(cid:30)(cid:42)(cid:33)(cid:1)(cid:26)(cid:34)(cid:48)(cid:49)(cid:46)(cid:42)(cid:1)(cid:43)(cid:42)(cid:1)(cid:19)(cid:50)(cid:34)(cid:46)(cid:30)(cid:36)(cid:34)(cid:1)(cid:19)(cid:47)(cid:47)(cid:34)(cid:48)(cid:1)(cid:3)(cid:26)(cid:43)(cid:19)(cid:19)(cid:4)(cid:1)(cid:33)(cid:46)(cid:43)(cid:44)(cid:44)(cid:34)(cid:33)(cid:1)(cid:53)(cid:34)(cid:30)(cid:46)(cid:6)(cid:43)(cid:42)(cid:6)(cid:53)(cid:34)(cid:30)(cid:46)(cid:1)(cid:43)(cid:42)(cid:1)(cid:48)(cid:37)(cid:34)(cid:1)(cid:31)(cid:30)(cid:32)(cid:39)(cid:1)(cid:43)(cid:35)(cid:1)(cid:38)(cid:42)(cid:32)(cid:46)(cid:34)(cid:30)(cid:47)(cid:34)(cid:33)(cid:1)(cid:47)(cid:37)(cid:30)(cid:46)(cid:34)(cid:37)(cid:43)(cid:40)(cid:33)(cid:34)(cid:46)(cid:47)(cid:54)(cid:1)(cid:35)(cid:49)(cid:42)(cid:33)(cid:47)(cid:1)(cid:30)(cid:42)(cid:33)(cid:1)(cid:48)(cid:43)(cid:48)(cid:30)(cid:40)(cid:1)(cid:30)(cid:47)(cid:47)(cid:34)(cid:48)(cid:47)(cid:1)(cid:46)(cid:34)(cid:47)(cid:44)(cid:34)(cid:32)(cid:48)(cid:38)(cid:50)(cid:34)(cid:40)(cid:53)(cid:7)(cid:1)(cid:1)(cid:22)(cid:35)(cid:35)(cid:34)(cid:32)(cid:48)(cid:38)(cid:50)(cid:34)(cid:1)(cid:35)(cid:49)(cid:42)(cid:33)(cid:38)(cid:42)(cid:36)(cid:1)(cid:32)(cid:43)(cid:47)(cid:48)(cid:1)(cid:41)(cid:30)(cid:42)(cid:30)(cid:36)(cid:34)(cid:41)(cid:34)(cid:42)(cid:48)(cid:1)(cid:36)(cid:38)(cid:50)(cid:38)(cid:42)(cid:36)(cid:1)(cid:46)(cid:38)(cid:47)(cid:34)(cid:1)(cid:48)(cid:43)(cid:1)(cid:46)(cid:34)(cid:33)(cid:49)(cid:32)(cid:48)(cid:38)(cid:43)(cid:42)(cid:1)(cid:38)(cid:42)(cid:1)(cid:38)(cid:42)(cid:48)(cid:34)(cid:46)(cid:34)(cid:47)(cid:48)(cid:1)(cid:34)(cid:52)(cid:44)(cid:34)(cid:42)(cid:47)(cid:34)(cid:1)(cid:31)(cid:53)(cid:1)(cid:1)(cid:9)(cid:10)(cid:2)(cid:1)(cid:33)(cid:34)(cid:47)(cid:44)(cid:38)(cid:48)(cid:34)(cid:1)(cid:47)(cid:38)(cid:36)(cid:42)(cid:38)(cid:35)(cid:38)(cid:32)(cid:30)(cid:42)(cid:48)(cid:1)(cid:36)(cid:46)(cid:43)(cid:51)(cid:48)(cid:37)(cid:1)(cid:38)(cid:42)(cid:1)(cid:48)(cid:37)(cid:34)(cid:1)(cid:23)(cid:46)(cid:43)(cid:49)(cid:44)(cid:54)(cid:47)(cid:1)(cid:33)(cid:34)(cid:44)(cid:43)(cid:47)(cid:38)(cid:48)(cid:1)(cid:31)(cid:30)(cid:47)(cid:34)(cid:1)(cid:31)(cid:53)(cid:1)(cid:10)(cid:9)(cid:2)(cid:1)(cid:3)(cid:25)(cid:9)(cid:5)(cid:9)(cid:11)(cid:10)(cid:31)(cid:42)(cid:4)(cid:1)(cid:5)(cid:4)(cid:2)(cid:3)(cid:5)(cid:4)(cid:2)(cid:2)(cid:8)(cid:7)(cid:8)(cid:8)(cid:2)(cid:9)(cid:8)(cid:7)(cid:8)(cid:8)(cid:2)(cid:10)(cid:8)(cid:7)(cid:8)(cid:8)(cid:2)(cid:11)(cid:8)(cid:7)(cid:8)(cid:8)(cid:2)(cid:10)(cid:8)(cid:9)(cid:15)(cid:10)(cid:8)(cid:9)(cid:16)(cid:10)(cid:8)(cid:9)(cid:17)(cid:10)(cid:8)(cid:10)(cid:8)(cid:10)(cid:8)(cid:10)(cid:9)(cid:12)(cid:12)(cid:8)(cid:19)(cid:10)(cid:2)(cid:12)(cid:13)(cid:8)(cid:18)(cid:10)(cid:2)(cid:12)(cid:13)(cid:8)(cid:18)(cid:10)(cid:2)(cid:12)(cid:12)(cid:8)(cid:14)(cid:10)(cid:2)(cid:12)(cid:10)(cid:8)(cid:14)(cid:10)(cid:2)(cid:13)(cid:8)(cid:14)(cid:10)(cid:2)(cid:13)(cid:8)(cid:13)(cid:10)(cid:2)(cid:13)(cid:8)(cid:14)(cid:10)(cid:2)(cid:13)(cid:8)(cid:11)(cid:10)(cid:2)(cid:12)(cid:8)(cid:17)(cid:10)(cid:2)(cid:27)(cid:26)(cid:20)(cid:22)(cid:9)(cid:27)(cid:26)(cid:20)(cid:20)(cid:27)(cid:26)(cid:20)(cid:22)(cid:27)(cid:26)(cid:20)(cid:20)(cid:1)(cid:21)(cid:49)(cid:46)(cid:46)(cid:34)(cid:42)(cid:48)(cid:1)(cid:30)(cid:32)(cid:32)(cid:43)(cid:49)(cid:42)(cid:48)(cid:47)(cid:9)(cid:11)(cid:2)(cid:27)(cid:30)(cid:50)(cid:38)(cid:42)(cid:36)(cid:47)(cid:9)(cid:14)(cid:2)(cid:28)(cid:38)(cid:41)(cid:34)(cid:1)(cid:33)(cid:34)(cid:44)(cid:43)(cid:47)(cid:38)(cid:48)(cid:47)(cid:10)(cid:15)(cid:2)(cid:20)(cid:43)(cid:46)(cid:46)(cid:43)(cid:51)(cid:34)(cid:33)(cid:1)(cid:35)(cid:49)(cid:42)(cid:33)(cid:47)(cid:1)(cid:30)(cid:42)(cid:33)(cid:1)(cid:40)(cid:34)(cid:30)(cid:47)(cid:34)(cid:47)(cid:12)(cid:12)(cid:2)(cid:24)(cid:37)(cid:42)(cid:32)(cid:40)(cid:32)(cid:41)(cid:42)(cid:1)(cid:32)(cid:45)(cid:39)(cid:32)(cid:37)(cid:41)(cid:32)(cid:1)(cid:12)(cid:10)(cid:12)(cid:11)(cid:21)(cid:49)(cid:46)(cid:46)(cid:34)(cid:42)(cid:48)(cid:1)(cid:30)(cid:32)(cid:32)(cid:43)(cid:49)(cid:42)(cid:48)(cid:47)(cid:10)(cid:13)(cid:2)(cid:27)(cid:30)(cid:50)(cid:38)(cid:42)(cid:36)(cid:47)(cid:9)(cid:16)(cid:2)(cid:28)(cid:38)(cid:41)(cid:34)(cid:1)(cid:33)(cid:34)(cid:44)(cid:43)(cid:47)(cid:38)(cid:48)(cid:47)(cid:10)(cid:12)(cid:2)(cid:20)(cid:43)(cid:46)(cid:46)(cid:43)(cid:51)(cid:34)(cid:33)(cid:1)(cid:35)(cid:49)(cid:42)(cid:33)(cid:47)(cid:1)(cid:30)(cid:42)(cid:33)(cid:1)(cid:40)(cid:34)(cid:30)(cid:47)(cid:34)(cid:47)(cid:11)(cid:11)(cid:2)(cid:24)(cid:42)(cid:48)(cid:34)(cid:46)(cid:34)(cid:47)(cid:48)(cid:1)(cid:34)(cid:52)(cid:44)(cid:34)(cid:42)(cid:47)(cid:34)(cid:1)(cid:10)(cid:8)(cid:10)(cid:8)(cid:1)(cid:1)(cid:1)(cid:12)(cid:10)(cid:12)(cid:11)(cid:1)(cid:12)(cid:10)(cid:12)(cid:10)(cid:1)7Strategic ReportNigeriaGambiaGhanaSierra LeoneUnited KingdomDubaiChinaSubsidiariesRep OﬃcesZenith Bank Plc. (Parent) Established: 1990Branches: 3932021 FYE PBT: N257.2BnTotal deposits: N5,169BnTotal assets: N7,872BnROE: 24%Staﬀ strength: 6,298Sierra LeoneEstablished: 2008Zenith ownership: 99.99%Branches: 72021 FYE PBT: N2.6BnTotal deposits: N26BnTotal assets: N34BnROE: 31%Staﬀ strength: 149GambiaEstablished: 2009Zenith ownership: 99.96% Branches: 72021 FYE PBT: N1.3BnTotal deposits: N24BnTotal assets: N32BnROE: 16%Staﬀ strength: 136GhanaEstablished: 2005Zenith ownership: 99.42%Branches: 302021 FYE PBT: N23.4BnTotal deposits: N448BnTotal assets: N622BnROE: 15%Staﬀ strength: 704United KingdomEstablished 2007Zenith ownership: 100% Branches: 22021 FYE PBT: N4.9BnTotal deposits: N1,097BnTotal assets: N1,219BnROE: 4%Staﬀ strength: 117UAEBranch of Zenith UKEstablished 20161 branchZenith Pension Established: 2005Branches: 2Zenith ownership: 99%2021 FYE PBT: N8.6BnCustody assets: N5,568BnTotal assets: N27BnROE: 27%Staﬀ strength: 107ChinaRepresentative OﬃceEstablished 2011Zenith Nominee Established: 2018Branches: 1Zenith ownership: 99%2021 FYE PBT: N176MCustody assets: N618BnTotal assets: N2.1BnROE: 7%Staﬀ strength: 7The Bank and its Subsidiaries8Group Financial HighlightsINTRODUCTIONZenith Bank Plc was named the best Commercial Bank in Nigeria in the World Finance Banking Awards 2021 (World Finance Magazine, July 2021).Zenith Bank is an international bank with operations in the United Kingdom, United Arab Emirates and three other West African countries apart from Nigeria, namely, Ghana, Sierra Leone, and Gambia. In Nigeria we have a strong franchise and reputation and are either the top or one of the leaders in key ﬁnancial variables such as customer deposits, total assets, earnings, and proﬁtability.Within thirty-one years of its existence, Zenith Bank has demonstrated its resilience irrespective of the business/economic cycle and witnessed growth in virtually all areas. Its growth is driven principally by strategic business focus and a conservative business model. The group has a stable and experienced management team that is well positioned for strong execution, leading to signiﬁcant market share opportunities. The combined intellectual capital and dedication of the staﬀ, Management and Board have shaped Zenith Bank into the world-class institution that it is today.Over the years the Zenith Bank brand has become synonymous with leadership in the use of Information and Communication Technology (ICT) in banking and general innovation in the Nigerian banking industry.The Bank has eﬃciently deployed its competitive edge of excellent customer services, size, brand name, branch network and customer reach, stable management as well as motivated workforce, strong capital and liquidity base in order to eﬀectively compete in the Nigerian banking landscape. Today, Zenith Bank is easily associated with the following attributes in the Nigerian banking industry:9Zenith Bank Plc Annual Report December 31, 2021Strategic ReportServiceTechnologyPeopleAt Zenith Bank , Our people are our most valuable asset. we attract, motivate and retain a highly talented pool of people from diverse backgrounds.Technology is the core of the business strategy of Zenith Bank. We depoly global best innovative technology infrastructureFor us at Zenith Bank, the customer is the reason we are in business, and this is not a mere mantra. Exceptional service delivery is at the centre of our operationsCorporate Proﬁle & StrategyInnovationGood financial performanceStable and dedicated management teamHighly Skilled PersonelLeadership in the use of Informationand Communication TechnologyStrategic distribution channelsGood asset quality“....establish a presence in all major economic and ﬁnancial centres in Nigeria, Africa and indeed all over the world; creating premium value for all stakeholders”Our Mission“.....to build the Zenith brand into a reputable international ﬁnancial institution recognized for innovation, superior customer service and performance while creating premium value for all stakeholders”.Our Vision. Integrity. Professionalism. Excellence. Ethics. Commitment· Transparency· ServiceOur Value32110Zenith Bank Group is a customer centric, innovation and technology enabled ﬁnancial services organisation that is geared towards surpassing its customers’ expectations. It focuses and channels its resources only on its core business segments, international subsidiary businesses, its pension/custodian services and nominees business only.a) Core Business SegmentsThe Bank’s core business segments provide a broad range of banking products and services to both corporate and retail customers. These business activities are conducted through the following business units: Institutional and Investment Banking Corporate Banking Commercial/SMEs Retail Banking Public Sector BankingInstitutional and Investment BankingThe Institutional and Investment Banking Unit (the “IIBU”) manages the Group’s business relationship with other banks, ﬁnancial institutions, multilateral agencies, securities houses, insurance companies, asset management companies and other non-bank ﬁnance companies, private equity and venture funds. The IIBU also assists individuals, corporations, and governments in raising capital by underwriting and/or acting as the client’s agent in the issuance of securities as well as assisting companies in mergers and acquisitions processes.The unit through its Treasury sub unit provides ancillary services such as market- marking, derivatives trading, ﬁxed income instruments, foreign exchange, commodities and equity securities and manages the group’s correspondent banking relationships. The Treasury sub-group works closely with branches and various business focus groups as well as corporate customers and pension funds to deliver currency and ﬁxed income solutions tailored speciﬁcally for their requirements. The Treasury sub-group focuses on creating wealth while mitigating interest rate and foreign exchange risks for the Zenith Group and its customers. It oﬀers the Group’s customers a broad array of money market and foreign exchange services that enable them to carry out their business operations locally and internationally. The Treasury sub-group’s activities are carried out t hrough subsidiary four units: the Liability and Deposit Management Unit, Bonds Trading Unit, Foreign Currency Trading Unit and the Correspondent Banking Unit.Corporate BankingThe Group’s Corporate Banking business unit oﬀers a wide variety of services to multinationals, large local conglomerates and corporate clients. The unit is focused on providing superior banking services and customized banking products to the top tier of the market. It is primarily focused on attracting, building and sustaining strong enduring relationships with its target market through the provision of innovative solutions together with excellent customer services to meet clients’ banking needs.Business Focus11Zenith Bank Plc Annual Report December 31, 2021Strategic ReportIt also looks at promoting the businesses of these corporate clients through the provision of services to the various stakeholders within the value chain of these corporate clients. This is aimed at building long-term relationships and partnership with our clients.Within Corporate Banking, industry speciﬁc desks or sub-units exist to facilitate the eﬃcient and eﬀective management of the relationships with the unit’s corporate customers. These sub-units include;a) Transport and Aviation,b) Conglomeratesc) Breweries & Beverages d) Oil and Gase) Power, Infrastructure and Construction.f) Telecommunications and FintechsCommercial/SMEsThe Commercial/SME unit focuses on all small, medium and micro enterprises (MSMEs), and other commercial businesses which also includes all unincorporated entities (such as societies, clubs, churches, mosques etc).It oﬀers loans and advances in the form of overdrafts, import ﬁnance lines, term loans and leases to the customers especially those involved in the sales and distribution of fast moving consumer good items and key distributors to major manufacturing companies. Credit facilities oﬀered by the unit are priced higher than those extended to corporate or institutional banking customers in order to compensate for the relatively higher risk.The Group oﬀers a wide range of generic banking services and products to meet the needs of the customers in this sub-sector. These include various lending and deposit products such as working capital lines (overdraft, invoice discounting, invoice/contract ﬁnancing, stock ﬁnancing, etc), lease ﬁnance lines, Bonds and Guarantee lines, current account, domiciliary accounts and ﬁxed deposit accounts. Ancillary services rendered to this sub-sector include; local drafts issuance, local inter/intra bank funds transfers payroll services, bill payments, safe custody, duty/tax payments and remittances and so on. The group aims to build a value chain synergy between this sub-sector and the corporate banking clients thereby promoting businesses across the various business units.SME grow my businessIn an eﬀort to expand our customer base and create more diversiﬁcation, the Group in the course of the year renewed her commitment to support the micro, small and medium enterprises (MSMEs) segment of the economy.MSMEs remain the growth engine of any developing economy especially, contributing over 96% of businesses in Nigeria and up to 49.5% of our National GDP. MSMEs therefore provide a huge base to deliver value innovation and oﬀer compelling propositions and engagements for business growth and contribute more to National Development.On the back of this development, the bank launched a new product SME Grow My Business (SME-GMB). More than a bank account, this innovative product creates a veritable platform for MSMEs to better manage their business, become more competitive and get more visibility in the market across the web and digital platforms.To achieve these and thereby fulﬁll this renewed commitment to support smaller businesses, the bank is collaborating with service providers, digital and technology companies in partnerships that focus on addressing the major challenges of this sector - providing digital skills and sector-based trainings, oﬀering business solutions and tools that help businesses ﬁnd customers and build loyalty, access to business loans in a swifter manner as well as earn savings from discounted business expenses. These in addition to the adoption of our customized SME card, enrollment on our electronic channels of Zenith Mobile App, Corporate Internet Banking and e-collection solutions gradually sets the tone for small businesses to commence own digital transformation, at their pace.Retail BankingThe Group’s strategic objective is to become the market leader in the retail market. To this end, the Group provides retail banking products and services through its extensive branch network and ever widening array of digital channels driven by cutting edge technology. The Group’s retail strategy includes categorizing the retail market into two major broad segments namely; PRESTIGE (rich and aﬄuent) and WAVE (retail aﬄuent and mass). These two broad segments drive the Group’s design of retail deposits products and services which range from standard to specialized savings, current, domiciliary and investment accounts.Specialized products include the Zenith Children Accounts (ZECA), Individual Current and Savings Accounts, Easysave Classic and Premium Accounts (ﬁnancial inclusion customers), On the back of this development, the bank launched a new product SME Grow My Business (SME-GMB).12Corporate Proﬁle & StrategyAspire Savings Accounts (tertiary institution students), Timeless Accounts (senior citizens) and Platinum and Gold Current Accounts (high net worth individuals) etc.Also, the Group oﬀers a wide range of digital products and services such as internet banking, mobile banking services (mobile app), *966 EazyBanking, Zenith Scan to Pay, EazyMoney etc. Furthermore, the Group oﬀers other channels such as ATMs, cards and POS terminals which have been designed to meet the ever-changing needs of the retail segment of the banking industry.In addition, the Group oﬀers credit products including personal loans, advances, mortgages, asset ﬁnance, and credit cards through our traditional channels. The Group recognizes that attracting, winning and retaining this segment of customers is through the development of customer value propositions (CVPs) unique to each customer sub-segment. To ensure eﬀective delivery of these CVPs through branches as well as through digital channels, the Group employsadvanced analytics to identify micro segments and customer spending patterns. Also, in order to maximize customer acquisition, customer growth and customer retention, the Group constantly carries out environmental scanning and closely monitors key trends in the retail industry.Recently, the Group, in addition to the on boarding of super agents, deployed agency banking services across the 36 states of the federation to ensure the bank has a touch point at every location in the country. The Bank has on-boarded about 75,827 agents as at 31st December 2021. This is to service mostly customers who might not be able to visit a bank branch because of distance. These agents provide access to basic ﬁnancial services such as account opening, cash-in, cash-out, bills payments and electronic transfers.Also, the Group collaborates with selected Fintechs and Micro Finance Banks to make the Group’s innovative products and services available to their customers and vice versa.The Group regularly reviews its retail strategies to ensure eﬃcient execution as well as to ensure that the Group is on course to become the market leader in retail in an ever-changing banking landscape.The Group will continue to leverage on cutting edge technology to deliver best in class retail products and services that will be adapted to the digital demands of retail customers. The Group will also continue to enable market leading capabilities, developing best-in-class digital products and solutions as well as increasing speed to market supported by agility of innovation.Public Sector BankingThe Public Sector Group (PSG) provides services to meet the banking needs of all tiers of government (Federal, State and Local Governments), ministries, departments and agencies, The focus of the PSG business is all institutions operating under the auspices of Government, including those within the executive, legislative and judiciary branches, and at the Federal, State and/or Local Government levels. Some of the products and services oﬀered to the public sector include revenue collection schemes, cash management, deposit and investment, electronic payroll systems, oﬀshore remittances and foreign exchange and project ﬁnance.13Zenith Bank Plc Annual Report December 31, 2021Strategic Reportb) Overseas SubsidiariesThe Group’s overseas subsidiaries carry out banking operations, providing traditional banking products and services tailored to meet the needs of those customers who are either located in countries where the subsidiaries are based or who have a business presence in such locations. Each of the Group’s overseas subsidiaries act as intermediary between the ﬁnancially surplus and deﬁcit units in their locations, oﬀering a wide range of products and services to attract deposits and extend loans and advances. The Group’s overseas subsidiaries include the following:Zenith Bank UK LimitedZenith Bank UK Limited (“Zenith UK”) leverages on trade and investment ﬂows between Nigeria and Europe to intermediary banking services which include post shipment ﬁnance, back-to-back letters of credit, standby letters of credit and contract guarantees. Zenith UK also provides facilities for working capital and capital expenditure directly to Nigerian borrowers through participation in syndicated loans. The subsidiary acts as the contact point for correspondent banking relationships with Nigerian and other West African banks by providing facilities for letter of credit conﬁrmation and treasury products.The operational mandate of Zenith UK also enables it to source deposits from institutions such as parastatals, corporate and institutional counterparties to support its funding needs. Through eﬀective treasury management, Zenith UK trades in ﬁxed income instruments which include government and institutional bonds and certiﬁcates of deposit. Zenith UK also has a wealth management unit which is dedicated to oﬀering long-term investment advisory and wealth management solutions to its customers.Zenith Bank West African SubsidiariesZenith Bank (Ghana) Limited, Zenith Bank (Sierra Leone) Limited and Zenith Bank (The Gambia) Limited make up our West African subsidiaries. They provide comprehensive trade services to major global corporations and medium sized enterprises operating in the region. With the support of the parent company and Zenith UK which operate an account with Citigroup, the West African subsidiaries have both a global reach and local market knowledge which allows them to provide high quality importing and exporting intermediary services to to their respective customers. Solutions are customized to each subsidiary’s customers’ needs, integrating letters of credit and other trade ﬁnance alternatives or products for an end-to-end trade proposition.The West African subsidiaries source deposits from retail, corporate and institutional customers to support their respective funding needs. Each subsidiary also lends to customers in diﬀerent sectors of their respective economies, through term loans, short term overdrafts, trade ﬁnance facilities and bonds and guarantees. Investment in ﬁxed income instruments such as treasury bills, government and corporate bonds also form part of the banking activities carried out by each of the West African subsidiaries.c) Pension and Custodial ServicesThe Group’s Pension Custodian services business is conducted through Zenith Pension Custodians Limited (“Zenith Pensions”) which oﬀers pension management and custodian services to pension funds administrators (PFAs). As at 31 December 2021, total funds under its custody amounted to approximately N5.568 trillion. Zenith Pensions has 112 funds under its custody. The main service oﬀerings provided by Zenith Pensions include; collecting pension contributions, paying beneﬁciaries from their respective retirement saving accounts, safe keeping of assets, managing real estate assets of the funds under its custody and the settlement of transactions in ﬁnancial investments such as equities, bonds, and treasury bills. Zenith Pensions also provides administrative and record-keeping services to the funds under its custody on a day-today basis.d) Zenith Nominees LimitedZenith Nominees Limited provides nominees, trustees, administrators, and executorship services for non-pension assets. It started operations in 2018. As at 31 December 2021, total funds under its custody amounted to approximately N618 billion.Strategic ObjectivesThe strategic objectives of Zenith Bank remains the continuous improvement of its capacity to meet the customers’ changing and increasing banking needs as well as sustain high quality growth in a volatile business environment through: Strategic and continuing investment in branch The Group’s strategic objective is to become the market leader in the retail market.14Corporate Proﬁle & Strategynetwork expansion to reach out to existing and potential customers where digital technology alone is not adequate to meet this. Increasing investment in technology infrastructure that brings banking services to all nooks and crannies of the nation with the use of agents ensuring our banking services can reach the last mile. Continuous investment and deployment of state of the art technology and ICT platform Continue to seek, employ and retain the best personnel available Continuous investment in training and re- training of our personnel Maintain and reinforce our core customer service delivery charter Sustain strong proﬁtability and ensure adequate Return on Equity (ROE) Remain conservative but innovative Sustain strong balance sheet size with adequate liquidity and capital base Sustain our brand and premium customer services Cautious and synergistic global expansion Remain customer service focused Continuous emphasis on use of technology as a competitive tool Maintain strong risk management and corporate governance practicesLocally, branches will continue to be located at commercial business districts in all the state of the federation, taking into consideration the existence of the following: Commercial activities, enough to ensure that the branch breaks even within a year. Synergistic loop based on business line (i.e. ensuring that the branches are located in areas having similar business lines to facilitate needed synergy). Convenience to our customers.Our international outlook will focus on consolidating our presence in our selected African and European markets while we continue to evaluate opportunities in other markets as well.The key strategies that will be used to drive our vision and mission are as follows:1. Continue to deliver superior and tailor- made service experience to all our customers at all times2. Continue to develop deeper and broader relationship with all clients and strive to understand their individual and industry peculiarities with a view to developing speciﬁc solutions for each segment of our customer base3. Continue to expand our operations by adding new distribution channels especially in the digital space4. Consolidate our leadership as a banking service provider in Nigeria by continuing to build on long standing relationships, capabilities and the strength of our brand and reputation to drive our international business network expansion5. Continually enhance our processing and systems platforms to deliver new capabilities and improve operational eﬃciencies and achieve economies of scale.6. Maintain strong risk management and corporate governance culture7. Ensure proper pricing of our products and services8. Increase our market share of retail banking customers and deploy our E-business tools and enhanced customer serviceOur international outlook will focus on consolidating our presence in our selected African and European markets while we continue to evaluate opportunities in other markets as well.15Zenith Bank Plc Annual Report December 31, 2021Strategic Report9. Develop compelling customer value proposition (CVP) for our various customer segments that ensures we can optimize our average revenue per customer.10. Continuous investment in technology infrastructure that is essential to support our growing customer transactions annually.11. Increasing corporate ﬁnance activities to boost fee income.12. Leveraging on our existing branch network to drive our product delivery and deposit liability growth.13. Leveraging on our understanding of speciﬁc trade and correspondent banking requirements to drive business relationships with banks and ﬁnancial institutions in the West African sub region to encourage them to use our foreign subsidiaries for businesses they are currently transacting with other banks.14. Continue its leadership of the corporate banking business in its chosen territories, ensuring our customers receive best-in-class services and maximize returns of all stakeholders.15. Our foreign subsidiaries will target companies that currently have trade partners in Nigeria and other locations where we have presence across the globe and process their trade transactions through the Zenith Bank network. This approach is aimed at encouraging cross border marketing and the routing of a portion of their international trade transactions through the Group. The idea is to demonstrate to the local companies that their relationship with Zenith Bank in their country and dealing with Zenith Bank in another country will be mutually beneﬁcial. “Our Strategic Plan is part of a process of our development, and attempts to engender a commitment to continuous improvement, by focusing and harnessing the energies of everyone in the group. We believe that the concepts of strategic readiness, life-long learning and community engagement encourage and support quality in all aspects of the Bank’s performance.”16. The lending businesses in all our subsidiaries will focus primarily on international and export trade transactions. It will involve discounting international trade bills for companies and also providing short-term credits to ﬁnancial institutions that use the bank as their correspondent bank.MARKET AND BUSINESS STRATEGYThe strategic objectives of the Group in the next ﬁve years include: to be amongst and remain one of the top tier banks in Africa in terms of proﬁtability, balance sheet size, risk assets quality, ﬁnancial stability, and operational eﬃciency. Re-channeling its eﬀorts in deploying more innovative electronic banking products, following the divestment from non-core banking operations. The Group will look to strengthen its retail banking business by consolidating on its retail banking transformation exercise which has signiﬁcantly grown its retail banking revenue, deposit liabilities and risk assets and continue to obtain a signiﬁcant share of the retail banking industry in Nigeria. Improving its capacity to meet its customers’ changing and increasing banking needs as well as sustain high quality growth despite the volatile business environment.Enhancing the Group’s internal operating systems to reduce costsThe Group expects to continue its drive to deploy the latest innovations in banking technology in order to maintain its position at the forefront of the changing banking landscape in Nigeria. In addition, the Group will aim to enhance its systems and internal procedures, in order to be able to improve its levels of customer service by delivering improved operational capabilities and eﬃciencies, whilst at the same time achieving economies of scale.The Group’s increased deployment of digital channels and agency banking means more customers are able to carry out banking transactions without visiting its branches, thereby reducing operating costs. From an internal operating perspective, the Group has automated most of the operational activities, such as cheque conﬁrmation and clearing processes, account opening processes, credit administration process and internal audit processes. These automated processes have started yielding results in the form of reduced turnaround times in all operational activities as well as a reduction in operating costs.In addition to the above, other strategies that have been adopted to streamline our cost include: 16Corporate Proﬁle & StrategyBusiness LocationsAs at 31 December 2021, the geographical spread of the Group’s business locations is as follows:Geographical LocationsBranchesCash CentresNon-Banking OperationsFederal Republic of Nigeria 3931553Republic of Ghana3010 - United Kingdom2 - - Sierra Leone716 - The Gambia77-China Representative Oﬃce 1 --Total4401883As shown above, the Group also has 188 oﬀ- site locations, strategically located in various commercial centres around Nigeria and the African countries in addition to its network of branches. These oﬀ-site locations comprise small business oﬃces such as kiosks/cash oﬃces and are located in the airports, university campuses, large shopping malls or the premises of core customers of the Group. These oﬀ-site locations only oﬀer deposit taking services and would eventually diminish in number as the CBN fully implements several cashless policies such as the e Naira launched in October 2021. However, we expect an increase in e-centres where various electronic transactions can be consummated as well as agents for its ﬁnancial inclusion customers.ATM networkThe Group has a total of 2,086 ATM machines with 1,998 in Nigeria, 64 in Ghana, 15 in Sierra Leone and 9 in The Gambia. The ATM machines are located in branches and strategic locations such as airports, university campuses, large shopping malls and premises of large manufacturing ﬁrms employing large numbers of workers. Due to collaboration and shared services arrangements which the Bank has with other banks, ATM cards issued by the Bank are accepted by the ATM machines of other institutions. Collaborating with training companies to redesign our training needs into an electronic format that allows it to be deployed electronically to all our staﬀ (by so doing de-emphasizing classroom and physical trainings) and thereby improving eﬃciency and lowering training costs, power and energy costs. The Bank also collaborates with other card issuing agencies to oﬀer internationally recognised cards, such as MasterCard, Visa and Verve, in diﬀerent currencies to their customers.Distribution ChannelsOther distribution channels which the Group uses include electronic and digital channels which oﬀers products and services, including electronic fund transfers at points of sale (POS), telephone banking, internet banking, visa telebanking, mobile banking, agency banking and the Group’s call centres.Furthermore, in addition to being able to use its branches, ATMs and the network of third party ATMs available throughout Nigeria under arrangements between the Bank and third party vendors, the Group’s customers are currently entitled to use the Bank’s card products to pay for goods and services at trade service outlets throughout Nigeria and also online shopping.The Group has invested signiﬁcantly in software which enables electronic product platforms to interface with core banking applications, hardware to enable data storage and to improve processing speed and in training of its IT staﬀ. [The Group has also developed electronic delivery systems in order to implement multiple delivery channels to its customers, including its ATM networks, on mobile devices and over the internet.] The Group’s 17Zenith Bank Plc Annual Report December 31, 2021Strategic Reportrange of internet and mobile banking products and services oﬀer customers services such as collections and remittances of bills (including utility bills), real time internet banking, purchase of mobile phone airtime, funds transfers, cheque requisitions and conﬁrmations, balance enquiries, transfer of/ receipt of funds between Visa Credit Cards and Prepaid Cards, and statement services.Speciﬁc electronic products oﬀered by the Group include: Zenith Scan to Pay – This is a quick response (QR) code solution which involves customers scanning merchants QR displayed in their stores or on their websites using a smart device; *966*911# – This is a distress code to be dialed by Zenith customers to automatically block their accounts where customers’ smart phones has been stolen or privacy details have been compromised; *966*60# – This allows you to perform other self service. These include retrieve card PIN, Block Cards, manage card less withdrawal, select preferred USSD account to debit, perform transaction above N100k via USSD subject to signing an indemnity, activate agent banking activities i.e cash in and cash out and perform USSD on POS. USSD on POS – This allows customers to make payments at merchant stores using *966eazybanking even without their payment cards (debit, credit, prepaid); Corporate i-Bank - a secure online solution that allows corporate customers to carry- out banking transactions on the internet; Zenith Payroll (Branch i-Bank) – automates the [end-to-end] payroll process of the Group’s customers which eliminates the manual processes involved in the generation of monthly payroll while also remitting funds electronically to staﬀ accounts. The platform provides, database backup, payroll reports, customization option, secure payment authorization and salary payments; Xpath (Customised Branch Collections) allows customers to collect or receive remittance from their key distributors and customers through any branch of the Group. The platform also enables customers to capture speciﬁc information relating to their account. Other features of the product include the provision of electronic receipts, PIN Vending and direct integration; Internet Banking - a real-time solution that provides customers with access to their account 24 hours a day, 7 days a week via the internet; EaZymoney, Zenith Bank’s mobile money platform is a wallet payment solution that allows customers make withdrawals (cash- out), make deposits (cash-in), transfer funds, pay bills (DSTV, Electricity etc. ) make purchases and top up airtime using their mobile phones. EaZymoney is a virtual account (also called an Eazymoney wallet) created for the subscriber. With this solution, the subscriber’s mobile number will be the account number. Payment for goods and services, cash withdrawals and deposits can be done from this mobile number through diﬀerent channels. Global Pay - a convenient, ﬂexible and secure platform for receiving payments through the internet. This platform accepts multi-currency transactions and also provides online transaction monitoring capabilities; and Electronic Multicard – this product enables merchants to receive payments from customers when they use a bank card issued either by the Group or another institution recognised by Group on this platform. The platform provides additional beneﬁts to customers as it enables merchant to accept payment after banking hours, provides online transaction monitoring, can be customised to capture speciﬁc data and provides an alternative mode of payment. The Zenith Bank Virtual Card - The Zenith Bank Virtual Card is speciﬁcally designed for web transactions and can be used to shop online (accepted locally and internationally), pay bills and subscriptions etc. The Zenith Bank virtual card can be used over Internet Banking and the USSD platform (*966#). Visa Telebanking – this innovative oﬀering on the bank’s website allows customers to transfer/receive funds between Visa Credit and Prepaid Cards. It provides real time option for funds transfer between diﬀerent parties and allows you to use your Visa Card account online. *966 EazyBanking - is a convenient, fast, secure, and aﬀordable way to access your bank account 24 hours a day, 7 days a week through your mobile phone without internet data and is available to all individual account holders with any phone that runs on the GSM platform and runs with debit cards.18Corporate Proﬁle & StrategyAs an industry leader in Digital Finance, the Bank launched the Zenith Intelligent Virtual Assistant (ZiVA), an upgraded Mobile App and the ‘Pay with Transfer on POS’ in response to the markets demands and the ever changing lifestyles of our customers.The Zenith Intelligent Virtual Assistant (ZiVA) enables banking services to be oﬀered on WhatsApp, and subsequently across other social media platforms. It leverages artiﬁcial intelligence to provide transactional and support services to customers of the bank such as bills payment, funds transfer, account opening, balance check, dispute log and other value-added services. ZiVA is designed for existing and prospective individual account holders, who today have adopted the WhatsApp platform as preferred destination for online banking services. It is a reliable, convenient, and more “personal” medium of performing basic banking transactions, on their mobile devices. The launch is a response by the bank to banking on social media. The Zenith Mobile App was more recently upgraded to include features that make banking more interactive, intuitive, seamless, exciting, and productive. Life really has become mobile. The market keeps experiencing a signiﬁcant movement in terms of volume of transactions on the mobile applications. The mobile have become an everyday necessity, and banks are constantly raising the bars. Most of the mobile banking applications have become full-ﬂedged and service mobile banking powerhouses. They provide many of the same banking services as a brick and mortar bank- without the long queues and long waits.The enhanced Zenith Mobile boast of Customers Personal ﬁnance manager (PFM), editable proﬁle page, forex calculator and a lifestyle page amongst other interesting and exciting new features.Pay with Transfer on POS’ terminal is an industry ﬁrst, pioneered by the Bank in 2021. This leverages the advantage in the market today where customers have adopted transfers as a faster means of making payments for goods and services, person to person and person to business. The POS typically today allows for only card payments on the terminals. However, this service enables transfers to the POS and a receipt is generated afterwards as proof of payment, thus eliminating dispute situations of non-receipt or conﬁrmation of payment for goods and services at merchant’s locations. This service is cardless and contactless payment, keeping with the realities of our time which the COVID 19 pandemic has thrown at the market.COVID 19 Pandemic Response As we transit to the new normal amid this pandemic, the health and safety of our employees, customers and other stakeholders are of utmost importance to us while we remain focused on preserving value for our shareholders. We have set a clear direction and communicated this eﬀectively to all staﬀ and other stakeholders in accordance with our Business Continuity Plan (BCP). Our BCPs are constantly being reviewed and strengthened to avoid any form of surprises in the future and to reﬂect the current and potential impacts of COVID-19 pandemic. We have also developed a strategic crisis-action plan to guide our response across all COVID-19 scenarios - short, medium and long term, while leveraging on emerging opportunities. Executive Management has encouraged virtual meetings and discussions of the bank activities across various teams. Several stress tests to assess the possible impacts of COVID-19 on our liquidity, capital adequacy and earning capacity had been conducted. We remain resilient to short and medium term shocks from the adverse impacts of coronavirus pandemic. We review our loan books continuously and closely monitor all assets and liabilities classes to ensure suﬃcient liquidity to meet our ﬁnancial obligations. We are engaging our customers in key sectors of the economy to better understand their current challenges and provide eﬀective and bespoke actions to alleviate their hardships while preserving shareholders’ funds. We have increased our investment in IT and Cyber Security infrastructure to enable us meet the increasing digital needs of our customers while protecting our organization and customers from all cyber security threats.19Zenith Bank Plc Annual Report December 31, 2021Strategic Report20NOTICE IS HEREBY GIVEN that the Thirty-First Annual General Meeting of Zenith Bank Plc will hold at the Civic Centre, Ozumba Mbadiwe Street, Victoria Island, Lagos State at 9.00 a.m. on Wednesday the 6th day of April, 2022 to transact the following business:-ORDINARY BUSINESS1. To present and consider the Bank’s Audited Accounts for the ﬁnancial year ended 31 December, 2021, the Reports of the Directors, Auditors and Audit Committee thereon.2. To declare a ﬁnal dividend.3. To approve the appointment of Dr. Omobola Arike Ibidapo-Obe Ogunfowora, as an Independent Non-Executive Director The appointment of the Director has been approved by the Central Bank of Nigeria. The Proﬁle of the aforementioned Director is available in the Annual Report and also on the Bank’s website at www.zenithbank.com4. To elect the following Directors who retire by rotation at this meeting(i) Engr. Mustafa Bello(ii) Dr. Al-Mujtaba Abubakar(iii) Mr. Dennis Olisa5. To authorize the Directors to ﬁx the remuneration of the Auditors.6. Disclosure of the remuneration of Managers of the Bank.7. To elect members of the Audit Committee.SPECIAL BUSINESS8. That Mr. Jim Ovia, CON, who has attained the age of 70 years since the last general meeting be re-elected as a Non-Executive Director of the Bank.9. To consider and if thought ﬁt, to pass the following as ordinary resolution: “That the remuneration of the Directors of the Bank for the year ending December 31, 2022 be and is hereby ﬁxed at N25 million only” for each Director.Notice of Annual General Meeting10. (A) To consider and if thought ﬁt pass the following resolution as an ordinary resolution: “That pursuant to Articles 56(1) (c) and 56(2) of the Company’s Memorandum and Articles of Association, the Directors be and are hereby authorized to take steps to comply with the requirements of the Companies and Allied Matters Act (CAMA), 2020 S. 124 and the Companies Regulations, 2021 as it relates to unissued shares currently standing to the capital of the company including but not limited to cancellation of such unissued shares of the company”. (B) “That the Directors be and are hereby authorized to enter into and execute any agreements, deeds, notices and any other documents necessary for and or incidental to aﬀecting resolution (A) above”.(C) “That the Directors of the Company or any one of them for the time being, be and are hereby authorized to appoint such professional parties and advisers, and to perform all such other acts and do all such other things as may be necessary for or incidental to aﬀecting the above resolutions, including without limitation, complying with directives of any regulatory authority”.11. Special Resolution(A) Pursuant to section 51(1) of the Companies and Allied Matters Act (CAMA), 2020, the Memorandum and Articles of the Association of the Bank be and are hereby altered in the following manner: By adding a new clause 41(A) to the Memorandum of Association of the Bank as follows; “To act in conjunction with any relevant Exchanges as a Derivatives Clearing member for all exchange traded or over the counter trades and in accordance with the Rules and Regulations of the Securities and Exchange Commission (SEC) in place from time to time”.(B) That Article 90 of the Articles of Association of the Bank be and are hereby altered in the following manner: By deleting the words: “Unless and until otherwise determined by the Bank by Ordinary Resolution, the Directors of the Bank shall not be less than ﬁve or more than ﬁfteen in number” and substituting thereto the following: “Unless and until otherwise determined by the Bank by Ordinary Resolution, the Directors of the Bank shall not be less than ﬁve or more than twenty in number.”Dated this 28th day of February, 202221Zenith Bank Plc Annual Report December 31, 2021Strategic ReportNOTES:1 . PROXY:A member of the company entitled to attend and vote at the general meeting is entitled to appoint a proxy in his stead. All instruments of proxy should be completed, stamped and deposited at the oﬃce of the Company’s Registrars, Veritas Registrars Limited, 89A, Ajose Adeogun Street, Victoria Island, Lagos State not later than 24 hours before the time of holding the meeting. A proxy need not be a member of the company. Shareholders should note that the Corporate Aﬀairs Commission has in view of the Covid19 pandemic and following the Government’s restriction on public gathering approved that attendance to the Meeting shall only be by proxy to ensure public health and safety. Shareholders are therefore requested to submit their completed proxy forms appointing any of the listed proxies in line with the Corporate Aﬀairs Commission’ Guidelines to the oﬃce of the Company’s Registrars, Veritas Registrars Limited, 89A, Ajose Adeogun Street, Victoria Island, Lagos State and/or enquiry@veritasregistrars.com and th veritasregistrars@veritasregistrars.com not later than 4th April, 2022 to enable the Bank stamp the proxy forms and lodge same with the Registrarsnot later than 24 hours prior to the time of the meeting. The Proceedings will also be streamed live on the Bank’s website and social media platforms.2. CLOSURE OF REGISTER OF MEMBERSThe Register of Members and Transfer Books of the Company will be closed 28th March 2022, to enable the Registrar prepare for the payment of dividend.3. DIVIDEND WARRANTSIf approved, dividend warrants for the sum of N2.80K for every share of 50K (bringing the total dividend for the ﬁnancial year ended December 31, 2021 to N3.10K) will be paid via emandate on the 6th April, 2022, to shareholders whose names are registered in the register of members at the close of business on the 25th March, 2022. Shareholders are advised to forward particulars of their account details to the Registrar to enable direct credit of their dividend on same day. Note however, that holders of the Company’s Global Depository Receipts listed on the London Stock Exchange will receive their dividend payments after the local payment date.4. AUDIT COMMITTEEIn accordance with Section 404(6) of the Companies and Allied Matters Act, 2020, any shareholder may nominate another shareholder for appointment to the Audit Committee. Such nomination should be in writing and should reach the Company Secretary at least 21 days before the Annual General Meeting.5 RIGHTS OF SHAREHOLDERS/SECURITIES’ HOLDERS TO ASK QUESTIONSShareholders/Securities’ Holders have a right to ask questions not only at the Meeting, but also in writing prior to the Meeting, and such questions must be th submitted to the Company on or before the 5th April, 2022.6. UNCLAIMED DIVIDEND WARRANTS AND SHARE CERTIFICATESShareholders are hereby informed that a number of share certiﬁcates and dividend warrants have been returned to the Registrars as “unclaimed”. A list of all unclaimed dividend will be circulated with the Annual Report and Financial Statements. Any member aﬀected by this notice is advised to write to or call at the oﬃce of the Bank’s Registrars, Veritas Registrars Limited, Plot 89A, Ajose Adeogun Street, Victoria Island, Lagos during normal working hours.7. E-DIVIDENDNotice is hereby given to all shareholders to open bank accounts for the purpose of dividend payment in line with the Securities and Exchange Commission (SEC) directives. Detachable application forms for edividend and ebonus are attached to the Annual Report to enable all shareholders furnish the particulars of their bank accounts/CCS details to the Registrars as soon as possible. 8. PROFILE OF DIRECTORSThe proﬁle of all Directors are available for viewing on the bank’s website, www.zenithbank.comBy Order of the BoardMICHAEL OSILAMA OTU, ESQ.Company Secretary/General CounselPlot 87, Ajose Adeogun StreetVictoria Island, LagosMy Fellow Shareholders, Distinguished Guests, Ladies and Gentlemen,It is with great pleasure and delight that I welcome you to our Bank’s 2021 Annual General Meeting and present to you the Annual Report and Financial Statements for the ﬁnancial year ended December 31, 2021. I would like to sincerely thank you all for your unﬂinching loyalty, which has enabled the Bank to rise to the pinnacle of the nation’s ﬁnancial industry. Indeed, your commitment to the Bank’s progress is reﬂected in your continuous engagement, including your presence here today.The macroeconomic environment remained very challenging in 2021 as the coronavirus (COVID-19) pandemic resurged, which continued to signiﬁcantly impact businesses globally. Notwithstanding, we were able to adapt our strategies to leverage available opportunities and create value for all our stakeholders. Against this background, I will review the economic and ﬁnancial environment within which our Bank operated in the outgone ﬁnancial year.MACROECONOMIC REVIEWIn the outgone year, the Nigerian economy rebounded from one of its deepest economic recessions occasioned by the COVID-19 pandemic in 2020. Supported by a raft of commendable monetary and ﬁscal stimulus packages rolled out by the monetary and ﬁscal authorities, the economy exited recession in Q4 2020 and continued on a positive trajectory in 2021. According to the National Bureau of Statistics (NBS), Gross Domestic Product (GDP) grew by 0.51 per cent, 5.01 per cent, 4.03 per cent and 3.98 in Q1, Q2, Q3 and Q4, respectively. Overall, in 2021, the annual JIM OVIA, CONFounder and Chairman FOUNDER AND CHAIRMAN’S STATEMENT22growth of real GDP stood at 3.40 per cent, a rate far better than the -1.92 per cent contraction recorded in 2020. The better-than-expected performance in 2021 was majorly driven by the non-oil sector (Information & Communication, Agriculture, Finance, Trade, Construction), which grew by 4.44 per cent compared to -1.25 per cent recorded in 2020. However, the oil sector remains subdued, reﬂecting the lingering impact of muted global oil demand triggered by the COVID-19 pandemic. Speciﬁcally, the oil sector contracted by -8.30 per cent compared to -8.89 per cent recorded in 2020. Overall, the sustained positive performance of the economy in 2021 reﬂects steady progress in stemming the pandemic, through faster progress on vaccine roll out, and the associated negative impact on the economy.To sustain the ﬂow of credit to productive sectors of the economy, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained the benchmark interest rate – the Monetary Policy Rate (MPR) – at 11.5 per cent throughout 2021, the lowest rate since 2016. Also, the asymmetric corridor was maintained at +100/-700 basis points around the MPR, while the Cash Reserve Ratio (CRR) at 27.5 per cent. The Liquidity Ratio (LR) was retained at 30 per cent. The CBN had cut the benchmark interest rate in September 2020 as part of strategies to aggressively boost credit to the real sector and stimulate output growth in the face of economic recession triggered by the COVID-19 pandemic.In the year under review, headline inﬂation, measured by the Consumer Price Index (CPI), recorded a signiﬁcant uptick relative to the preceding year, despite moderating for eight consecutive months in 2021. According to the NBS, the average inﬂation rate in 2021 stood at 16.98 per cent compared to 13.21 per cent recorded in 2020, signiﬁcantly above the CBN target band of 6-9 per cent. It was also signiﬁcantly above the 11.95 per cent benchmark set by the Federal Government in the 2021 budget. The headline index remained elevated due to exchange rate volatility, slow moderation in food inﬂation and disruptions in the supply chain.The year 2021 witnessed the recovery of crude oil prices as the U.S. West Texas Intermediate (WTI) and Brent averaged 68 per barrel and $71 per barrel, respectively. The spot price of Brent crude oil started the year at $50 per barrel and increased to a high of $86 per barrel in late October before declining in the ﬁnal weeks of the year. Overall, Brent ended the year up 50.5 per cent, its biggest gain since 2016, while WTI posted a 55.5 per cent gain, the strongest performance since 2009. The rise in crude oil prices was driven by the rebound in economic activities within which global demand for petroleum rose faster than supply, supported by increased COVID-19 vaccination rates that aided relaxation of pandemic-related restrictions. The slower increase in supply was mostly attributable to the Organization of Petroleum Exporting Countries (OPEC) and participating non-OPEC countries crude oil production cuts that started in late 2020. The cartel and its allies limited production increases throughout 2021 to support higher crude oil prices. During the year under review, the CBN adopted the Nigerian autonomous foreign exchange (NAFEX) rate as the oﬃcial exchange (interbank) rate in May 2021. Overall, the sustained positive performance of the economy in 2021 reflects steady progress in stemming the pandemic, through faster progress on vaccine roll out, and the associated negative impact on the economy.23Zenith Bank Plc Annual Report December 31, 2021Consequently, the exchange rate remained under pressure across all foreign exchange market segments. The situation was further aggravated by huge dollar demand and a decline in forex inﬂow from foreign capital ﬂows, remittances and non-oil exports. As at the end of December 2021, the exchange rate stood at an average of NGN412.03/$1 at the interbank segment of the market and NGN414.60/$1 at the Investors’ and Exporters’ (I&E) Window. The CBN implemented policies such as stoppage of the sale of foreign exchange to Bureau De Change (BDC) Operators and frequent intervention in the foreign exchange market to support the local currency.Thus, Nigeria witnessed a signiﬁcant accretion in the stock of foreign exchange reserves in 2021. Speciﬁcally, the nation’s external reserves, which stood at $36.30 billion in January, rose signiﬁcantly to $41.83 billion in October, its highest level in two years. However, the stock of reserves dropped moderately to close the year at $40.52 billion. The rise in reserves above the $40 billion mark is attributable to the Special Drawing Rights (SDR) of $3.35 billion allocated to Nigeria in August and the issuance of a $4 billion Eurobond in September 2021. The apex bank introduced strategies such as the ‘Naira 4 Dollar’ Scheme and the licensing of new International Money Transfer Operators (IMTOs) to support foreign exchange inﬂow, particularly through diaspora remittances.During the year, the Federation Account Allocation Committee (FAAC) disbursed a total of NGN8.14 trillion as allocations to the three tiers of Government. The ﬁgure represents an increase of nearly half a trillion compared to the NGN7.68 trillion shared in the preceding year. The increase is attributable to improved government oil and non-oil revenue receipt. The Nigerian Exchange (NGX) witnessed a bullish trend in 2021. The All-Share Index (ASI) opened at 40,270.72 index points but closed the year at 42,716.44, representing an appreciation of about 6 per cent. While market capitalisation was at NGN21.056trillion at the start of the year, it recorded a 6 per cent growth to NGN22.297 trillion at the close of the year. The outstanding performance of the market was supported by the relatively low yield in the ﬁxed income market, which resulted in increased participation of domestic investors in the equities market. FINANCIAL RESULTSAs stated earlier, 2021 was characterised by signiﬁcant global and domestic economic developments with far-reaching implications for the Nigerian ﬁnancial services sector. Notwithstanding the challenges, we were able to leverage the inherent opportunities within the business environment to record a performance that further attests to our resilience as a brand. The result is a manifestation of the remarkable ﬁnancial health of the Bank and the Group. The Group’s gross earnings grew by 9.92 per cent from NGN696.45 billion in 2020 to NGN765.56 billion in 2021. Proﬁt-Before-Tax (PBT) rose by 9.58 per cent, from NGN255.86billion in 2020 to NGN280.37 billion in 2021, while Proﬁt-After-Tax (PAT) rose by 6.07 per cent, from NGN230.57 billion in 2020 to NGN244.56 billion in 2021. The total deposit was NGN6.47 trillion for the year ended December 31, 2021, representing a 21.20 per cent increase over the previous year’s ﬁgure of NGN5.34 trillion. During the same period, the Group’s total assets grew by Notwithstanding the challenges, we were able to leverage the inherent opportunities within the business environment to record a performance that further attests to our resilience as a brand.24 Founder And Chairman’s Statement11.40 per cent from NGN8.48 trillion to NGN 9.45 trillion, while shareholders’ funds rose by 14.51 per cent, from NGN1.12trillion to NGN1.28 trillion.DIVIDENDZenith Bank maintains a corporate culture of consistently delivering superior value to our highly esteemed shareholders. We continue to drive growth and proﬁtability of the business, as well as ensure that a signiﬁcant portion of our proﬁt is set aside for you. To demonstrate this unwavering commitment, we had declared and paid an interim dividend of 30 kobo per share in the course of the 2021 ﬁnancial year. We hereby propose a ﬁnal dividend of NGN 2.80 kobo per share. If approved, this will bring the total dividend for the year ended December 31, 2021, to NGN3.10 per share.THE BOARD OF DIRECTORSDuring the year under review, the following changes occurred on the Board of the Bank:• On January 3, 2021, one of the Bank’s Independent Non-Executive Directors, Prof. Oyewusi Ibidapo-Obe passed on.• At its meeting on April 29, 2021, the Board approved the appointment of Dr. Omobola Ibidapo-Obe Ogunfowora as an Independent Non-Executive Director. The Central Bank of Nigeria subsequently conﬁrmed the appointment on June 30, 2021.INVESTMENT IN TECHNOLOGYZenith Bank remains a clear leader in the deployment of technology to provide best-in-class quality service. In the year under review, we invested massively in new technologies and digital solutions to ensure convenience, speed and safety of transactions. We remain committed to leveraging technology to deploy innovative products and services that will cater to the varied appetites of our customers in a constantly changing world, as well as create value for our highly esteemed shareholders.CORPORATE SOCIAL RESPONSIBILITYZenith Bank is a responsible corporate citizen committed to building a more sustainable and inclusive economy. Beyond a regulatory requirement, sustainability has become a corporate strategy for the Bank. As such, we have continued to integrate sustainability principles in our business operations and investment decisions in line with global best practices. In the outgone ﬁnancial year, we consolidated on the progress we have made in this regard, bearing in mind our role in fast-tracking the achievement of the United Nations Sustainable Development Goals (SDGs). During the year under review, more than 90 per cent of Bank’s credit and investments were screened for Environmental and Social (E&S) risks.Through our sustainability and Corporate Social Responsibility (CSR) and community investment initiatives, we have continued to deliver projects that have long-term social and economic beneﬁts for our host communities, in line with the SDGs. In the course of the year, Zenith Bank made donations/social investments totaling NGN4.37 billion and targeted at health, education, women and youth empowerment, sports development and public infrastructure enhancement projects across the country. A detailed breakdown of our social investments for the year is contained in the Report. As a testament to our achievements in these areas, Zenith Bank won the awards for “Most Responsible Organisation”, “Best Company in Reporting and Transparency”, “Best Company in Infrastructure Development 2021” and “Best Company in Gender Equality and Women Empowerment” in Africa at the 2021 Sustainability, Enterprise and Responsibility Awards (SERAs).MACROECONOMIC OUTLOOKAlthough the outlook for the domestic and global economies remains largely uncertain due to the resurgence of new variants of COVID-19, most economic prognoses suggest a continuous positive growth in 2022. The domestic economy is expected to continue on a positive trajectory in 2022, supported by improvements in 25Zenith Bank Plc Annual Report December 31, 2021global economic activities, faster progress on the vaccine rollout and uptake. Thus, the IMF expects the economy to grow by 2.6 per cent in 2022, while the World Bank projects a growth rate of 2.5 per cent. The Federal Government projects a more optimistic growth rate of 4.2 per cent for 2022. In addition, growth is expected to be driven by an uptick in private consumption and investment and government spending, as detailed in the 2022 budget.The Federal Government of Nigeria (FGN) 2022 budget has an aggregate expenditure estimate [inclusive of General Operating Expenses (GOEs) and project tied loans] of N17.13trillion, representing a 26 per cent increase compared to the N13.59 trillion (inclusive of GOEs and project tied loans) budget for 2021 ﬁscal year. A breakdown of the budget estimates shows that the sum of NGN3.88 trillion was earmarked for debt service, while NGN6.91 trillion was set aside for recurrent non-debt expenditure. The sum of NGN5.47 trillion was approved for capital expenditure, while Statutory Transfer is NGN869.67billion.The 2022 Budget deﬁcit (inclusive of Government-Owned Enterprises and project-tied loans) is estimated at about NGN6.36 trillion and will be ﬁnanced mainly by new borrowings totalling NGN5.01 trillion, NGN90.73 billion from Privatisation Proceeds and NGN1.16 trillion drawdowns on loans secured for speciﬁc development projects. The 2022 Budget is predicated on crude oil production of 1.88 million barrels per day, a crude oil price of $62 per barrel, and an average exchange rate of NGN410.15/dollar.The global economy is projected to continue to grow in 2022, supported by vaccine rollout and continued supportive ﬁnancial conditions across economies. Thus, the World Bank expects global economic output to expand by 4.3 per cent in 2022, while the International Monetary Fund projects a more optimistic growth rate of 4.9 per cent in 2022. Despite the expected rebound, some downside risks to recovery include the resurgence of new variants of COVID-19, delays in vaccine procurement and distribution, etc. Overall, the economic prospect in 2022 remains that of cautious optimism.APPRECIATIONIndeed, 2021 was challenging but successful year for Zenith Bank. The superior performance we recorded was made possible by the collective eﬀorts of all our staﬀ, Management and Board. I am, therefore, very thankful to our customers for their unﬂinching loyalty; our staﬀ and Management, whose passion and commitment have sustained our very good performances over the years; and our Board, whose vision and exemplary leadership ensure that our Bank does not falter in the pursuit of its mission and objectives. Ladies and gentlemen, I welcome you to the 2022 ﬁnancial year, with unwavering assurance of continued improved performance by our Bank. Thank you.Jim Ovia, CONFounder and ChairmanThe global economy is projected to continue to grow in 2022, supported by vaccine rollout and continued supportive financial conditions across economies. 26 Founder And Chairman’s StatementI am delighted to welcome you, our highly esteemed shareholders, to the 2021 Annual General Meeting. In 2021, the global economy recorded some measures of signiﬁcant recovery from the pandemic-induced recession witnessed in 2020, even as COVID-19 resurged with new variants. The recovery was largely supported by continued resilience and adaptation of economic activities to the pandemic combined with ongoing policy support in many countries. Consequently, according to the International Monetary Fund (IMF), the global economy grew by an estimated 5.5 per cent in 2021, its strongest post-recession pace in nearly a century. On the domestic front, the Nigerian economy continued on the part of recovery as the economy showed sustained positive growth over the last ﬁve quarters since the economy exited recession in Q4 2020. According to the National Bureau of Statistics (NBS), aggregate output, measured by Gross Domestic Product (GDP), grew by 3.98 per cent in the last quarter of 2021, up from the 0.51 per cent growth recorded in Q1 2021. The recovery came on the strength of the steady rebound in oil prices and sustained ﬁscal and monetary interventions to critical sectors of the economy even as re-opening of the global economy gathered pace. Overall, annual economic performance ticked up to 3.4 per cent in 2021 compared to the negative GDP growth of -1.92 per cent in 2020. The Central Bank of Nigeria (CBN) played a crucial role in Nigeria’s 2021 rebound as it continued key strategic policies which were put in place in 2020 to reﬂate the economy. Some of the most impactful interventions during the year, according to the CBN, include the 1-year extension of the moratorium on principal repayments for CBN intervention facilities, reduction of the interest rate on CBN intervention loans from 9 to 5 per cent, and creation of NGN300 billion Targeted Credit Facility (TCF) for aﬀected households and small and medium enterprises GMD/CEO’S REVIEWEBENEZER ONYEAGWU27Zenith Bank Plc Annual Report December 31, 2021In the face of the challenges inherent in the operating environment, our teams responded with creative agility, dedication and the highest levels of professionalism. through the NIRSAL Microﬁnance Bank. The CBN had also put in place a NGN1 trillion facility to boost local manufacturing and production across critical sectors. The CBN noted that the loans created through these initiatives was a key ingredient in the economic recovery and employment generation that the country recorded in the past year. In the face of the challenges inherent in the operating environment, our teams responded with creative agility, dedication and the highest levels of professionalism. Our commitment to achieving market dominance through innovation during the year enabled us to bring innovative outstanding products to the market. Several of these initiatives seek to develop new business verticals and revenue pools as well as expand opportunities for our customers in the retail segment of the market as part of our strategy to support our clients in their journey towards recovery from some of the negative impacts that many small businesses have suﬀered due to the pandemic. Other initiatives cover every segment of the market from the very high proﬁle corporate to the grasssroot retail segments of the market, providing them with the support to get their businesses back on track. We are unwavering in our objective to be a major player in ﬁnancing the growth and expansion of businesses in strategic sectors of the Nigerian economy. In recognition of our pedigree of strong ethos, impeccable service delivery and our all-round stellar performance in the course of 2021, we received the following awards and recognition: Most Valuable Banking Brand in Nigeria 2021 (The Banker), Number One Bank in Nigeria by Tier-1 Capital (The Banker), Best Bank in Nigeria 2021 (Global Finance Magazine), Best Corporate Governance ‘Financial Services’ Africa 2021 (Ethical Boardroom), Best Commercial Bank in Nigeria 2021 (World Finance), Most Responsible Organisation in Africa (SERAs), Best Company in Reporting and Transparency (SERAs), Best Company in Infrastructure Development (SERAs), and Best Company in Promotion of Gender Equality and Women Empowerment (SERAs). We remain committed to strengthening our digital capabilities in view of the digital transformation trend accelerated by the pandemic. As a technology-driven bank, this is a prerequisite for maintaining our competitive edge. Consequently, we are making the requisite investments in the personnel and infrastructure required to maintain our ability to deliver innovative solutions to the market and serve our esteemed customers. We are currently implementing a digital transformation programme, an initiative that will usher in a new best-in-class enterprise information technology architecture and framework. It will allow us to boost the agility and creativity of our teams and improve our processes while delivering new levels of service excellence and convenience to all our esteemed customers.We are fully cognizant of the major developments in the regulatory space and the implications for our operations. For example, the preponderance of electronic channels and service options has increased compliance and cybercrime challenges. We will continue to strengthen our procedures, processes, and overall operations to ensure compliance with extant regulations. We are elevating our digital literacy and cybercrime awareness and advocacy. To respond to other risks in the operating environment, we will continue to place a high premium on developing a robust risk management framework to promote the soundness of the Bank and protect its assets. We will make the needed investments in systems and personnel to entrench robust enterprise risk management and global best practices in corporate governance.28GMD/CEO’s ReviewTo respond to other risks in the operating environment, we will continue to place a high premium on developing a robust risk management framework to promote the soundness of the Bank and protect its assets.As vaccine rollout continues across the globe and supportive ﬁnancial policies remain across economies, the global economy is projected to continue on the growth path. Despite the expected rebound, some downside risks to recovery include the resurgence of new variants of COVID-19, delays in vaccine procurement and distribution and inﬂationary pressures. Nigeria’s economic growth outlook for 2022 is signiﬁcantly brighter than 2021, even though challenges remain. The economy is projected to grow by 2.5 per cent in 2022, about 0.1 percentage points higher than the estimated 2.4 per cent growth rate recorded in 2021, according to the World Bank’s January 2022 Global Economic Prospects report. Growth will be supported by higher oil prices, a gradual easing of the Organisation of the Petroleum Exporting Countries (OPEC) production cuts and regulatory reforms. However, the Russia-Ukraine tension poses a very formidable headwind to the global economy with tremendous adverse impact on inﬂation, food security and international trade. To address the forex challenges in the economy, the CBN initiated the RT200 Non-Export Repatriation Scheme which has now made non-oil export drive a compelling business proposition for banks. This aligns strategically with our focus on non-oil export drive which we initiated for the past seven years on the platform of our annual export seminar. As part of eﬀorts to maintain the economic growth trajectory, the CBN will likely continue with initiatives to boost credit ﬂows to key productive sectors of the economy to stimulate output growth while keeping a close watch on inﬂationary trends. At Zenith Bank, we will continue to build scenarios along the emerging trends and adapt in the most strategically intelligent manner as we move along and seek growth opportunities while adopting sound policies and sustainable banking practices. We are resolute and will steadfastly double down on our overall goal of creating enduring value for all our stakeholders.Thank you.EBENEZER ONYEAGWUGroup Managing Director / CEO29Zenith Bank Plc Annual Report December 31, 2021Board of Directors BOARD OF DIRECJim Ovia is the founder and chairman of Zenith Bank Plc, one of Africa’s largest banks with over $22.80 billion in assets and shareholders’ funds of US$3.03 billion as at December, 2021. Zenith Bank is a global brand listed on the London Stock Exchange and the Nigerian Stock Exchange. In addition to major operations in Nigeria and other West African countries, the Bank has sizeable operations in London and Dubai.Jim Ovia is the founder and chancellor of James Hope University Lekki, Lagos which was recently approved by the National Universities Commission (NUC) to oﬀer postgraduate degrees in business courses. James Hope University will commence academic activities in September 2023.Through his philanthropy – the Jim Ovia Foundation – he has shown the importance he accords good education. In support of the Nigerian youth, Jim Ovia Foundation oﬀers scholarships to indigent students through the Mankind United to Support Total Education (MUSTE) initiative. Most of the beneﬁciaries of Jim Ovia Foundation scholarship are now accountants, business administrators, lawyers, engineers, doctors etc.He is the author of “Africa Rise And Shine”, published by ForbesBooks. The book which encapsulates Zenith Bank’s meteoric rise, details the secrets of success in doing business in Africa.He is an alumnus of the Harvard Business School (OPM), University of Louisiana (MBA), and Southern University, Louisiana, (B.Sc. Business Administration).Jim Ovia is a member of the World Economic Forum Community of Chairpersons, and a champion of the Forum’s EDISON Alliance.In recognition of Jim Ovia’s contributions to the economic development of Nigeria, in 2011 the Federal Government of Nigeria honoured him with Commander of the Order of the Niger, CON.32JIM OVIA, CONFounder and ChairmanARD OF DIRECTORSMr. Ebenezer Onyeagwu was appointed Group Managing Director/CEO of Zenith Bank Plc on the 1st of June 2019. He is a seasoned banker and an astute ﬁnancial strategist with over three decades of banking experience. He is an alumnus of Auchi Polytechnic, Delta State University Nigeria, the University of Oxford, England and Salford Business School, University of Salford, Manchester, United Kingdom. At the University of Oxford, he obtained a Postgraduate Diploma in Financial Strategy and a certiﬁcate in Macroeconomics while he received a Masters Degree in Financial Services Management from the University of Salford. He also holds an MBA from Delta State University, Abraka. He undertook extensive executive-level education in Wharton Business School of the University of Pennsylvania, Columbia Business School of Columbia University, the Harvard Business School of Harvard University in the United States. Before joining Zenith Bank Plc, he worked at Citizens International Bank Limited between 1991 and 2002. He joined Zenith Bank Plc in 2002 as a Senior Manager in the Internal Control and Audit Group of the bank. His professionalism, competence, integrity and commitment to the objectives of the bank saw him rise swiftly between 2003 and 2005, ﬁrst, as Assistant General Manager, then Deputy General Manager, and eventually, General Manager of the bank. In these capacities, he handled strategies for new business and branch development, management of risk assets portfolios, treasury functions, strategic top level corporate, multinationals and public institutional relationships, among others. He was appointed Executive Director of the bank in 2013, responsible for Lagos and South-South Zones as well as strategic groups/business units of the bank, including Financial Control & Strategic Planning, Treasury & Correspondent Groups, Human Resources Group, Oil & Gas Group, and Credit Risk Management Group.Mr. Onyeagwu was named Deputy Managing Director of the bank in 2016. In that capacity, he deputised for the Group Managing Director and Chief Executive Oﬃcer with direct oversight of the bank’s Financial Control and Strategic Planning, Risk Management, Retail Banking, Institutional and Corporate Banking Portfolios, Information Technology Group, Credit Administration, and Treasury & Foreign Exchange Trading.Mr Onyeagwu is the Chairman of Zenith Pensions Custodian Limited and Zenith Nominees Limited. He is also on the Board of Zenith Bank (UK) Limited, FMDQ Holdings Plc and Lagos State Security Trust Fund (LSSTF). Mr. Onyeagwu is a member of the International Monetary Conference (IMC), Wall Street Journal CEO Council, and member of the African Trade Gateway Advisory Council of the Africa Export-Import Bank (Afreximbank). He also served on the board of Zenith Bank Ghana Limited, Zenith General Insurance, Zenith Securities Limited, Zenith Assets Management Company, Zenith Medicare Limited, and Africa Finance Corporation (AFC). Mr. Onyeagwu is a Fellow (FCA) of the Institute of Chartered Accountants of Nigeria (ICAN), a Fellow of Nigerian Institute of Management (NIM), The Chartered Institute of Bankers of Nigeria (CIBN), Institute of Credit Administrators (ICA) and Senior Associate Member, Risk Management Institute of Nigeria (RIMAN).33Zenith Bank Plc Annual Report December 31, 2021EBENEZER ONYEAGWUGroup Managing Director/CEOBOARD OF DIRECWith over 20 years cognate banking and broad executive management experience, Dame (Dr.) Adaora Umeoji rose through the ranks to her current position. She is an alumnus of Harvard Business School, she holds a Bachelor’s degree in Sociology from the University of Jos and a ﬁrst class honours in Law from Baze University Abuja. She also holds a Master in Law from the University of Salford, United Kingdom, a Master in Business Administration (MBA) from the University of Calabar. She is a graduate of the Advanced Management Program (AMP) from Havard Business School, Boston, USA and she holds a doctorate degree in Business Administration from Apollos University, Montana, USA. Her dissertation was on inspirational leadership and her ﬁndings have been recognized as a major contribution to leadership and people management.She attended the strategic thinking and management programme at Wharton Business School, Pennsylvania, USA and also holds a Certiﬁcate in Leading Global Businesses from Harvard Business School, Boston, USA. She is a fellow of notable professional bodies including the Chartered Bankers Institute of London, Chartered Institute of Bankers of Nigeria, Institute of Credit Administration, Institute of Certiﬁed Public Accountants of Nigeria, Institute of Chartered Meditators & Conciliators, and the Institute of Chartered Secretaries & Administrators of Nigeria, among others.She has presented lead papers at major academic conferences and symposia. Recently, she was a keynote speaker at the Zenith Global Economic Forum held in New York City, USA where she delivered a thought-provoking lecture on Financing Growth Drivers in the Nigerian Economy.Dame (Dr.) Adaora Umeoji has at diﬀerent times participated in high-level Bankers’ meetings with impactful contributions towards the advancement of the banking industry, national economic growth and development. She has delivered several motivational speeches at strategic sessions aimed at mentoring youths and managers, especially banking professionals. Beyond banking, Dame (Dr.) Adaora Umeoji supports research and learning on inspirational leadership, mentorship, talent development, collaboration, change and adaptability, strategic thinking, innovation and creativity, amongst others. She promotes the Pink Breath Cancer Care Foundation which supports several healthcare programs within the six geopolitical zones of Nigeria. She has won numerous awards for excellence and creativity in management. Her contribution towards improving humanity has been recognized by various organizations including the Nigerian Red Cross. As a result of her passion in promoting professionalism in the banking industry and improving the well-being of the less privileged, Dr. Adaora Umeoji founded the Catholic Bankers Association of Nigeria (CBAN), a platform she uses to promote ethical banking and service to humanity.Dame (Dr.) Adaora Umeoji is a Peace Advocate of the United Nations (UN-POLAC), and a Lady of the Order of Knights of St. John International (KSJI), and was recently awarded a Papal Knight of the Order of St. Sylvester by His Holiness Pope Francis.34Deputy Managing DirectorDAME (DR.) ADAORA UMEOJIARD OF DIRECTORSHe is a Professor at the San Diego State University, California, United States of America. Prior to this appointment, he was the Professor and Dean, College of Health Sciences, University of Wisconsin, Milwaukee, United States of America. He was also Professor and Dean, School of Health Professions, New York Institute of Technology, Old Westbury, New York, United States of America and Professor/Chairman, University of Kansas (Medical Center), Kansas City, United States of America as well as Associate Professor of Orthopaedics and Rehabilitation, University of Miami, School of Medicine, Miami, Florida, United States of America.He graduated and obtained his ﬁrst degree in 1978 from the University of Ibadan, Ibadan, Oyo State, Nigeria. He obtained his Master’s degree in 1983 from the University of Southern California, Los Angeles, United States of America and thereafter proceeded to the New York University, New York, United States of America where he bagged his Ph.D. in 1985.Professor Enwemeka is a distinguished scholar who has authored several books and has provided administrative oversight and academic leadership for various degree programs and in various prestigious Universities.Non-Executive DirectorPROF. CHUKUKA ENWEMEKAHe is an experienced and well-rounded international banker, interna-tional trade expert and ﬁnancial services professional with a powerful entrepreneurial streak, combined with risk aversion and with an eye to the “bottom line”. He is an energetic lateral thinker with several years experience in Man-agement Consulting, Board and Corporate Governance.Mr. Efeyini is a fellow of the Chartered Institute of Bankers, United King-dom. He holds a Master’s degree from the London School of Econom-ics and Political Science as well as an MBA from the University of Lagos, Nigeria.He recently retired as the Managing Director of Melvale Group, United Kingdom (a diversiﬁed international trade ﬁnance and foreign direct investment consulting organization).From2003 to 2009, he was an Independent Director with Union Bank UK Plc, London. He was also a Director and later Chairman of Britain Nigeria Business Council, London. He started his professional banking career with Barclays Bank Interna-tional, United Kingdom, later Union Bank of Nigeria and rose to the position of the pioneer Chief Executive/General Manager, Union Bank of Nigeria Plc, London.35Zenith Bank Plc Annual Report December 31, 2021Non-Executive DirectorJEFFREY EFEYINIBOARD OF DIRECMr. Ukpeh is an internationally acclaimed consultant in business strategy, risk management, process re-engineering and ﬁnancial services, who was, until recently, a Senior Partner and Risk Quality Leader for Africa at PricewaterhouseCoopers (PwC).He is a fellow of the Institute of Chartered Accountants of Nigeria with over thirty ﬁve (35) years experience in Financial Audit and Reporting, as well as a member of the Institute of Taxation of Nigeria.A graduate of accounting, he holds Graduate Diploma in Business Administration from the University of Warwick, Coventry, United Kingdom. He obtained a Master of Science (M.Sc) Degree in Contemporary Accounting from the Leeds Metropolitan University, UK in 2009.He worked with PwC, an International Business auditing and consulting ﬁrm for over thirty ﬁve (35) years, and as a Partner for over 20 years led, directed, planned and managed the audit, accounting, and consulting assignments for numerous ﬁnancial institutions, multinationals and local companies, including most major banks in Nigeria.Dr. Omobola Ibidapo-Obe Ogunfowora, a Legal Practitioner and Corporate Governance Practitioner, graduated LLB (Hons) from the Cardiﬀ Law School, United Kingdom and obtained LLM from the same University. She obtained a Master’s degree (MRes) from the Queen Mary University of London, United Kingdom in 2010 and subsequently advanced to the Middlesex University, London, United Kingdom for her Doctorate degree and graduated with PhD in Competition Law.Dr. Ibidapo-Obe Ogunfowora was a Law Lecturer at the University of Lagos, Nigeria where she lectured at the Department of Commercial and Industrial Law.She has been a Legal Counsel with Olusola Ibidapo-Obe & Co., Legal Practitioners for almost two decades and also a Dispute Resolution Compliance Specialist with Ombudsman Services, United Kingdom. She had previously worked as a Research Assistant with the Lagos State Judiciary between February 2003 and August 2004.She is a Non-Executive Director with Barton Schools, Lagos, Nigeria, where she is responsible for overseeing the long term development of the schools and provide strategic advisory services to ensure sustainability of the schools.Dr. Ogunfowora is a Corporate Governance Practitioner.Non-Executive DirectorDr. OMOBOLA IBIDAPO-OBE OGUNFOWORANon-Executive DirectorGABRIEL UKPEH36ARD OF DIRECTORSEngr. Mustafa Bello graduated with B.Engr. (Civil Engineering), from the Ahmadu Bello University (ABU), Zaria in 1978 with Second Class Upper Division and won the Shell prize for best project and thesis for Faculty of Engineering in 1978.He served in the Directorate of Quartering and Engineering Service (Nigerian Army) between 1978 / 1979 and later joined the Niger State Housing Corporation between 1980 and 1983 as a Senior Civil Engineer.He served as a cabinet Minister of the Federal Republic of Nigeria as the Federal Minister of Commerce between 1999 and 2002. He was subsequently appointed Executive Secretary/Chief Executive Oﬃcer of the Nigerian Investments Promotion Commission (NIPC) between November 2003 and February 2014.He is currently the Chairman of Invest-in-Northern Nigeria Limited, a special purpose vehicle for the economic and social transformation of the Northern Nigerian Economy.He has been involved in several projects in Nigeria including CAC on-line project in 2002, developed WTO consistent Trade Policy for the Federal Republic of Nigeria etc.He has attended several conferences, missions and meetings and represented the Federal Government of Nigeria.Dr. Al-Mujtaba Abubakar is currently the Managing Director of Apt Pensions Funds Managers Limited.He is a graduate of the Leeds Polytechnic, UK. He is a renowned Chartered Accountant and a Fellow of the Institute of Chartered Accountants of Nigeria.Dr. Abubakar has extensive and tremendous experience in the ﬁnancial services industry, audit and consulting. He worked with the ﬁrm of Akintola Williams Deloitte between January 2000 and November 2008, and rose to become the Partner and Board Member of West Africa sub-region. Prior to this, he had served on the Board of several ﬁnancial institutions in Nigeria.He has attended several management and leadership training programmes and conferences both within and outside the country.He brings to the Board of the bank tremendous track record in Risk Management, Credit & Marketing, Auditing and very outstanding leadership skills.Non-Executive DirectorDR. AL-MUJTABA ABUBAKARNon-Executive DirectorENGR. MUSTAFA BELLO37Zenith Bank Plc Annual Report December 31, 202138Umar graduated in 1990 with B.Sc (Hons) Accounting from Ahmadu Bello University, Zaria and later obtained an MSc. (Banking & Finance) from Bayero University Kano in 1998. He started his banking career over 28 years ago in 1993 at Citibank (Nigeria International Bank). Thereafter, worked in two other banks before joining Zenith bank in 2006. Prior to his appointment as an Executive Director in Zenith Bank, he was a General Manager responsible for private sector businesses in the Abuja region as well as supervising branches in the Northwest and Northeastern regions of the bank.He has attended several local and international courses at renowned institutions including London Business School and Harvard. He is a Fellow of the Nigerian Institute of Management; Fellow, Chartered Institute of Loan and Risk Management; Senior Honorary Member, Chartered Institute of Bankers; and Member, Association of National Accountants of Nigeria.He also sits on the board of Zenith Pension Custodians.Dr. Temitope Fasoranti is a seasoned banker with over three decades of experience in the Nigerian ﬁnancial services industry. He is an alumnus of the Obafemi Awolowo University (OAU) Ile-Ife, where he received a Bachelor’s Degree in Economics (1988), a Master’s Degree in Economics (1991) and a Doctor of Philosophy Degree (PhD) in Economics.He has also received executive-level education and attended several international courses and programmes, including Changing The Game: Negotiation and Competitive Decision Making (Harvard Business School), Creating and Leading High-Performance Teams (The Wharton School, Pennsylvania, USA), and Developing Strategy for Value Creation (London Business School). He worked in FBN Merchant Bankers from 1991 to 1997 before joining Zenith Bank in 1997. Prior to his appointment as Executive Director in December 2017, he was a General Manager/Group Zonal Head overseeing several branches and zones in Lagos State, including Ikeja Zone, Apapa Zone, Ilupeju Zone, and South-West region. He also served as the Group Head of strategic business units in the head oﬃce, including Oil & Gas, Conglomerate Group, and Agriculture Desk. Dr. Fasoranti’s experience spans Treasury Management, Corporate Finance, Corporate Banking, Risk Management and Retail Banking. He is also vastly experienced in managing Fintech relationships, with competences in cards, electronic banking and payment systems.Dr. Fasoranti is a member of the Nigerian Economic Society (NES), Nigerian Institute of Management (NIM), the Institute of Credit Administration, and an honorary member of the Chartered Institute of Bankers of Nigeria (CIBN). He sits on the board of Zenith Pensions Custodian Limited. DR. TEMITOPE FASORANTIExecutive DirectorExecutive DirectorUMAR SHUAIB AHMED39Zenith Bank Plc Annual Report December 31, 2021Mr. Olisa attended the Federal Polytechnic Bida graduating with distinction and as the best student in the Faculty of Business Administration and Management during his time. He is a Chartered Accountant and holds an MBA. He is a Fellow of the Institute of Chartered Accounts of Nigeria (FCA), Fellow of the Chartered Institute of Bankers of Nigeria (FCIB) and an Associate, Chartered Institute of Taxation (ACIT). He serves on various Boards which include: The Nigeria Interbank Settlement System, Quantum Zenith Nominees and Visa CEMEA Risk Executive Council. He has attended several international courses including INSEAD Business School, Fontainebleau, France; Harvard Business School, Boston, Massachusetts, USA; Booth School of Business, University of Chicago, USA; London School of Economics (LSE) UK, and Oxford Princeton Programme, Oxford, United Kingdom.Mr. Olisa has spent over twenty-eight (28) years in the Nigerian Banking Industry. He joined the services of the bank in 1998. His experience covers Treasury, Banking Operations, Credit Risk Management, Commercial Banking, Telecommunication, Oil and Gas, Internal Control as well as Branch Management and Zonal Management. He has a very good knowledge of Strategy, Risk and Digital Transformation. Prior to his appointment, he was a General Manager and Chief Inspector of the bank, overseeing the Internal Audit and Inspection function of the Group.Henry Oroh holds a Bachelor’s Degree in Accounting from the University of Benin, Edo State and an MBA from the Lagos State University as well as an LLB Degree from the University of London. He is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and an honorary member of the Chartered Institute of Bankers (CIBN), Nigeria.He has over two decades of banking experience. He began his banking career in 1992 at Citibank where he served for seven (7) years in Operations, Treasury and Marketing.He joined Zenith Bank in February 1999 and has worked in various Groups and Departments within the Zenith Group Oﬃce. His expertise spans Operations, Information Technology, Treasury, Marketing, including the Manufacturing, Food and Beverages, Pharmaceuticals, Oil and Gas, Public Sector, Consumer, as well as Corporate Banking and Business Development.In April 2012, he was seconded to Zenith Bank Ghana Limited as an Executive Director and became the Managing Director/ Chief Executive in February 2016, where he successfully spearheaded the phenomenal growth of the Zenith Brand both within the Ghana market and the West African sub-region.Henry has attended several Leadership Programmes and Executive Management Courses at the Harvard Business School, Columbia Business School, New York, University of Chicago, University of Pennsylvania, HEC Paris, JP Morgan Chase, UK and the Lagos Business School.He comes to the Board of Zenith Bank Plc with strong competencies in Credit & Marketing, Operations, Information Technology, Treasury and impressive Leadership skills.Executive DirectorHENRY OROHExecutive DirectorDENNIS OLISAThe directors present their report on the aﬀairs of ZENITH BANK PLC (“the Bank”), together with the ﬁnancial statements and independent auditor’s report for the year ended 31 December 2021.1. Legal formThe Bank was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on 30 May,1990. It was granted a banking licence in June 1990, to carry on the business of commercial banking and commenced business on June 16, 1990. The Bank was converted into a Public Limited Liability Company on 20 May 2004. The Bank’s shares were listed on the ﬂoor of the Nigerian Stock Exchange on 21 October 2004. In August 2015, the Bank was admitted into the premium Board of the Nigerian Stock Exchange. The Bank is also listed on the London Stock Exchange.There have been no material changes to the nature of the Group’s business from the previous year.2. Principal activities and business reviewThe principal activity of the Bank is the provision of banking and other ﬁnancial services to corporate and individual customers. Such services include obtaining deposits from the public, granting of loans and advances, corporate ﬁnance and money market activities.The Bank has six subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pensions Custodian Limited, Zenith Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited, Zenith Bank (The Gambia) Limited and Zenith Nominees Limited. During the year, the Bank did not open any new branch and neither was any existing branch closed.As at 31 December 2021 the Group had 440 branches, 188 cash centers; 2,086 ATM terminals; 163,398 POS terminals and 14,743,191 cards issued to its customers. (31 December 2020: 440 branches, 177 cash centers, 2,042 ATM terminals, 89,636 POS terminals and 10,985,869 cards issued).3. Operating resultsGross earnings of the Group increased by 9.9% while the proﬁt before tax increased by 9.6% . Highlights of the Group’s operating results for the year under review are as follows:31-Dec-2131-Dec-20N' MillionN' MillionGross earnings765,558696,450Proﬁt before tax280,374255,861Income tax expense(35,816)(25,296)Proﬁt after tax244,558230,565Non- controlling interest(156)(191)Profit attributable to the equity holders of the parent244,402230,374Appropriations Transfer to statutory reserve44,68629,875Transfer to retained earnings and other reserves199,716196,462244,402230,374Basic and diluted earnings per share (Naira)7.787.344. DividendsThe Board of Directors, pursuant to the powers vested in it by the provisions of section 426 of the Companies and Allied Matters Act (CAMA 2020) of Nigeria, proposed a ﬁnal dividend of N2.80 per share which in addition to the N0.30 per share as interim dividend amounts to N3.10 per share (2020: Interim dividend of N0.30 per share, ﬁnal dividend of N2.70 per share and total dividend per share of N3.00) from the retained earnings account as at 31 December 2021. This will be presented for ratiﬁcation by the shareholders at the next Annual General Meeting.Payment of dividends is subject to withholding tax at a rate of 10% in the hands of qualiﬁed recipients.5. Directors’ shareholdingThe direct and indirect interests of directors in the issued share capital of Zenith Bank Plc as recorded in the register of directors shareholding and/or as notiﬁed by the directors for the purposes of sections 301 and 302 of CAMA 2020 and the listing requirements of the Nigerian Stock Exchange is as follows: Directors’ Report for the Year Ended 31 December, 202140Interests in sharesNumber of Shareholding31 December, 202131 December, 2020DirectorDesignationDirectIndirectDirectIndirectJim Ovia, CON.Chairman / Non-Executive Director3,546,199,3951,525,904,9163,546,199,3951,525,904,916Prof. Chukuka EnwemekaNon-Executive Director127,137127,137Mr. Jeﬀrey EfeyiniNon Executive Director541,690-541,690-Prof. Oyewusi Ibidapo-Obe*Non Executive Director / Independent--1,000,000-Mr. Gabriel UkpehNon Executive Director / Independent32,660-32,660-Engr. Mustafa BelloNon Executive Director / Independent----Dr. Al-Mujtaba AbubakarNon Executive Director / Independent----Dr. Omobola Ibidapo-ObeOgunfowora**Non Executive Director / Independent----Mr. Ebenezer OnyeagwuGroup Managing Director65,062,844-46,500,000-Dame (Dr.) Adaora UmeojiDeputy Managing Director68,873,1691,710,12368,873,1691,710,123Mr. Ahmed Umar ShuaibExecutive Director14,077,343-9,577,343-Dr. Temitope FasorantiExecutive Director11,075,000-8,075,000-Mr. Dennis OlisaExecutive Director14,125,000-10,122,316-Mr. Henry OrohExecutive Director9,964,127-7,827,027-* Deceased on 3 January 2021** Appointed to the Board eﬀective 30 June 2021The indirect holdings relate to the holdings of the Directors in the under listed companies:• Jim Ovia: (Institutional investors Ltd, Lurot Burca Ltd, Jovis Nigeria Ltd, Veritas Registrars Ltd, Quantum Zenith Securities Ltd)• Adaora Umeoji: (Palaise Vendome Limited)6. Directors’ RemunerationThe Bank ensures that remuneration paid to its Directors complies with the provisions of the Code of Corporate Governance issued by its regulators.In compliance with The National Code of Corporate Governance Section 34(5) of the Code of Corporate Governance for Public Companies as issued by Securities and Exchange Commission, the Bank makes disclosure of the remuneration paid to its directors as follows:Type of package Fixed Description TimingBasic Salary- Part of gross salary package for Executive Directors only. Reﬂects the banking industry competitive salary package and the extent to which the Bank’s objectives have been met for the ﬁnancial year.Paid monthly duringthe ﬁnancial year.Other allowances- Part of gross salary package for Executive Directors only. Reﬂects the banking industry competitive salary package and the extent to which the Bank’s objectives have been met for the ﬁnancial year.Paid at periodic intervals during the ﬁnancial year.Productivity bonus-Paid to executive directors only and tied to performance of the line report. It is also a function of the extent to which the Bank’s objectives have been met for the ﬁnancial year.Paid annually in arears.Director fees- Paid annually on the day of the Annual General Meeting (‘AGM’) to Non-Executive Directors only.Paid annually on the day of the AGM.Sitting allowances- Allowances paid to Non-Executive Directors only, for attending Board and Board Committee Meetings.Paid after each Meeting.41Zenith Bank Plc Annual Report December 31, 2021Strategic Report11. Shareholding analysisThe shareholding pattern of the Bank as at 31 December, 2021 is as stated below:Share rangeNo. of ShareholdersPercentage of ShareholdersNumber of holdingsPercentage Holdings (%)1-10,000539,92183.8432 %1,595,654,8315.08 %10,001 - 50,00079,67612.3727 %1,644,838,6015.24 %50,001 - 1,000,00022,6903.5235 %3,846,174,54612.25 %1,000,001 - 5,000,0001,2520.1944 %2,625,604,6978.36 %5,000,001 - 10,000,0001840.0286 %1,276,980,0614.07 %10,000,001 - 50,000,0001680.0261 %3,610,190,36211.50 %50,000,001 - 1,000,000,000720.0112 %11,968,532,27938.12 %Above 1,000,000,00020.0003 %4,828,518,41015.38 %643,965100 %31,396,493,787100 %The shareholding pattern of the Bank as at December 31, 2020 is as stated below: Share rangeNo. of ShareholdersPercentage of ShareholdersNumber of holdingsPercentage Holdings (%)1-9,999540,08983.8506 %1,600,471,2285.10 %10,000 - 50,00079,95112.4127 %1,649,026,2875.25 %50,001 - 1,000,00022,3783.4743 %3,742,557,95911.92 %1,000,001 - 5,000,0001,2320.1913 %2,594,952,8118.27 %5,000,001 - 10,000,0001910.0297 %1,327,572,7624.23 %10,000,001 - 50,000,0002020.0314 %4,418,860,98714.07 %50,000,001 - 1,000,000,000640.0099 %11,234,533,34335.78 %Above 1,000,000,000 20.0003 %4,828,518,41015.38 %644,109100 %31,396,493,787100 %7. Changes on the BoardIn the course of the year, Professor Oyewusi Ibidapo-Obe died on 3 January 2021 and ceased to be a member of the board. Also, Dr. Omobola Ibidapo-Obe Ogunfowora was appointed as an Independent Non-Executive Director eﬀective 30 June 2021.8. Directors’ interests in contractsFor the purpose of section 303(1) and (3) of CAMA 2020, all contracts with related parties during the year were conducted at arm’s length. Information relating to related parties transactions are contained in Note 38 to the ﬁnancial statements.9. Acquisition of own sharesThe shares of the Bank are held in accordance with the Articles of Association of the Bank. The Bank has no beneﬁcial interest in any of its shares.10. Property and equipmentInformation relating to changes in property and equipment is given in Note 26 to the ﬁnancial statements. In the opinion of the directors, the market value of the Group’s property and equipment is not less than the value shown in the ﬁnancial statements.42Directors’ Report for the Year Ended 31 December, 202112. Substantial interest in sharesAccording to the register of members as at 31 December, 2021, the following shareholders held more than 5% of the issued share capital of the Bank.Number of Shares HeldNumber of Shares HeldJim Ovia, CON3,546,199,39511.29 %According to the register of members at 31 December 2020, the following shareholders held more than 5% of the issued share capital of the Bank.Jim Ovia, CON3,546,199,39511.29 %13. Donations and charitable giftsThe Bank made contributions to charitable and non-political organisations amounting to N4,372 million during the year ended 31 December 2021 (31 December 2020: N3,285 million).The beneﬁciaries are as follows: Various Security Trust Funds2,782Nigerian law School500University of Lagos244Ogun State Cooperative Society75Donation to various charity organisations55Delta State Principal Cup50Opekete Charity Foundation50Lagos Economic Summit50Okowa Five Charity Initiative44St. Saviour School Ikoyi20Sponsorship of SERAS CSR182021 Microsoft Office Secured Productive Enterprise13Sponsorship of 2021 Nigerian Fintech Week10Sponsorship of 21st Annual Women Conference30Sponsorship of 51st Annual ICAN Conference10Other donations individually below N10 million4214,37214. Events after the reporting period Finance Act 2021The Finance Act was signed into Law on 31 December, 2021, with an eﬀective date of 1 January, 2022. The signing into law of the Finance bill on 31 December 2021 qualiﬁes as an adjusting event as the bill had been in existence at the end of the ﬁnancial year. In view of this development, the Bank has reviewed the provisions of the Act and have made appropriate adjustments to the ﬁnancial estimates disclosed in the Financial statement in line with the relevant provisions of the Finance Act. 15. Group’s strategy against the impact of Covid-19The Group has considered the impact of Covid-19 on its business operations and has put in place appropriate safeguards to minimize negative impact of Covid-19 pandemic on its business.The Group continues to make adjustments to the way and manner in which it renders banking and other ﬁnancial services to its customers in order to cope with the challenges posed by the Covid-19 pandemic. Critical areas of the bank’s business and operation which are closely monitored vis-a-vis the threat posed by Covid-19 are;a. Protection of the bank’s cash ﬂow,b. Protection of the bank’s human resources and,c. Enhancement of the digital & electronic platforms of the bank to facilitate fast and seamless banking services to its customers.Protection of the Group’s Cash flowIn order to protect the cashﬂow of the Group and prevent a drop in the Group’s earnings, proﬁt and asset quality, the Group has adopted the following strategies: Provision of critical support to the bank’s loan customers to help them navigate through the challenges posed by the pandemic. Engaging of the bank’s customers in key sectors of the economy to better understand their current challenges and provide eﬀective and bespoke actions to alleviate their hardships while preserving shareholders’ funds.43Zenith Bank Plc Annual Report December 31, 2021Strategic Report Continuous adoption of a complete and integrated approach to risk management that is driven from the Board level to the operational activities of the bank. Continuous review of the bank’s loan book in order to closely monitor all assets and liabilities classes and ensure that the bank has suﬃcient liquidity to meet its ﬁnancial obligations. Developing and testing several stress scenarios to assess the possible impacts of Covid-19 on the bank’s liquidity, capital adequacy and earning capacity. Updating the bank’s Expected Credit Loss (ECL) model in order to appropriately captures forward looking macro- economic indices which incorporates eﬀects of covid-19.In updating its ECL model, the Group leveraged on guidance from the International Accounting Standard Board (IASB) and the Financial Reporting Council of Nigeria (FRCN) circular “Covid-19 and its impact on the ﬁnancial reporting of entities in Nigeria, guidance for preparers of ﬁnancial statements during Covid-19 period”.Protection of the Group’s Human ResourcesThe Group has put in place measures to protect its employees, customers and other stakeholders of the bank. Some of the measures are: Setting a clear direction and communicated this eﬀectively to all staﬀ and other stakeholders in accordance with our Business Continuity Plan (BCP). The Group continues to encourage remote working and electronic self-services for our traditional banking services. Constant review and strengthening of the Group’s Business Continuity Plan (BCP) to reﬂect the current and potential impacts of Covid-19 pandemic.The Group also continues to encourage ﬂexible working condition among its employees. Consequently, the Group has made signiﬁcant investment in IT infrastructure that facilitates remote working condition. To complement this, increased our investment in IT and Cyber Security infrastructure to enable us meet the increasing digital needs of our customers while protecting our organization and customers from all cyber security threats.Enhancement of the Digital & Electronic Platforms of the GroupThe Group continues to enhance the capabilities of its digital and electronic banking channels. Some of the digital initiatives launched by the bank during the year include the birth of ZIVA (Zenith Intelligent Virtual Assistant) which is an highly interactive chatbot that helps with the provision of mobile banking services to customers.16. Disclosure of customer complaints in financial statements for the year ended 31 December 2021DescriptionNumberAmount claimedAmount refunded31-Dec-2131-Dec-2031-Dec-21 N’m31-Dec-20 N’m31-Dec-21 N’m31-Dec-20 N’mPending complaints brought forward83,89954962,988180,7651313Received Complaints307,537175,70235,22727,939-9Resolved Complaints225,12292,35240,700145,7167,0123,723Unresolved Complaints escalated to CBN for intervention / carried forward166,31483,89957,51562,988-44Directors’ Report for the Year Ended 31 December, 202117. Human resources(i) Employment of disabled personsThe Group maintains a policy of giving fair consideration to the application for employment made by disabled persons with due regard to their abilities and aptitude. The Group’s policy prohibits discrimination against disabled persons in the recruitment, training and career development of its employees. In the event of members of staﬀ becoming disabled, eﬀorts will be made to ensure that their employment continues and appropriate training arranged to ensure that they ﬁt into the Group’s working environment.(ii) Health, safety and welfare at workThe Group enforces strict health and safety rules and practices at the work environment, which are reviewed and tested regularly. The COVID-19 pandemic also presented an opportunity for the Group to enhance its health and safety protocols in all its operating locations. The Group also provides medical insurance cover for staﬀ and immediate family members.Fire prevention and ﬁre-ﬁghting equipment are installed in strategic locations within the Group’s premises, while occassional ﬁre drills are conducted to create awareness amongst staﬀ.The Group operates both a Group Personal Accident and the Workmen’s Compensation Insurance covers for the beneﬁt of its employees. It also operates a contributory pension plan in line with the Pension Reform Act.(iii) Employee training and developmentThe Group ensures, through various fora, that employees are informed on matters concerning them. Formal and informal channels are also employed in communication with employees with an appropriate two-way feedback mechanism.In accordance with the Group’s policy of continuous development, training facilities are provided in well-equipped training centres. These are complemented by on-the-job training. 45Zenith Bank Plc Annual Report December 31, 2021Strategic Report{iv) Gender analysis of staffThe average number of employees of the Bank during the year by gender and level is as follows:a. Analysis of total employeesGender NumberGender PercentageMaleFemaleTotalMaleFemaleEmployees3,2123,0866,29851 %49 %3,2123,0866,29851 %49 %b. Analysis of Board and top management staffGender NumberGender PercentageMaleFemaleTotalMaleFemaleBoard members(Executive and Non-executive directors)1121385 %15 %Top management staﬀ (AGM-GM)53247769 %31 %64269071 %29 %c. Further analysis of board and top management staffGender NumberGender PercentageMaleFemaleTotalMaleFemaleAssistant general managers32174965 %35 %Deputy general managers1762374 %26 %General managers41580 %20 %Board members (Non-executive directors)61786 %14 %Executive directors (excluding MD and DMDs)4-4100 %-%Deputy managing director-11-%100%Managing director/CEO1-1100%-%64269071 %29 %18. AuditorsThe auditors, Messrs Pricewaterhousecoopers, having satisﬁed the relevant corporate governance rules on their tenure in oﬃce, have indicated their willingness to continue in oﬃce as auditors to the Bank. In accordance with section 401 (2) of the Companies and Allied Matters Act of Nigeria 2020, therefore, the auditors will be reappointed at the next annual general meeting of the Bank.By order of the BoardMichael Osilama Otu (Esq.) Company SecretaryJanuary 27, 2022FRC/2013/MULTI/0000000108446Directors’ Report for the Year Ended 31 December, 2021In line with the provision of S. 405 of CAMA 2020, we have reviewed the audited ﬁnancial statements of the bank for the year ended December 31, 2021 and based on our knowledge conﬁrm as follows: (i) The audited ﬁnancial statements do not contain any untrue statement of material fact or omit to state a material fact, which would make the statements misleading.(ii) The audited ﬁnancial statements and all other ﬁnancial information included in the statements fairly present, in all material respects, the ﬁnancial condition and results of operation of the bank as of and for the year ended December 31, 2021.(iii) The bank’s internal controls has been designed to ensure that all material information relating to the bank and its subsidiaries is received and provided to the Auditors in the course of the audit.(iv) The bank’s internal controls were evaluated within 90 days of the ﬁnancial reporting date and are eﬀective as of 31 December 2021.(v) That we have disclosed to the bank’s Auditors and the Audit Committee the following information:(a) there are no signiﬁcant deﬁciencies in the design or operation of the bank’s internal controls which could adversely aﬀect the bank’s ability to record, process, summarise and report ﬁnancial data, and have discussed with the auditors any weaknesses in internal controls observed in the cause of the Audit.(b) there is no fraud involving management or other employees which could have any signiﬁcant role in the bank’s internal control.(vi) There are no signiﬁcant changes in internal controls or in other factors that could signiﬁcantly aﬀect internal controls subsequent to the date of this audit, including any corrective actions with regard to any observed deﬁciencies and material weaknesses.January 27, 2022 Mukhtar Adam, PhDChief Financial Oﬃcer FRC/2013/MUL Tl/00000003196Mr. Ebenezer OnyeagwuGroup Managing Director / CEOFRC/2013/ICAN/00000003788 Statement of Corporate Responsibility for the Financial Statements for the Year Ended 31 December 202147Zenith Bank Plc Annual Report December 31, 2021Strategic ReportGovernance & Sustainability 021. Introduction The Group subscribes to the highest level of Corporate Governance and best practice in the conduct of its business. The Group’s governance practices are constantly reviewed to ensure that it is consistent with global standards.2 The Directors and other key personnel During the year under review, the Directors and other key personnel of the Bank complied with the following Codes of Corporate Governance, which the Bank subscribes to:a. The National Code of Corporate Governance for Public Companies which became eﬀective in January 2019.b. The Securities and Exchange Commission (SEC) issued Code of Corporate Governance for public companies.c. The Central Bank of Nigeria (CBN) issued Code of Corporate Governance for Banks and Discount Houses in Nigeria 2014. In addition to the above Codes, the Bank complies with relevant disclosure requirements in other jurisdictions where it operates.3. Shareholding The Bank has a diverse shareholding structure with no single ultimate individual shareholder holding more than 12% of the bank’s total shares.4. Board of directors The Board has the overall responsibility for setting the strategic direction of the Bank and for oversight of Senior Management. It also ensures that good Corporate Governance processes and best practices are implemented across the Bank and the Group at all times. The Board of the Bank consists of persons of diverse disciplines and skills, chosen on the basis of professional background and expertise, business experience and integrity as well as knowledge of the Bank’s business. Directors are fully aware of their responsibilities and are knowledgeable in the business. They are therefore able to exercise good judgment on issues relating to the Bank’s business. Directors have on the basis of this acted in good faith with due diligence and skill and in the overall best interest of the Bank and relevant stakeholders during the year under review. The Board has a Charter which regulates its operations. The Charter is in line with the National and other Sectoral Governance practices Code of Corporate Governance.5. Board structure The Board is made up of a Non-Executive Chairman, six (6) Non-Executive Directors and six (6) Executive Directors including the GMD/CEO. Four (4) of the Non-Executive Directors are Independent Directors, appointed in compliance with the Central Bank of Nigeria (CBN) circular on Appointment of Independent Directors by Banks. 50Corporate Governance Report for the Year Ended 31 December 2021 The Group Managing Director/Chief Executive is responsible for the day to day running of the Bank and oversees the Group structure, assisted by the Executive Committee (EXCO). EXCO comprises the Executive Directors, Deputy Managing Director as well as the Group Managing Director/Chief Executive as its Chairman.6. Responsibilities of the Board The Board is responsible for the following amongst others:a. reviewing and approving the Bank’s strategic plans for implementation by management;b. review and approving the Bank’s ﬁnancial statements;c. reviewing and approving the Bank’s ﬁnancial objectives, business plans and budgets, including capital allocations and expenditures;d. monitoring corporate performance against the strategic plans and business, operating and capital budgets;e. implementing the Bank’s succession planning;f. approving acquisitions and divestitures of business operations, strategic investments and alliances and major business development initiatives;g. approving delegation of authority for any unbudgeted expenditure;h. setting the tone for and supervising the Corporate Governance Structure of the Bank, including corporate structure of the Bank and the Board and any changes to the strategic plans of the Bank and the Group;i. assessing its own eﬀectiveness in fulﬁlling its responsibilities, including monitoring the eﬀectiveness of individual directors.The membership of the Board during the year is as follows:Board of DirectorsNAME POSITIONJim Ovia, CON ChairmanMr. Jeﬀrey Efeyini Non-Executive DirectorProf. Chukuka S. Enwemeka Non-Executive DirectorProf. Oyewusi Ibidapo-Obe* Independent/Non-Executive DirectorMr. Gabriel Ukpeh Independent/Non-Executive DirectorEngr. Mustafa Bello Independent/Non-Executive DirectorDr. Al-Mujtaba Abubakar Independent/Non-Executive DirectorDr. Omobola Ibidapo-Obe Ogunfowora** Independent/Non-Executive DirectorMr. Ebenezer Onyeagwu Group Managing Director/CEODame (Dr.) Adaora Umeoji Deputy Managing DirectorMr. Umar Shuaib Ahmed Executive DirectorDr. Temitope Fasoranti Executive DirectorMr. Dennis Olisa Executive DirectorMr. Henry Oroh Executive Director* Deceased on 3 January 2021** Appointed to the Board eﬀective 30 June, 2021The Board meets at least once every quarter but may hold extra-ordinary sessions to address urgent matters requiring the attention of the Board.51Governance & SustainabilityZenith Bank Plc Annual Report December 31, 20217. Roles of Chairman and Chief Executive The roles of the Chairman and Chief Executive are separate and no one individual combines the two positions. The Chairman’s main responsibility is to lead and manage the Board to ensure that it operates eﬀectively and fully discharges its legal and regulatory responsibilities. The Chairman is responsible for ensuring that Directors receive accurate, timely and clear information to enable the Board take informed decisions and provide advice to promote the success of the Bank. The Chairman also facilitates the contribution of Directors and promotes eﬀective relationships and open communications between Executive and Non-Executive Directors, both inside and outside the Boardroom. The Board has delegated the responsibility for the day-to-day management of the Bank to the Group Managing Director/Chief Executive Oﬃcer, who is supported by Executive Management. The Group Managing Director executes the powers delegated to him in accordance with guidelines approved by the Board of Directors. Executive Management is accountable to the Board for the development and implementation of strategies and policies. The Board regularly reviews group performance, matters of strategic concern and any other matter it regards as material.8. Director Nomination Process The Board Governance Nomination and Remuneration Committee is charged with the responsibility of leading the process for Board appointments and for identifying and nominating suitable candidates for the approval of the Board. With respect to new appointments, the committee identiﬁes, reviews and recommends candidates for potential appointment as Directors. In identifying suitable candidates, the Committee considers candidates on merit against objective criteria and with due regard for the beneﬁts of diversity on the Board, including gender as well as the balance and mix of appropriate skills and experience. Shareholding in the Bank is not a criterion for the nomination or appointment of a Director. The appointment of Directors is subject to the approval of the shareholders and the Central Bank of Nigeria.9. Induction and Continuous Training Upon appointment to the Board and to Board Committees, all Directors receive an induction tailored to meet their individual requirements. The induction, which is arranged by the Company Secretary, may include meetings with senior management staﬀ and key external advisors, to assist Directors in acquiring a detailed understanding of the Bank’s operations, its strategic plan, its business environment, the key issues the Bank faces, and to introduce Directors to their ﬁduciary duties and responsibilities. The Bank attaches great importance to training its Directors and for this purpose, continuously oﬀers training and education from onshore and oﬀshore institutions to its Directors, in order to enhance their performance on the Board and the various committees to which they belong.10. Board Committees The Board carries out its oversight functions using its various Board Committees. This makes for eﬃciency and allows for a deeper attention to speciﬁc matters for the Board. Membership of the Committees of the Board is intended to make the best use of the skills and experience of non-executive directors in particular. The Board has established the various Committees with well-deﬁned terms of reference and Charters deﬁning their scope of responsibilities in such a way as to avoid overlap or duplication of functions.52Corporate Governance Report for the Year Ended 31 December 2021 The Committees of the Board meet quarterly but may hold extraordinary sessions as the business of the Bank demands. The following are the current standing Committees of the Board:10.1 Board credit committee The Committee is currently made up of seven (7) members comprising four (4) non-Executive Directors and three (3) Executive Directors of the Bank. The Board Credit Committee is chaired by a non-Executive Director who is well versed in credit matters. The Committee considers loan applications above the level of Management Credit Committee. It also determines the credit policy of the Bank or changes therein. The membership of the Committee during the year is as follows: Mr. Gabriel Ukpeh - Chairman Mr. Jeﬀrey Efeyini Prof. Chukuka Enwemeka Dr. Al-Mujtaba Abubakar Mr. Ebenezer Onyeagwu Dr. Adaora Umeoji Dr. Temitope Fasoranti Terms of reference To conduct a quarterly review of all collateral security for Board consideration and approval; To recommend criteria by which the Board of Directors can evaluate the credit facilities presented from various customers; To review the credit portfolio of the Bank; To approve all credit facilities above Management approval limit; To establish and periodically review the bank’s credit portfolio in order to align organizational strategies, goals and performance; To evaluate on an annual basis, the components of total credit facilities as well as market competitive data and other factors as deemed appropriate, and to determine the credit level based upon this evaluation; To make recommendations to the Board of Directors with respect to credit facilities based upon performance, market competitive data, and other factors as deemed appropriate; To recommend to the Board of Directors, as appropriate, new credit proposals, restructure plans, and amendments to existing plans; To recommend non-performing credits for write-oﬀ by the Board; To perform such other duties and responsibilities as the Board of Directors may assign from time to time.10.2 Staff Welfare, Finance and General Purpose Committee This Committee is made up of six (6) members: three (3) Non-Executive Directors and three (3) Executive Directors. It is chaired by a non-executive Director. The Committee considers large scale procurement by the Bank, as well as matters relating to staﬀ welfare, discipline, staﬀ remuneration and promotion.53Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021The membership of the Committee during the year is as follows:Prof. Chukuka Enwemeka - Chairman Mr. Gabriel UkpehDr. Omobola Ibidapo-Obe Ogunfowora Mr. Henry OrohDr. Adaora UmeojiMr. Ebenezer Onyeagwu Terms of reference Approval of large scale procurements by the bank and other items of major expenditure by the bank; Recommendation of the bank’s Capital Expenditure (CAPEX) and major Operating Expenditure (OPEX) limits for consideration by the Board; Consideration of management requests for branch set up and other business locations; Consideration of management request for establishment of oﬀshore subsidiaries and other oﬀshore business oﬃces; Consideration of the dividend policy of the Group and the declaration of dividends or other forms of distributions and recommendation to the Board; Consideration of capital expenditures, divestments, acquisitions, joint ventures and other investments, and other major capital transactions; Consideration of senior management promotions as recommended by the GMD/CEO; Review and recommendations on recruitment, promotion, and disciplinary actions for senior management staﬀ; To discharge the Board’s responsibility relating to oversight of the management of the health and welfare plans that cover the company’s employees; Review and recommendation to the Board, salary revisions and service conditions for senior management staﬀ, based on the recommendation of the Executives; Oversight of broad-based employee compensation policies and programs;10.3 Board Risk Management Committee: The Board Risk Management Committee has oversight responsibility for the overall risk assessment of various areas of the Bank’s operations and compliance. The Chief Risk Oﬃcer and the Chief Inspector have access to this Committee and make quarterly presentations for the consideration of the Committee. Chaired by Engr. Mustapha Bello (an Independent Non-Executive Director), the Committee’s membership comprises the following:54Corporate Governance Report for the Year Ended 31 December 2021 Engr. Mustapha Bello - Chairman Mr. Jeﬀrey Efeyini Prof. Chukuka S. Enwemeka Dr. Al-Mujtaba Abubakar Mr. Ebenezer Onyeagwu Mr. Ahmed Umar Shuaib Mr. Dennis OlisaTerms of reference The primary responsibility of the Committee is to ensure that sound policies, procedures and practices are in place for the risk-wide management of the Bank’s material risks and to report the results of the Committee’s activities to the Board of Directors; Design and implement risk management practices, speciﬁcally provide ongoing guidance and support for the reﬁnement of the overall risk management framework and ensuring that best practices are incorporated; Ensure that management understands and accepts its responsibility for identifying, assessing and managing risk; Ensure and monitor risk management practices, speciﬁcally determine which enterprise risks are most signiﬁcant and approve resource allocation for risk monitoring and improvement activities, assign risk owners and approve action plans; Periodically review and monitor risk mitigation process and periodically review and report to the Board of Directors:(a) the magnitude of all material business risks;(b) the processes, procedures and controls in place to manage material risks; and(c) the overall eﬀectiveness of the risk management process; To ensure the implementation of the approved cyber security policies, standards and delineation of cybersecurity responsibilities. To ensure that cybersecurity processes are conducted in line with the business requirements, applicable laws and regulation. To engage the Chief Information Security Oﬃcer (CISO) whose duties includes amongst others – responsibility for the implementation of approved cybersecurity policies and standards as well as to focus on the bank-wide cybersecurity activities and the mitigation of cybersecurity risks in the bank. Facilitate the development of a comprehensive risk management framework for the Bank and develop the risk management policies and processes and enforce its compliance; To perform such other duties and responsibilities as the Board of Directors may assign from time to time.10.4 Board audit and compliance committee: The Committee is chaired by an independent Non-Executive Director, who is well experienced and knowledgeable in ﬁnancial matters. The Chief Inspector and Chief Compliance Oﬃcer have access to this Committee and make quarterly presentations for the consideration of the Committee.55Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021 Committee’s membership comprises the following: Dr. Al-Mujtaba Abubakar - Chairman Mr. Gabriel Ukpeh Engr. Mustafa Bello Mr. Jeﬀrey Efeyini Dr. Omobola Ibidapo-Obe OgunfoworaCommittee’s terms of referenceThe Board Audit and Compliance Committee have the following responsibilities as delegated by the Board of Directors: Ascertain whether the accounting and reporting policies of the Bank are in accordance with legal requirements and acceptable ethical practices; Review the scope and planning of audit requirements; Review the ﬁndings on management matters (Management Letter) in conjunction with the external auditors and Management’s responses thereon; Keep under review the eﬀectiveness of the Bank’s system of accounting and internal control; Make recommendations to the Board with regard to the appointment, removal and remuneration of the external auditors of the Bank; Authorize the internal auditor to carry out investigations into any activities of the Bank which may be of interest or concern to the Committee; Oversight of compliance with legal and other regulatory requirements, assessment of qualiﬁcations and independence of the external auditors and performance of the Bank’s internal audit function as well as that of the external auditors; Ensure that the internal audit function is ﬁrmly established and that there are other reliable means of obtaining suﬃcient assurance of regular review or appraisal of the system of internal control in the Bank; Oversee management’s processes for the identiﬁcation of signiﬁcant fraud risks across the Bank and ensure that adequate prevention, detection and reporting mechanisms are in place; On a quarterly basis, obtain and review reports by the internal auditor on the strength and quality of internal controls, including any issues or recommendations for improvement, raised during the most recent control review of the Bank; Discuss and review the Bank’s unaudited quarterly, audited half year and annual ﬁnancial statements with management and external auditors to include disclosures, management control reports, independent reports and external auditors’ reports before submission to the Board, in advance of publication; Meet separately and periodically with management, the internal auditor and the external auditors, respectively; Review and ensure that adequate whistle - blowing procedures are in place and that a summary of issues reported is highlighted to the Board, where necessary; Review with external auditors, any audit scope limitations or problems encountered and management responses to them;56Corporate Governance Report for the Year Ended 31 December 2021 Review the independence of the external auditors and ensure that they do not provide restricted services to the Bank; Appraise and make recommendation to the Board on the appointment of internal auditor of the Bank and review his/her performance appraisal annually; Review the response of management to the observations and recommendation of the Auditors and Bank regulatory authorities; Agree Internal Audit Plan for the year annually with the Internal auditor and ensure that the internal audit function is adequately resourced and has appropriate standing within the Bank; Review quarterly Internal Audit progress against Plan for the year and review outstanding Agreed Actions and follow up; To develop a comprehensive internal control framework for the Bank and obtain assurances on the operating eﬀectiveness of the Bank’s internal control framework; To establish management’s processes for the identiﬁcation of signiﬁcant fraud risks across the Bank and ensure that adequate prevention, detection and reporting mechanisms are in place; To work with the Internal Auditor to develop the Internal Audit Plan for the year and ensure that the internal audit function is adequately resourced to carry out the plan; To review periodically the Internal Audit progress against Plan for the year and review outstanding Agreed Actions and follow up; To review the report of the Chief Compliance Oﬃcer as it relates to Anti-Money Laundering policies of the Bank and other law enforcement issues. To perform such other duties and responsibilities as the Board of Directors may assign from time to time.10.5 Board governance, nominations and remuneration committee:The Committee is made up of four (4) Non-Executive Directors and one of the Non-Executive Directors chairs the Committee.The membership of the committee is as follows:Mr. Jeﬀrey Efeyini - (Chairman) Engr. Mustafa BelloMr. Gabriel UkpehDr. Al-Mujtaba AbubakarCommittee’s terms of reference To determine a fair reasonable and competitive compensation practices for Executive Directors of the bank which are consistent with the bank’s objectives; Determining the amount and structure of compensation and beneﬁts for Executive Directors; Ensuring the existence of an appropriate remuneration policy and philosophy for Executive Directors; Review and recommendation for Board ratiﬁcation, all terminal compensation arrangements for Directors; Recommendation of appropriate compensation for Non-Executive Directors for Board and Annual General Meeting consideration;57Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021 Review and approval of any recommended compensation actions for the Company’s Executive Committee members, including base salary, annual incentive bonus, long-term incentive awards, severance beneﬁts, and perquisites; Review and continuous assessment of the size and composition of the Board and Board Committees, and recommend the appropriate Board structure, size, age, skills, competencies, composition, knowledge, experience and background in line with needs of the Group and diversity required to fully discharge the Board’s duties; Recommendation of membership criteria for the Group Board, Board Committees and subsidiary companies Boards. Identiﬁcation at the request of the Board of speciﬁc individuals for nomination to the Group and subsidiary companies Boards and to make recommendations on the appointment and election of New Directors (including the Group MD) to the Board, in line with the Group’s approved Director Selection criteria; Review of the eﬀectiveness of the process for the selection and removal of Directors and to make recommendations where appropriate; Ensuring that there is an approved training policy for Directors, and monitor compliance with the policy; Review and make recommendations on the Group’s succession plan for Directors and other senior management staﬀ for the consideration of the Board; Regular monitoring of compliance with Group’s code of ethics and business conduct for Directors and staﬀ; Review the Group’s organization structure and make recommendations to the Board for approval; Review and agreement at the beginning of the year, of the key performance indicators for the Group MD and Executive Directors; Ensure annual review or appraisal of the performance of the Board is conducted. This review/appraisal covers all aspects of the Board’s structure, composition, responsibilities, individual competencies, Board operations, Board’s role in strategy setting, oversight over corporate culture, monitoring role and evaluation of management performance and stewardship towards shareholders.10.6 Statutory Audit Committee of the BankThe Committee is established in line with section 404(2) (CAMA 2020). The Committee’s membership consists of three (3) representatives of the shareholders elected at the Annual General Meeting (AGM) and two (2) Non-Executive Directors. The Committee is chaired by a shareholder’s representative. The Committee meets every quarter, but could also meet at any other time, should the need arise.The Chief Inspector, the Chief Financial Oﬃcer, as well as the External Auditors are invited from time to time to make presentation to the Committee.All members of the Committee are ﬁnancially literate. The membership of the Committee is as follows:Shareholders’ RepresentativeMrs. Adebimpe Balogun - ChairmanProf (Prince) L.F.O. ObikaMr. Michael Olusoji Ajayi58Corporate Governance Report for the Year Ended 31 December 2021Non-Executive Directors / Director’s RepresentativesMr. Gabriel Ukpeh Engr. Mustafa BelloCommittee’s terms of reference To meet with the independent auditors, Chief ﬁnancial oﬃcer, internal auditor and any other Bank executive both individually and/or together, as the Committee deems appropriate at such times as the Committee shall determine to discuss and review: the bank’s quarterly and audited ﬁnancial statements, including any related notes, the bank’s speciﬁc disclosures and discussion under “Managements Control Report” and the independent auditors’ report, in advance of publication; the performance and results of the external and internal audits, including the independent auditor’s management letter, and management’s responses thereto; the eﬀectiveness of the Bank’s system of internal controls, including computerized information systems and security; any recommendations by the independent auditor and internal auditor regarding internal control issues and any actions taken in response thereto; and, the internal control certiﬁcation and attestation required to be made in connection with the Bank’s quarterly and annual ﬁnancial reports; such other matters in connection with overseeing the ﬁnancial reporting process and the maintenance of internal controls as the committee shall deem appropriate. To prepare the Committee’s report for inclusion in the Bank’s annual report; To report to the entire Board at such times as the Committee shall determine.10.7 Executive committee (EXCO) The EXCO comprises the Group Managing Director, Deputy Managing Director as well as all the Executive Directors. EXCO has the GMD/CEO as its Chairman. The Committee meets weekly (or such other times as business exigency may require) to deliberate and take policy decisions on the eﬀective and eﬃcient management of the bank. It also serves as a ﬁrst review platform for issues to be discussed at the Board level. EXCO’s primary responsibility is to ensure the implementation of strategies approved by the Board, provide leadership to the Management team and ensure eﬃcient deployment and management of the bank’s resources. Its Chairman is responsible for the day-to-day running and performance of the Bank.10.8 Other committees In addition to the afore-mentioned committees, the Bank has in place, other standing management committees. They include:(a) Management Committee (MANCO);(b) Assets and Liabilities Committee (ALCO);(c) Management Global Credit Committee (MGCC);(d) Risk Management Committee (RMC)(e) Information Technology (IT) Steering Committee(f) Sustainability Steering Committee59Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021(a) Management committee (MANCO) The Management Committee comprises the senior management of the Bank and has been established to identify, analyze, and make recommendations on risks arising from day-to-day activities. They also ensure that risk limits as contained in the Board and Regulatory policies are complied with. Members of the management committee make contributions to the respective Board Committees and also ensure that recommendations of the Board Committees are eﬀectively and eﬃciently implemented. They meet weekly and as frequently as the need arises.(b) Assets and liabilities committee (ALCO) The ALCO is responsible for the management of a variety of risks arising from the Bank’s business including market and liquidity risk management, loan to deposit ratio analysis, cost of funds analysis, establishing guidelines for pricing on deposit and credit facilities, exchange rate risks analysis, balance sheet structuring, regulatory considerations and monitoring of the status of implemented assets and liability strategies. The members of the Committee include the Group Managing Director, Executive Directors, the Treasurer, the Head of Financial Control, Group Head, Risk Management Group and a representative of the Assets and Liability Management Unit. A representative of the Asset and Liability Management Department serves as the secretary of this Committee. The Committee meets weekly and as frequently as the need arises.(c) Management global credit committee (MGCC) The Management Global Credit Committee is responsible for ensuring that the Bank complies with the credit policy guide as established by the Board. The Committee also makes contributions to the Board Credit Committee. The Committee can approve credit facilities to individual obligors not exceeding in aggregate a sum as pre-determined by the Board from time to time. The Committee is responsible for reviewing and approving extensions of credit, including one-obligor commitments that exceed an amount as may be determined by the Board. The Committee reviews the credit portfolio of the Bank and conducts periodic assessment of the quality of risk assets in the Bank. It also ensures that adequate monitoring of performance is carried out. The secretary of the committee is the Head of the Credit Administration Department. The Committee meets weekly or fortnightly depending on the number of credit applications to be considered. The members of the Committee include the Group Managing Director, the Executive Directors and all divisional and group heads.(d) Risk management committee (RMC) This Committee is responsible for regular analysis and consideration of risks other than credit risk in the Bank. It meets [at least once in a month or as the need arises] to review environmental and other risk issues and policies aﬀecting the Bank and recommend steps to be taken. The Committee’s approach is entirely risk based. The Committee makes contributions to the Board Risk Management Committee and also ensures that the Committee’s decisions and policies are implemented. The members of the Committee include the Group Managing Director, two Executive Directors, the Chief Risk Oﬃcer and all divisional and group heads.(e) Information technology (IT) steering committee The Information Technology (IT) Steering Committee is responsible for amongst others, development of corporate information technology (IT) strategies and plans that ensure cost eﬀective application and management of resources throughout the organization. Membership of the committee is as follows:1 The Group Managing Director/Chief Executive Oﬃcer;2 Two (2) Executive Directors;3 Chief Financial Oﬃcer;60Corporate Governance Report for the Year Ended 31 December 20214 Chief Inspector;5 Chief Risk Oﬃcer;6 Chief Compliance Oﬃcer7 Chief Information Security Oﬃcer/Head of Info Tech;8 Head of Info Tech - Software;9 Head of Info Tech - Engineering;10 Head of Card Services;11 Group Head of IT Audit;12 Head of e-Business; The committee meets monthly or as the need arises.(f) Sustainability Steering Committee (SSC) This Committee is responsible for regular analysis and review of sustainable banking policies and practices within the bank to ensure compliance with globally acceptable economic, environmental and social norms. The bank, recognizing that every institution is as strong as the strength of its relationship and that the ability to nurture existing relationships and develop new ones will invariably play a signiﬁcant role in the ﬁnancial stability of the organization. Therefore, the bank believes that an organization must forge a closer relationship with its stakeholders, including customers, employees, local communities, suppliers, among others, to ensure triple bottom line proﬁt. The Committee present quarterly reports to the Board Risk Management Committee and also ensures that the Committee’s decisions and policies are implemented. The members of the Committee include representatives from various marketing and operations departments and groups within the bank as well as the CSR and Research Group.11. Policy on trade in the Bank’s securities The Bank has in place a policy on trading on the Bank’s Securities by Directors and other key personnel of the Bank. This is to guide against situations where such personnel in possession of conﬁdential and price sensitive information deal with Bank’s securities in a manner that amounts to insider trading.12. Relationship with shareholders The Bank maintains an eﬀective communication with its shareholders, which enables them understand our business, ﬁnancial condition and operating performance and trends. Apart from our annual report and accounts, proxy statements and formal shareholders’ meetings, we maintain a rich website (with suggestion boxes) that provide information on a wide range of issues for all stakeholders. Also, a quarterly publication of the Bank and group performance is made in line with the disclosure requirements of the Nigeria Stock Exchange. The Bank has an Investors Relations Unit which holds regular forum to brief all stakeholders on operations of the Bank. The Bank also, from time to time, holds brieﬁng sessions with market operators (stockbrokers, dealers, institutional investors, issuing houses, stock analysts, mainly through investors conference) to update them with the state of business. These professionals, as advisers and purveyors of information, relate with and relay to the shareholders useful information about the Bank. The Bank also regularly briefs the regulatory authorities, and ﬁle statutory returns which are usually accessible to the shareholders.61Governance & SustainabilityZenith Bank Plc Annual Report December 31, 202113. Directors remuneration policy The Bank’s remuneration policy is structured taking into account the environment in which it operates and the results it achieves at the end of each ﬁnancial year. It includes the following elements: Non-executive directors• Components of remuneration is annual fee and sitting allowances which are based on levels of responsibilities.• Directors are also sponsored for training programmes that they require to enhance their duties to the Bank. Executive directorsThe remuneration policy for Executive Directors considers various elements, including the following:• Fixed remuneration, taking into account the level of responsibility, and ensuring this remuneration is competitive with remuneration paid for equivalent posts in banks of equivalent status both within and outside Nigeria.• Variable annual remuneration linked to the Zenith Bank ﬁnancial results. The amount of this remuneration is subject to achieving speciﬁc quantiﬁable targets, aligned directly with shareholders’ interest. Chief Compliance Officer The Chief Compliance Oﬃcer monitors compliance with money laundering requirements and the implementation of the Code of Corporate Governance of the Bank. The Chief Compliance Oﬃcer and the Company Secretary forward regular returns to the Central Bank of Nigeria on all whistle-blowing reports and also on corporate governance compliance. Whistle Blowing Procedures The Bank has a whistle-blowing procedure that ensures anonymity for whistle-blowers. The Bank has a direct link on the bank’s website, provided for the purpose of whistle-blowing. Internally, the Bank has a direct link on its intranet for dissemination of information, to enable members of staﬀ report all identiﬁed breaches of the Bank’s Code of Corporate Governance. All reports are investigated and necessary sanctions applied for breaches. During the year, the Bank ﬁled quarterly returns in line with the provision on whistle blowing. Codes of Conduct The Bank has an internal Code of Professional Conduct for Employees and vendors which all members of staﬀ subscribe to upon assumption of duties. The Bank also has a Code of Conduct for Directors.14. Foreign Subsidiaries Governance Structure The Bank as at 31 December 2021 has four (4) foreign subsidiaries, two (2) local subsidiaries and a branch in UAE supervised by Zenith Bank (UK). Their activities are governed by the governance framework put in place by the Group Head Oﬃce to ensure eﬃcient and eﬀective operations. The framework establishes the scope, method of performance management, periodic reviews and feedback mechanism for operating within the local laws in their jurisdiction. The activities of the subsidiaries are closely monitored by Zenith Bank Plc using the following strategies: 62Corporate Governance Report for the Year Ended 31 December 2021 Liaison and Oversight Function The Foreign Subsidiaries Department is charged with the responsibility of overseeing the growth and implementation of the Bank’s global expansion strategy into new territories/regions. The Department serves as an interface between the bank and its oﬀshore subsidiaries. It also provides guidance on how to optimize synergy within the Group. Reports from the Group is presented to the Board at its quarterly meetings. Representation on the Subsidiary Board Zenith Bank Plc exercises control over the subsidiaries by maintaining adequate representation on the Board of each subsidiary. The representatives are chosen on the basis of professional competencies, business experience and integrity as well as knowledge of the Bank’s business. The Board of Directors of the subsidiaries are responsible for reviewing and approving the strategic plans and ﬁnancial objectives as well as monitoring the corporate performance against these objectives. Local Board and Board Committees To ensure that the activities of the subsidiaries reﬂects the same values, ethics, controls and processes, Zenith Bank Plc is represented by at least two (2) non-executive directors in the local board and board committee of each foreign subsidiary. These directors provide eﬀective oversight function over each subsidiary and ensure that there is consistency with the strategic direction of the Bank. They also act a link with the parent board at the Group Head Oﬃce in Nigeria. Subsidiary Board Committees The Subsidiary Board meets at least every quarter and exercises oversight function on the business of each location through the following committee structure.• Board Credit Committee which is charged with the responsibility of considering the approval of new loans and renewal of existing ones above the threshold set for the Management Credit Committee. It also determines the credit policy or changes therein.• Board Risk Management Committee which has oversight responsibility for the overall risk management of various areas of the Bank’s operations and compliance. This includes advising the Board on risk-related matters arising from its business.• Board Audit and Compliance Committee is responsible for the review of accounting and reporting policies to ensure compliance with regulatory and ﬁnancial reporting requirements. The Board, through the committee exercise oversight on the Compliance and AML/CFT activities of the Bank. Overall, it monitors the eﬀectiveness of the Bank’s system of internal control to safeguard its assets for shareholders.• Board Governance, Nomination and Remuneration Committee (BGNRC) saddled with the responsibility of determining a fair, reasonable and competitive structure for senior management of the Bank as well as administering the Governance structure for the Bank.• Board Staﬀ Welfare, Finance & General Purpose Committee has the responsibility of approving large scale procurements by the Bank, as well as matters relating to staﬀ welfare, discipline, staﬀ remuneration and promotion. Management of Subsidiaries Zenith Bank Plc appoints one of its senior management staﬀ to act as the Managing Director of each subsidiary. Other key staﬀ are seconded to assist the managing director in the supervision of critical departments of the Bank. 63Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021 The objective of this management structure is to ensure that the core values and principles of the Zenith Bank brand are instilled seamlessly across its oﬀshore subsidiaries. It also oﬀers the Group an opportunity to adopt a uniform culture of best practices in the area of corporate governance, technology, controls and customer service excellence. Monthly and Quarterly Reports The subsidiaries furnish Zenith Bank Plc with monthly and quarterly reports on their business and operational activities. These reports cover the subsidiaries’ ﬁnancial performance, risk assessment, regulatory and compliance matters amongst others. The reports are analyzed and presented to Executive Management and the Group Board of Directors for decision making and fulﬁlment of its oversight function. Group Performance & Strategy Review/Budget Session The Managing Directors and senior management team of the respective Subsidiaries of the Bank attend the annual Group’s Performance & Strategy Review/Budget Session during which their performances are analyzed and recommendations made towards achieving continuous improvement in ﬁnancial, social and environmental performance. The annual budget of the subsidiaries is discussed at this session. This session also serves as a forum for sharing business ideas, tapping into identiﬁed synergy within the Group and disseminating information on relevant best practices that could enhance our sustained growth in the banking landscape. Annual Internal Control Audit The Internal Control & Audit Department of Zenith Bank Plc carries out an annual audit of each of the oﬀshore subsidiaries in line with the Group’s Annual Audit Programme. This audit exercise covers all operational areas of the subsidiaries and the outcome is discussed with Executive Management at the home oﬃce for timely intervention on identiﬁed lapses. It is important to note that this exercise is distinct from the daily operations audit carried out by the respective internal audit unit within the subsidiaries. Annual Loan Review/Audit This audit is carried out by the Loan Review & Monitoring Unit of Zenith Bank Plc. The core areas of concentration during this audit exercise include asset quality assessment, loan performance, review of security pledged, loan conformity with credit policy, documentation check and review of central liability report among others. Zenith Bank Plc is committed to complying with regulatory requirements in all locations where it operate. To this end, The Bank’s Compliance Group monitors ongoing developments in the regulatory environment of each location where it operates and ensuring compliance with same. This include conducting periodic compliance checks on each subsidiary annually to ascertain compliance with local banking laws and regulations. Report of External Auditors In line with global best practices and regulatory guidelines, the Bank undertake review of Management letters from external Auditors on periodic audit of the subsidiary companies. This is to ensure that all exceptions are complied with and for implementation of the Auditors’ recommendations.15 Complaints management policy The Bank has put in place a complaints management policy framework to resolve complaints arising from issues covered under the Investments and Securities Act, 2007 (ISA). This can be found on the Bank’s website.64Corporate Governance Report for the Year Ended 31 December 202116. Schedule of board and board committees meeting held during the yearThe table below shows the frequency of meetings of the Board of directors, board committees and members’ attendance at these meetings during the year under review.DirectorsBoardBoard Credit CommitteeFinance & General Purpose CommitteeBoard Governance,Nomination And Remuneration CommitteeBoard Risk Management CommitteeBoard Audit AndCompliance CommitteeAttendance / Number of Meetings744444Jim Ovia, CON7N/AN/AN/AN/AN/AMr. Jeﬀrey Efeyini743 *** 3 *4 4Prof. Chukuka S. Enwemeka743 *1 *4N/AMr. Gabriel Ukpeh744 4N/A4Engr. Mustafa Bello7 N/A N/A444Dr. Al-Mujtaba Abubakar74N/A3 *44Dr. Omobola Ibidapo-Obe Ogunfowora2 **N/A***N/AN/A***Dame (Dr) Adaora Umeoji744N/AN/AN/AMr. Ebenezer Onyeagwu 744N/A4N/AMr. Ahmed Umar Shuaib7N/A N/AN/A4 N/ADr. Temitope Fasoranti74 N/AN/AN/AN/AMr. Dennis Olisa7N/AN/AN/A4N/AMr. Henry Oroh7N/A4N/AN/AN/ANote:N/A Not Applicable (Not a Committee member)* Reconstitution of Board Committee, following the demise of Late Prof. Oyewusi lbidapo-Obe in January 2021 ** Appointed to the Board and conﬁrmed by CBN as an Independent Non-Executive Director, eﬀective June 30, 2021*** Reconstitution of Board Committees in compliance with Code of Corporate Governance/CAMA 202065Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021Dates for Board and Board Committee meetings held within the year to December 31, 2021Board meetingsBoard creditcommitteemeetingFinance andgeneralpurposecommitteeBoard risk andauditcommitteemeetingBoard audit andcompliancescommitteemeetingBoard governance,nominations andremunerationcommitteeAudit committeemeeting of thebank28-Jan-2127-Jan-2126-Jan-2126-Jan-2126-Jan-2126-Jan-2126-Jan-2123-Feb-2116-Mar-2129-Apr-2128-Apr-2128-Apr-2127-Apr-2127-Apr-2127-Apr-2127-Apr-2111-May-2123-Jul-2122-Jul-2122-Jul-2119-Jul-2119-Jul-2119-Jul-2119-Jul-2129-Oct-2127-Oct-2127-Oct-2126-Oct-2126-Oct-2126-Oct-2126-Oct-2117. Audit CommitteeThe table below shows the frequency of meetings of the audit committee and members’ attendance at these meetings during the year under review.Number of meetings held during the year:Members Number of Meetings attendedMrs. Adebimpe Balogun (SR)4Prof. (Prince) L. F. O Obika (SR)4Mr. Michael Olusoji Ajayi (SR)4Engr. Mustafa Bello (NED)4Mr. Jeﬀrey Efeyini (NED)2Mr. Gabriel Ukpeh (NED)4SR - Shareholders representativeNED- Non-Executive Director66Corporate Governance Report for the Year Ended 31 December 202167 Report of the Independent Consultant to the Board of Directors of Zenith Bank PLC. On their Appraisal for the Year Ended 31 December 2021. In compliance with the guidelines of Section 2.8.3 of the Central Bank of Nigeria (CBN) Revised Code of Corporate Governance for Banks in Nigeria Post Consolidation (“the CBN Code”), the Securities and Exchange Commission (SEC) Code of Corporate Governance (“the SEC Code”) and Section 14.1 of the Nigerian Code of Corporate Governance 2018 (“NCCG”), Zenith Bank Plc. (“Zenith Bank” or “the Bank”) engaged KPMG Advisory Services to carry out an appraisal of the Board of Directors (“the Board”) for the year ended 31 December 2021. The CBN Code mandates an annual appraisal of the Board with specific focus on the Board’s structure and composition, responsibilities, processes and relationships, individual director competencies and respective roles in the performance of the Board. We have performed the procedures agreed with Zenith Bank in respect of the appraisal of the Board in accordance with the provisions of the CBN Code, SEC Code and the NCCG. These procedures, which are limited in scope but sufficient for the Board’s objectives in line with the Codes, are different in scope from an external audit. Consequently, no opinion is expressed by us on the activities reported upon. Our approach to the appraisal of the Board involved a review of the Bank’s Board papers and minutes, key corporate governance structures, policies and practices. This included the review of the corporate governance framework and representations obtained from questionnaires and interviews with members of the Board and Senior Management. On the basis of our review, the Bank’s corporate governance practices are largely in compliance with the key provisions of the Codes of Corporate Governance mentioned above. Specific recommendations for further improving the Bank’s governance practices have been articulated and included in our detailed report to the Board. These include recommendations in the following key areas: Board Committee charters and strategy monitoring. Olumide Olayinka Partner & Head, Risk Consulting KPMG Advisory Services FRC/2013/ICAN/00000000427 16 February 2022 Corporate& Sustainable Banking PracticesRESPONSIBILITY68For three decades, Zenith Bank has maintained a strong reputation as a leader in the ﬁnancial services sector. Zenith Bank has demonstrated its resilience irrespective of the economic cycle and witnessed enormous growth. The combined intellectual capital and dedication of the Staﬀ, Management and Board have shaped Zenith Bank into the world-class institution it is today. Despite the disruptions engendered by the coronavirus (COVID-19) pandemic, we continued to make signiﬁcant strides in our sustainability journey. In 2021, we adopted the dual materiality approach to assess our impacts and improve our disclosures on issues that impact our stakeholders, environment, climate, and ﬁnancial performance. This approach involved adopting an inside-out and outside-in perspective to identify the impact of our operations on the economy, environment, and society, on the one hand, and how the material topics aﬀect the ﬁnancial and strategic objectives of our business on the other hand.Our Journey Towards Creating Sustainable ValueAs a member of the United Nations Global Compact (UNGC), Zenith Bank is committed to driving progress towards achieving the sustainable development goals (SDGs) of the United Nations. We recognise that we have a critical role to play, through our operations, in promoting sustainable development. We understand that the sustenance of our operations is directly related to the sustained value that we create for our people, investors and society. We strive to be a trusted partner 69Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021that is better, simpler, and faster in meeting the needs of our stakeholders and creating long-term value for our employees, investors, customers, suppliers, regulators, and the community. Consequently, we have aligned our operations with the SDGs by identifying the goals through which we believe we can make the most impact, assessing our exposures to Environmental, Social, and Governance (ESG) risks and evaluating our impacts and performance. As a testament to our achievements in this area of Sustainability, Zenith Bank won the award for “Most Responsible Organisation” at the 2021 Sustainability, Enterprise and Responsibility Awards (SERAs).Social Investments and Community DevelopmentThrough a myriad of CSR initiatives and donations, Zenith Bank contributes signiﬁcantly to the sustainable development of many local communities across Nigeria. We understand the developmental gap across many rural communities in Nigeria; hence, we make concerted eﬀorts to bridge these gaps by providing access roads, potable water, establishing health centres and cottage hospitals, and providing free agricultural extension services, amongst others. Furthermore, while the devastating impact of the COVID-19 pandemic on society has somewhat reduced, many communities still struggle to recover from pandemic-related losses. Zenith Bank continues to play an active role in the recovery and rebuilding process. In 2021, Zenith Bank’s total Corporate Social Responsibility (CSR) investment was NGN4.372 billion, representing 1.79 per cent of our Proﬁt After Tax (PAT) and a 33.1 per cent increase from 2020. Zenith Bank has remained one of the biggest spenders on social investment in the Nigerian corporate space. The focus areas of our CSR endeavours during the year mirror the Sustainable Development Goals (SDGs) of the United Nations and include security, healthcare, education and skills development, sports development, youth and women empowerment, and public infrastructure development. Security: Ensuring the security of lives and properties remained a signiﬁcant social investment in 2021. Similar to the previous year, our need-gap analysis revealed that security remains a fundamental need of our communities. Thus, in 2021, we invested NGN2.78 billion in various partnerships with the local communities, the federal, state and local governments, and other relevant agencies to preserve public peace and ensure a crime-free environment. The sum also includes contributions to several State Security Funds across the federation. As a testament to our achievements in this area of Sustainability, Zenith Bank won the awards for “Best Company in Infrastructure Development 2021” at the 2021 Sustainability, Enterprise and Responsibility Awards (SERAs).Sports: Our investments in sports development in the year under review included various initiatives such as title sponsorship of the Zenith Bank Delta State Principal’s Cup; Zenith Bank Headmasters’ Cup, Ikoyi Club Zenith Tennis Championship, Ikoyi Club Ball Boys Zenith Tennis Championship, Lagos Country Club Zenith Tennis Championship, Zenith Bank Next Gen Tennis Championship. Our total investments in the year under review was about NGN62.5 million.Health: In 2021, Zenith Bank supported the Private Sector Health Alliance of Nigeria, a health initiative complementing the government’s eﬀorts at improving life expectancy in the country. We also invested in medical interventions for low-income individuals faced with various life-threatening medical conditions. Our total investment in health in the year under review was about NGN 103.5 million.Education: The Bank pays great attention to championing SDG 4 (Quality Education). In reaﬃrmation of our commitment to developing the nation’s education sector, we expended about NGN776.5 million towards educational initiatives in the outgone ﬁnancial year. Some of our initiatives include donations to the Nigerian Law School, University of Lagos, educational endowment fund of St. Saviour’s School, Ikoyi, and sponsorship of activities related to the 2021 Microsoft Oﬃce Specialist World Championship. 70Environmental Sustainability and Carbon Footprint ManagementZenith Bank remains committed to managing its environmental footprint and reducing carbon emissions. Our approach is to leverage goals and targets under the Sustainable Development Goal 13 (Climate Action), the 2015 Paris Climate Agreement and the Task Force on Climate-Related Financial Disclosures (TCFD). We are on a journey to expand our Environmental and Social (E&S) risks dragnet to cover all projects, irrespective of size, by 2025. We are committed to sustainable ﬁnancing and mitigating the sustainability risks associated with the projects we fund as part of our E&S risk due diligence. Zenith Bank’s Environmental and Social Risk Management System (ESMS) benchmarks the Equator Principles, the International Finance Corporation (IFC) Performance Standards, among other global sustainability principles. In 2021, 91.7 per cent of our projects, with a total value of over NGN9.63 trillion, were assessed for environmental and social risks. The automation of our E&S Risk Exposure Assessment process was a major milestone in our resolve to ensure sustainable ﬁnancing of every project we invest in and the adoption of responsible practices in line with the Nigerian Sustainable Banking Principles (NSBP) of the Central Bank of Nigeria (CBN) and the Principles for Responsible Banking of the United Nations Environment Programme Finance Initiative (UNEP-FI). By monitoring, reviewing, and setting environmental targets, we are able to manage our carbon footprint and overall environmental impacts. Our strategy also involves adopting eco-friendly practices to meet our targets, tracking our Greenhouse gas (GHG) emissions and seeking alternative energy sources. It also incorporates mitigations to third party E&S risks resulting from the projects we ﬁnance. Our ESMS entails assessing prospective and ongoing projects for E&S risks before approval. Our overarching strategy to minimise overall environmental footprint prioritises reducing GHG emissions through improved energy eﬃciency, sourcing carbon-eﬃcient assets, optimising digital solutions, reducing business trips and reducing emissions by third parties. Our commitment to net-zero greenhouse emissions by 2050 implies that there are still a lot more opportunities to optimise our impacts and adopt carbon-friendly technologies in our operations. WorkplaceThe events of 2021 largely mirrored 2020. Hence, at the top of the labour management agenda were health and safety, remote work, skill acquisition and productivity amidst the physical limitation caused by the COVID-19 pandemic. We continued to implement practices that ensured that our people were safe and provided with the necessary support to carry out their responsibilities. Our total active workforce stood at 6,298 as at 31 December 2021, out of which 3,212 (51 per cent) were male, while 3,086 (49 per cent) were female. V4 imagePresented toZENITH BANK PLCPlot 84/87, AjoseAdeogunStreet, Victoria IslandLagos –Nigeria For its Greenhouse Gas Auditing and Reporting for the calendar year 2021, using V4 Advisors’ tool that is in compliancewith the Greenhouse Gas Corporate Standard and ISO 14064-1, 2006.V4 Advisors’ calculation and reporting tool has been reviewed by WRI for conformance with the GHG Protocol Corporate Standard. Contacting V4 Advisors: www.V4advisors.com –telephone & fax: +961 9 911 953 –V4 Advisors SAL Registered in Lebanon –Company No. 2032165 Corporate Responsibilty & Sustainable Banking Practices71Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021Human RightsWe uphold and respect the rights of our people. This is reﬂected in our day-to-day operations, decision making and reward system. We ensure that all employees are given equal rights and opportunities in every aspect of our business. We also ensure that our employees are aware of their rights and the rights of our clients and customers. Every year, we conduct human rights training. This year, 5,563 of our employees participated in human and women’s rights training, increasing by 9 per cent from 5,087 in 2020.We continue to operate a robust system for managing human rights-related risks. Beyond providing human rights training for our employees, our human rights processes and procedures include providing a platform for reporting and investigating reported cases of human rights breaches. Also, as part of our credit risk assessment process, we evaluate the human rights risk associated with the projects and businesses that we ﬁnance.No human rights violations were reported across our complaint channels in the reporting year. We will continue to respect and uphold human rights in line with the values of leading frameworks such as United Nations Principles on Business and Human Rights, the UN Global Compact, and the United Nations Environment Programme Finance Initiative (UNEP-FI).Women EmpowermentZenith Bank promotes a business environment that is devoid of gender bias. We provide equal opportunities to all employees to participate and compete at all levels of our organisation. In 2021, 52 per cent of our active employees and 29 per cent of our staﬀ in management positions were women. Employees were trained on women’s rights courses through our e-learning module. These courses include Women in Leadership: Mastering Key Leadership Competencies and Women in Leadership: Moving Beyond Gender Roles as A Leader. We remain unwavering in our commitment to promote the participation of women in economic and business activities. Our Z-Woman Business Package is designed to address the unique needs of women-owned businesses. The package comes with loans of up to NGN10 million at a single-digit interest rate, free digital skills training, free exhibition stands at Zenith Bank events and many other beneﬁts that will help them grow their businesses and increase sales. In recognition of our achievements in this area of Sustainability, Zenith Bank won the awards for “Best Company in Gender Equality and Women Empowerment” in Africa at the 2021 Sustainability, Enterprise and Responsibility Awards (SERAs).Financial InclusionWe are deliberate in our ambition to boost ﬁnancial inclusion through a broad range of products and services. The volume and value of our Unstructured Supplementary Service Data (USSD) transactions grew from 145.5 million and NGN912.7 billion in 2020 to 237.7 million and NGN1, 256 billion, respectively, in 2021. Also, 30 of our branches were accessible to physically challenged persons in 2021, up from 21 in 2020. We have developed customised products targeted at the unbanked population. Our Eazy Account, a non-Bank Veriﬁcation Number (BVN) enabled account, is designed to foster ﬁnancial inclusion of the unbanked through easy account creation. Also, our EazySave Classic/Premium allows individuals with minimal forms of identiﬁcation to open an account.We invest in increasing ﬁnancial education and awareness of our products and services across all media platforms. We invested NGN582.7 million in creating ﬁnancial awareness via radio campaigns, TV adverts and other digital campaigns on social media.72Corporate Responsibilty & Sustainable Banking PracticesZenith Bank Financial Literacy and World Savings Day Celebration In partnership with the Central Bank of Nigeria, Zenith Bank marked the Financial Literacy Day and the World Saving Days with students from schools in 21 states. This employee volunteering initiative provided the Bank and its employees an avenue to impact young persons with basic ﬁnancial literacy knowledge. Also, the beneﬁtting students were gifted with corporate branded items such as knapsacks, liquid ﬂasks, food ﬂasks, towels, water bottles, raincoats, watch set, drawing set, notebooks, pen and pencil sets, kiddies lunch bags, etc. A total of 2,306 male students and 1,182 female students were impacted during the Financial Literacy Day celebration. Similarly, a total of 4,804 male students and 5,038 female students were impacted during the World Saving Days celebration.Training and Capacity BuildingThe Bank has a robust training system and job rotation for staﬀ development. We understand that the life outcomes of many individuals are tied to their careers. Therefore, we are keen to support our people in achieving lifelong success in their careers. We provide generic and bespoke training on human rights, anti-money laundering, leadership, banking processes, basic emergency response and ﬁrst aid, ﬁre safety, other occupational health and safety courses, etc. We want our employees to develop into innovative and responsible leaders in their respective capacities. As part of our contribution to their growth, we identify and provide impactful and high value-adding training, programmes and workshops to our employees. Staﬀ appraisals covering career and performance development are carried out twice a year for all eligible staﬀ.We continued with our hybrid model of providing classroom and online training in 2021 in furtherance of our mitigation response to the coronavirus pandemic. In 2021, we invested a total of NGN579,910,266.56 in employee training. This represents a 26.10 per cent increase from the 2020 spending on employee training. We trained 6,661 members of staﬀ, representing 96.23 per cent of our total workforce in 2021. A total of 5,351 permanent employees, representing 58.77 per cent of our employees, received training on anti-corruption and anti-money laundering. Also, 5,377 permanent employees were trained on human rights. A total of 2,866 staﬀ members received other training, including in-plant, orientation, in-house and open programs. Our anti-money laundering and operational risk management training integrates sustainability, environmental, and social risk management sessions. As part of our strategy to increase sustainability awareness among our people, we publish and circulate weekly, “Sustainability Titbits”, Safety Nuggets, “Sustainability Lifestyle Tips” and “Sustainability Headlines” to all our employees via email.E&S Governance At Zenith Bank, we have a robust governance structure to guide our ESG activities. Our E&S policy guides the way we manage inherent ESG risks. We endeavour to review our policies and the eﬀectiveness of our E&S governance structures regularly. At the Board level, we have a Sustainability Banking Governance Committee, which helps to steer the Bank’s sustainability agenda from the top. In addition, the Sustainability Steering Committee (SSC), at the Management level, helps to drive our sustainability initiatives across the Bank’s operations. Our Sustainability Champions’ Group consists of 162 staﬀ across all business units in our Head Oﬃce, and representatives from the zones serve as sustainability promoters.73Governance & SustainabilityThe Corporate Sustainability & Responsibility (CSR) unit oversees the daily implementation of the Bank’s E&S policies. The unit reports to the Executive Management through the line Executive Director and reports, quarterly, on the progress of the Bank’s ESG policies and initiatives to the Board through the Company Secretary/Legal Adviser. ReportingZenith Bank remains fully committed to sustainability reporting. We are signatory to the Central Bank of Nigeria’s Nigerian Sustainable Banking Principles (NSBP), a member of the United Nations Global Compact and the United Nations Environment Programme Finance Initiative (UNEP-FI) Principles for Responsible Banking. Consequently, we publish a standalone Sustainability Report annually to demonstrate our economic, environmental and social progress. The report incorporates the Nigerian Exchange (NGX) and Global Reporting Initiative (GRI) Sustainability reporting guidelines. Additionally, Zenith Bank sends biannual progress reports to the CBN and annual reports to the IFC, UNGC, PROPARCO, and the African Development Bank (AfDB).Zenith Bank won the “Best Company in Reporting and Transparency” award at the 2021 Sustainability, Enterprise and Responsibility Awards (SERAs).ConclusionZenith Bank remains committed to entrenching sustainable banking principles in its business and investment decisions. Our commitment stems from the conviction that sustainability remains a springboard to build the future that we desire. Consequently, we have a robust governance structure to support sustainable lending, wealth creation and social investment. We believe that our continued alignment with global principles and the strategic and proactive pursuit of our targets will ensure sustainable growth in line with the SDGs.Independent Auditor’s Limited Sustainability Assurance Report on the Selected Sustainability Information in Zenith Bank Plc’s Sustainability Report for the year ended 31 December 2021 To the Directors of Zenith Bank Plc. We have undertaken a limited assurance engagement in respect of the selected sustainability information, as described below, and presented in the 2021 Sustainability Report of Zenith Bank Plc. for the year ended 31 December 2021. This engagement was conducted by a multidisciplinary team including economic, social and environmental assurance specialists with relevant experience in sustainability reporting. Subject Matter You have engaged us to provide a limited assurance conclusion in our report on the following selected sustainability information, marked with on the relevant pages in the sustainability report for the year ended 31 December 2021. The selected sustainability information in the table contained in this opinion have been prepared in accordance with the reporting criteria that accompanies the sustainability information on the relevant pages of the Report (the accompanying reporting criteria). Zenith Bank Plc. Management’s responsibility The Management of Zenith Bank Plc. is responsible for the selection, preparation and presentation of the selected sustainability information in accordance with the accompanying reporting criteria as set out in the Sustainability Report (the “Reporting Criteria”). This responsibility includes: (cid:120) Identification of the stakeholder requirements, material issues, commitments with respect to sustainability performance, and (cid:120) Design, implementation and maintenance of internal control relevant to the preparation of the Sustainability performance data so that is free from material misstatement, whether due to fraud or error. (cid:120) Determining the appropriateness of the measurement and reporting criteria in view of the intended users of the selected sustainability information and for ensuring that those criteria are publicly available to the report users. PricewaterhouseCoopers Chartered Accountants Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria T: +234 1 271 1700, (cid:90)(cid:90)(cid:90)(cid:17)(cid:83)(cid:90)(cid:70)(cid:17)(cid:70)(cid:82)(cid:80)(cid:18)(cid:81)(cid:74)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)TIN: 01556757-0001 Partners: S Abu, O Adekoya, O Adeola, T Adeleke, W Adetokunbo-Ajayi, A Akingbade, UN Akpata, O Alakhume, C Azobu, E Erhie, K Erikume, U Muogilim, C Obaro, P Obianwa, T Labeodan, C Ojechi, U Ojinmah, O Oladipo, W Olowofoyeku, P Omontuemhen, O Osinubi, T Oyedele, AB Rahji, O Ubah, Y Yusuf 74PricewaterhouseCoopers Chartered Accountants Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria T: +234 1 271 1700, (cid:90)(cid:90)(cid:90)(cid:17)(cid:83)(cid:90)(cid:70)(cid:17)(cid:70)(cid:82)(cid:80)(cid:18)(cid:81)(cid:74)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)TIN: 01556757-0001 Partners: S Abu, O Adekoya, O Adeola, T Adeleke, W Adetokunbo-Ajayi, A Akingbade, UN Akpata, O Alakhume, C Azobu, E Erhie, K Erikume, U Muogilim, C Obaro, P Obianwa, T Labeodan, C Ojechi, U Ojinmah, O Oladipo, W Olowofoyeku, P Omontuemhen, O Osinubi, T Oyedele, AB Rahji, O Ubah, Y Yusuf Focus Area Zenith Bank Indicators Sub Heading in Sustainability Report Reporting Criteria (GRI/NSBPs) Updated Performance result statement (as would be stated in the final sustainability report) Page number Social 1. Social Investments Enhancing Financial Inclusion GRI 413-1 Operations with local community engagement, impact assessments and development programs NSBP 2 Our business operations: Environmental and social footprint NSBP 5 Financial Inclusion NSE Principle 6 Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized. 103 employees visited 26 Secondary Schools across various parts of the Country to mark the Financial Literacy Day in 2021. In 2021, 162 employees were involved in our World Savings Day programmes. 35 2. Total employees by gender (number and percentage) Labour Relations GRI 405-1 Diversity of governance bodies and employees NSBP- 4 Women’s economic empowerment NSE Principle 5: Businesses should promote the wellbeing of all employees. Our total active workforce stood at 9,105 as at 31 December 2021, out of which 4,377 (48%) were male, while 4,728 (52%) were female. 77 75Zenith Bank Plc Annual Report December 31, 2021 Focus Area Zenith Bank Indicators Sub Heading in Sustainability Report Reporting Criteria (GRI/NSBPs) Updated Performance result statement (as would be stated in the final sustainability report) Page number 3. Total Board and top management staff (number and percentage in gender representation) Diversity and Equal Opportunity GRI 405-1 Diversity of governance bodies and employees NSBP- 4 Women’s economic empowerment NSE Principle 5: Businesses should promote the wellbeing of all employees. As of December 31, 2021, we had 11 males and 2 females on our Board of Directors, representing 84.6% male and 15.4% female and as at 31 December 2021, 29% (25) of our top management staff (of Assistant General Manager and above level) were female while 71% (62) were male. 80 4. Employee training and development (number, percentage of total employee and naira amount) Training and Development GRI 401-1 Average hours of training per year NSE Principle 5: Businesses should promote the wellbeing of all employees. A total of 278,620.94 hours were expended on training 8,692 employees in 2021. In 2021, we invested a total of (cid:2818)579,910,266.56 in employee trainings. This represents a 26.11% increase in the 2020 spend on employee trainings. 82 5. Employee turnover rate (number and percentage) Employee Count, Hires and Turnover GRI 401 -1 New employee hires and employee turnover NSE Principle 5: Businesses should promote the wellbeing of all employees. In 2021, the bank welcomed 1,985 new employees (permanent & contract) while 1,093 permanent and contract workers exited the company. 78 6. Employee who have undergone training on fighting/combating financial Nigerian Sustainable Banking Principles: Principle 7 – Training and GRI 205 - 2 Communication and training about anti-corruption policies and procedures NSE Principle 1 Businesses should conduct and govern 5,351 employees, representing 58.77% of our total workforce, received training on anti-corruption and anti-money laundering in 2021. 27 76 Focus Area Zenith Bank Indicators Sub Heading in Sustainability Report Reporting Criteria (GRI/NSBPs) Updated Performance result statement (as would be stated in the final sustainability report) Page number crime (number and percentage of total employee) capacity building themselves with ethics, transparency and accountability 7. Analysis of Human Rights and non-discrimination policies and practices (number). Human Rights Assessment GRI 412-1 Operations that have been subject to human rights reviews or impact assessment NSBP 3 Human Rights NSE Principle 1 Businesses should conduct and govern themselves with ethics, transparency and accountability NSE Principle 7: Businesses should respect and promote human rights. In 2021, 493.71 hours were spent on training by 5,377 permanent staff on various aspects of human rights. 81 8. Financial inclusion and financial literacy activities (number and location). Enhancing Financial Inclusion NSBP 5 Financial Inclusion NSE Principle 6 Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized. 3,488 students were impacted during our Financial Literacy Day initiative in conjunction with the CBN. Overall, 9,842 students were impacted in 37 Schools visited across 33 States in Nigeria during our World Savings Day program. 35 77Zenith Bank Plc Annual Report December 31, 2021 Focus Area Zenith Bank Indicators Sub Heading in Sustainability Report Reporting Criteria (GRI/NSBPs) Updated Performance result statement (as would be stated in the final sustainability report) Page number Environmental 9. Energy consumption pattern within the organisation Energy Consumption GRI 302-1 Energy consumption within the organisation NSBP 2 Our Business operations: Environmental and social footprint NSE Principle 9 Business should respect, protect, and make efforts to restore the environment. In our Head Office, the total amount of electricity purchased from the national grid was 8,901,015kWh, hence the total electricity consumed per employee was 7,195.65 KWh. The total volume of fuel used to run Zenith Bank’s Head Office generators was 2,019,710 litres and 1,632.75 litres per employee. 66 10. Carbon footprint measurement and management Nigerian Sustainable Banking Principles: Principle 2 – Managing environmental and social footprints in the Bank’s operations GRI 305-1 Direct (scope 1) GHG emission GRI 305 - 2 Energy Indirect (GHG emission GRI-3: Other Indirect (scope 3) GHG emission NSBP 2 Our Business operations: Environmental and social footprint NSE Principle 9 Business should respect, protect, and make efforts to restore the environment. In 2021, the total area covered in the external carbon footprint audit conducted by V4 Advisors stood at 12,938.49 m2, accommodating 1,039 employees. GHG emissions at our Head Office was 1.2 tCO2e per m2 in 2021, indicating a 33.33% increase from 0.9 tCO2e/ m2 in 2020. 24 78PricewaterhouseCoopers Chartered Accountants Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria T: +234 1 271 1700, (cid:90)(cid:90)(cid:90)(cid:17)(cid:83)(cid:90)(cid:70)(cid:17)(cid:70)(cid:82)(cid:80)(cid:18)(cid:81)(cid:74)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)TIN: 01556757-0001 Partners: S Abu, O Adekoya, O Adeola, T Adeleke, W Adetokunbo-Ajayi, A Akingbade, UN Akpata, O Alakhume, C Azobu, E Erhie, K Erikume, U Muogilim, C Obaro, P Obianwa, T Labeodan, C Ojechi, U Ojinmah, O Oladipo, W Olowofoyeku, P Omontuemhen, O Osinubi, T Oyedele, AB Rahji, O Ubah, Y Yusuf Inherent Limitations Non-financial performance information is subject to more inherent limitations than financial information, given the characteristics of the subject matter and the methods used for determining, calculating, sampling and estimating such information. The absence of a significant body of established practices on which to draw allows for the selection of different but acceptable measurement techniques that can result in materially different measurements and can impact on comparability. Qualitative interpretation of relevance, materiality and the accuracy of data are subject to individual assumptions and judgements. The precision of different measurement techniques may also vary. Furthermore, the nature and methods used to determine the information, as well as the measurement criteria and the precision thereof, may change over time. Our Independence and Quality Control We have complied with the independence and other ethical requirements of the International Ethics Standards Board for Accountants (IESBA) issued by the International Federation of Accountants, which is founded on the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. The firm applies the International Standard on Quality Control 1 (ISQC 1), and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Assurance provider’s responsibility Our responsibility is to express a conclusion on the sustainability report based on conducting a limited assurance engagement. We performed our limited assurance engagement in accordance with International Standard on Assurance Engagements (revised), Assurance Engagements Other Than Audits or Reviews of Historic Financial Information (ISAE 3000). This standard requires that we comply with ethical requirements and that we plan and perform the engagement to obtain limited assurance about whether the subject matter information is free from material misstatement. Our assurance engagement involves performing procedures to obtain sufficient appropriate evidence about the sustainability report which is the subject of our assurance engagement. The procedures selected depend on our professional judgement, including an identification of areas where a material misstatement of the subject matter information is likely to arise whether due to fraud or error. In our identification, we considered internal control relevant to management’s preparation of the sustainability report in order to design procedures that are appropriate in the circumstances. A limited assurance is substantially less in scope than a reasonable assurance engagement in relation to both risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks. The procedures we performed were based on our professional judgement and included inquiries, observation of processes followed, inspection of documents, analytical procedures, evaluating the appropriateness of qualification methods and reporting policies, and agreeing or reconciling with underlying records. Given the circumstances of the engagement, and performing the procedures listed above, we: 79Zenith Bank Plc Annual Report December 31, 2021 (cid:120) Interviewed management to obtain an understanding of the internal control environment, risk assessment process and information systems relevant to the sustainability reporting process; (cid:120) Inspected documentation to corroborate the statements of management in our interviews; (cid:120) Tested the processes and systems to generate, collate, aggregate, monitor and report the selected sustainability information; (cid:120) Performed a controls walkthrough of identified key controls; (cid:120) Inspected supporting documentation on a sample basis and performed analytical procedures to evaluate the data generation and reporting processes against the reporting criteria; (cid:120) Evaluated the reasonableness and appropriateness of significant estimates and judgements made by Management in the preparation of the selected sustainability information; and (cid:120) Evaluated whether the selected sustainability information presented in the report are consistent with our overall knowledge and experience of sustainability management and performance at the Bank. The procedures performed in a limited assurance engagement vary in nature and timing and are less in extent than for a reasonable assurance engagement. As a result, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance opinion about whether the Bank’s sustainability information have been prepared, in all material respects, in accordance with the accompanying Bank’s reporting criteria. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Limited Assurance Conclusion Based on procedures we have performed and the evidence we have obtained, and subject to inherent limitations outlined elsewhere in this report, nothing has come to our attention that causes us to believe that the selected sustainability information as set out in the subject matter paragraph above for the year ended 31 December 2021 are not prepared, in all material respects, in accordance with the reporting criteria. 80 Other Matters The maintenance and integrity of Zenith Bank’s website is the responsibility of Zenith Bank’s Directors. Our procedures did not involve consideration of these matters and, accordingly we accept no responsibility for any changes to either the information in the Report or our independent assurance report that may have occurred since the initial date of presentation on Zenith Bank’s website. Our work has been undertaken to enable us to express a limited assurance conclusion on the selected sustainability information to the Directors of the Bank in accordance with the terms of our engagement, and for no other purpose. We do not accept or assume liability to any party other than the Bank for our work, for this report, or for the conclusion we have reached. For: PricewaterhouseCoopers 22 March 2022 Chartered Accountants Lagos, Nigeria Engagement Partner: Sam Abu FRC/2013/ICAN/00000001495 (cid:3)81Zenith Bank Plc Annual Report December 31, 2021Financials 03The Directors accept responsibility for the preparation of the consolidated and separate ﬁnancial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies and Allied Matters Act, (CAMA 2020) of Nigeria, Financial Reporting Council of Nigeria Act, 2011, the Banks and Other Financial Institutions Act, (BOFIA),2020 relevant Central Bank of Nigeria (CBN) Guidelines and Circulars. The Directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act, (CAMA 2020) of Nigeria and for such internal control as the directors determines necessary to enable the preparation of ﬁnancial statements that are free from material misstatements whether due to fraud or error. The Directors have made assessment of the Bank and Group’s ability to continue as a going concern and have no reason to believe that the Bank and the Group will not remain a going concern in the year ahead. SIGNED ON BEHALF OF THEBOARD OF DIRECTORS BY: _________________________ _________________________ Mr. Jim Ovia, CON. Mr. Ebenezer Onyeagwu Chairman Group Managing Director / CEO FRC/2113/CIBN/00000002406 FRC/2113/ICAN/00000003788 January 27, 2022 January 27, 2022 84Statement of Directors’ Responsibilities in Relation to the Financial Statements for the Year Ended 31 December 2021In compliance with Section 404(7) of the Companies and Allied Matters Act of Nigeria (2020), we have reviewed the consolidated and separate ﬁnancial statements of Zenith Bank Plc for the period ended 31st December, 2021 and hereby state as follows: 1. The scope and planning of the audit were adequate in our opinion;2. The accounting and reporting policies of the Group and Bank conformed with the statutory requirements and agreed ethical practices;3. The Internal Control and Internal Audit functions were operating eﬀectively; and4. The External Auditor’s ﬁndings as stated in the management letter are being dealt with satisfactorily by the management.5. Related party transactions and balances have been disclosed in note 37 to the Financial Statements in accordance with requirements of the International Financial Reporting Standards (IFRS) and the Central Bank of Nigeria (CBN) directives as contained in the Prudential Guidelines for Deposit Money Banks in Nigeria and Circular on Disclosure of Insider -Related Credits in Financial Statements BSD/1/2004.Dated January 26, 2022Mrs. Adebimpe BalogunChairman, Audit CommitteeFRC/2117/CITN/00000017467MEMBERS OF THE COMMITTEEShareholders’ Representative1. Mrs Adebimpe Balogun - Chairman2. Professor Leonard F.O. Obika3. Mr. Michael Olusoji Ajayi Directiors’ RepresentativeDirectors’ Representatives1. Mr. Gabriel Ukpeh2. Engr. Mustafa Bello85Governance & SustainabilityZenith Bank Plc Annual Report December 31, 2021Report of the Audit Committee for the Period Ended 31st December, 2021 Independent auditor ·s report To the Members of Zenith Bank Pie Report on the audit of the consolidated and separate financial statements Our opinion In our opinion, the consolidated and separate financial statements give a true and fair view of the consolidated and separate financial position of Zenith Bank Plc rthe bank") and its subsidiaries (together «the group") as at 31 December 2021, and of their consolidated and separate financial performance and their consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act, the Banks and Other Financial Institutions Act and the Financial Reporting Council of Nigeria Act. What we have audited Zenith Bank Plc's consolidated and separate financial state(cid:256)ents comprise: •the consolidated and separate statements of profit and loss and other comprehensive income for the yearended 31 December 2021; •the consolidated and separate statements of financial position as at 31 December 2021; •the consolidated and separate statements of changes in equity for the year then ended;•the consolidated and separate statements of cash flows for the year then ended; and•the notes to the consolidated and separate financial statements, which include a summary of significantaccounting policies.Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities underthose standards are further described in the Auditor's responsibilities for the audit of the consolidated and separate financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards), i.e. the IESBA Code issued by the International Ethics Standards Board for Accountants. We have fu(cid:255)filled our other ethical responsibilities in accordance with the IESBA Code. PricewaterhouseCoopers Chartered Accountants, Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria 86Independent auditor ·s report To the Members of Zenith Bank Pie Report on the audit of the consolidated and separate financial statements Our opinion In our opinion, the consolidated and separate financial statements give a true and fair view of the consolidated and separate financial position of Zenith Bank Plc rthe bank") and its subsidiaries (together «the group") as at 31 December 2021, and of their consolidated and separate financial performance and their consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act, the Banks and Other Financial Institutions Act and the Financial Reporting Council of Nigeria Act. What we have audited Zenith Bank Plc's consolidated and separate financial state(cid:256)ents comprise: •the consolidated and separate statements of profit and loss and other comprehensive income for the yearended 31 December 2021; •the consolidated and separate statements of financial position as at 31 December 2021; •the consolidated and separate statements of changes in equity for the year then ended;•the consolidated and separate statements of cash flows for the year then ended; and•the notes to the consolidated and separate financial statements, which include a summary of significantaccounting policies.Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities underthose standards are further described in the Auditor's responsibilities for the audit of the consolidated and separate financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards), i.e. the IESBA Code issued by the International Ethics Standards Board for Accountants. We have fu(cid:255)filled our other ethical responsibilities in accordance with the IESBA Code. PricewaterhouseCoopers Chartered Accountants, Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria 86Zenith Bank Plc Annual Report December 31, 2021 87 8889Zenith Bank Plc Annual Report December 31, 202190 Consolidated and Separate Statements of Proﬁt or Loss and other Comprehensive Income for the Year Ended 31 December 2021GroupBankIn millions of NairaNote(s)31-Dec-2131-Dec-2031-Dec-2131-Dec-20Interest and similar income6427,597420,813340,388342,492Interest and similar expense7(106,793)(121,131)(82,718)(102,111)Net interest income320,804299,682257,670240,381Impairment loss on ﬁnancial and non-ﬁnancial instruments8(59,932)(39,534)(56,175)(37,237)Net interest income after impairment loss on financial and non-financial instruments260,872260,148201,495203,144Net income on fees and commission 9103,95879,33284,18561,417Trading gains 11167,483121,678171,469118,601Other operating income 1037,59450,73553,26650,450Depreciation of property and equipment 26(25,305)(25,125)(23,204)(22,686)Amortisation of intangible assets 27(3,779)(3,537)(3,064)(2,776)Personnel expenses 37(79,885)(79,520)(61,123)(61,515)Operating expenses 12(180,564)(147,850)(165,857)(136,628)Profit before tax280,374255,861257,167210,007Income tax expense13a(35,816)(25,296)(24,034)(12,155)Profit for the year after tax244,558230,565233,133197,852Other comprehensive income:Items that will never be reclassified to profit or loss:Fair value movements on equity instruments at FVOCI5,59916,2955,59916,295Items that are or may be reclassified to profit or loss:Foreign currency translation diﬀerences for foreign operations8,48515,011--Fair value movements on debt securities at FVOCI(2,227)1,981--Income tax relating to fair value movement on debt securities at FVOCI-(355)--Other comprehensive income for the year11,85732,9325,59916,295Total comprehensive income for the year256,415263,497238,732214,147Profit attributable to:Equity holders of the parent244,402230,374233,133197,852Non controlling interest156191--Total comprehensive income attributable to:Equity holders of the parent256,245263,277238,732214,147Non controlling interest170220--Earnings per share Basic and diluted (Naira) 147.787.347.436.30The accompanying notes are an integral part of these consolidated and separate ﬁnancial statements.92GroupBankIn millions of NairaNote(s)31-Dec-2131-Dec-2031-Dec-2131-Dec-20AssetsCash and balances with central banks 151,488,3631,591,7681,397,6661,503,245Treasury bills 161,764,9451,577,8751,577,6471,393,421Assets pledged as collateral 17392,594298,530357,000298,530Due from other banks 18691,244810,494518,053532,377Derivative assets 1956,18744,49657,47641,729Loans and advances 203,355,7282,779,0273,099,4522,639,797Investment securities 211,303,726996,916477,004333,126Investment in subsidiaries 22--34,62534,625Deferred tax asset 241,8375,787-4,733Other assets 25168,210169,967152,326159,625Property and equipment 26200,008190,170177,501169,080Intangible assets 2725,00116,24323,54214,699Total assets9,447,8438,481,2737,872,2927,124,987LiabilitiesCustomers' deposits 28 6,472,0545,339,9115,169,1994,298,258Derivative liabilities 33 14,67411,07615,17011,076Current income tax payable 13 16,90911,69014,2419,117Deferred tax liabilities 24 11,603111,596-Other liabilities 29 487,432703,292427,876599,464On-lending facilities 30 369,241384,573369,241384,573Borrowings 31 750,469870,080769,395874,090Debt securities issued 32 45,79943,17745,79943,177Total liabilitles8,168,1817,363,8006,822,5176,219,755Capital and reservesShare capital 34 15,698 15,69815,69815,698Share premium 35 255,047255,047255,047255,047Retained earnings 35 607,203521,293466,249382,292Other reserves 35 400,570324,461312,781252,195Attributable to equity holders of the parent 1,278,5181,116,4991,049,775905,232Non-controlling interest 351,144974--Total shareholders' equity 1,279,6621,117,4731,049,775905,232Total liabilities and equity 9,447,8438,481,2737,872,2927,124,987The accompanying notes are an integral part of these consolidated and separate ﬁnancial statements.The ﬁnancial statements were approved and authorised for issue by the Board of Directors on 27 January, 2022 and signed on its behalf by:Jim Ovia, CON (Chairman) FRC/2013/CIBN/00000002406 Ebenezer Onyeagwu (Group Managing Director & Chief Executive Officer) FRC/2013/ICAN/00000003788 Mukhtar Adam, PhD (Chief Financial Officer) FRC/2013/MUL Tl/00000003196 Consolidated and Separate Statements of Financial Position as at 31 December, 202193FinancialsZenith Bank Plc Annual Report December 31, 2021GroupAttributable to equity holders of the ParentIn millions of Naira NotesShare capitalShare premium Foreign currency translationreserveFair value reserveStatutory reserveSMIEISreserveCredit risk reservee Retained earningsTotal Non- controlling interest Total equity At 1 January, 202015,698255,04730,07624,180197,3953,7292,059412,948941,132754941,886Proﬁt for the year-------230,374230,374191230,565Foreign currency translation diﬀerences--14,982-----14,9822915,011Fair value movements on equity instruments---16,295----16,295-16,295Fair value movements on debt securities---1,626----1,626-1,626Total comprehensive income for the Year--14,98217,921---230,374263,277220263,497 Transfer between reserves 35----33,912-207(34,119)---Transactions with owners of the Parent Dividends 40-------(87,910)(87,910)-(87,910)Acquisition of NCI without change in controlAt 31 December, 202015,698255,04745,05842,101231,3073,7292,266521,2931,116,4999741,117,473At 1 January, 202115,698255,04745,05842,101231,3073,7292,266521,2931,116,4999741,117,473Proﬁt for the year-------244,402244,402156244,558Foreign currency translation diﬀerences--8,471-----8,471148,485Fair value movements on equity instruments---5,599----5,599-5,599Fair value movements on debt securities (net of tax)---(2,227)----(2,227)-(2,227)Total comprehensive income for the year--8,4713,372---244,402256,245170256,415Transfer between reserves 35----44,686-19,580(64,266)---Transactions with owners of the Parent Dividends 40-------(94,226)(94,226)-(94,226)At 31 December, 202115,698255,04753,52945,473275,9933,72921,846607,2031,278,5181,1441,279,662Zenith Bank Plc Annual Report December 31, 2021Consolidated and Separate Statements of Changes in Equity for the Year Ended 31 December 202194Bank In millions of Naira NotesShare capital Share premium Fair value reserve Statutory reserve SMIEIS reserve Credit risk reserve Retained earnings Total equity At 1 January, 2020,255,04723,728178,7653,729-302,028778,995Proﬁt for the year------197,852197,852Fair value movements on equity instruments--16,295----16,295Total comprehensive income for the year--16,295---197,852214,147Transfer between reserves35---29,678--(29,678)-Dividends40------(87,910)(87,910)At December 30, 202015,698255,04740,023208,4433,729-382,292905,232At 01 January 202115,698255,04740,023208,4433,729-382,292905,232Proﬁt for the period------233,133233,133Fair value movements on equity instruments--5,599----5,599Total comprehensive income for the year--5,599---233,133238,732Transfer between reserves35---34,971-20,016(54,987)-Dividends40------(94,189)(94,189)Balance at 31 December, 202115,698255,04745,622243,4143,72920,016466,2491,049,775The accompanying notes are an integral part of these consolidated and separate ﬁnancial statements.FinancialsZenith Bank Plc Annual Report December 31, 202195GroupBankFor the year ended 31 DecemberNote(s)2021202020212020In millions of NairaCash flows from operating activities Proﬁt before tax for the year280,374255,861257,167210,007Adjustments for: Net impairment loss on ﬁnancial and non-ﬁnancial nstruments859,93239,53456,17537,237Unrealised fair value change in trading bond, bills and derivatives44(xii)(94,564)(8,283)(97,873)(3,670)Depreciation of property and equipment2625,30525,12523,20422,686Amortisation of intangible assets273,7793,5373,0642,776Dividend income10(2,754)(1,707)(19,186)(5,307)Foreign exchange revaluation gain10(25,537)(43,441)(26,012)(39,668)Write-oﬀ of Intangible272,454-2,454-Interest income6(427,597)(420,813)(340,388)(342,492)Interest expense7106,793121,13182,718102,111Gain on sale of property and equipment10(78)(347)(69)(348)Gain on disposal of ﬁnancial instrument10(251)(891)-(891)Modiﬁcation loss44(v)353---(71,791)(30,294)(58,746)(17,559)Changes in operating assets and liabilities: Net increase in loans and advances44(iii)(536,014)(385,651)(409,303)(352,819)Net (increase)/decrease in other assets44(viii)1,362(88,605)6,896(90,079)Net decrease/(increase) in treasury bills (FVTPL) including bills pledged44(iib)(97,724)81,210(95,938)79,661Net (increase)/decrease in investment securities including bonds pledged (FVTPL and FVOCI)44(ib)(160,011)(220,706)33,389(33,934)Net (increase)/decrease in restricted balances (cash reserves)44(x)80,525(650,472)95,418(609,669)Net decrease in due from banks with maturity greater than three months and restricted cash44(vii)139,06167,91875,55666,725Net increase in customer deposits44(iv)1,091,293960,138823,850761,784Net increase/(decrease) in other liabilities44(v)(225,060)337,972(180,330)212,884 221,64171,510290,79216,994Interest received from operating activities44 (xiiia)286,640245,537253,341230,789Interest paid 44 (xi)(107,051)(101,461)(83,695)(84,934)Tax paid 44(xv)(15,045)(16,746)(2,581)(2,678)Net cash flows generated from operations386,185198,840457,857160,17196Consolidated and Separate Statement of Cash Flows for the Year Ended 31 December, 2021 GroupBankIn millions of NairaNote(s)2021202020212020Cash flows from investing activities Purchase of property and equipment44(xivb)(34,109)(23,950)(31,584)(21,853)Proceeds from sale of property and equipment44(vi)4481,113437593Purchase of Intangible assets27(14,884)(2,473)(14,362)(2,366)Additions to treasury bills44(iia)(2,652,094)(2,157,223)(2,346,839)(1,834,272)Disposal of treasury bills44(iia)2,449,8161,992,5862,056,9951,685,163Interest received from treasury bills and investment securities44(xiiib)78,97095,10541,49272,455Acquisition of Right of Use asset44(xiva)(240)(3,244)(150)(3,070)Additions to other Investment securities44(i(300,852)(120,712)(159,577)(98,245)Disposal of other Investment securities44(i)230,05697,22575,92880,658Proceeds from sale of ﬁnancial instruments10251891-891Dividend received102,7541,70719,1865,307Net cash used in investing activities(239,884)(118,975)(358,474)(114,739)Cash flows from financing activitiesCash inﬂow from long term borrowings31712,420872,332693,944872,332Repayment of long term borrowing31(860,123)(353,338)(826,805)(357,341)Cash inﬂow from onlending facility30(b)14,48232,26314,48232,263Repayment of onlending facility30(b)(33,011)(39,758)(33,011)(39,758)Repayment of principal for lease liability44(v)(2,802)(742)(2,007)(684)Unclaimed dividend received44(v)612-612-Dividends paid to shareholders40(94,226)(87,910)(94,189)(87,910)Net cash used in financing activities(262,648)422,847(246,974)418,902Net (decrease)/increase in cash and cash equivalents (116,347)502,712(147,591)464,334Analysis of changes in cash and cash equivalents : Cash and cash equivalent at the beginning of the year1,208,520670,715882,683388,853(decrease)/increase in cash and cash equivalents(116,347)502,712(147,591)464,334Eﬀect of exchange rate movement on cash balances42,34635,09341,48229,496Cash and cash equivalents at the end of the year411,134,5191,208,520776,574882,683The accompanying notes are an integral part of these consolidated and separate ﬁnancial statements.97FinancialsZenith Bank Plc Annual Report December 31, 2021For more details, visit  www.zenithbank.com/timeless. Notes1. General informationZenith Bank Plc (the “Bank”) was incorporated in Nigeria under the Companies and Allied Matters Act as a private limited liability company on May 30, 1990. It was granted a banking licence in June 1990, to carry on the business of commercial banking and commenced business on June 16, 1990. The Bank is domiciled in Nigeria and was converted into a Public Limited Liability Company on May 20, 2004. The Bank’s shares were listed on October 21, 2004 on the Nigerian Stock Exchange. In August 2015, the Bank was admitted into the Premium Board of the Nigerian Stock Exchange.The registered oﬃce address of the company is Plot 87 Ajose Adeogun street, Victoria Island, Lagos.The principal activity of the Bank is the provision of banking and other ﬁnancial services to corporate and individual customers. Such services include granting of loans and advances, corporate ﬁnance and money market activities.The Bank has six subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pensions Custodian Limited, Zenith Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited, Zenith Bank (The Gambia) Limited and Zenith Nominees Limited. The Bank also has a representative oﬃce in China in addition to operating a branch of Zenith Bank (UK) Limited in the United Arab Emirates.The consolidated and separate ﬁnancial statements for the year ended 31 December 2021 comprise the Bank and its subsidiaries (together referred to as “the Group” and individually as “Group entities”) and the separate ﬁnancial statements comprise the Bank. The consolidated and separate ﬁnancial statements for the year ended 31 December 2021 were approved and authorised for issue by the Board of Directors on 27 January 2022. The directors have the power to amend and re-issue the ﬁnancial statementsThe Group does not have any unconsolidated structured entity.2. (a) Changes in accounting policiesExcept as noted below, the Group has consistently applied the accounting policies as set out in Note 2(b) to all periods presented in these consolidated and separate ﬁnancial statements.The Group has adopted the following amendments including any consequential amendments to other standards with initial date of application of January 1, 2021.i.) Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16 Interest Rate Benchmark Reform - Phase 2‘Phase 2’ of the amendments requires that, for ﬁnancial instruments measured using amortised cost measurement (that is, ﬁnancial instruments classiﬁed as amortised cost and debt ﬁnancial assets classiﬁed as FVOCI), changes to the basis for determining the contractual cash ﬂows required by interest rate benchmark reform are reﬂected by adjusting their eﬀective interest rate. No immediate gain or loss is recognised. A similar practical expedient exists for lease liabilities (see below). These expedients are only applicable to changes that are required by interest rate benchmark reform, which is the case if, and only if, the change is necessary as a direct consequence of interest rate benchmark reform and the new basis for determining the contractual cash ﬂows is economically equivalent to the previous basis (that is, the basis immediately preceding the change). Where some or all of a change in the basis for determining the contractual cash ﬂows of a ﬁnancial asset and liability does not meet the above criteria, the above practical expedient is ﬁrst applied to the changes required by interest rate benchmark reform, including updating the instrument’s eﬀective interest rate. Any additional changes are accounted for in the normal way (that is, assessed for modiﬁcation or derecognition, with the resulting modiﬁcation gain / loss recognised immediately in proﬁt or loss where the instrument is not derecognised). For lease liabilities where there is a change to the basis for determining the contractual cash ﬂows, as a practical expedient the lease liability is remeasured by discounting the revised lease payments using a discount rate that reﬂects the change in the interest rate where the change is required by IBOR reform. If lease modiﬁcations are made in addition to those required by IBOR reform, the normal requirements of IFRS 16 are applied to the entire lease modiﬁcation, including those changes required by IBOR reform.Interest rate benchmark reform OverviewA reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank oﬀered rates (IBORs) with alternative nearly risk-free rates (referred to as ‘IBOR reform’).Zenith Bank has assessed and quantiﬁed its exposure to IBORs on its ﬁnancial instruments that will be reformed as part of this market-driven initiative. Over the course of the transition, the IBOR reform has had operational, risk management, legal and accounting impacts across all of our business lines. From the management point of view, the ﬁnancial risk is limited mainly to interest rate risk.Zenith Bank established a cross-functional IBOR Transition Working Group to manage its transition to alternative rates. The objectives of the Working Group include evaluating the extent to which the 100Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021entity’s ﬁnancial assets and liabilities reference IBOR cash ﬂows, developing and executing a structured plan for the transition and how to manage communication about IBOR reform with clients and counterparties. The Working Group reports periodically to the Board and ALCO to support the management of interest rate risk and provide relevant information for key decisions relating to the IBOR reform. The Working Group aslo collaborates with other business functions as needed.No newly originated ﬂoating-rate loan or instrument will reference IBOR from 1 January 2022. The IBOR Transition Working Group is working closely with the business teams to establish pricing for new lending products to be indexed to alternative nearly risk-free rates.For existing contracts that are indexed to an IBOR and mature after the expected cessation of the IBOR rate, the Working Group has established policies to transition the aﬀected contracts either by amending the contractual terms to replace the IBOR rate.There are no derivatives benchmarked to IBOR as at year end.a. Non-derivative financial assetsZenith Bank’s IBOR exposures on ﬂoating-rate loans to customers is predominantly USD LIBOR. For these assets, Zenith Bank is in the process of reforming them to the Secured Overnight Financing Rate (‘SOFR’). This also consists of a change to the underlying calculation methodology. SOFR is a broad measure of the cost of borrowing cash overnight collateralised by U.S. Treasury securities in the repurchase agreement (repo) market. This rate is robust, is not at risk of cessation, and it meets international standards. It is produced by the New York Federal Reserve Bank in cooperation with the Oﬃce of Financial Research.The publication of the one week and two-month USD LIBOR ceased on December 31, 2021 and all other USD LIBOR tenors (e.g., overnight, one month, three-month, six-month and twelve-month) will cease after June 30, 2023 (applicable to legacy contracts only).Zenith Bank has revised its internal treasury and risk management systems to support the transition to SOFR.During the course of the transition, Zenith Bank’s IBOR Transition Working Group established policies for amending the interbank oﬀered rates on existing ﬂoating-rate loan portfolio indexed to IBORs. Loan products will be amended in a uniform way, while syndicated products, will be amended in bilateral negotiations with syndicated loan partners.The IBOR Transition Working Group is monitoring the progress of transition from IBORs to SOFR by reviewing the total amounts of impacted contracts. Zenith Bank also considers that a contract is not yet transitioned to an alternative benchmark rate when interest under the contract is indexed to a benchmark rate that is still subject to IBOR reform, (referred to as an ‘unreformed contract’).The following tables show the total amounts of unreformed non-derivative ﬁnancial assets as at 31 December 2021. The amounts of these assets are shown at their gross carrying amounts. USD LIBORIn millions of dollars31 December 2021Carrying Value as at 31 December 2021Of which have yet to be transitioned as at 31 December 2021Loans and advances to customers2,8832,883Multilateral loans--2,8832,883b. Non-derivative financial liabilities Zenith Bank has ﬂoating-rate liabilities indexed to USD LIBOR. The IBOR Transition Working Group and Zenith Bank’s treasury team is in discussions with the counterparties of our ﬁnancial liabilities to amend the contractual termsin response to IBOR reform.The following tables show the total amounts of unreformed non-derivative ﬁnancial liabilities as at 31 December 2021. The amounts shown in the table are the carrying amounts.USD LIBORIn millions of dollars31 December 2021Carrying Value as at 31 December 2021Of which have yet to be transitioned as at 31 December 2021Loans and advances to customers805805Multilateral-Borrowings--805805(b) Significant accounting policies Except as noted in Note 2.0(a), the Group has consistently applied the following accounting policies to all periods presented in these consolidated and separate ﬁnancial statements, unless otherwise stated.(c) Standards issued but not yet effective The following standards and interpretations had been issued but were not mandatory for annual reporting period ended on 31 December 2021. The Group has not 101FinancialsZenith Bank Plc Annual Report December 31, 2021early adopted the underlisted standards in preparing the ﬁnancial statements as it plans to adopt them at their respective eﬀective dates if applicable.(i) Classification of Liabilities as current or non-current - Amendments to IAS 1 The narrow-scope amendments to IAS 1 Presentation of Financial Statements clarify that liabilities are classiﬁed as either current or noncurrent, depending on the rights that exist at the end of the reporting period. Classiﬁcation is unaﬀected by the expectations of the entity or events after the reporting date (eg the receipt of a waiver or a breach of covenant). The amendments also clarify what IAS 1 means when it refers to the ‘settlement’ of a liability. The amendments could aﬀect the classiﬁcation of liabilities, particularly for entities that previously considered management’s intentions to determine classiﬁcation and for some liabilities that can be converted into equity. They must be applied retrospectively in accordance with the normal requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. In May 2020, the IASB issued an Exposure Draft proposing to defer the eﬀective date of the amendments to 1 January 2023. The eﬀective date is 1 January 2023. The impact of this amendment on the Groups ﬁnancial statements is currently under assessment.(ii) Reference to the Conceptual Framework - Amendments to IFRS 3 Minor amendments were made to IFRS 3 Business Combinations to update the references to the Conceptual Framework for Financial Reporting and add an exception for the recognition of liabilities and contingent liabilities within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets and Interpretation 21 Levies. The amendments also conﬁrm that contingent assets should not be recognised at the acquisition date. The eﬀective date is 1 January 2022. The amendment has no eﬀect on the Group ﬁnancial statements for the year, as there has been no business combinations for the reporting year.(iii) Onerous Contracts - Cost of Fulfilling Contract Amendments to IAS The amendment to IAS 37 clariﬁes that the direct costs of fulﬁlling a contract include both the incremental costs of fulﬁlling the contract and an allocation of other costs directly related to fulﬁlling contracts. Before recognising a separate provision for an onerous contract, the entity recognises any impairment loss that has occurred on assets used in fulﬁlling the contract. The eﬀective date is 1 January 2022. The Group has no contracts as at the reporting dates to which the amendments apply.(iv) Annual Improvements to IFRS Standards 2018-2020 The following improvements were ﬁnalised in 2020: IFRS 9 Financial Instruments - clariﬁes which fees should be included in the 10% test for derecognition of ﬁnancial liabilities. IFRS 16 Leases - To remove the illustration of payments from the lessor relating to leasehold improvements, to remove any confusion about the treatment of lease incentives.The eﬀective date is 1 January 2022.(v) Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 The IASB amended IAS 1 to require entities to disclose their material rather than their signiﬁcant accounting policies. The amendments deﬁne what is ‘material accounting policy information’ and explain how to identify when accounting policy information is material. They further clarify that immaterial accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material accounting information. To support this amendment, the IASB also amended IFRS Practice Statement 2 Making Materiality Judgements to provide guidance on how to apply the concept of materiality to accounting policy disclosures. The eﬀective date is 1 January 2023. The impact of this amendment on the Group’s ﬁnancial statements is currently under assessment.102Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021vi) Definition of Accounting Estimates – Amendments to IAS 8 The amendment to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors clariﬁes how companies should distinguish changes in accounting policies from changes in accounting estimates. The distinction is important, because changes in accounting estimates are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events as well as the current period. The eﬀective date is 1 January 2023. The impact of this amendment on the Group’s ﬁnancial statements is currently under assessment.vii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 The amendments to IAS 12 Income Taxes require companies to recognise deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary diﬀerences. They will typically apply to transactions such as leases of lessees and decommissioning obligations and will require the recognition of additional deferred tax assets and liabilities. The amendment should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, entities should recognise deferred tax assets (to the extent that it is probable that they can be utilised) and deferred tax liabilities at the beginning of the earliest comparative period for all deductible and taxable temporary diﬀerences associated with: right-of-use assets and lease liabilities, and decommissioning, restoration and similar liabilities, and the corresponding amounts recognised as part of the cost of the related assets. The cumulative eﬀect of recognising these adjustments is recognised in retained earnings, or another component of equity, as appropriate. IAS 12 did not previously address how to account for the tax eﬀects of on-balance sheet leases and similar transactions and various approaches were considered acceptable. The eﬀective date is 1 January 2023. The impact of this amendment on the Group’s ﬁnancial statements is currently under assessment.2.1 Basis of preparation(a). Statement of compliance The ﬁnancial statements are prepared in accordance with International Financial Reporting Standard (IFRS) and in the manner required by the Companies and Allied Matters Act of Nigeria, the Financial Reporting Council of Nigeria Act, the Banks and other Financial Institutions Act of Nigeria, and relevant Central Bank of Nigeria circulars.(b). Basis of measurement The ﬁnancial statements have been prepared under the historical cost convention with the exception of the following: Financial assets and liabilities measured at amortised cost; Derivative ﬁnancial instruments which are measured at fair value; and Non-derivative ﬁnancial instruments, carried at fair value through proﬁt or loss, or fair value through OCI are measured at fair value.(c) Use of estimates and judgements The preparation of ﬁnancial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are signiﬁcant to the consolidated and separate ﬁnancial statements are disclosed in Note 4.2.2 Basis of Consolidation(a) Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity if it is exposed to, or has the rights to variable returns from its involvement with the entity and has the ability to aﬀect those returns through its power over the entity. The Group reassesses whether it has control if there are changes to one or more elements of control. This includes circumstances in which protective rights held become substantive and lead to the Group having control over an investee.103FinancialsZenith Bank Plc Annual Report December 31, 2021 The ﬁnancial statements of subsidiaries are consolidated from the date the Group acquires control, up to the date that such eﬀective control ceases. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (transactions with owners). When the proportion of the equity held by Non-controlling Interests (NCIs) changes, the carrying amounts of the controlling and NCIs are adjusted to reﬂect the changes in their relative interests in the Subsidiary. Any diﬀerence between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the Group. Inter-company transactions, balances and unrealised gains on transactions between companies within the Group are eliminated on consolidation. Unrealised losses are also eliminated in the same manner as unrealised gains, but only to the extent that there is no evidence of impairment. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. In the separate ﬁnancial statements, investments in subsidiaries are measured at cost less accumulated impairment.(b) Loss of Control On loss of control, the Group derecognises the assets and liabilities of the subsidiary, any related non-controlling interests and the other components of equity relating to a subsidiary. Any surplus or deﬁcit arising on the loss of control is recognised in proﬁt or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, that retained interest is accounted for as an equity-accounted investee or as a ﬁnancial asset depending on the level of inﬂuence retained.(c) Associates Associates are all entities over which the Group has signiﬁcant inﬂuence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill identiﬁed on acquisition, net of any accumulated impairment loss. The Group’s share of its associates’ post-acquisition proﬁts or losses is recognised in proﬁt or loss, and its share of post- acquisition movements in reserves are recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. (d) Non-controlling interests Non-controlling interests are measured at their proportionate share of the acquiree’s identiﬁable net assets at the acquisition date. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.2.3 Translation of foreign currenciesForeign currency transactions and balances(a) Functional and presentation currency Items included in the ﬁnancial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The parent entity’s functional currency (Nigerian Naira) is adopted as the presentation currency for the separate and consolidated ﬁnancial statements. Except as otherwise indicated, ﬁnancial information presented in Naira has been rounded to the nearest million.(b) Group companies The results and ﬁnancial position of all the Group entities (none of which has the currency of a hyper-inﬂationary economy) that have a functional currency diﬀerent from the presentation currency are translated into the presentation currency as follows:(i) assets and liabilities for statement of ﬁnancial position presented are translated at the closing rate at the reporting date;104Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(ii) income and expenses for each statement of proﬁt or loss and other comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative eﬀect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and(iii) all resulting exchange diﬀerences are recognised in other comprehensive income and presented within equity as foreign currency translation reserves. On the disposal of a foreign operation, the Group recognises in proﬁt or loss the cumulative amount of exchange diﬀerences relating to that foreign operation. When a subsidiary that includes a foreign operation is partially disposed of or sold, the Group re-attributes the proportionate share of the cumulative amount of the exchange diﬀerences recognised in other comprehensive income to the non-controlling interests in that foreign operation. In the case of any other partial disposal of a foreign operation, the Group reclassiﬁes to proﬁt or loss only the proportionate share of the cumulative amount of exchange diﬀerences recognised in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate at the reporting date.(c) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in proﬁt or loss. Non-monetary assets and liabilities denominated in foreign currencies that are measured at historical cost are translated to the functional currency using the exchange rate at the transaction date, and those measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined and are recognised in the proﬁt or loss. When a gain or loss on non-monetary item is recognised in other comprehensive income, any exchange component of that gain or loss shall be recognised in other comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognised in proﬁt or loss, any exchange of that gain or loss shall be recognised in proﬁt or loss. Translation diﬀerences on equities measured at fair value through other comprehensive income are included in other comprehensive income and transferred to the fair value reserve in equity. Foreign currency gains and losses on intra-group loans are recognised in proﬁt or loss unless settlement of the loan is neither planned nor likely to occur in the foreseeable future, in which case the foreign currency gains and losses are initially recognised in the foreign currency translation reserve in the consolidated ﬁnancial statements. Those gains and losses are recognised in proﬁt or loss at the earlier of settling the loan or at the time at which the foreign operation is disposed.2.4 Cash and cash equivalents For the purposes of the statement of cash ﬂow, cash and cash equivalents comprise balances with original maturities of three (3) months or less than three months from the date of acquisition that are subject to an insigniﬁcant risk of changes in their fair value, and are used by the Group in the management of its short-term commitments. They include cash and non- restricted balances with central banks, treasury bills and other eligible bills, amounts due from other banks and short-term government securities.2.5 Financial instruments(a) Initial recognition and measurement Financial instruments are recognised initially when the Group becomes a party to the contractual provisions of the instruments. Financial instruments carried at fair value through proﬁt or loss are initially recognised at fair value with transaction costs, which are directly attributable to the acquisition or issue of the ﬁnancial instruments, being recognised immediately through proﬁt or loss. Financial instruments that are not carried at fair value through proﬁt or loss are initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issue of the ﬁnancial instruments. Financial instruments are recognised or de-recognised on the date the Group settles the purchase or sale of the instruments (settlement date accounting).105FinancialsZenith Bank Plc Annual Report December 31, 2021(b) Subsequent measurement Subsequent to initial measurement, ﬁnancial instruments are measured either at amortised cost or fair value depending on their classiﬁcation category.(c) Classification(i) Financial assets Subsequent to initial recognition, all ﬁnancial assets within the Group are measured at: amortised cost; fair value through other comprehensive income (FVOCI); or fair value through proﬁt or loss (FVTPL) The Group’s ﬁnancial assets are subsequently measured at amortised cost if they meet both of the following criteria and are not designated as at FVTPL: ‘Hold to collect’ business model test - The asset is held within a business model whose objective is to hold the ﬁnancial asset in other to collect contractual cash ﬂows; and ‘SPPI’ contractual cash ﬂow characteristics test - The contractual terms of the ﬁnancial asset give rise to cash ﬂows that are solely payments of principal and interest (SPPI) on the principal amount outstanding on a speciﬁed date. Interest in this context is the consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time. Debt instruments are measured at amortised cost by the Group if they meet both of the following criteria and are not designated as at FVTPL: ‘Hold to collect and sell’ business model test: The asset is held within a business model whose objective is achieved by both holding the ﬁnancial asset in order to collect contractual cash ﬂows and selling the ﬁnancial asset; and ‘SPPI’ contractual cash ﬂow characteristics test: The contractual terms of the ﬁnancial asset give rise on speciﬁed dates to cash ﬂows that are solely payments of principal and interest on the principal amount outstanding. All other ﬁnancial assets including equity investments are measured at fair value. A ﬁnancial asset is classiﬁed and measured at fair value through proﬁt or loss (FVTPL) by the Group if the ﬁnancial asset is: A debt instrument that does not qualify to be measured at amortised cost or FVOCI; An equity investment which the Group has not irrevocably elected to classify as at FVOCI and present subsequent changes in fair value in OCI; A ﬁnancial asset where the Group has elected to measure the asset at FVTPL under the fair value option.(ii) Financial liabilities Financial liabilities are either classiﬁed by the Group as: Financial liabilities at amortised cost; or Financial liabilities as at fair value through proﬁt or loss (FVTPL). Financial liabilities are measured at amortised cost by the Group unless either: The ﬁnancial liability is held for trading and is therefore required to be measured at FVTPL, or The Group elects to measure the ﬁnancial liability at FVTPL (using the fair value option).(iii) Financial guarantees contracts and loan commitments A ﬁnancial guarantee contract is a contract that requires the Group (issuer) to make speciﬁed payments to reimburse the holder for a loss it incurs because a speciﬁed debtor fails to make payment when due in accordance with the original or modiﬁed terms of a debt instrument. Loan commitments’ are ﬁrm commitments to provide credit under pre-speciﬁed terms and conditions. Financial guarantees issued or commitments to provide a loan at a below-market interest rate are initially measured at fair value. 106Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Subsequently, they are measured at the higher of the loss allowance determined in accordance with IFRS 9 (see note 3.2.18) and the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15. The Group has issued no loan commitments that are measured at FVTPL. Liabilities arising from ﬁnancial guarantees and loan commitments are included within provisions. The Group conducts business involving commitments to customers. The majority of these facilities are set-oﬀ by corresponding obligations of third parties. Contingent liabilities and commitments comprise usance lines and letters of credit. Usance and letters of credit are agreements to lend to a customer in the future subject to certain conditions. An acceptance is an undertaking by a bank to pay a bill of exchange drawn on a customer. Letters of credit are given as security to support the performance of a customer to third parties. As the Group will only be required to meet these obligations in the event of the Customer’s default, the cash requirements of these instruments are expected to be considerably below their nominal amounts. Contingent liabilities and commitments are initially recognized at fair value which is also generally equal to the fees received and amortized over the life of the commitment. The carrying amount of contingent liabilities are subsequently measured at the higher of the present value of any expected payment when a payment under the contingent liability has become probable and the unamortised fee.Business model assessmentThe Group assesses the objective of a business model in which an asset is held at a portfolio level because this best reﬂects the way the business is managed, and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management’s strategy focuses on earning contractual interest revenue, maintaining a particular interest rate proﬁle, matching the duration of the ﬁnancial assets to the duration of the liabilities that are funding those assets or realising cash ﬂows through the sale of the assets; how the performance of the portfolio is evaluated and reported to the Group’s management; the risks that aﬀect the performance of the business model (and the ﬁnancial assets held within that business model) and its strategy for how those risks are managed; how managers of the business are compensated (e.g. whether compensation is based on the fair value of the assets managed or the contractual cash ﬂows collected); and the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Group’s stated objective for managing the ﬁnancial assets is achieved and how cash ﬂows are realised. Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at FVTPL because they are neither held to collect contractual cash ﬂows nor held both to collect contractual cash ﬂows and to sell ﬁnancial assets.Assessment of whether contractual cash flows are solely payments of principal and interestFor the purposes of this assessment, ‘principal’ is deﬁned as the fair value of the ﬁnancial asset on initial recognition. ‘Interest’ is deﬁned as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as proﬁt margin.In assessing whether the contractual cash ﬂows are SPPI, the Group considers the contractual terms of the instrument. This includes assessing whether the ﬁnancial asset contains a contractual term that could change the timing or amount of contractual cash ﬂows such that it would not meet this condition. In making the assessment, the Group considers: contingent events that would change the amount and timing of cash ﬂows; terms that limit the Group’s claim to cash ﬂows from speciﬁed assets (e.g. non-recourse loans); and features that modify consideration of the time value of money (e.g. periodical reset of Interest rate).107FinancialsZenith Bank Plc Annual Report December 31, 2021The Group holds a portfolio of long-term ﬁxed-rate loans for which the Group has the option to propose to revise the interest rate at periodic reset dates. These reset rights are limited to the market rate at the time of revision. The borrowers have an option to either accept the revised rate or redeem the loan at par without penalty. The Group has determined that the contractual cash ﬂows of these loans are SPPI because the option varies the interest rate in a way that is consideration for the time value of money, credit risk, other basic lending risks and costs associated with the principal amount outstanding.ReclassificationsFinancial assets are not reclassiﬁed subsequent to their initial recognition, except in the period after the Group changes its business model for managing ﬁnancial assets.(d) Derecognition(i) Financial assets The Group derecognises a ﬁnancial asset when the contractual rights to the cash ﬂows from the ﬁnancial asset expire (see also (e)), or it transfers the rights to receive the contractual cash ﬂows in a transaction in which substantially all of the risks and rewards of ownership of the ﬁnancial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the ﬁnancial asset. On derecognition of a ﬁnancial asset, the diﬀerence between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in proﬁt or loss. Any cumulative gain/loss recognised in OCI in respect of equity investment securities designated as at FVOCI is not recognised in proﬁt or loss on derecognition of such securities. Any interest in transferred ﬁnancial assets that qualify for derecognition that is created or retained by the Group is recognised as a separate asset or liability. The Group sometimes enters into transactions whereby it transfers assets recognised on its statement of ﬁnancial position, but retains either all or substantially all of the risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not derecognised. Examples of such transactions are securities lending and sale-and- repurchase transactions. When assets are sold to a third party with a concurrent total rate of return swap on the transferred assets, the transaction is accounted for as a secured ﬁnancing transaction similar to sale-and-repurchase transactions, because the Group retains all or substantially all of the risks and rewards of ownership of such assets. In transactions in which the Group neither retains nor transfers substantially all of the risks and rewards of ownership of a ﬁnancial asset and it retains control over the asset, the Group continues to recognise the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred asset. In certain transactions, the Group retains the obligation to service the transferred ﬁnancial asset for a fee. The transferred asset is derecognised if it meets the derecognition criteria. An asset or liability is recognised for the servicing contract if the servicing fee is more than adequate (asset) or is less than adequate (liability) for performing the servicing.(ii) Financial liabilities The Group derecognises a ﬁnancial liability when its contractual obligations are discharged or cancelled, or expire.(e) Modifications of financial assets and financial liabilities Financial assets If the terms of a ﬁnancial asset are modiﬁed, then the Group evaluates whether the cash ﬂows of the modiﬁed asset are substantially diﬀerent. If the cash ﬂows are substantially diﬀerent, then the contractual rights to cash ﬂows from the original ﬁnancial asset are deemed to have expired. In this case, the original ﬁnancial asset is derecognized (see (d)) and a new ﬁnancial asset is recognised at fair value plus any eligible transaction costs. Any fees received as part of the modiﬁcation are accounted for as follows: - fees that are considered in determining the fair value of the new asset and fees that represent reimbursement of eligible transaction costs are included in the initial measurement of the asset; and - other fees are included in proﬁt or loss as part of the gain or loss on derecognition. If cash ﬂows are modiﬁed when the borrower is in ﬁnancial diﬃculties, then the objective of the modiﬁcation is usually to maximize recovery of the 108Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021original contractual terms rather than to originate a new asset with substantially diﬀerent terms. If the Group plans to modify a ﬁnancial asset in a way that would result in forgiveness of cash ﬂows, then it ﬁrst considers whether a portion of the asset should be written oﬀ before the modiﬁcation takes place (see below for write oﬀ policy). This approach impacts the result of the quantitative evaluation and means that the derecognition criteria are not usually met in such cases. If the modiﬁcation of a ﬁnancial asset measured at amortised cost or FVOCI does not result in derecognition of the ﬁnancial asset, then the Group ﬁrst recalculates the gross carrying amount of the ﬁnancial asset using the original eﬀective interest rate of the asset and recognises the resulting adjustment as a modiﬁcation gain or loss in proﬁt or loss. For ﬂoating-rate ﬁnancial assets, the original eﬀective interest rate used to calculate the modiﬁcation gain or loss is adjusted to reﬂect current market terms at the time of the modiﬁcation. Any costs or fees incurred and fees received as part of the modiﬁcation adjust the gross carrying amount of the modiﬁed ﬁnancial asset and are amortised over the remaining term of the modiﬁed ﬁnancial asset. If such a modiﬁcation is carried out because of ﬁnancial diﬃculties of the borrower (see (2.9)), then the gain or loss is presented together with impairment losses for stage 1 facilities, for stage 2 and 3 the modiﬁcation gain or loss is disclosed separately. In other cases, it is presented as interest income calculated using the eﬀective interest rate method. Financial liabilities The Group derecognises a ﬁnancial liability when its terms are modiﬁed and the cash ﬂows of the modiﬁed liability are substantially diﬀerent. In this case, a new ﬁnancial liability based on the modiﬁed terms is recognised at fair value. The diﬀerence between the carrying amount of the ﬁnancial liability derecognised and consideration paid is recognised in proﬁt or loss. Consideration paid includes non-ﬁnancial assets transferred, if any, and the assumption of liabilities, including the new modiﬁed ﬁnancial liability. If the modiﬁcation of a ﬁnancial liability is not accounted for as derecognition, then the amortised cost of the liability is recalculated by discounting the modiﬁed cash ﬂows at the original eﬀective interest rate and the resulting gain or loss is recognised in proﬁt or loss. For ﬂoating-rate ﬁnancial liabilities, the original eﬀective interest rate used to calculate the modiﬁcation gain or loss is adjusted to reﬂect current market terms at the time of the modiﬁcation. Any costs and fees incurred are recognised as an adjustment to the carrying amount of the liability and amortised over the remaining term of the modiﬁed ﬁnancial liability by re-computing the eﬀective interest rate on the instrument.(f) Offsetting Financial assets and ﬁnancial liabilities are oﬀset and the net amount presented in the statement of ﬁnancial position when, and only when, the Group currently has a legally enforceable right to set oﬀ the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under IFRS, or for gains and losses arising from a group of similar transactions such as in the Group’s trading activity.(g) Amortised cost measurement The amortised cost of a ﬁnancial asset or liability is the amount at which the ﬁnancial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the eﬀective interest rate method of any diﬀerence between the initial amount recognised and the maturity amount, minus any reduction for impairment.(h) Fair value measurement ‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reﬂects its non-performance risk. The best evidence of the fair value of a ﬁnancial instrument at initial recognition is the transaction price – i.e. the fair value of the consideration given or received. However, in some cases the initial estimate of fair value of a ﬁnancial instrument on initial recognition may be diﬀerent from its transaction price. If this estimated fair value is evidenced by comparison with other observable current market transactions in the same instrument (without modiﬁcation or repackaging) or based on a valuation technique whose variables include only data from observable markets, then the diﬀerence is recognised in proﬁt or loss on initial recognition of the instrument. In other cases, the fair value at initial recognition is considered to be the transaction price and the diﬀerence is not recognised in 109FinancialsZenith Bank Plc Annual Report December 31, 2021proﬁt or loss immediately but is recognised over the life of the instrument on an appropriate basis or when the instrument is redeemed, transferred or sold, or the fair value becomes observable. If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price. Where the Bank has positions with oﬀsetting risks, mid market prices are used to measure the oﬀsetting risk positions and a bid or ask price adjustment is applied only to the net open position as appropriate. The fair value of a demand deposit is not less than the amount payable on demand, discounted from the ﬁrst date on which the amount could be required to be paid. The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred. Subsequent to initial recognition, the fair value of a ﬁnancial instrument is based on quoted market prices or dealer price quotation for ﬁnancial instruments. If a market for a ﬁnancial instrument is not active, then the Group establishes fair value using a valuation technique. Valuation techniques include using recent arm’s length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other instruments that are substantially the same, discounted cash ﬂow analyses and option pricing models. The chosen valuation technique makes maximum use of market inputs, relies as little as possible on estimates speciﬁc to the Group, incorporates all factors that market participants would consider in setting a price, and is consistent with accepted economic methodologies for pricing ﬁnancial instruments. Inputs into valuation techniques reasonably represent market expectations and measures of the risk-return factors inherent in the ﬁnancial instrument. See note 3.5 on fair valuation methods and assumptions.(i) Assets pledged as collateral Financial assets transferred to external parties and which do not qualify for de-recognition are reclassiﬁed in the statement of ﬁnancial position from treasury bills and investment securities to assets pledged as collateral, if the transferee has received the right to sell or re-pledge them in the event of default from agreed terms. Assets pledged as collateral are initially recognised at fair value, and are subsequently measured at amortised cost or fair value as appropriate. These transactions are performed in accordance with the usual terms of securities lending and borrowing.(j) Assets under repurchase agreement Assets under repurchase agreement are transactions in which the Group sells a security and simultaneously agrees to repurchase it (or an asset that is substantially the same as the one sold) at a ﬁxed price on a future date. The Group continues to recognise the securities in their entirety in the statement of ﬁnancial position because it retains substantially all of the risks and rewards of ownership. The cash consideration received is recognised as a ﬁnancial asset and a ﬁnancial liability is recognised for the obligation to pay the repurchase price. Because the Group sells the contractual rights to the cash ﬂows of the securities, it does not have the ability to use the transferred assets during the term of the arrangement. 2.6 Derivative instruments The Group recognizes the derivative instruments on the statement of ﬁnancial position at their fair value. The Group designates the derivative as an instrument held for trading or non-hedging purposes (a “trading” or “non-hedging” instrument). Trading or non-hedging derivatives assets and liabilities are those derivative assets and liabilities such as swaps and forward contracts that the Group acquires or incurs for the purpose of selling or purchasing in the near term, or holds as part of a portfolio that is managed together for short-term proﬁt or position taking. Non-hedging derivative assets and liabilities are initially recognized and subsequently measured at fair value in the statement of ﬁnancial position. All changes in fair value are recognized as part of net trading income in proﬁt or loss. Non- hedging derivative assets and liabilities are not reclassiﬁed subsequent to their initial recognition.2.7 Impairment The Group recognises loss allowances for ECL on the following ﬁnancial instruments that are not measured at FVTPL: Financial assets that are debt instruments; Lease receivables; Financial guarantee contracts issued; and Loan commitments issued.110Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021No impairment loss is recognised on equity investments.The Group measures loss allowances at an amount equal to lifetime ECL, except for the following, for which they are measured as 12-month ECL: Debt investment securities that are determined to have low credit risk at the reporting date; and Other ﬁnancial instruments on which credit risk has not increased signiﬁcantly since their initial recognition. 12-month ECL are the portion of ECL that result from default events on a ﬁnancial instrument that are possible within the 12 months after the reporting date. Financial instrument for which a 12-month ECL is recognised are referred to as ‘stage 1 ﬁnancial instruments’. Life-time ECL are the ECL that result from all possible default events over the expected life of the ﬁnancial instrument. Financial instruments for which a lifetime ECL is recognised but which are not credit-impaired are referred to as ‘Stage 2 ﬁnancial instruments’. Financial instruments for which lifetime ECL is recognised which are credit impaired are referred to as ‘Stage 3 ﬁnancial instruments”. Loss allowances for other assets and lease receivables are always measured at an amount equal to lifetime ECL. The Group considers debt investment securities to have low credit risk when its credit risk rating is equivalent to the globally understood deﬁnition of ‘investment grade’ or its is a sovereign debt instruments issued in the local currency.2.7.1 Measurement of ECLECL are a probability-weighted estimate of credit losses. They are measured as follows: Financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the diﬀerence between the cash ﬂows due to the entity in accordance with the contract and the cash ﬂows that the Group expects to receive); Financial assets that are credit-impaired at the reporting date: as the diﬀerence between the gross carrying amount and the present value of estimated future cash ﬂows; Undrawn loan commitments: as the present value of the diﬀerence between the contractual cash ﬂows that are due to the Group if the commitment is drawn down and the cash ﬂows that the Group expects to receive; and Financial guarantee contracts: the expected payments to reimburse the holder less any amount that the Group expects to recover. There has been no change in estimation techniques from prior year. Also, signiﬁcant assumptions made during the year can be seen in note .1 Reversal of Impairment and Backward Transfer Criteria When the Group has measured the loss allowance for a ﬁnancial instrument at an amount equal to lifetime ECL in the previous reporting period but determines at the current reporting date that criteria for recognizing the lifetime ECL is no longer met i.e. cured, the Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date. However, the Group observes the following backward transfer criteria (probationary period) to monitor if the criteria for recognizing the lifetime ECL has decreased signiﬁcantly before the backward transfer can be eﬀected on the credit rating of the customer; 90 days probationary period to move a ﬁnancial instrument from Lifetime ECL not credit-impaired (Stage 2 ﬁnancial instruments) to 12 months ECL (Stage 1 ﬁnancial instruments); 90 days probationary period to move a ﬁnancial instrument from Lifetime ECL credit-impaired (Stage 3 ﬁnancial instruments) to Lifetime ECL not impaired (Stage 2 ﬁnancial instruments); 180 days probationary period to move a loan from Lifetime ECL credit-impaired (Stage 3 ﬁnancial instruments) to 12 months ECL (Stage 1 ﬁnancial instruments). The Group also considers other qualitative criteria where necessary. Impairment gains arising from backward transfers will be recognized as part of ‘impairment losses on ﬁnancial instruments.’111FinancialsZenith Bank Plc Annual Report December 31, 20212.7.2 Credit-impaired financial assetsAt each reporting date, the Group assesses whether ﬁnancial assets carried at amortised cost are credit-impaired referred to as ‘Stage 3 ﬁnancial instruments. A ﬁnancial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash ﬂows of the ﬁnancial asset have occurred.Evidence that a ﬁnancial asset is credit-impaired includes the following observable data: Signiﬁcant ﬁnancial diﬃculty of the borrower or issuer; A breach of contract such as a default or past due event; The restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise; It is becoming probable that the borrower will enter bankruptcy or other ﬁnancial reorganisation; or The disappearance of an active market for a security because of ﬁnancial diﬃculties.A loan that has been renegotiated due to a deterioration in the borrower’s condition is usually considered to be credit- impaired unless there is evidence that the risk of not receiving contractual cash ﬂows has reduced signiﬁcantly and there are no other indicators of impairment. In addition, a loan that is overdue for 90 days or more is considered impaired.In making an assessment of whether an investment in sovereign debt is credit-impaired, the Group considers the following factors. The market’s assessment of creditworthiness as reﬂected in the bond yields. The rating agencies’ assessments of creditworthiness. The country’s ability to access the capital markets for new debt issuance. The probability of debt being restructured, resulting in holders suﬀering losses through voluntary or mandatory debt forgiveness. The international support mechanisms in place to provide the necessary support as ‘lender of last resort’ to that country, as well as the intention, reﬂected in public statements, of governments and agencies to use those mechanisms. This includes an assessment of the depth of those mechanisms and, irrespective of the political intent, whether there is the capacity to fulﬁl the required criteria.2.7.3 Presentation of allowance for ECL in the statement of financial positionLoss allowances for ECL are presented in the statement of ﬁnancial position as follows: Financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets; Loan commitments and ﬁnancial guarantee contracts: generally, as a provision; Where a ﬁnancial instrument includes both a drawn and an undrawn component, and the Group cannot identify the ECL on the loan commitment component separately from those on the drawn component: the Group presents a combined loss allowance for both components. The combined amount is presented as a deduction from the gross carrying amount of the drawn component. Any excess of the loss allowance over the gross amount of the drawn component is presented as a provision and; Debt instruments measured at FVOCI, no loss allowance is recognised in the statement of ﬁnancial position because the carrying amount of the asset is their fair value. However, the loss allowance is disclosed and recognised in the fair value reserve.2.7.4 Write-off policyThe Group writes oﬀ a loan balance when the Group’s credit department determines that the loan is uncollectable and had been declared delinquent and subsequently classiﬁed as lost. This determination is made after considering information such as the continuous deterioration in the customer’s ﬁnancial position, such that the customer can no longer pay the obligation, or that proceeds from the collateral will not be suﬃcient to pay back the entire exposure. Board approval is required for such write-oﬀ. For insider-related loan (loans by the Bank to its own oﬃcers and directors), CBN approval is required. The loan recovery department continues with its recovery eﬀorts and any written-oﬀ loan subsequently recovered is recognised as part of other operating income (see note 10).Loans and debt securities are written oﬀ (either partially or in full) when there is no realistic prospect of recovery. This is generally the case when the Group determines that the borrower does 112Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021not have assets or sources of income that could generate suﬃcient cash ﬂows to repay the amounts subject to the write-oﬀ. However, ﬁnancial assets that are written oﬀ could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.The outstanding contractual amount of assets written oﬀ during the year ended 31 December 2021 was N45.1 billion (31 December, 2020: N53.8 billion). The Group still seeks to recover amounts it is legally owed in full, but which have been written oﬀ due to no reasonable expectation of full recovery.2.8 Reclassification of financial instrumentsFinancial assets are required to be reclassiﬁed in certain rare circumstances among the amortised cost, FVOCI and FVTPL categories. When the Group changes its business model for managing ﬁnancial assets, the Group reclassiﬁes all aﬀected ﬁnancial assets in accordance with the new model. The reclassiﬁcation is applied prospectively from the reclassiﬁcation date. Accordingly, any previously recognised gains, losses or interest are not reinstated. Changes in the business model for managing ﬁnancial assets are expected to be very infrequent.2.9 Restructuring of financial instrumentsFinancial instruments are restructured when the contractual terms are renegotiated or modiﬁed or when an existing ﬁnancial instrument is replaced with a new one due to ﬁnancial diﬃculties of the borrower. Restructured loans represent loans whose repayment periods have been extended due to changes in the business dynamics of the borrowers. For such loans, the borrowers are expected to pay the principal amounts in full within extended repayment period and all interest, including interest for the original and extended terms. 2.10 CollateralThe Group obtains collateral where appropriate, from customers to manage their credit risk exposure to the customers. The collateral normally takes the form of a lien over the customer’s assets and gives the Group a claim on these assets for customers in the event that the customer defaults.The Group may also use other credit instruments, such as derivative contracts in order to reduce their credit risk.Collateral received in the form of securities and other non-cash assets is not recorded on the statement of ﬁnancial position. Collateral received in the form of cash is recorded on the statement of ﬁnancial position with a corresponding liability see note 3.2.7(a)(i) In certain circumstances, property may be repossessed following the foreclosure on loans that are in default. These repossessed collateral are sold as soon as practicable. Repossessed properties are measured at the lower of carrying amount of the related loan and fair value less cost to sell and reported within ‘Other asset’.2.11 Property and equipmentProperty and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Where signiﬁcant parts of an item of property and equipment have diﬀerent useful lives, they are accounted for as separate items (major components) of property and equipment.Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic beneﬁts associated with the item will ﬂow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to proﬁt or loss during the ﬁnancial year in which they are incurred.Property and equipment are depreciated on the straight line basis to their residual values over the estimated useful lives of the assets. Land is not depreciated.Depreciation is calculated on a straight line basis to write down the cost of property and equipment to their residual values over their estimated useful lives as follows:ItemLand(Not depreciated)Motor vehicles4 yearsOffice equipment5 yearsFurniture and fittings5 yearsComputer equipment3 yearsBuildings50 yearsLeasehold improvementOver the remaining lease periodRight of use assetsLower of lease term or the useful life for the specified class of itemDepreciation is included in proﬁt or loss.Work in progress consists of items of property and equipment that are not yet available for use. Work in progress is carried at cost less any required impairment. Depreciation starts when assets are available for use. An impairment loss is recognised if the asset’s recoverable amount is less than cost. The asset is reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. Once the items are available for use, they are transferred to relevant classes of property and equipment as appropriate.113FinancialsZenith Bank Plc Annual Report December 31, 2021Property and equipment are derecognized on disposal, or when no future economic beneﬁts are expected from their use or disposal.Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in proﬁt or loss.Depreciation methods, useful lives and residual values are reassessed at each reporting date and adjusted if appropriate. Borrowing CostsBorrowing costs that are directly attributable to the acquisition or construction of a qualifying asset is capitalized as part of the cost of the asset. Other costs relating to borrowings which the group undertakes in the normal course of business are expensed in the period which they are incurred.2.12 Intangible assets Computer softwareSoftware that is not integral to the related hardware acquired by the Group is stated at cost less accumulated amortisation and accumulated impairment losses.Costs associated with maintaining computer software programmes are recognised expenses as they are incurred. Development costs that are directly attributable to the design and testing of identiﬁable and unique software products controlled by the Group, are recognised as intangible assets when the following criteria are met:(iv) it is technically feasible to complete the software product so that it will be available for use;(v) management intends to complete the software product and use or sell it;(vi) there is an ability to use or sell the software product;(vii) it can be demonstrated how the software product will generate probable future economic beneﬁts(viii) adequate technical, ﬁnancial and other resources to complete the development and to use/sell the software product are available(ix) the expenditure attributable to the software product during its development can be reliably measured.Subsequent expenditure on computer software is capitalised only when it increases the future economic beneﬁts embodied in the speciﬁc asset to which it relates.Amortisation is recognised in proﬁt or loss on a straight-line basis over the estimated useful life of the software, from the date that the asset is available for use since this most closely reﬂects the expected pattern of consumption of the future economic beneﬁts embodied in the asset. The estimated useful life for computer software is 5 years.Amortisation methods, useful lives and residual values are reviewed at each ﬁnancial period-end and adjusted if appropriate. Intangible assets are derecognized on disposal or when no future economic beneﬁts are expected from their use or disposal.2.13 Impairment of non-financial assetsThe carrying amounts of the Group’s non-ﬁnancial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For intangible assets that have indeﬁnite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time.An impairment loss is recognised if the carrying amount of an asset or its Cash Generating Unit (CGU) exceeds its estimated recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash ﬂows are discounted to their present value using a pre-tax discount rate that reﬂects current market assessments of the time value of money and the risks speciﬁc to the asset or CGU. For the purposes of assessing impairment, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inﬂows from continuing use that are largely independent of the cash ﬂows of other assets or CGU.The Group’s corporate assets do not generate separate cash inﬂows and are utilised by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.Impairment losses are recognised in proﬁt or loss. Impairment losses in respect of CGUs are allocated ﬁrst to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs) and then to reduce the carrying amount of the other assets in the CGU (group of CGUs) on a pro rata basis. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only 114Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. An impairment loss in respect of goodwill is not reversed.2.14 LeasesThe major lease transaction wherein the Group/Bank is a lessee relates to the lease of aircraft and lease of Bank’s branches.A. Definition of a leaseUnder IFRS 16, a contract is, or contains a lease if the contract conveys a right to control the use of an identiﬁed asset for a period of time in exchange for consideration. The change in deﬁnition of a lease mainly relates to the concept of control. IFRS 16 distinguishes between leases and service contracts on the basis of whether the use of an identiﬁed asset is controlled by the customer. Control is considered to exist if the customer has: The right to obtain substantially all of the economic beneﬁts from the use of an identiﬁed asset; and The right to direct the use of that asset.The Group applies the deﬁnition of a lease and related guidance set out in IFRS 16 to all lease contracts entered into or modiﬁed on or after 1 January 2019 (where the Group is a lessee in the lease contract).At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices. However, for leases of properties in which it is a lessee, the Group has elected not to separate non-lease components and will instead account for the lease and non-lease component as a single component.B. Group / Bank as a lesseeLeases, under which the Bank possess a contract that conveys the right to control the use of an identiﬁed asset for a period of time in exchange for consideration is disclosed in the Bank’s statement of ﬁnancial position and recognized as a leased asset.To assess whether a contract conveys the right to control the use of an identiﬁed asset for a period of time, the Bank assesses whether, throughout the period of use, it has both of the following:(a) the right to obtain substantially all of the economic beneﬁts from use of the identiﬁed asset, and(b) the right to direct the use of the identiﬁed asset.The Group has elected not to recognize right-of-use assets and lease liabilities for some leases of low value assets. The Group recognizes expenses associated with these leases as an expense on straight line basis over the lease term.The Group presents right-of-use assets as a separate class under ‘property and equipment’. The Group presents lease liability in other liabilities in the statement of ﬁnancial position.The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability.The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which signiﬁcantly aﬀects the amount of lease liabilities and right-of-use assets recognized.2.15 ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events and it is probable that an outﬂow of resources embodying economic beneﬁts will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Provisions are determined by discounting the expected future cash ﬂows using a pre-tax discount rate that reﬂects current market assessments of the time value of money and, where appropriate, the risks speciﬁc to the liability.115FinancialsZenith Bank Plc Annual Report December 31, 2021A provision for restructuring is recognised when the Group has approved a detailed formal plan, and the restructuring either has commenced or has been announced publicly. Future operating costs or losses are not provided for. A provision for onerous contracts is recognised when the expected beneﬁts to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.Contingent liabilities are possible obligations that arise from past events whose existence will be conﬁrmed only by the occurrence, or non-occurrence, of one or more uncertain future events not wholly within the Group’s control. Contingent liabilities are not recognised in the ﬁnancial statements but are disclosed in the notes to the ﬁnancial statements.The Group recognises liability for a levy not earlier than when the activity that triggers payment occurs. Also, the Group accrues liability on levy progressively only if the activity that triggers payment occurs over a period of time. However, for a levy that is triggered upon reaching a minimum threshold, no liability is recognised before the speciﬁed minimum threshold is reached.2.16 Employee benefits(a) Post-employment benefitsThe Group operates a deﬁned contribution plan.A deﬁned contribution plan is a pension plan under which the Group pays ﬁxed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold suﬃcient assets to pay all employees the beneﬁts relating to employee service in the current and prior periods. For deﬁned contribution plans, the Group makes contributions on behalf of qualifying employees to a mandatory scheme under the provisions of the Pension Reform Act. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee beneﬁt expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. For entities operating in Nigeria, the contribution by employees and the employing entities are 8% and 10% respectively of the employees’ basic salary, housing and transport allowances. Entities operating outside Nigeria contribute in line with the relevant pension laws in their jurisdictions.(b) Short-term benefitsShort-term beneﬁts consist of salaries, accumulated leave allowances, proﬁt share, bonuses and any non-monetary beneﬁts.Short-term employee beneﬁts are measured on an undiscounted basis and are expensed as the related services are provided. They are included in personnel expenses in the proﬁt or loss. A liability is recognised for the amount expected to be paid under short-term cash beneﬁts such as accumulated leave and leave allowances if the Group has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be measured reliably.(c) Termination benefitsThe Group recognises termination beneﬁts as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination beneﬁts as a result of an oﬀer made to encourage voluntary redundancy. The Group settles termination beneﬁts within twelve months and are accounted for as short-term beneﬁts.2.17 Share capital and reserves(a) Share issue costsIncremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are shown in equity as a deduction, net of tax, from the proceeds.(b) Dividends on ordinary sharesDividends on ordinary shares are recognised in equity in the period in which they are approved by the Bank’s shareholders. Dividends for the period that are declared after the end of the reporting period are dealt with in the subsequent events note.(c) Share premiumPremiums from the issue of shares are reported in share premium.(d) Statutory reserveNigerian banking regulations require the Bank to make an annual appropriation to a statutory reserve. As stipulated by The Banks and Other Financial Institutions Act (BOFIA) 2020, an appropriation of 30% of proﬁt after tax is made if the statutory 116Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021reserve is less than the paid-up share capital and 15% of proﬁt after tax if the statutory reserve is greater than the paid-up share capital.(e) SMIEIS reserveThe SMIEIS reserve is maintained to comply with the Central Bank of Nigeria (CBN) requirement that all licensed banks set aside a portion of the proﬁt after tax in a fund to be used to ﬁnance equity investments in qualifying small and medium scale enterprises. Under the terms of the guideline (amended by CBN letter dated 11 July 2006), the contributions will be 10% of proﬁt after tax and shall continue after the ﬁrst 5 years but banks’ contributions shall thereafter reduce to 5% of proﬁt after tax. The small and medium scale industries equity investment scheme reserves are non-distributable. Transfer to this reserve is no longer mandatory.(f) Statutory reserve for credit riskThe Nigerian banking regulator requires the Bank to create a reserve for the diﬀerence between impairment provision determined in line with the principles of IFRS and impairment provision determined in line with the prudential guidelines issued by the Central Bank of Nigeria (CBN). This reserve is not available for distribution to shareholders.(g) Retained earningsRetained earnings comprise the undistributed proﬁts from previous periods which have not been reclassiﬁed to any speciﬁed reserves.(h) Fair value reserveComprises fair value movements on equity instruments and debt securities carried at FVOCI. (i) Foreign currency translation reserveComprises exchange diﬀerences resulting from the translation to Naira of the results and ﬁnancial position of Group companies that have a functional currency other than Naira.2.18 Recognition of interest income and expenseEffective interest rateInterest income and expense are recognised in proﬁt or loss using the eﬀective interest method. The ‘eﬀective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the ﬁnancial instrument to: the gross carrying amount of the ﬁnancial asset; or the amortised cost of the ﬁnancial liability.When calculating the eﬀective interest rate for ﬁnancial instruments other than purchased or originated credit-impaired assets, the Group estimates future cash ﬂows considering all contractual terms of the ﬁnancial instrument, but not ECL. For purchased or originated credit impaired ﬁnancial assets, a credit adjusted eﬀective interest rate is calculated using estimated future cash ﬂows including ECL.The calculation of the eﬀective interest rate includes transaction costs and fees and points paid or received that are an integral part of the eﬀective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a ﬁnancial asset or ﬁnancial liability.Amortised cost and gross carrying amountThe ‘amortised cost’ of a ﬁnancial asset or ﬁnancial liability is the amount at which the ﬁnancial asset or ﬁnancial liability is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the eﬀective interest method of any diﬀerence between that initial amount and the maturity amount and, for ﬁnancial assets, adjusted for any expected credit loss allowance.The ‘gross carrying amount of a ﬁnancial asset’ is the amortised cost of a ﬁnancial asset before adjusting for any expected credit loss allowance.Calculation of interest income and expenseThe eﬀective interest rate of a ﬁnancial asset or ﬁnancial liability is calculated on initial recognition of a ﬁnancial asset or a ﬁnancial liability. In calculating interest income and expense, the eﬀective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit impaired) or to the amortised cost of the liability. The eﬀective interest rate is revised as a result of periodic re-estimation of cash ﬂows of ﬂoating rate instruments to reﬂect movements in market rates of interest.However, for ﬁnancial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the eﬀective interest rate to the amortised cost of the ﬁnancial asset. If the asset is no longer credit- impaired, then the calculation of interest income reverts to the gross basis.For ﬁnancial assets that were credit-impaired on initial recognition, interest income is calculated by applying the credit- adjusted eﬀective interest rate to the amortised cost of the asset. The calculation of interest income does not revert to a gross basis, even if the credit risk of the asset improves.117FinancialsZenith Bank Plc Annual Report December 31, 2021For information on when ﬁnancial assets are credit-impaired, see Note 2.7.2.PresentationInterest income calculated using the eﬀective interest method presented in the consolidated and separate statement of proﬁt or loss includes only interest on ﬁnancial assets and ﬁnancial liabilities measured at amortised cost and FVTOCI. Interest expense presented in the consolidated and separate statement of proﬁt or loss and other comprehensive income includes only interest on ﬁnancial liabilities measured at amortised cost.Interest income and expense on all trading assets and liabilities are considered to be incidental to the Group’s trading operations and are presented together with all other changes in the fair value of trading assets and liabilities in net trading income (see Note 2.20).2.19 Fees, commission and other incomeFee and commission income and expense that are integral to the eﬀective interest rate on a ﬁnancial asset or ﬁnancial liability are included in the eﬀective interest rate (see Note 2.18).Other fee and commission income – including account servicing fees, fees on electronic products, sales commission, placement fees and syndication fees – is recognised as the related services are performed. If a loan commitment is not expected to result in the draw-down of a loan, then the related loan commitment fee is recognised on a straight-line basis over the commitment period.A contract with a customer that results in a recognised ﬁnancial instrument in the Group’s ﬁnancial statements may be partially in the scope of IFRS 9 and partially in the scope of IFRS 15. If this is the case, then the Group ﬁrst applies IFRS 9 to separate and measure the part of the contract that is in the scope of IFRS 9 and then applies IFRS 15 to the residual.Other fee and commission expenses relate mainly to transaction and service fees, which are expensed as the services are received.Dividend income is recognised when the right to receive income is established. Usually, this is the exdividend date for quoted equity securities. Dividends are presented in net trading gains, or other income based on the underlying classiﬁcation of the equity investment.Dividends on equity instruments designated as at FVOCI that clearly represent a recovery of part of the cost of the investment are presented in OCI.Income on cash handling relates to services provided to customers in processing cash withdrawal and deposits above the regulated limit, provided by the Central Bank of Nigeria. Income is recognised as the service is provided.Fees and commission income are recognised at point in time and over time. Fees recognised over time relate to credit related fees (concerning participation fee and invoice discounting), guarantee fees, corporate ﬁnance fees, account maintenance fees and fees on electronic products charged monthly. Fees recognised at a point in time relate to credit related fees other than those recognised over time, account maintenance fee, auction fees, commission on agency and collection services, fees on electronic products (recognised at point in time), foreign currency transaction fees and foreign withdrawal charges.2.20 Net Trading gainsNet trading gain comprises gains less losses relating to trading assets and liabilities and includes all fair value changes, interest, dividends and foreign exchange diﬀerences.2.21 Operating expenseExpenses are decreases in economic beneﬁts during the accounting period in the form of outﬂows, depletion of assets or incurrence of liabilities that result in decrease in equity, other than those relating to distributions to equity participants.Expenses are recognized on an accrual basis regardless of the time of spending cash. Expenses are recognized in the income statement when a decrease in future economic beneﬁt related to a decrease in an assets or an increase of a liability has arisen that can be measured reliably. Expenses are measured at historical cost.Only the portion of cost of a previous period that is related to the income earned during the reporting period is recognized as an expense. Expenses that are not related to the income earned during the reporting period, but expected to generate future economic beneﬁts, are recorded in the ﬁnancial statement as assets. The portion of assets which is intended for earning income in the future periods shall be recognized as an expense when the associated income is earned. Expenses are recognized in the same reporting period when they are incurred in cases when it is not probable to directly relate them to particular income earned during the current reporting period and when they are not expected to generate any income during the coming years.118Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 20212.22 Current and deferred income taxIncome tax expense comprises current tax (company income tax, tertiary education tax national information technology development agency levy and Nigeria Police Trust Fund levy) and deferred tax. It is recognised in proﬁt or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.The Bank had determined that interest and penalties relating to income taxes, including uncertain tax treatments, do not meet the deﬁnition of income taxes, and therefore are accounted for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.(a) Current taxCurrent tax comprises the expected tax payable or receivable on the taxable income or loss for the year, and any adjustment to tax payable or receivable in respect of previous years.The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reﬂects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date and is assessed as follows: Company income tax is computed on taxable proﬁts. Tertiary education tax is computed on assessable proﬁts. National Information Technology Development Agency levy is computed on proﬁt before tax. Nigeria Police Trust Fund levy is computed on net proﬁt (i.e. proﬁt after deducting all expenses and taxes from revenue earned by the company during the year).(b) Deferred taxDeferred tax is recognised in respect of temporary diﬀerences between the carrying amounts of assets and liabilities for ﬁnancial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: – temporary diﬀerences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that aﬀects neither accounting nor taxable proﬁt or loss; – temporary diﬀerences related to investments in subsidiaries, associates and joint arrangements to the extent that the Bank is able to control the timing of the reversal of the temporary diﬀerences and it is probable that they will not reverse in the foreseeable future; and – taxable temporary diﬀerences arising on the initial recognition of goodwill.Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary diﬀerences to the extent that it is probable that future taxable proﬁts will be available against which they can be used. Future taxable proﬁts are determined based on the reversal of relevant taxable temporary diﬀerences.If the amount of taxable temporary diﬀerences is insuﬃcient to recognise a deferred tax asset in full, then future taxable proﬁts, adjusted for reversals of existing temporary diﬀerences, are considered, based on the business plans of the Company. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax beneﬁt will be realised; such reductions are reversed when the probability of future taxable proﬁts improves.Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable proﬁts will be available against which they can be used.Deferred tax is measured at the tax rates that are expected to be applied to temporary diﬀerences when they reverse, using tax rates enacted or substantively enacted at the reporting date, and reﬂects uncertainty related to income taxes, if any.The measurement of deferred tax reﬂects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are oﬀset only if certain criteria are met.2.23 Earnings per shareThe Group presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the proﬁt or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the period. Where there are shares that could potentially aﬀect the numbers of share issued, those shares are considered in calculating the diluted earnings per share. There is currently no share that could potentially dilute the total issued shares.2.24 Segment reportingAn operating segment is a component of the Group engaged in business activities from which it can earn revenues, whose operating results are regularly reviewed by the Board in order to make decisions about resources to be allocated to segments and assessing segment performance. The Group’s identiﬁcation of segments and the measurement of segment results are based on the Group’s internal reporting to management.119FinancialsZenith Bank Plc Annual Report December 31, 20212.25 Fiduciary activitiesThe Group acts as trustees and in other ﬁduciary capacities through its subsidiaries, Zenith Pensions Custodian Limited and Zenith Nominees that results in the holding or placing of assets on behalf of individuals, trusts, retirement beneﬁt plans and other institutions. These assets and income arising thereon are excluded from these ﬁnancial statements, as they are not assets of the Group. The fees earned on these activities are recognised as assets based fees.2.26 Deposit for Investment in AGSMEISThe Agri-Business/Small and Medium Enterprises Investment Scheme is an initiative of Banker’s committee of Nigeria. The contributed funds are meant for supporting the Federal Government’s eﬀort at promoting agricultural businesses as well as Small and Medium Enterprises. In line with this initiative, the Bank will contribute 5% of Proﬁt After Tax yearly to the fund. 3. Risk management3.1 Enterprise Risk ManagementThe Zenith Bank Group adopts an integrated approach to risk management by bringing all risks together under a limited number of oversight functions. The Group addresses the challenge of risks comprehensively through the Enterprise Risk Management (ERM) Framework by applying practices that are supported by a governance structure consisting of Board- level and executive management committees.As part of its risk management policy, the Group segregates duties between market-facing business units and risk management functions while management is governed by well-deﬁned policies, which are clearly communicated across the Group.Risk related issues are taken into consideration in all business decisions and the Group continually strives to maintain a conservative balance between risk and revenue consideration. Continuous education and awareness of risk management has strengthened the risk management culture across the Group.3.1.1 Risk Management Philosophy/StrategyThe Group considers sound risk management practice to be the foundation of a long lasting ﬁnancial institution.a. The Group adopt a holistic and integrated approach to risk management and therefore, brings all risks together under one or a limited number of oversight functions.b. Risk management is a shared responsibility. Therefore, the Group aims to build a shared perspective on risks that is grounded in consensus.c. There is clear segregation of duties between market-facing business units and risk management functions.d. Risk Management is governed by well-deﬁned policies which are clearly communicated across the Group.e. Risk related issues are taken into consideration in all business decisions.3.1.2 Risk AppetiteThe Group’s risk appetite is reviewed by the Board of Directors annually, at a level that minimizes erosion of earnings or capital due to avoidable losses or from frauds and operational ineﬃciencies.The Group’s risk appetite describes the quantum of risk that the Group would assume in pursuit of its business objectives at any point in time. The Group uses this risk appetite deﬁnition in aligning its overall corporate strategy, its capital allocation and risks.The Group sets tolerance limits for identiﬁed key risk indicators (“KRIs”), which served as proxies for the risk appetite for each risk area and business/support unit. Tolerance levels for KRIs are jointly deﬁned, agreed upon by the business/support units and subject to annual reviews.3.1.3 Risk Management ApproachThe Group addresses the challenge of risks comprehensively through an enterprise-wide risk management framework and a risk governance policy by applying leading practices that are supported by a robust governance structure consisting of Board-level and executive management committees. The Board drives the risk governance and compliance process through its committees. The Board audit and compliance committee provides oversight on the systems of internal control, ﬁnancial reporting and compliance. The Board credit committee reviews the credit policies and approves all loans above the deﬁned limits for Executive Management. The Board Risk Committee sets the risk philosophy, policies and strategies as well as provides guidance on the various risk elements and their management. The Board Risk Control Functions are supported by various management committees and sub committees (Global Credit committee and Management Risk committee) that help it develop and implement various risk strategies. The Global Credit committee manages the credit approval and documentation activities. It ensures that the credit policies and procedures are 120Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021aligned with the Group’s business objectives and strategies. The Board Risk committee drives the management of the ﬁnancial risks (Market, Liquidity and Credit Risk), operational risks as well as strategic and reputational risks.In addition, Zenith Group manages its risks in a structured, systematic and transparent manner through a global risk policy which embeds comprehensive risk management processes into the organisational structure, risk measurement and monitoring activities. This structure ensures that the Group’s overall risk exposures are within the thresholds set by the Board. The key features of the Group’s risk management policy are:a. The Board of Directors provides overall risk management direction and oversight;b. The Group’s risk appetite is approved by the Board of Directors;c. Risk management is embedded in the Group as an intrinsic process and is a core competence of all its employees;d. The Group manages its credit, market, operational and liquidity risks in a coordinated manner within the organisation;e. The Group’s risk management function is independent of the business divisions; andf. The Group’s internal audit function reports to the Board Audit and compliance Committee and provides independent validation of the business units’ compliance with risk policies and procedures, and the adequacy and eﬀectiveness of the risk management framework on an enterprise-wide basis.The Group continuously modiﬁes and enhances its risk management policies and systems to reﬂect changes in markets, products and international best practices. Training, individual responsibility and accountability, together with a disciplined and cautious culture of control, are an integral part of the Group’s management of risk.The Board of Directors ensures strict compliance with relevant laws, rules and standards issued by the industry regulators and other law enforcement agencies, market conventions, codes of practices promoted by industry associations and internal policies.The compliance function, under the leadership of the Chief Compliance Oﬃcer of the Bank, has put in place a robust compliance framework, which includes:a. Comprehensive compliance manual detailing the roles and responsibilities of all stakeholders in the compliance process:b. Review and analysis of all relevant laws and regulations, which are adopted into policy statements to ensure business is conducted professionally;c. Review of the Bank’s Anti-Money Laundering Policy in accordance with changes in the Money Laundering Prohibition Act 2011 and Anti-Terrorism Act 2011 as amended; andd. Incorporation of new guidelines in the Bank’s “Know Your Customer” policies in line with the increasing global trend as outlined in the Central Bank of Nigeria’s Anti-Money Laundering/Combating Finance of Terrorism Compliance Manual.3.1.4 Methodology for Risk RatingThe risk management strategy is to develop an integrated approach to risk assessments, measurement, monitoring and control that captures all risks in all aspects of the Group’s activities.All activities in the Group have been proﬁled and the key risk drivers and threats in them identiﬁed. Mitigation and control techniques are then determined to tackle each of these threats. The Board has strategically implemented risk policies and procedures using techniques that addresses its risk appetite. Techniques employed in meeting these objectives culminate in the following roles for the risk control functions of the Group:a. Develop and implement procedures and practices that translate the Board’s goals, objectives, and risk tolerances into operating standards that are well understood by staﬀ;b. Establish lines of authority and responsibility for managing individual risk elements in line with the Board’s overall direction;c. Risk identiﬁcation, measurement, monitoring and control procedures;d. Establish eﬀective internal controls that cover each risk management process;e. Ensure that the Group’s risk management processes are properly documented;f. Create adequate awareness to make risk management a part of the corporate culture of the Group; 121FinancialsZenith Bank Plc Annual Report December 31, 2021g. Ensure that risk remains within the boundaries established by the Board; andh. Ensure that business lines comply with risk parameters and prudent limits established by the Board;The CBN Risk Management Guidelines prescribes quantitative and qualitative criteria for the identiﬁcation of signiﬁcant activities and sets a threshold of contributions for determining signiﬁcant activities in the Bank and its subsidiaries. This practice is essentially to drive the risk control focus of ﬁnancial institutions.Zenith Bank applies a mix of qualitative and quantitative techniques in the determination of its signiﬁcant activities under prescribed broad headings. The criteria used in estimating the materiality of each activity is essentially based on the following:a. The strategic importance of the activity and sector;b. The contribution of the activity/sector to the total assets of the Bank;c. The net income of the sector; andd. The risk inherent in the activity and sector.Risk management structures and processes are continuously reviewed to ensure their adequacy and appropriateness for the Group’s risk and opportunities proﬁle as well as with changes in strategy, business environment, evolving thoughts and trends in risk management.3.1.5 Risk management strategies under the current economic conditionsAmid the impacts of the COVID-19 pandemic, the Nigerian economy recorded a better-than-expected performance in 2021, driven by policy support, sustained oil price recovery and stable oil production. After exiting recession in Q4 2020, the Nigerian economy measured by Gross Domestic Product (GDP) rose steadily from 0.5% reported in Q1 2021 to 4.01 per cent, year-on-year, in Q3 2021. This growth rate was signiﬁcantly driven by the performance of oil and non-oil sectors, particularly Transportation, Trade, manufacturing, chemical and pharmaceutical, agriculture, among others.Accordingly, foreign investment inﬂows rebounded signiﬁcantly in the third quarter of the year to $1.73billion, up from US$0.88bn in Q2 2021 and US$1.46bn in Q3 2020, according to the National Bureau of Statistics (NBS). Continuous focus and clarity on exchange rate reforms and enabling business environment could further boost the conﬁdence of foreign investors in the Nigerian economy.Headline inﬂation fell to about 15.63 per cent in December 2021, in line with the IMF’s forecast. However, elevated food price levels and exchange rate pressures could dampen inﬂationary expectations in 2022. These developments, along with rising global inﬂation rates, could lead to hike in both local and global benchmark interest rates.Following the recent modiﬁcation of the foreign exchange (FX) management strategy by the Central Bank of Nigeria (CBN), the exchange rate of the naira has remained largely stable in investors and Exporters (I&E) window. During the period under review, Nigeria’s external reserves received a signiﬁcant boost from the U$4billion Eurobond Sale and U$3.4billion SDR allocation from the IMF, closing the year at U$40.5billion.The banking sector remains robust and well-capitalized while non-performing loans (NPLs) stood at about 6% in 2021. The CBN stress tests showed that the banking system would remain adequately capitalized except in case of a severe deterioration of credit quality. The extension of the moratorium on principal payments of qualifying credit facilities on a case- by-case basis through March 2022 is welcoming.The downside risk to outlook remains uncertainty regarding 2023 General Election, deteriorating security conditions, the outbreak of Omicron variant of COVID-19 pandemic, currency depreciation, hike in electricity tariﬀ, potential increase in fuel pump price, etc. That said, The Nigerian economic recovery will likely be sustained and broaden among sectors, with GDP growth expected to reach 2.5 per cent in 2022, according to the World Bank.3.2 Credit RiskCredit risk is the risk of a ﬁnancial loss if an obligor does not fully honour its contractual commitments to the Group. Obligors may be borrowers, issuers, counterparties or guarantors. Credit risk is the most signiﬁcant risk facing the Bank in the normal course of business. The Bank is exposed to credit risk not only through its direct lending activities and transactions but also through commitments to extend credit, letters of guarantee, letters of credit, securities purchased under reverse repurchase agreements, deposits with ﬁnancial institutions, brokerage activities, and transactions carrying a settlement risk for the Bank such as irrevocable fund transfers to third parties via electronic payment systems.The Group has robust credit standards, policies and procedures to control and monitor intrinsic and concentration risks through all credit levels of selection, underwriting, administration and control. Some of the policies are:122Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021a. Credit is only extended to suitable and well identiﬁed customers and never where there is any doubt as to the ethical standards and record of the intending borrower;b. Exposures to any industry or customer will be determined by the regulatory guidelines, clearly deﬁned internal policies, debt service capability and balance sheet management guidelines;c. Credit is not extended to customers where the source of repayment is unknown or speculative, and also where the destination of funds is unknown. There must be clear and veriﬁable purpose for the use of the funds;d. Credit is not given to a customer where the ability of the customer to meet obligations is based on the most optimistic forecast of events. Risk considerations will always have priority over business and proﬁt considerationse. The primary source of repayment for all credits must be from an identiﬁable cash ﬂow from the counterparty’s normal business operations or other ﬁnancial arrangements. The realization of security remains a fall back option;f. A pricing model that reﬂects variations in the risk proﬁle of various credits to ensure that higher risks are compensated by higher returns is adopted;g. All insiders’ related credits are limited to regulatory and strict internal limits and are disclosed as required; andh. The consequences for non-compliance with the credit policy and credit indiscipline are communicated to all staﬀ and are implemented.3.2.1 Credit Metrics and Measurement ToolsZenith Bank and its subsidiaries have devoted resources and harnessed their credit data to develop models that will improve the determination of economic and ﬁnancial threats resulting from credit risk. Before a sound and prudent credit decision can be taken, the credit risk engendered by the borrower or counterparty must be accurately assessed. This is the ﬁrst step in processing credit applications. As a result, some key factors are considered in credit risk assessment and measurement: These are:a. Adherence to the strict credit selection criteria, which includes deﬁned target market, credit history, the capacity and character of customers;b. Credit rating of obligor;c. The likelihood of failure to pay over the period stipulated in the contract;d. The size of the facility in case default occurs; ande. Estimated Rate of Recovery, which is a measure of the portion of the debt that can be recovered through realisation of assets and collateral should default occur.3.2.2 Credit Rating ToolsThe principal objective of the credit risk rating system is to produce a reliable assessment of the credit risk to which the Group is exposed. As such, all loans and indirect credits such as guarantees and bonds as well as treasury investments undergo a formal credit analysis process that would ensure the proper appraisal of the facility. (a) Loans and advances and amounts due from banksEach individual borrower is rated based on an internally developed rating model that evaluates risk based on ﬁnancial, qualitative and industry-speciﬁc inputs. The associated loss estimate norms for each grade have been developed based on the experience of the Bank and its various subsidiaries.In order to allow for a meaningful distribution of exposures across grades with no excessive concentrations on the Group’s borrower-rating and its facility-rating scale, the Group maintains the under listed rating grade, which is applicable to both new and existing customers.Zenith Group RatingDescription of the gradeAAAInvestment Risk (Extremely Low Risk)AAInvestment Risk (Very Low Risk)AInvestment Risk (Low Risk)BBBUpper Standard Grade (Acceptable Risk)BBLower Standard Grade (Moderately High Risk)BNon-Investment Grade (High Risk)CCCNon-Investment Grade (Very High Risk)CCNon-Investment Grade (Extremely High Risk)CNon-Investment Grade (High Likelihood of Default)DNon-Investment Grade (Lost)Below CIndividually insignificant (unrated)123FinancialsZenith Bank Plc Annual Report December 31, 2021(b) Other debt instruments With respect to other debt instruments, the Group takes the following into consideration in the management of the associated credit risk:(i) Internal and external research and market intelligence reports; and(ii) Regulatory agencies reports In addition to the above, we have put in place limits structure which is monitored from time to time in order to limit our risk exposures on these securities.Control mechanisms for the credit risk rating systemZenith’s credit risk rating system is reviewed periodically to conﬁrm that the rating criteria and procedures are appropriate given the current portfolio and external conditions. Hence, in accordance with the Groups model risk policy, all models that materially impact the risk rating process are reviewed.Furthermore, the ratings accorded to customers are regularly reviewed, incorporating new ﬁnancial information available and the experience in the development of the banking relationship. The regularity of the reviews increases in the case of clients who reach certain levels in the automated warning systems. The rating system is currently undergoing external review with a view to enhancing its robustness.3.2.3 Credit ProcessesZenith operates a centralised credit approval process system. Credits are originated from the branches/business groups and subjected to reviews at various levels before they are presented along with all documents and information deﬁned for the proper assessment and decision of Credit to the Global Credit Committee for consideration. All Credits presented for approval are required to be in conformity with the documented and communicated Risk Acceptance Criteria(RAC).As part of credit appraisal process, the Group will have to review the following:a. Credit assessment of the borrower’s industry, and macro-economic factors;b. The purpose of credit and source of repayment;c. The track record / repayment history of borrower;d. Assess/evaluate the repayment capacity of the borrower;e. The proposed terms and conditions and covenants;f. Adequacy and enforceability of collaterals; andg. Approval from appropriate authority. 3.2.4 Group Credit Risk ManagementZenith’s approach in managing credit risk is a key element in achieving its strategic objective of maintaining and further enhancing its asset quality and credit portfolio risk proﬁle. The credit standards, policies and procedures, risk methodologies and framework, solid structure and infrastructure, risk monitoring and control activities enable the Group to deal with the emerging risks and challenges with a high level of conﬁdence and determination.The framework for credit risk assessment at Zenith is well-deﬁned and institutionally predicated on:a. Clear tolerance limits and risk appetite set at the Board level, well communicated to the business units and periodically reviewed and monitored to adjust as appropriate;b. Well-deﬁned target market and risk asset acceptance criteria;c. Rigorous ﬁnancial, credit and overall risk analysis for each customer/transaction;d. Regular portfolio examination in line with key performance indicators and periodic stress testing;e. Continuous assessment of concentrations and mitigation strategies;f. Continuous validation and modiﬁcation of early warning system to ensure proper functioning for risk identiﬁcation;g. Systematic and objective credit risk rating methodologies that are based on quantitative, qualitative and expert judgment;h. Systematic credit limits management which enables the Bank to monitor its credit exposure on daily basis at country, borrower, industry, credit risk rating and credit facility type levels;i. Solid documentation and collateral management process with proper coverage and top-up triggers and follow-ups; andj. Annual and interim individual credit reviews to ensure detection of weakness signs or warning signals and considering proper remedies.124Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The credit processes are supplemented by sectoral portfolio reviews, which focus on countries, regions or speciﬁc industries as well as multiple stress testing scenarios. These are intended to identify any inherent risks in the portfolios resulting from changes in market conditions and are supplemented by independent reviews from our Group Internal Audit.3.2.5 Group Credit Risk LimitsThe Group applies credit risk limits, among other techniques in managing credit risk. This is the practice of stipulating a maximum amount that the individual or counterparty can obtain as loan. Internal and regulatory limits are strictly adhered to. Through this, the Group not only protects itself, but also in a sense, protects the counterparties from borrowing more than they are capable of repaying.The Group focuses on its concentration and intrinsic risks and further manages them to a more comfortable level. This is very important due to the serious risk implications that intrinsic and concentration risk pose to the Group. A thorough analysis of economic factors, market forecasting and prediction based on historical evidence is used to mitigate these risks.The Group has in place various portfolio concentration limits (which are subject to periodic review). These limits are closely monitored and reported on from time to time.The Group’s internal credit approval limits for the various authorities levels are as indicated below.Zenith Group RatingApproval limit (% of Shareholders’ Fund)Board Credit CommitteeN3.5 billion and above (Not exceeding 20% of total shareholders’ fund)Management Global Credit CommitteeBelow N3.5 billionThese internal approval limits are set and approved by the Group Board and are reviewed regularly as the state of aﬀairs of the Group and the wider ﬁnancial environment demand. 3.2.6 Group Credit Risk MonitoringThe Group’s exposures are continuously monitored through a system of triggers and early-warning signals aimed at detecting symptoms, which could result in deterioration of credit risk quality. The triggers and early-warning systems are supplemented by facility utilisation and collateral valuation monitoring together with a review of upcoming credit facility expiration and market intelligence to enable timely corrective action by management. The results of the monitoring process are reﬂected in the internal rating process through quarterly review activities.Credit risk is monitored on an ongoing basis with formal weekly, monthly and quarterly reporting to keep senior management aware of shifts in credit quality and portfolio performance along with changing external factors such as economic and business cycles.The capabilities of the credit review team is continuously enhanced in order to improve the facility monitoring activity and assure excellent quality Risk Assets Portfolio across the Group.A specialised and focused loan recovery and workout team handles the management and collection of problematic credit facilities.Credit risk is monitored on an ongoing basis with formal weekly, monthly and quarterly reporting to keep senior management aware of shifts in credit quality and portfolio performance along with changing external factors such as economic and business cycles.The capabilities of the credit review team is continuously enhanced in order to improve the facility monitoring activity and assure good quality Risk Assets Portfolio across the Group.A specialised and focused loan recovery and workout team handles the management and collection of problematic credit facilities.3.2.7 (a) Credit Risk Mitigation, Collateral and other Credit EnhancementsThe Group’s approach to controlling various risks begins with optimizing the diversiﬁcation of its exposures. Zenith uses a variety of techniques to manage the credit risk arising from its lending activities. These techniques are set out in the Group’s internal policies and procedures. They are mainly reﬂected in the application of various exposure limits: credit concentration limits by counterparty and credit concentration limits by industry, country, region and type of ﬁnancial instrument.Enforceable legal documentation establishes Zenith’s direct, irrevocable and unconditional recourse to any collateral, security or other credit enhancements.(i) Collateral SecurityA key mitigation step employed by the Group in its credit risk management process includes the use of collateral securities to secure its loans and advances as alternative sources of repayment during adverse conditions. All major credit facilities to our customers are to be secured and the security instruments and documentations must be perfected and all conditions precedent must be met before drawdown or disbursement is allowed. Collateral analysis includes a good description of the collateral, its value, how the value was arrived at, and when 125FinancialsZenith Bank Plc Annual Report December 31, 2021the valuation was made. It is usually necessary to review the potential adverse changes in the value of collateral security for the foreseeable future.Collateral securities that are pledged must be in negotiable form and usually fall under the following categories:a. Real estate, plant and equipment collateral (usually all asset or mortgage debenture or charge), which have to be registered and enforceable under Nigerian law;b. Collateral consisting of inventory, accounts receivable, machinery equipment, patents, trademarks, farm products, general intangibles, etc. These require a security agreement (usually a ﬂoating debenture) which has to be registered and, must be enforceable under Nigerian law;c. Stocks and shares of publicly quoted companies;d. Domiciliation of contracts proceeds;e. Documents of title to goods such as shipping documents consigned to the order of Zenith Bank or any of its subsidiaries;f. Letter of lien; andg. Cash collateral.Collateral securities are usually valued and inspected prior to disbursement and on a regular basis thereafter until full repayment of the exposure. We conduct a regular review of all collateral documentation in respect of all credits in the Bank and speciﬁc gaps in the collateral documentation addressed immediately. Borrowers are required to conﬁrm adherence to covenants including periodic conﬁrmation of collateral values which are used by the Bank to provide early warning signals of collateral value deterioration. Periodic inspections of physical collateral are performed where appropriate and where reasonable means of doing so are available.The type and size of collateral held as security for ﬁnancial assets other than loans and advances are usually a function of the nature of the instrument. Our debt securities, treasury and other eligible bills are normally unsecured but our comfort is on the issuer’s credit rating, which is the Federal Government of Nigeria (FGN) and other sovereigns.Details of collateral pledged by customers against the carrying amount of loans and advances as at 31 December 2021 are as follows:GroupBankIn millions of NairaTotal exposureFair Value of collateralTotal exposureFair value of collateralSecured against real estate463,049350,232418,264286,414Secured by shares of quoted companies7,2493,7857,2493,785Cash Collateral, lien over ﬁxed and ﬂoating assets1,283,4891,016,9941,239,790952,128Unsecured1,748,091-1,572,670-Total Gross amount3,501,8781,371,0113,237,9731,242,327ECL Allowance(146,150)-(138,521)-Net carrying amount3,355,7281,371,0113,099,4521,242,327Group 31 December 2021Term loan Overdrafts On lending Total Disclosure by Collateral Property/Real estate 298,86736,43714,928350,232Equities 1,6532,132-3,785Cash Collateral, lien over ﬁxed and ﬂoating assets 639,79874,542302,6541,016,994Grand total: Fair value of collateral 940,318113,111317,5821,371,011Grand total: Gross loans 2,522,278439,459540,1413,501,878Grand total: ECL Allowance (77,487)(63,176)(5,487)(146,150)Grand total: Net amount 2,444,791376,283534,6543,355,728Grand total: Amount of undercollaterization(1,504,473)(263,172)(217,072)(1,984,717)126Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202131 December 2021Term loan Overdrafts On lending Total Against 12 months ECL loans and advances Property/Real estate 85,48118,54014,918118,939Equities 1,6527-1,659Cash Collateral, lien over ﬁxed and ﬂoating assets397,27762,551299,605759,433Fair value of collateral 484,41081,098314,523880,031Gross loans 1,771,887326,517501,9462,600,350ECL Allowance(12,942)(3,642)(5,222)(21,806)Net amount1,758,945322,875496,7242,578,544Grand total: Amount of undercollaterization(1,274,535)(241,777)(182,201)(1,698,513)31 December 2021Term loan Overdrafts On lending Total Against lifetime ECL not credit-impaired loans and advancesProperty/Real estate 204,3454,448-208,793Cash Collateral, lien over ﬁxed and ﬂoating assets222,1476,8262,589231,562Fair value of collateral 426,49211,2742,589440,355Gross loans 686,22530,80837,674754,707ECL Allowance(26,239)(542)(257)(27,038)Net amount 659,98630,26637,417727,669Grand total: Amount of undercollaterization(233,494)(18,992)(34,828)(287,314) 31 December 2021Term loan Overdrafts On lending Total Against lifetime ECL credit-impaired loans and advancesProperty/Real estate 9,04113,4471022,498Equities -2,126-2,126Cash Collateral, lien over ﬁxed and ﬂoating assets 20,3755,16646026,001Fair value of collateral 29,41620,73947050,625Gross loans 64,16682,134521146,821ECL Allowance(38,306)(58,992)(8)(97,306)Net amount 25,86023,14251349,515Grand total: Amount of (undercollaterization)/overcollaterization3,556(2,403)(43)1,110Bank 31 December 2021Term loan Overdrafts On lending Total Disclosure by Collateral Property/Real estate 245,73225,75414,928286,414Equities 1,6532,132-3,785Cash Collateral, lien over ﬁxed and ﬂoating assets586,49962,975302,654952,128Grand total: Fair value of collateral 833,88490,861317,5821,242,327Grand total: Gross loans 2,278,613419,219540,1413,237,973Grand total: ECL Allowance (73,557)(59,478)(5,486)(138,521)Grand total: Net amount 2,205,056359,741534,6553,099,452Grand total: Amount of undercollaterization(1,371,172)(268,880)(217,073)(1,857,125)127FinancialsZenith Bank Plc Annual Report December 31, 202131 December 2021Term loan Overdrafts On lending Total Against 12 months ECL loans and advances Property/Real estate 32,96211,84414,92059,726Equities 1,6537-1,660Cash Collateral, lien over ﬁxed and ﬂoating assets 343,97750,999299,605694,581Fair value of collateral 378,59262,850314,525755,967Gross loans 1,530,854312,155501,9472,344,956ECL Allowance(9,312)(3,000)(5,222)(17,534)Net amount 1,521,542309,155496,7252,327,422Grand total: Amount of undercollaterization(1,142,950)(246,305)(182,200)(1,571,455)31 December 2021Term loan Overdrafts On lending Total Against lifetime ECL not credit-impaired loans and advancesProperty/Real estate 203,7284,432-208,160Cash Collateral, lien over ﬁxed and ﬂoating assets 222,1476,8102,589231,546Fair value of collateral 425,87511,2422,589439,706Gross loans 684,54730,77337,674752,994ECL Allowance(25,942)(472)(257)(26,671)Net amount 658,60530,30137,417726,323Grand total: Amount of undercollaterization(232,730)(19,059)(34,828)(286,617)31 December 2021Term loan Overdrafts On lending Total Against lifetime ECL credit-impaired loans and advancesProperty/Real estate 9,0409,4771018,527Equities -2,126-2,126Cash Collateral, lien over ﬁxed and ﬂoating assets 20,3755,16746026,002Fair value of collateral29,41516,77047046,655Gross loans63,21176,290522140,023ECL Allowance(38,304)(56,004)(8)(94,316)Net amount24,90720,28651445,707Grand total: Amount of undercollaterization4,508(3,516)(44)948.128Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Details of collateral pledged by customers against carrying amount of loans and advances as at 31 December 2020 are as follows:In millions of NairaGroupBank31 December 2020Total exposure Value of collateral Total exposure Value of collateral Secured against real estate 293,904242,928231,672171,661Secured by shares of quoted companies 4,5873,2414,5873,241Cash collateral, lien over ﬁxed and ﬂoating assets1,296,2521,291,9221,224,1651,193,685Unsecured 1,324,599-1,312,239-Total Gross amount 2,919,3421,538,0912,772,6631,368,587ECL Allowance(140,315)-(132,866)-Net carrying amount 2,779,0271,538,0912,639,7971,368,587Group31 December 2020Term loan Overdrafts On lending Total Disclosure by CollateralProperty/Real estate 185,65935,78121,488242,928Equities 1,3011,940-3,241Cash Collateral, lien over ﬁxed and ﬂoating assets 881,73578,869331,3181,291,922Grand total: Fair value of collateral1,068,695116,590352,8061,538,091Grand total: Gross loans2,142,728248,003528,6112,919,342Grand total: ECL Allowance(109,575)(26,283)(4,457)(140,315)Grand total: Net amount2,033,153221,720524,1542,779,027Amount of undercollaterization(964,458)(105,130)(171,348)(1,240,936)31 December 2020Term loan Overdrafts On lending TotalAgainst 12 months ECL loans and advances Property/Real estate 88,12114,31018,462120,893Equities 1,301110-1,411Cash Collateral, lien over ﬁxed and ﬂoating assets 457,49870,011330,419857,928Fair value of collateral 546,92084,431348,881980,232Gross loans 1,475,417154,570523,5922,153,579ECL Allowance(16,421)(2,571)(4,408)(23,400)Grand total: Net amount1,458,996151,999519,1842,130,179Amount of undercollaterization(912,076)(67,568)(170,303)(1,149,947) 129FinancialsZenith Bank Plc Annual Report December 31, 202131 December 2020Term loan Overdrafts On lending Total Against lifetime ECL not credit-impaired loans and advancesProperty/Real estate95,57710,8482,999109,424Cash Collateral, lien over ﬁxed and ﬂoating assets397,3811,342-398,723Fair value of collateral492,95812,1902,999508,147Gross loans539,96034,3774,200578,537ECL Allowance(7,217)(1,448)(38)(8,703)Net amount532,74332,9294,162569,834Amount of undercollaterization(39,785)(20,739)(1,163)(61,687)31 December 2020Term loan Overdrafts On lending Total Against lifetime ECL credit-impaired loans and advancesProperty/Real estate 1,96210,6232612,611Equities -1,830-1,830Cash Collateral, lien over ﬁxed and ﬂoating assets 26,8567,51689935,271Fair value of collateral 28,81819,96992549,712Gross loans 127,35159,056819187,226ECL Allowance(85,937)(22,264)(11)(108,212)Net amount 41,41436,79280879,014Amount of undercollaterization(12,596)(16,823)117(29,302)Bank31 December 2020Term loan Overdrafts On lending Total Disclosure by CollateralProperty/Real estate 121,27128,90221,488171,661Equities 1,3011,940-3,241Cash Collateral, lien over ﬁxed and ﬂoating assets 792,20370,164331,3181,193,685Grand total: Fair value of collateral914,775101,006352,8061,368,587Grand total: Gross loans2,013,764230,288528,6112,772,663Grand total: ECL Allowance(103,512)(24,897)(4,457)(132,866)Grand total: Net amount1,910,252205,391524,1542,639,797Grand total: Amount of undercollaterization(995,477)(104,385)(171,348)(1,271,210)31 December 2020Term loan Overdrafts On lending Total Against 12 months ECL loans and advances Property/Real estate 25,24111,14918,46254,852Equities 1,301110-1,411Cash Collateral, lien over ﬁxed and ﬂoating assets 367,96662,197330,419760,582Fair value of collateral 394,50873,456348,881816,845Gross loans 1,347,431140,977523,5922,012,000ECL Allowance(10,393)(2,130)(4,408)(16,931)Net amount 1,337,038138,847519,1841,995,069Amount of undercollaterization(942,530)(65,391)(170,303)(1,178,224) 130Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202131 December 2020Term loan Overdrafts On lending Total Against lifetime ECL not credit-impaired loans and advancesProperty/Real estate 95,57710,8322,999109,408Cash Collateral, lien over ﬁxed and ﬂoating assets 397,3811,342-398,723Fair value of collateral 492,95812,1742,999508,131Gross loans 539,97734,3044,200578,481ECL Allowance(7,217)(1,447)(38)(8,702)Net amount 532,76032,8574,162569,779Amount of undercollaterization(39,802)(20,683)(1,163)(61,648)31 December 2020Term loan Overdrafts On lending Total Against lifetime ECL credit-impaired loans and advancesProperty/Real estate 4546,921267,401Equities -1,830-1,830Cash Collateral, lien over ﬁxed and ﬂoating assets 26,8566,62589934,380Fair value of collateral 27,31015,37692543,611Gross loans 126,35655,007819182,182ECL Allowance(85,902)(21,320)(11)(107,233)Net amount 40,45433,68780874,949Amount of undercollaterization(13,144)(18,311)117(31,338)(ii) Balance Sheet Netting Arrangements Risk reduction by way of current account set-oﬀ is recognised for exposures to highly rated and creditworthy customers. Customers are required to enter into formal agreements giving Zenith Bank Plc the right to set-oﬀ gross credit and debit balances in their nominated accounts to determine the Groups net exposure. Cross-border set-oﬀs are not permitted.(iii) Guarantees and Standby Letters of Credit Guarantees and Standby Letters of Credit are perceived to have comparable level of credit risk as loans and advances. In accordance with the Group’s credit policies, banks and creditworthy companies and individuals with high net worth are accepted as guarantors, subject to credit risk assessment. Furthermore, Zenith Bank Plc only recognises unconditional irrevocable guarantees or standby letters of credit provided they are not related to the underlying obligor.3.2.7 (b) Maximum Exposure to Credit Risk Before Collateral Held or Credit Enhancements The Group’s maximum exposure to credit risk at 31 December 2021 and 31 December 2020 respectively, are represented by the net carrying amounts of the ﬁnancial assets, with the exception of ﬁnancial and other guarantees issued by the Group for which the maximum exposure to credit risk are represented by the maximum amount the Group would have to pay if the guarantees are called on (refer to note 39 Contingent liabilities and commitments). Maximum exposure to credit risk - Financial instruments not subject to impairment The following table contains an analysis of the maximum credit risk exposure from ﬁnancial assets not subject to impairment as at 31 December 2021.131FinancialsZenith Bank Plc Annual Report December 31, 202131 December, 2021GroupBankIn millions of NairaMaximum exposure to credit riskMaximum exposure to credit riskTrading assets- Treasury bills824,222823,891- Investment in securities22,33811,897- Derivatives56,18757,476- Assets pledged as collateral234,687199,093Trading assets- Treasury bills698,493698,199- Investment in securities49,27744,933- Derivatives44,49641,729- Assets pledged as collateral71,60271,602Maximum exposure to credit risk - Financial instruments subject to impairmentThe following table contains an analysis of the maximum credit risk exposure from ﬁnancial assets subject to impairment as at 31 December, 2021Financial assets measured at amortised cost- Balances with central bank1,404,2861,341,767- Treasury bills940,723753,756- Investment in securities654,185379,533- Assets pledged as collateral157,907157,907- Loans and advances to customers3,355,7283,099,452- Due from banks691,244518,053- Other ﬁnancial assets148,821134,794Financial assets measured through other comprehensive income- Investment in securities541,629-Off balance sheet exposures1,108,856924,176 The following table contains an analysis of the maximum credit risk exposure from ﬁnancial assets subject to impairment as at 31 December 2020Financial assets measured at amortised cost- Balances with central bank1,487,2241,436,411- Treasury bills879,382695,222- Investment in securities475,514208,218- Assets pledged as collateral226,928226,928- Loans and advances to customers2,779,0272,639,797- Due from banks810,494532,377- Other ﬁnancial assets149,568143,301Financial assets measured through other comprehensive income- Investment in securities392,150-Off balance sheet exposures599,927459,001132Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 20213.2.8 Concentration of Risks of Financial Assets with Credit Risk Exposure The Group monitors concentrations of credit risk by geographical location and by industry sector. An analysis of concentrations of credit risk at 31 December 2021 and 31 December 2020 respectively is set out below:(a) Geographical sectorsThe following table breaks down the Group’s main credit exposure at their carrying amounts, as categorised by geographical region at 31 December 2021 and 31 December 2020 respectively. For this table, the Group has allocated exposures to regions based on the regions the counterparties are domiciled. Other ﬁnancial assets included in the table below represents other assets excluding prepayment.In millions of NairaGroupBank31 December 2021Nigeria Rest of AfricaOutside AfricaNigeria Rest of AfricaOutside AfricaBalances with central bank 1,341,76862,518-1,341,767--Treasury bills 1,671,64093,305-1,577,647--Assets pledged as collateral 357,00035,594-357,000--Due from other banks -49,158642,086-7,663510,390Investment securities 460,456239,155518,541390,917513-Derivative instruments 55,22369826655,2231,437816Other ﬁnancial assets 115,09515,04918,677115,3331,17818,283Total 4,001,182495,4771,179,5703,837,88710,791529,489Financial GuaranteesUsance 195,354--195,354--Letters of credit 493,18059,5741,732398,605--Performance bond and guarantees343,23817,2394,155335,833--Total 1,031,77276,8135,887929,792--In millions of NairaGroupBank31 December 2020Nigeria Rest of AfricaOutside AfricaNigeria Rest of AfricaOutside AfricaBalances with central bank 1,487,224--1,436,411--Treasury bills 1,409,564168,311-1,393,421--Assets pledged as collateral 298,530--298,530--Due from other banks 3,00055,224752,2703,000-529,377Investment securities 492,96745,517378,457253,151--Derivative instruments 41,2202,91735941,220150359Other ﬁnancial assets 142,2517,154163143,301--Total 3,874,756279,1231,131,2493,569,034150529,736Financial GuaranteesUsance 49,569-1,20149,569--Letters of credit 84,18339,30149,42184,183--Performance bond and guarantees325,24933,67717,326325,249--Total 459,00172,97867,948459,001--133FinancialsZenith Bank Plc Annual Report December 31, 2021Gross loans and advances to customers and the impairment allowance per geographical region as at 31 December 2021Carrying amounts presented in the table below is determined as gross loans less impairment allowances.In millions of NairaGroupBank31 December 2021Loans and advances to customersLoans and advances to customersGross loansImpairment AllowanceCarrying amountGross loansImpairment AllowanceCarrying amountSouth South Nigeria366,2466,774359,515366,2466,774359,472South West Nigeria2,445,088126,7342,357,6972,444,975126,7332,318,242South East Nigeria128,6381,279127,478128,6381,279127,359North Central Nigeria111,5702,740109,177111,5702,740108,830North West Nigeria75,43045374,97775,43045374,977North East Nigeria151,683763110,571111,114542110,572Rest of Africa121,1526,016115,622---Outside Africa102,0711,391100,691---3,501,878146,1503,355,7283,237,973138,5213,099,45231 December 2020South South Nigeria268,7387,657261,081266,2837,571258,712South West Nigeria2,166,507121,7832,044,7242,129,935121,0562,008,879South East Nigeria104,223918103,305104,223918103,305North Central Nigeria103,1012,737100,364103,1012,737100,364North West Nigeria54,35228354,06954,35228354,069North East Nigeria114,769300114,469114,769301114,468Rest of Africa78,0565,39972,657---Outside Africa29,5961,23828,358---2,919,342140,3152,779,0272,772,663132,8662,639,797(b) Industry sectors Gross loans and advances to customers and the impairment allowance per geographical region as at 31 December, 2021 Carrying amounts presented in the table below is determined as gross loans less impairment allowances.In millions of NairaGroupBank31 December 2021Loans and advances to customersLoans and advances to customersGross loansImpairment AllowanceCarrying amountGross loansImpairment AllowanceCarrying amountAgriculture227,2378,931218,306212,5878,571204,016Oil and gas782,41255,273727,139756,93654,418702,518Consumer Credit199,12915,124184,005170,23913,064157,175Manufacturing848,4785,408843,070826,2755,035821,240Real estate and construction109,1431,668107,475105,7601,580104,180Finance and insurance5,9961585,8388,562838,479Government509,0212,375506,646472,1511,597470,554Power67,1324,83062,30266,6494,82561,824Transportation176,7471,236175,511162,688990161,698Communication59,11122,41036,70152,12622,31629,810Education11,54213611,40610,57913310,446General Commerce505,93028,601477,329393,42125,909367,5123,501,878146,1503,355,7283,237,973138,5213,099,452134Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Gross loans and advances to customers per industry sector as At 31 December 2020In millions of NairaGroupBank31 December 2020Loans and advances to customersLoans and advances to customersGrossloansImpairment AllowanceCarrying amountGross loansImpairment AllowanceCarrying amountAgriculture182,1273,193178,934182,1033,194178,909Oil and gas731,51750,834680,683720,49650,445670,051Consumer Credit123,59311,930111,663121,02211,842109,180Manufacturing620,3113,947616,364593,2663,008590,258Real estate and construction126,5804,837121,743113,4084,783108,625Finance and insurance10,7081,7668,9424,8872044,683Government432,7652,932429,833416,64872416,576Power72,63328,27144,36272,63328,27144,362Transportation169,3015,600163,701168,3405,566162,774Communication120,09519,322100,773112,61919,30193,318Education11,25292610,32611,25392610,327General Commerce318,4606,757311,703255,9885,254250,7342,919,342140,3152,779,0272,772,663132,8662,639,797GroupFinancial assets excluding loans and advances per industry sector as at 31 December, 202131 December, 2021 In millions of nairaBalances with central bank Treasury billsAssets pledged as collateralDue from other banksInvestment securitiesDerivative instrumentsOther financial assets Government1,404,2851,765,760392,792-1,148,30256,18710,274Manufacturing----16,771--Finance and Insurance---691,96817,208-148,472Communication----39,637--Gross amount1,404,2851,765,760392,792691,9681,221,91856,187158,746Impairment allowance-(815)(198)(724)(3,766)(9,925)Carrying amount1,404,2851,764,945392,594691,2441,218,15256,187148,821Financial assets excluding loans and advances per industry sector as at 31 December, 202031 December, 2020 In millions of nairaBalances with central bank Treasury billsAssets pledged as collateralDue from other banksInvestment securitiesDerivative instrumentsOther financial assets Government1,487,2241,579,450298,885-987,92939,875-Manufacturing----9,7601,079-Finance and Insurance---810,552-3,542151,709Gross amount1,487,2241,579,450298,885810,552997,68944,496151,709Impairment allowance-(1,575)(355)(58)(773)-(2,141)Carrying amount1,487,2241,577,875298,530810,494996,91644,496149,568135FinancialsZenith Bank Plc Annual Report December 31, 2021BankFinancial assets excluding loans and advances per industry sector as at 31 December, 202131 December, 2021 In millions of nairaBalances with central bank Treasury billsAssets pledged as collateralDue from other banksInvestment securitiesDerivative instrumentsOther financial assets Government1,341,7671,578,042357,198-321,26257,47610,274Manufacturing----15,512--Finance and Insurance---518,11115,685-134,355Communication----39,637--Gross amount1,341,7671,578,042357,198518,111392,09657,476144,629Impairment allowance-(395)(198)(58)(666)-(9,835)Carrying amount1,341,7671,577,647357,000518,053391,43057,476134,794Financial assets excluding loans and advances per industry sector as at 31 December, 202031 December, 2020Government1,436,4111,394,097298,885-333,88139,875-Manufacturing-----1,079-Finance and Insurance---532,435-775145,347Gross amount1,436,4111,394,097298,885532,435333,88141,729145,347Impairment allowance-(676)(355)(58)(755)-(2,046)Carrying amount1,436,4111,393,421298,530532,377333,12641,729143,3013.2.9 Credit quality analysisAll other ﬁnancial assets are subject to 12 months ECL.Group31 December, 2021 In millions of nairaBalances with central bank Treasury billsAssets pledged as collateralDue from other banksInvestment securitiesDerivative instrumentsOther financial assets Credit rating - 12 month ECL: All financial assets excluding loans and advancesAAA to A1,404,2851,765,760392,792263,051856,41056,18790,351BBB to BB---84,147175,600-38,530CCC to C---1,0555,487--Unrated---343,715184,421-29,865Gross amount1,404,2851,765,760392,792691,9681,221,91856,187158,746ECL - impairment-(815)(198)(724)(3,766)-(9,925)Carrying amount1,404,2851,764,945392,594691,2441,218,15256,187148,821136Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Loans and AdvancesTerm loan Overdrafts On lending Total 12 months ECL1,771,887326,517501,9462,600,350Lifetime ECL not credit impaired686,22530,80837,674754,707Lifetime ECL credit impaired64,16682,134521146,821Gross loans and advances 2,522,278439,459540,1413,501,878Less allowance for impairment12 - months ECL12,9423,6425,22221,806Lifetime ECL not credit impaired26,23954225727,038Lifetime ECL credit impaired38,30658,992897,306Total allowances for impairment77,48763,1765,487146,150Net loans and advances2,444,791376,283534,6543,355,728Loans and AdvancesTerm loan Overdrafts On lending Total A658,12056,707170,443885,270AA218,817150,95077,029446,796BB634,8927,6544,841647,387BBB850,174126,942287,3091,264,425C12,08425,52648538,095CC1,5461,971-3,517CCC35,57521,168-56,743Below C18,01328,5983446,645Unrated93,05719,943-113,000Gross amount2,522,278439,459540,1413,501,878ECL-Impairment(77,487)(63,176)(5,487)(146,150)Carrying amount2,444,791376,283534,6543,355,728 Bank31 December 2021Credit rating - 12 month ECL: All ﬁnancial assets excluding loans and advancesIn millions of nairaBalances with central bank Treasury billsAssets pledged as collateralDue from other banksInvestment securitiesDerivative instrumentsOther financial assets AAA to A1,341,7671,578,042357,198228,273367,26157,47690,349BBB to BB---286,17524,835-38,529CCC to C---1,056---Unrated---2,607--15,751Gross amount1,341,7671,578,042357,198518,111392,09657,476144,629ECL - impairment-(395)(198)(58)(666)-(9,835)Carrying amount1,341,7671,577,647357,000518,053391,43057,476134,794137FinancialsZenith Bank Plc Annual Report December 31, 2021Loans and AdvancesTerm loan Overdrafts On lending Total 12 months ECL1,529,907311,567501,9462,343,420Lifetime ECL not credit impaired684,54730,41937,674752,640Lifetime ECL credit impaired64,15977,233521141,913Gross loans and advances2,278,613419,219540,1413,237,973Less allowance for impairment12 - months ECL9,3123,0005,22117,533Lifetime ECL not credit impaired25,94247425726,673Lifetime ECL credit impaired38,30356,004894,315Total allowances for impairment73,55759,4785,486138,521Net loans and advances2,205,056359,741534,6553,099,452Loans and AdvancesTerm loan Overdrafts On lending Total A687,81656,707170,443914,966AA218,817150,95077,029446,796BB634,8927,6544,841647,387BBB672,929126,676287,3091,086,914C12,08425,52648538,095CC1,5461,971-3,517CCC32,52321,168-53,691Below C18,00628,5673446,607Gross amount2,278,613419,219540,1413,237,973ECL-Impairment(73,557)(59,478)(5,486)(138,521)Carrying amount2,205,056359,741534,6553,099,452Group31 December, 2020 Credit rating - 12 month ECL: All ﬁnancial assets excluding loans and advancesIn millions of nairaBalances with central bank Treasury billsAssets pledged as collateralDue from other banksInvestment securitiesDerivative instrumentsOther financial assets AAA to A1,487,2241,579,450298,885810,552888,93444,496-BBB to BB----28,780--Unrated------151,709Gross amount1,487,2241,579,450298,885810,552917,71444,496151,709ECL - impairment-(1,575)(355)(58)(773)-(2,141)Carrying amount1,487,2241,577,875298,530810,494916,94144,496149,568138Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Loans and AdvancesTerm loan Overdrafts On lending Total 12 months ECL1,475,417154,570523,5922,153,579Lifetime ECL not credit impaired539,96034,3774,200578,537Lifetime ECL credit impaired127,35159,056819187,226Gross loans and advances2,142,728248,003528,6112,919,342Less allowance for impairment12 - months ECL16,4212,5714,40823,400Lifetime ECL not credit impaired7,2171,448388,703Lifetime ECL credit impaired85,93722,26411108,212Total allowances for impairment109,57526,2834,457140,315Net loans and advances2,033,153221,720524,1542,779,027Credit rating for loans and advances with 12 month ECLLoans and AdvancesTerm loan Overdrafts On lending Total A553,77564,10397,980715,858AA257,07231,28763,897352,256BB7312-85BBB536,51145,593361,715943,819Below C127,98613,575-141,561Gross amount1,475,417154,570523,5922,153,579ECL-Impairment(16,421)(2,571)(4,408)(23,400)Carrying amount1,458,996151,999519,1842,130,179 Bank31 December 2020Credit rating - 12 month ECL: All ﬁnancial assets excluding loans and advancesIn millions of nairaBalances with central bank Treasury billsAssets pledged as collateralDue from other banksInvestment securitiesDerivative instrumentsOther financial assets AAA to A1,436,4111,394,097298,885532,435242,09141,729-BBB to BB----11,815--Unrated------145,347Gross amount1,436,4111,394,097298,885532,435253,90641,729145,347ECL - impairment-(676)(355)(58)(755)-(2,046)Carrying amount1,436,4111,393,421298,530532,377253,15141,729143,301139FinancialsZenith Bank Plc Annual Report December 31, 2021Loans and AdvancesIn millions of NairaTerm loan Overdrafts On lending Total 12 months ECL1,347,431140,977523,5922,012,000Lifetime ECL not credit impaired539,97734,3044,200578,481Lifetime ECL credit impaired126,35655,007819182,182Gross loans and advances2,013,764230,288528,6112,772,663Less allowance for impairment12 - months ECL10,3932,1304,40816,931Lifetime ECL not credit impaired7,2171,447388,702Lifetime ECL credit impaired85,90221,32011107,233Total allowances for impairment103,51224,8974,457132,866Net loans and advances1,910,252205,391524,1542,639,797Credit rating for loans and advances with 12 month ECLLoans and AdvancesTerm loan Overdrafts On lending Total A553,77564,08597,980715,840AA257,07231,28763,897352,256BB7312-85BBB536,51145,593361,715943,819Gross amount1,347,431140,977523,5922,012,000ECL-Impairment(10,393)(2,130)(4,408)(16,931)Carrying amount1,337,038138,847519,1841,995,069 3.2.10 Amounts Arising from ECL For inputs, assumptions and techniques used for estimating impairment see accounting policy in note 2.7 3.2.11 Amounts arising from ECLCorporate exposuresRetail exposuresAll exposures–Information obtained during periodic review of customer ﬁles – e.g. audited ﬁnancial statements, management accounts, budgets and projections.Examples of areas of particular focus are: gross proﬁt margins, ﬁnancial leverage ratios, debt service coverage, compliance with covenants, quality of management, senior management changes Data from credit reference agencies, press articles, changes in external credit ratings Quoted bond and credit default swap (CDS) prices for the borrower where available Actual and expected signiﬁcant changes in the political, regulatory and technological environment of the borrower or in its business activities– Internally collected data on customer behaviour – e.g. utilisation of credit card facilities Aﬀordability metrics External data from credit reference agencies, including industry-standard credit scores– Payment record – this includes overdue status as well as a range of variables about payment ratios Utilisation of the granted limit Requests for and granting of forbearance Existing and forecast changes in business, ﬁnancial and economic conditions140Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The Group allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of default and applying experienced credit judgement. Credit risk grades are deﬁned using qualitative and quantitative factors that are indicative of risk of default. These factors vary depending on the nature of the exposure and the type of borrower.Credit risk grades are deﬁned and calibrated such that the risk of default occurring increases exponentially as the credit risk deteriorates so, for example, the diﬀerence in risk of default between credit risk grades 1 and 2 is smaller than the diﬀerence between credit risk grades 2 and 3.Each exposure is allocated to a credit risk grade at initial recognition based on available information about the borrower. Exposures are subject to ongoing monitoring, which may result in an exposure being moved to a diﬀerent credit risk grade.3.2.12 Internal portfolio segmentationCredit risk grades are a primary input into the determination of the term structure of PD for exposures. The Group collects performance and default information about its credit risk exposures analysed by jurisdiction or region and by type of product and borrower as well as by credit risk grading. For some portfolios, information purchased from external credit reference agencies is also used. The credit risk grades are reviewed quarterly.The Group employs statistical models to analyse the data collected and generate estimates of the remaining lifetime PD of exposures and how these are expected to change as a result of the passage of time.This analysis includes the identiﬁcation and calibration of relationships between changes in default rates and changes in key macro-economic factors as well as in-depth analysis of the impact of certain other factors (e.g. forbearance experience) on the risk of default. For most exposures, key macro-economic indicators include: GDP growth, benchmark interest rates and unemployment. For exposures to speciﬁc industries and/or regions, the analysis may extend to relevant commodity and/or real estate prices.Based on advice from the Group Market Risk Committee and economic experts and consideration of a variety of external actual and forecast information, the Group formulates a ‘base case’ view of the future direction of relevant economic variables as well as a representative range of other possible forecast scenarios (see discussion below on incorporation of forward-looking information). The Group then uses these forecasts to adjust its estimates of PDs.In determining the ECL for other assets, the Group applies the simpliﬁed model to estimate ECLs, adopting a provision matrix, where the receivables are grouped based on the nature of the transactions, aging of the balances and diﬀerent historical loss patterns, to determine the lifetime ECLs. Receivables relate to amounts due for the provision of services to the Banks’ customers. The provision matrix estimates ECLs on the basis of historical default rates, adjusted for current and future economic conditions (expected changes in default rates) without undue cost and eﬀort.3.2.13 Significant increase in credit risk At each reporting date, the Group assesses whether there has been a signiﬁcant increase in credit risk for exposures since initial recognition by comparing the risk of default occurring over the remaining expected life from the reporting date and the date of initial recognition. The criteria for determining whether credit risk has increased signiﬁcantly depends on quantitative, qualitative as well as backstop indicators. The credit risk of a particular exposure is deemed to have increased signiﬁcantly since initial recognition if, based on the Group’s quantitative modelling, the credit rating is determined to have deteriorated since initial recognition by more than a predetermined range. This in turn increases the probability of default of these facilities as a lifetime ECL is now used in estimating ECL. Using its expert credit judgement and, where possible, relevant historical experience, the Group may determine that an exposure has experienced a signiﬁcant increase in credit risk based on particular qualitative indicators that it considers are indicative of such and whose eﬀect may not otherwise be fully reﬂected in its quantitative analysis on a timely basis.As a backstop, the Group considers that a signiﬁcant increase in credit risk occurs no later than when an asset is more than 30 days past due. Days past due are determined by counting the number of days since the earliest elapsed due date in respect of which full payment has not been received. Due dates are determined without considering any grace period that might be available to the borrower. If there is evidence that there is no longer a signiﬁcant increase in credit risk relative to initial recognition, then the loss allowance on an instrument returns to being measured as 12-month ECL. Some qualitative indicators of an increase in credit risk, such as delinquency or forbearance, may be indicative of an increased risk of default that persists after the indicator itself has ceased to exist. In these cases, the Group determines a probation period during which the ﬁnancial asset is required to demonstrate good behaviour to provide evidence that its credit risk has declined suﬃciently. When contractual terms of a loan have been modiﬁed, evidence that the criteria for recognising lifetime ECL are no longer met includes a history of up-to-date payment performance against the modiﬁed contractual terms.141FinancialsZenith Bank Plc Annual Report December 31, 2021Generally, facilities with loss allowances being measured as Life-time ECL not credit impaired (Stage 2) are monitored for a probationary period of 90 days to conﬁrm if the credit risk has decreased suﬃciently before they can be migrated from Life- time ECL not credit impaired (Stage 2) to 12-month ECL (Stage 1) while credit-impaired facilities (Stage 3) are monitored for a probationary period of 180 days before migration from Stage 3 to 12-month ECL (Stage 1).The Group monitors the eﬀectiveness of the criteria used to identify signiﬁcant increases in credit risk by regular reviews (quarterly) to conﬁrm that: the criteria are capable of identifying signiﬁcant increases in credit risk before an exposure is in default; the criteria do not align with the point in time when an asset becomes 30 days past due; and there is no unwarranted volatility in loss allowance from transfers between 12-month PD (stage 1) and lifetime PD (stage 2).3.2.14 Modified financial assetsThe contractual terms of a loan may be modiﬁed for a number of reasons, including changing market conditions, customer retention and other factors not related to a current or potential credit deterioration of the customer. An existing loan whose terms have been modiﬁed may be derecognised and the renegotiated loan recognised as a new loan at fair value in accordance with the accounting policy set out in the accounting policy.The Group renegotiates loans to customers in ﬁnancial diﬃculties (referred to as ‘forbearance activities) to maximise collection opportunities and minimise the risk of default. Under the Group’s forbearance policy, loan forbearance is granted on a selective basis if the debtor is currently in default on its debt or if there is a high risk of default, there is evidence that the debtor made all reasonable eﬀorts to pay under the original contractual terms and the debtor is expected to be able to meet the revised terms.The revised terms usually include extending the maturity, changing the timing of interest payments and amending the terms of loan covenants. Both retail and corporate loans are subject to the forbearance policy. The Board audit and compliance Committee regularly reviews reports on forbearance activities.For ﬁnancial assets modiﬁed as part of the Group’s forbearance policy, the estimate of PD reﬂects whether the modiﬁcation has improved or restored the Group’s ability to collect interest and principal and the Group’s previous experience of similar forbearance action. As part of this process, the Group evaluates the borrower’s payment performance against the modiﬁed contractual terms and considers various behavioural indicators.Generally, forbearance is a qualitative indicator of a signiﬁcant increase in credit risk and an expectation of forbearance may constitute evidence that an exposure is credit-impaired/in default. A customer needs to demonstrate consistently good payment behaviour over a period of time before the exposure is no longer considered to be credit-impaired/in default or the PD is considered to have decreased such that the loss allowance reverts to being measured at an amount equal to 12- month ECL.3.2.15 Definition of defaultThe Group considers a ﬁnancial asset to be in default when; the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or the borrower is past due more than 90 days on any material credit obligation to the Group. Overdrafts are considered as being past due once the customer has breached an advised limit or been advised of a limit smaller than the current amount outstanding. In assessing whether a borrower is in default, the Group considers indicators that are: qualitative - e.g. breaches of covenant; quantitative - e.g. overdue status and non-payment on another obligation of the same issuer to the Group; and based on data developed internally and obtained from external sources. Inputs into the assessment of whether a ﬁnancial instrument is in default and their signiﬁcance may vary over time to reﬂect changes in circumstances.The deﬁnition of default largely aligns with that applied by the Group for regulatory purposes except where there is regulatory waiver on speciﬁcally identiﬁed loans and advances.3.2.16 Incorporation of forward-looking informationThe Group incorporates forward-looking information into both its assessment of whether the credit risk of an instrument has increased signiﬁcantly since its initial recognition and its measurement of ECL. Based on advice from the Group Market Risk Committee and economic experts and consideration of 142Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021a variety of external actual and forecast information, the Group formulates a ‘base case’ view of the future direction of relevant economic variables as well as a representative range of other possible forecast scenarios. This process involves developing two or more additional economic scenarios and considering the relative probabilities of each outcome. External information includes economic data and forecasts published by governmental bodies and monetary authorities in the countries where the Group operates, supranational organisations such as the OECD and the International Monetary Fund, and selected private-sector and academic forecasters.The base case represents a most-likely outcome while the other scenarios represent more optimistic and more pessimistic outcomes. Periodically, the Group carries out stress testing of more extreme shocks to calibrate its determination of these other representative scenarios.The Group has identiﬁed and documented key drivers of credit risk and credit losses for its ﬁnancial assets and, using an analysis of historical data, has estimated relationships between macro-economic variables and sectorial historical loan performance. Some of the macroeconomic variables considered include Crude Oil price, Foreign Exchange rate, GDP growth rate, Inﬂation rate, Monetary policy rate and Crude production. However, from the statistical analysis of the various macroeconomic variables, the result infers that the key drivers vary across the diﬀerent sectors. The macro economic variables used across the diﬀerent sectors are as follows: Oil and gas portfolio- GDP growth rate, Exchange rate and Crude oil production. Public sector Portfolio - Government revenue, Unemployment rate and Inﬂation. Manufacturing sector Portfolio - Unemployment rate and GDP growth rate. Consumer Credit sector portfolio - Unemployment rate and exchange rate. Agriculture sector portfolio- Unemployment rate and GDP growth rate. Others - Unemployment rate and GDP growth rate.The economic scenarios used as at 31 December 2021 included the following key indicators for Nigeria for the years ending 31 December 2022 to 2026.20222023202420252026GDP growth rate %Base 2.8Base 2.7Base 3.1Base 2.9Base 2.8Inﬂation rate forecast %Base 12.6Base 10Base 9.5Base 9.5Base 9.5Unemployment rate (%)Base 32Base 32Base 32Base 32Base 32Exchange rate (NGN / USD)Base 428Base 437Base 445Base 452Base 460Crude oil production (Million Barrels per day- mbpd)Base 1.88Base 2.23Base 2.22Base 2.22Base 2.22Government Revenue (NGN trillionsBase 16.219Base 17.851Base 19.776Base 21.732Base 24.435Predicted relationships between the historical loan performance of the Bank’s portfolio and the macroeconomic variables has been developed by analysing historical data over the past 5 years. The result of this analysis in addition to a 5 year forecast was used to determine the scalars used in adjusting ECL.3.2.17 Measurement of ECLThe key inputs into the measurement of ECL of ﬁnancial assets (treasury bills, assets pledged as collateral, due from other banks, loans and advances and investment securities) are the term structure of the following variables: probability of default (PD); loss given default (LGD) exposure at default (EAD)143FinancialsZenith Bank Plc Annual Report December 31, 2021ECL for exposures in stage 1 (12-months ECL) is calculated by multiplying the 12-months PD by LGD and EAD. Lifetime ECL is calculated by multiplying the lifetime PD by LGD and EAD.These parameters are generally derived from internally developed statistical models and other historical data and they are adjusted to reﬂect forward-looking information as described above.PD is an estimate of the likelihood of default over a given time horizon, which are calculated based on statistical rating models, and assessed using rating tools tailored to the various categories of counterparties and exposures. These statistical models are based on internally compiled data comprising both quantitative and qualitative factors. Where it is available, market data may also be used to derive the PD for large corporate counterparties. If a counterparty or exposure migrates between rating classes, then this will lead to a change in the estimate of the associated PD. The methodology of estimating PD is discussed in note 3.2.12.LGD is the magnitude of the likely loss if there is a default. The Group estimates LGD parameters based on the history of recovery rates of claims against defaulted counterparties. The LGD models consider the structure, collateral, seniority of the claim, counterparty industry and recovery costs of any collateral that is integral to the ﬁnancial asset. LGD estimates are recalibrated for diﬀerent economic scenarios and, for lending, to reﬂect possible changes in the economies. They are calculated on a discounted cash ﬂow basis using the eﬀective interest rate as the discount.EAD represents the expected exposure in the event of a default. The Group derives the EAD from the current exposure to the counterparty and potential changes to the current amount allowed under the contract including amortisation. The EAD of a ﬁnancial asset is its gross carrying amount at the time of default. For lending commitments, the EAD includes the amount drawn, as well as potential future amounts that may be drawn under the contract, which are estimated based on historical observations and forward-looking forecasts. For ﬁnancial guarantees, the EAD represents the amount of the guaranteed exposure when the ﬁnancial guarantee becomes payable. For some ﬁnancial assets, EAD is determined by modelling the range of possible exposure outcomes at various points in time using scenario and statistical techniques. As described above, and subject to using a maximum of a 12-month PD for ﬁnancial assets for which credit risk has not signiﬁcantly increased, the Group measures ECL considering the risk of default over the maximum contractual period (including any borrower’s extension options) over which it is exposed to credit risk, even if, for risk management purposes, the Group considers a longer period. The maximum contractual period extends to the date at which the Group has the right to require repayment of an advance or terminate a loan commitment or guarantee.For overdrafts and revolving facilities that include both a loan and an undrawn commitment component, the Group measures ECL over a period longer than the maximum contractual period if the Group’s contractual ability to demand repayment and cancel the undrawn commitment does not limit the Group’s exposure to credit losses to the contractual notice period. These facilities do not have a ﬁxed term or repayment structure and are managed on a collective basis. The Group can cancel them with immediate eﬀect but this contractual right is not enforced in the normal day-to-day management, but only when the Group becomes aware of an increase in credit risk at the facility level. This longer period is estimated taking into account the credit risk management actions that the Group expects to take and that serve to mitigate ECL. These include a reduction in limits, cancellation of the facility and/or turning the outstanding balance into a loan with ﬁxed repayment terms.Where modelling of a parameter is carried out on a collective basis, the ﬁnancial instruments are grouped on the basis of shared risk characteristics that include: instrument type credit risk grading collateral type Past due information date of initial recognition remaining term to maturity industry geographic location of the borrowerThe groupings are subject to regular review to ensure that exposures within a particular group remain appropriately homogeneous.3.2.18 Loss allowanceThe following tables show reconciliations from the opening to the closing balance of the loss allowance by class of ﬁnancial instrument. Comparative amounts for 2020 represent allowance account for credit losses and reﬂect measurement basis under IFRS 9.144Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Group31 December 202131 December 2020In millions of Naira12-month ECL12-month ECLTreasury bills at amortised costBalance at 1 January 1,575563Impairment Charge/(writeback) (see note 8)(781)972Foreign exchange and other movements2140Closing balance 8151,575Gross amount 941,538880,95731 December 2021 31 December 2020In millions of Naira12-month ECLLifetime ECL not credit impairedLifetime ECL credit impairedTotal12-month ECLLifetime ECL not credit impairedLifetime ECL credit impairedTotalOff balance sheet exposureBalance at 1 January 1,591203,2214,8325,538--5,538Transfer to lifetime ECL not credit-impairedTransfer to lifetime ECL credit-impairedImpairment/(write back) (see note 8)784--784(3,947)203.221(706)Foreign exchange and other movements--Closing balance 2,375203,2215,6161,591203,2214,832Gross amount 908,56614,5916,635929,792150,452432,47816,997599,92731 December 202131 December 2020In millions of Naira12-month ECL12-month ECLAssets pledged as collateral at ammortised costBalance at 1 January 35569Impairment Charge/(writeback) (see note 8)(158)(286)Foreign exchange and other movements1-Closing balance 198355Gross amount 158,105227,283145FinancialsZenith Bank Plc Annual Report December 31, 202131 December 202131 December 2020In millions of Naira12-monthECLLifetime ECL not creditimpairedLifetime ECL creditimpairedTotal12-month ECLLifetime ECL not credit- impairedLifetimeECL credit-impairedTotalLoans and advances to customers at amortised costBalance at 1 January 23,4008,703108,211140,31529,62116,083111,089156,794- Transfer to 12-month ECL2,911(1,309)(1,602)-1,091(250)(841)-- Transfer to lifetime ECL not credit-impaired(475)28,546(28,071)-(8,503)8,949(446)-- Transfer to lifetime ECL credit-impaired(301)(27,762)28,063-1523,847(3,999)-Impairment Charge (see note 8)13717,85430,88248,8731,039(19,926)56,32637,439Write-oﬀ--(42,508)(42,508)--(53,808)(53,808)Foreign exchange andother movements--(530)(530)--(110)(110)Closing balance 25,67226,03294,445146,15023,4008,703108,211140,315Gross amount 2,600,350754,707146,8213,501,8782,153,579578,537187,2262,919,34231 December 202131 December 2020In millions of Naira12-month ECL12-month ECLInvestment securities at amortised costBalance at 1 January 773551Impairment Charge/(writeback) (see note 8)2,993217Foreign exchange and other movements-5Closing balance 3,766773Gross amount 657,951476,28731 December 202131 December 2020In millions of Naira12-month ECL12-month ECLOther financial assetsBalance at 1 January 2,141777Impairment Charge (see note 8)7,7811,366Foreign exchange and other movements3(2)Closing balance 9,9252,141Gross amount 158,746151,70931 December 202131 December 2020In millions of Naira12-month ECL12-month ECLDue from other banksBalance at 1 January 58142Impairment/(write back) (see note 8)666(83)Foreign exchange and other movements-(1)Closing balance 72458Gross amount 691,968810,552146Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Bank31 December 202131 December 2020In millions of Naira12-month ECL12-month ECL1Treasury bills at ammortised costBalance at 1 January 67617Impairment Charge/(writeback) (see note 8)(281)659Closing balance 395676Gross amount 754,151695,89831 December 2021 31 December 2020In millions of Naira12-month ECLLifetime ECL not credit impairedLifetime ECL credit impairedTotal12-month ECLLifetime ECL not credit impairedLifetime ECL credit impairedTotalOff balance sheet exposureBalance at 1 January 1,591203,2214,8325,538--5,538Impairment/(write back) (see note 8)784--784(3,947)203,221(706)Closing balance 2,375203,2215,6161,591203,2214,832Gross amount 908,56614,5916,635929,792459,001432,47816,997908,47631 December 202131 December 2020In millions of Naira12-month ECL12-month ECLAssets pledged as collateral at amortised costBalance at 1 January 35568Impairment Charge/(writeback) (see note 8)(158)286Closing balance 198355Gross amount 158,105227,28331 December, 202131 December, 2020In millions of Naira12-monthECLLifetime ECL not creditimpairedLifetime ECL creditimpairedTotal12-month ECLLifetime ECL not credit- impairedLifetimeECL credit-impairedTotalLoans and advances to customers at amortised costBalance at 1 January 16,9318,702107,233132,86627,14314,276109,760151,179- Transfer to 12-month ECL810(509)(301) -1,091(250)(841)-- Transfer to lifetime ECL not credit-impaired(464)28,226(27,762)-(8,503)8,949446)-- Transfer to lifetime ECL credit-impaired(301)(27,762)28,063-1523,847(3,999)-Net remeasurement of loss allowances (see note 8)60217,97129,78448,357(2,952)18,120)56,56635,494Impairment Charge (see note 8)--------Write-oﬀs --(42,702)(42,702)--(53,807)(53,807)Foreign exchange and other movements----Closing balance 17,57826,62894,315138,52116,9318,702107,233132,866Gross amount 2,343,420752,640141,9133,237,9732,012,000578,481182,1822,772,663147FinancialsZenith Bank Plc Annual Report December 31, 202131 December 202131 December 2020In millions of NairaLifetime ECLLifetime ECLOther financial assetsBalance at 1 January 2,046720Impairment Charge (see note 8)7,7891,326Closing balance 9,8352,046Gross amount 144,629145,34731 December 202131 December 2020In millions of Naira12-month ECL12-month ECLDue from other BanksBalance at 1 January 58142Impairment/(write back) (see note 8)-(83)Closing balance 5858Gross amount 518,111532,43531 December 202131 December 2020In millions of Naira12-month ECL12-month ECLInvestment securities at amortised costBalance at 1 January 755538Impairment Charge/(write back)(see note 8)(90)217Closing balance 666755Gross amount 380,199208,973Signiﬁcant changes in the gross carrying amount of ﬁnancial assets that contributed to changes in the loss allowance were as follows:Group 31 December, 202131 December, 2020In millions of NairaStage 112-month ECLStage 212-month ECLTreasury bills at amortised costGross carrying amount at 1 January Transfers: 880,957283,845Financial assets derecognised during the period other than write-oﬀs(2,054,917)-Changes in amortised cost value111597,112New ﬁnancial assets originated or purchased2,115,387-Closing gross carrying amount941,538880,957 148Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202131 December 202131 December 2021Stage 1Stage 2Stage 3Stage 1In millions of Naira12-monthECLLifetime ECL not credit impairedLifetime ECL credit impairedTotal12-month ECLOff balance sheet exposureGross carrying amount at 1 January Transfers:599,927--599,927754,469Transfer from stage 1 to stage 2(14,591)14,591---Transfer from stage 1 to stage 3(6,635)-6,635--Financial assets derecognised during the year other than write- oﬀs(194,947)--(194,947)(482,096)New ﬁnancial assets originated or purchased709,492--709,492327,554Closing gross carrying amount 1,093,24614,5916,6351,114,472599,92731 December, 202131 December, 2020Stage 1Stage 2In millions of Naira12-month ECL12-month ECLAssets pledged as collateral at amortised costGross carrying amount at 1 January Transfers:227,283316,276Financial assets derecognised during the period other than write-oﬀs(122,884)(88,993)Changes in amortised cost value(535)-New ﬁnancial assets originated or purchased54,241-Closing gross carrying amount158,105227,28331 December, 202131 December, 2020Stage 1Stage 2Stage 3Stage 1Stage 2Stage 3In millions of Naira12-monthECLLifetime ECL not creditimpairedLifetime ECL creditimpairedTotal12-month ECLLifetime ECL not credit- impairedLifetimeECL credit-impairedTotalLoans and advances to customers at amortised costGross carrying amount at 1 January Transfers:2,160,991570,746187,6052,919,3422,113,588180,754168,0172,462,359Transfer from stage 1 to stage 2(66,388)66,388- -(359,012)359,012--Transfer from stage 1 to stage 3(17,593)-17,593-(7,026))-7,026-Transfer from stage 2 to stage 3-(39,210)39,210--(28,108)28,108-Transfer from stage 2 to stage 123,742(23,742)--5,927(5,927)--Transfer from stage 3 to stage 17,218-(7,218)-1,454-(1,454)-Transfer from stage 3 to stage 2-37,703(37,703)--710(710)-Financial assets derecognised during the period other than write- oﬀs(937,772)(19,235)(15,076)972,083)--(55,024)(55,024)New ﬁnancial assets originated or purchased1,430,151162,058-1,592,209406,06064,305-470,365Write-oﬀs--37,590)(37,590)--(53,807)(53,807)Foreign exchange and other movements------95,44995,449Closing gross carrying amount 2,600,349754,708146,8213,501,8782,160,991570,746187,6052,919,342149FinancialsZenith Bank Plc Annual Report December 31, 202131 December 202131 December 2020In millions of NairaStage 112-month ECLStage 212-month ECLInvestment securities at amortised costGross carrying amount at 1 January Transfers: 476,287234,857Financial assets derecognised during the year other than write-oﬀs(154,128)-Changes in amortised cost value34,940212,941New ﬁnancial assets originated or purchased300,852-Foreign exchange and other movements-28,489Closing gross carrying amount657,951476,28731 December 202131 December 2020In millions of NairaStage 112-month ECLStage 212-month ECLOther financial assetsGross carrying amount at 1 January Transfers: 151,70964,541New ﬁnancial assets originated or purchased7,03781,295Foreign exchange and other movements-5,873Closing gross carrying amount158,746151,70931 December 202131 December 2020In millions of NairaStage 112-month ECLStage 212-month ECLDue from other banksGross carrying amount at 1 January Transfers: 810,552707,245Financial assets derecognised during the year other than write-oﬀs(118,584)-New ﬁnancial assets originated or purchased-49,776Foreign exchange and other movements-53,531Closing gross carrying amount691,968810,552Bank31 December 202131 December 2020In millions of NairaStage 112-month ECLStage 212-month ECLTreasury bills at amortised costGross carrying amount at 1 January Transfers: 695,898114,352Financial assets derecognised during the year other than write-oﬀs(1,990,231)-Changes in amortised cost value63581,546New ﬁnancial assets originated or purchased2,048,421-Closing gross carrying amount754,151695,898150Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202131 December 202131 December 2020Stage 1Stage 2Stage 3Stage 1In millions of Naira12-monthECLLifetime ECL not credit impairedLifetime ECL credit impairedTotal12-month ECLOff balance sheet exposureGross carrying amount at 1 January Transfers:459,001--459,001754,469Transfer from stage 1 to stage 2(14,591)14,591---Transfer from stage 1 to stage 3(6,635)-6,635--Financial assets derecognised during the year other than write- oﬀs----(482,096)New ﬁnancial assets originated or purchased470,791--470,791186,628Closing gross carrying amount 908,56614,5916,635929,792459,00131 December 202131 December 2020In millions of NairaStage 112-month ECLStage 212-month ECLAssets pledged as collateral at amortised costGross carrying amount at 1 January Transfers: 227,283316,276Financial assets derecognised during the year other than write-oﬀs(122,884)(88,993)Changes in amortised cost value(535)-New ﬁnancial assets originated or purchased54,241-Closing gross carrying amount158,105227,28331 December, 202131 December, 2020Stage 1Stage 2Stage 3Stage 1Stage 2Stage 3In millions of Naira12-monthECLLifetime ECL not creditimpairedLifetime ECL creditimpairedTotal12-month ECLLifetime ECL not credit- impairedLifetimeECL credit-impairedTotalLoans and advances to customers at amortised costGross carrying amount at 1 January Transfers:2,012,000578,481182,1822,772,6632,052,919176,053161,6792,390,651Transfer from stage 1 to stage 2(53,296)53,296- -(359,012)359,012--Transfer from stage 1 to stage 3(8,904)-8,904-(7,026))-7,026-Transfer from stage 2 to stage 3-(29,193)29,193--(28,108)28,108-Transfer from stage 3 to stage 2-37,703(37,703)--710(710)-Transfer from stage 2 to stage 16,866(6,866)--5,927(5,927)--Transfer from stage 3 to stage 13,179-(3,179)-1,454-(1,454)-New ﬁnancial assets originated or purchased1,168,387138,454-1,306,841317,73823,54141,340382,619Financial assets derecognised during the year other than write-oﬀs(784,811)(19,235)-(804,046)----Write-oﬀs--(37,485)(37,485)--(53,807)(53,807)Foreign exchange and other movements-----53,200-53,200Closing gross carrying amount 2,343,421752,640141,9123,237,9732,012,000578,481182,1822,772,663151FinancialsZenith Bank Plc Annual Report December 31, 202131 December 202131 December 2020In millions of NairaStage 112-month ECLStage 212-month ECLnvestment securities at amortised costGross carrying amount at 1 January Transfers: 208,973113,959Changes in amortised cost value-94,546New ﬁnancial assets originated or purchased171,226-Foreign exchange and other movements-468Closing gross carrying amount380,199208,97331 December 202131 December 2020In millions of NairaStage 112-month ECLStage 212-month ECLOther financial assetsGross carrying amount at 1 January Transfers: 145,34761,973New ﬁnancial assets originated or purchased(718)83,374Closing gross carrying amount144,629145,34731 December 202131 December 2020In millions of NairaStage 112-month ECLStage 212-month ECLDue from other banksGross carrying amount at 1 January Transfers: 532,435482,212Financial assets derecognised during the year other than write-oﬀs(14,324)-New ﬁnancial assets originated or purchased-3,198Foreign exchange and other movements-47,025Closing gross carrying amount518,111532,435Summary of loss allowance by class of ﬁnancial instruments also showing ECL coverage ratio as at 31 December 2021 . GroupGross Carrying AmountECL ProvisionECL Coverage RatioFinancial Statement Items In millions of Naira Stage 1 Stage 2 Lifetime ECLStage 3 TotalStage 1 Stage 2 Lifetime ECLStage 3 TotalStage 1 Stage 2 Lifetime ECLStage 3 Total% % % % On-balance sheet items Assets pledged as collateral158,105--158,105198--1980.13--0.13Treasury bills 941,538--941,538815--8150.09--0.09Loans and advances to customers at amortised cost2,600,350754,707146,8213,501,87825,67226,03294,445146,1490.993.4564.334.17Debt investment securities at amortised cost 657,951--657,9513,766--3,7660.57--0.57Other ﬁnancial assets measured at amortised cost-158,746-158,746-9,925-9,925-6.25-6.25Due from other Banks691,968--691,968724--7240.10-- 0.10Subtotal 5,049,912913,453146,8216,110,18631,17535,95794,445161,5770.623.9464.332.64152Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Gross Carrying AmountECL ProvisionECL Coverage RatioFinancial Statement Items In millions of Naira Stage 1 Stage 2 Lifetime ECLStage 3 TotalStage 1 Stage 2 Lifetime ECLStage 3 TotalStage 1 Stage 2 Lifetime ECLStage 3 TotalOff-balance sheet items% % % % Loans and other credit related commitments Letters of credit546,9577,50325554,4851,4703-1,4730.27--0.27Usance Financial guarantee and similar contracts188,3455,3781,632195,3551,253-1,6322,8850.67-100.001.48Performance bonds and guarantees357,9441,7104,978364,63224-19430.01-0.380.01Undrawn overdraft balance125,94410,0451,941137,9308071162921,2150.641.1515.040.88Subtotal 1,219,19024,6368,5761,252,4023,5541191,9435,6160.290.4822.660.45Total 6,269,102938,089155,3977,362,58834,72936,07696,388167,1930.553.8562.032.27BankOn-balance sheet items Assets pledged as collateral158,105--158,105198--1980.13--0.13Treasury bills 754,151--754,151395--3950.05--0.05Loans and advances to customers at amortised cost 2,343,420752,640141,9133,237,97317,53426,67394,315138,5220.753.5466.464.28Debt investment securities at amortised cost 380,199--380,199666--6660.18--0.18Other ﬁnancial assets measured at amortised cost-144,629-144,629-9,835-9,835-6.80-6.80Due from other Banks518,111--518,11158--580.01-- 0.01Subtotal 4,153,986897,269141,9135,193,16818,85136,50894,315149,6740.454.0766.462.88Off-balance sheet itemsLoans and other credit related commitments Letters of credit391,0767,50325398,6041,4703-1,4730.380.04-0.37Usance Financial guarantee and similar contracts188,3455,3781,631195,3541,253-1,6322,8850.67-100.061.48Performance bonds and guarantees329,1451,7104,978335,83324-19430.01-0.380.01Undrawn overdraft balance125,94410,0451,941137,9308071162921,2150.641.1515.040.88Subtotal 1,034,51024,6368,5751,067,7213,5541191,9435,6160.340.4822.660.53Total 5,188,496921,905150,4886,260,88922,40536,62796,258155,2900.433.9763.962.48*The Group adopted the simpliﬁed approach in estimating the ECL for other ﬁnancial asset. Under this approach, all ECL allowance are lifetime ECL.153FinancialsZenith Bank Plc Annual Report December 31, 2021Summary of loss allowance by class of ﬁnancial instruments also showing ECL coverage ratio as at 31 December 2020GroupGross Carrying AmountECL ProvisionECL Coverage RatioStage 1 Stage 2 Stage 3 TotalStage 1 Stage 2 Stage 3 TotalStage 1 Stage 2 Stage 3 TotalFinancial Statement Items In millions of Naira On-balance sheet items% % % % Assets pledged as collateral227,283--227,283355--3550.16--0.16Treasury bills 880,957--880,9571,575--1,5750.18--0.18Loans and advances to customers at amortised cost2,153,579578,537187,2262,919,34223,4008,703108,211140,3141.091.5057.804.81Debt investment securities at amortised cost 476,287--476,287773--7730.16--0.16Other ﬁnancial assets measured at amortised cost-151,709-151,709-2,141-2,141-1.41-1.41Due from other Banks810,552--810,55258--580.01-- 0.01Subtotal 4,548,658730,246187,2265,466,13026,16110,844108,211145,2160.581.4857.802.66Off-balance sheet itemsLoans and other credit related commitments Letters of credit167,9602,7382,207172,905412121,9852,4090.25--1.39Usance Financial guarantee and similar contracts47,8591,6121,29950,77024181,1691,4180.500.50-2.79Performance bonds and guarantees357,58412,6476,021376,25210-2131---0.01Undrawn overdraft balance145,2021,3262,077148,605928-469740.64--0.66Subtotal 718,60518,32311,604748,5321,591203,2214,8320.220.1127.760.65Total 5,267,263748,569198,8306,214,66227,75210,864111,432150,0480.531.4556.042.41* The Group adopted the simpliﬁed approach in estimating the ECL for other ﬁnancial asset. Under this approach, all ECL allowance are lifetime ECL.BankGross Carrying AmountECL ProvisionECL Coverage RatioStage 1 Stage 2 Stage 3 TotalStage 1 Stage 2 Stage 3 TotalStage 1 Stage 2 Stage 3 TotalFinancial Statement Items In millions of Naira On-balance sheet items% % % % Assets pledged as collateral227,283--227,283355--3550.16--0.16Treasury bills 695,898--695,898676--6760.10--0.01Loans and advances to customers at amortised cost 2,012,000578,481182,1822,772,66316,9318,702107,233132,8660.841.5058.864.79Debt investment securities at amortised cost 208,973--208,973755--7550.36--0.36Other ﬁnancial assets measured at amortised cost-145,347-145,347-9,835-9,835-6.77-6.77Due from other Banks532,435--532,43558--580.01-- 0.01Subtotal 3,676,589723,828182,1824,582,59918,77518,537107,233144,5450.512.5658.863.15154Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Off-balance sheet itemsGross Carrying AmountECL ProvisionECL Coverage RatioStage 1 Stage 2 Stage 3 TotalStage 1 Stage 2 Stage 3 TotalStage 1 Stage 2 Stage 3 TotalLoans and other credit related commitments % % % % Letters of credit79,2382,7382,20784,183412121,9852,4090.52--2.86Usance Financial guarantee and similar contracts46,6581,6121,29949,56924181,1691,4180.520.50-2.86Performance bonds and guarantees306,58112,6476,021325,24910-2131---0.01Undrawn overdraft balance145,2021,3262,077148,605928-469740.64--0.66Subtotal 577,67918,32311,604607,6061,591203,2214,8320.280.1127.760.80Total 4,254,268742,151193,7865,190,20520,36618,557110,454149,3770.482.5057.002.88* The Group adopted the simpliﬁed approach in estimating the ECL for other ﬁnancial asset. Under this approach, all ECL allowance are lifetime ECL.3.2.19 Restructuring PolicyLoans with renegotiated terms are loans that have been restructured because the Group has made concessions by agreeing to terms and conditions that are more favorable for the customer than these provided by the Group initially. The Group implements restructuring policy in order to maximize collections opportunities and minimize the risk of default.The Group’s credit committee may, from time to time, grant approval for restructuring of certain facilities due to the following reasons:a. Where the execution of the loan purpose and the repayment are no longer realistic in light of new cash ﬂows;b. To avoid unintended default arising from adverse business conditions;c. To align loan repayment with new pattern of achievable cash ﬂows;d. Where there is proven cost over runs that may signiﬁcantly impair the project repayment capacity;e. Where there is temporary downturn in the customer’s business environment;f. Where the customer’s going concern status is NOT in doubt or threatened; andg. The revised terms of restructured facilities usually include extended maturity, changing timing of interest payments and amendments to the terms of the loan agreement.3.3 Market riskMarket risk is the risk of potential losses in both on- and oﬀ-balance sheet positions arising from movements in market prices. Market risks can arise from adverse changes in interest rates, foreign exchange rates, equity prices, commodity prices and other relevant factors such as market volatilities.The Group undertakes activities which give rise to some level of market risks exposures. The objective of market risk management activities is to continuously identify, manage and control market risk exposure within acceptable parameters, while optimizing the return on risks taken.3.3.1 Management of market riskThe Group has an independent Market Risk Management unit which assesses, monitors, manages and reports on market risk taking activities across the Group. The Group enhances its Market Risk Management Framework on a continuous basis. The operations of the unit is guided by the mission of “inculcating enduring market risk management values and culture, with a view to reducing the risk of losses associated with market risk-taking activities, and optimizing risk-reward trade-oﬀ.”The Group’s market risk objectives, policies and processes are aimed at instituting a model that objectively identiﬁes, measures and manages market risks in the Group and ensure that:The Group’s market risk objectives, policies and processes are aimed at instituting a model that objectively identiﬁes, measures and manages market risks in the Group and ensure that:155FinancialsZenith Bank Plc Annual Report December 31, 2021a. The individuals who take or manage risk clearly understand it;b. The Group’s risk exposure is within established limits;c. Risk taking decisions are in line with business strategy and objectives set by the Board of Directors;d. The expected payoﬀs compensate for the risks taken; ande. Suﬃcient capital, as a buﬀer, is available to take risk.The Group proactively manages its market risk exposures in both the trading and non-trading books within the acceptable levels.The Group’s market risks exposures are broadly categorised into:(i) Trading Market Risks - These are risks that arise primarily through trading activities and market making activities. These activities include position-taking in foreign exchange and ﬁxed income securities (Bonds and Treasury Bills).(ii) Non Trading Market Risks -These are risks that arise from assets and liabilities that are usually on the books for a longer period of time, but where the intrinsic value is a function of the movement of ﬁnancial market parameter.The Naira exchange rate continues to be an important inﬂuence on consumer prices and output recovery. Stability in the naira exchange rate has been sustained for most part of the year through appropriate policies and reforms of the exchange rate market; There has also been some form of convergence in the various markets.GroupAt 31 December 2021At 31 December 2020 In millions of NairaNoteCarrying AmountTradingNon-tradingCarrying AmountTradingNon-tradingAssetsCash and balances with central bank151,488,363-1,488,3631,591,768-1,591,768Treasury bills161,764,945824,222940,7231,577,875698,493879,382Assets pledged as collateral17392,594234,687157,907298,53071,602226,928Due from other banks18691,244-691,244810,494-810,494Derivative assets1956,18756,187-44,49644,496-Loans and advances203,355,728-3,355,7282,779,027-2,779,027Investment securities211,303,72622,3381,281,388996,91649,277947,639Other ﬁnancial assets25148,821-148,821149,568-149,568LiabilitiesCustomer deposits286,472,054-6,472,0545,339,911-5,339,911Derivative liabilities3314,67414,674-11,07611,076-Other ﬁnancial liabilities29455,776-455,776610,061-610,061On-lending facilities30369,241-369,241384,573-384,573Borrowings31750,469-750,469870,080-870,080Debt securities issued3245,799-45,79943,177-43,177156Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021BankAt 31 December 2021At 31 December 2020 In millions of NairaNoteCarrying AmountTradingNon-tradingCarrying AmountTradingNon-tradingAssetsCash and balances with central bank151,397,666-1,397,6661,503,245-1,503,245Treasury bills161,577,647823,891753,7561,393,421698,199695,222Assets pledged as collateral17357,000199,093157,907298,53071,602226,928Due from other banks18518,053-518,053532,377-532,377Derivative assets1957,47657,476-41,72941,729-Loans and advances203,099,452-3,099,4522,639,797-2,639,797Investment securities21477,00411,897465,107333,12644,933288,193Other ﬁnancial assets25134,794-134,794143,301-143,301LiabilitiesCustomer deposits285,169,199-5,169,1994,298,258-4,298,258Derivative liabilities3315,17015,170-11,07611,076-Other ﬁnancial liabilities29409,103-409,103564,558-564,558On-lending facilities30369,241-369,241384,573-384,573Borrowings31769,395-769,395874,090-874,090Debt securities issued3245,799-45,79943,177-43,1773.3.2 Measurement of Market RiskThe Group adopts Non-VAR (Value-at-risk) approach for quantitative measurement and control of market risks in both trading and non-trading books. The Non -VAR (Value at risk) measurements includes: Duration; Factor Sensitivities (Pv01), Stress Testing, Aggregate Open Position etc. The measured risks are therefore monitored against the pre-set limits on a daily basis. All exceptions are investigated and reported in line with internal policies and guidelines.Limits are sets to reﬂect the risk appetite that is approved by the Board of Directors. These limits are reviewed, at least, annually or at a more frequent interval. Some of the limits include; Net Open Position (NOP- for foreign exchange); Aggregate Control Limits (for Securities); Management Action Trigger (MAT); Duration; Factor Sensitivities (Pv01); Permitted Instrument and Tenor Limits; Holding Period and Oﬀ Market Rate Tolerance limit.Stress testing is an important risk management tool that is used by the Group as part of its enterprise-wide risk management. It is the evaluation of the Group’s ﬁnancial position under severe but plausible scenarios to assist in decision- making. Stress testing provides the Group with the opportunity to spot emerging risks, uncover weak spots and take preventive action. It also alerts management to adverse unexpected outcomes related to a variety of risks and provides an indication of how much capital might be needed to absorb losses should large shocks occur. The Group adopts both single factor and multifactor stress testing approaches (sensitivity and scenario based) in conducting stress testing within the risk areas of liquidity, foreign exchange, interest rate, market and credit risks. Stress testing is conducted both on a regular and ad-hoc basis in response to changing ﬁnancial, regulatory and economic environment/circumstances.157FinancialsZenith Bank Plc Annual Report December 31, 20213.3.3 Foreign exchange riskFluctuations in the prevailing foreign currency exchange rates can aﬀect the Group’s ﬁnancial position and cash ﬂows - ‘on’ and ‘oﬀ’ balance sheet. The Group manages part of the foreign exchange risks through basic derivative products and hedges (such as forwards and swaps). The risk is also managed by ensuring that all risks taken by the Group are within approved limits. In addition to adherence to regulatory limits, Zenith Group established various internal limits (such as non- VAR models, overall Overnight and Intra-day positions), dealer limits, as well as individual currency limits among others limits which are monitored by the Market Risk Department on a regular basis. These limits are set with the aim of minimizing the Group’s risk exposures to exchange rates volatilities to an acceptable level. The Group’s transactions are carried out majorly in four (4) foreign currencies with a signiﬁcant percentage of transactions involving US Dollars.GroupThe table below summarizes the Group’s exposure to foreign currency exchange rate risk at 31 December 2021 and 31 December 2020. Included in the table are the Group’s ﬁnancial instruments at carrying amounts, categorised by currency.In millions of NairaAt 31 December 2021NairaDollarGBPEuroOthersTotalAssetsCash and balances with central bank1,383,0594,6891,8779,43689,3021,488,363Treasury bills1,671,658---93,2871,764,945Assets pledged as collateral357,000---35,594392,594Due from other banks414507,06049,74982,80151,220691,244Derivative assets4,00351,557184144256,187Loans and advances to customers1,845,8371,301,54323,43959,872125,0373,355,728Investment securities501,224545,51743,55022,632190,8031,303,726Other ﬁnancial assets11,035123,896-1813,872148,821Liabilities4,940,388440,36394,247Customer’s deposits4,062,0401,626,142163,580116,701503,5916,472,054Derivative liabilities3,8209,475-47090914,674Other ﬁnancial liabilities256,532135,8045789,25253,610455,776On-lending facilities369,241----369,241Borrowings-750,469---750,469Debt securities issued-45,799---45,799As at 31 December 2021, the Group had outstanding SWAP transactions with various counterparties. The SWAP transactions create for the Group both a right to receive US dollars of the notional SWAP amount at diﬀerent maturities and an obligation to deliver NGN of the notional SWAP amount at diﬀerent maturities. The total USD receivables at various maturity dates is USD 1.66 billion while the total Naira payable at various maturities is N679billion.158Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021In millions of NairaAt 31 December 2020NairaDollarGBPEuroOthersTotalAssetsCash and balances with central bank1,477,43672,0655,7627,02329,4821,591,768Treasury bills1,507,915---69,9601,577,875Assets pledged as collateral298,530----298,530Due from other banks3,000625,44460,26860,79260,990810,494Derivative assets9,86233,7742615316844,496Loans and advances to customers (gross)1,477,5621,185,0376,68635,07074,6722,779,027Investment securities480,093482,62621,27012,927-996,916Other ﬁnancial assets126,35317,014--6,201149,568LiabilitiesCustomer’s deposits3,483,7841,174,302352,35346,468283,0045,339,911Derivative liabilities9,5141,497-56011,076Other ﬁnancial liabilities497,46133,77919713,12665,498610,061On-lending facilities384,573----384,573Borrowings-870,080---870,080Debt securities issued-43,177---43,177The Group’s exposure to foreign currency risk is largely concentrated in the US Dollar. Movement in exchange rate betweenthe US Dollar, and the Nigerian Naira aﬀects reported earnings through revaluation gain or loss and statement of ﬁnancial position size through increase or decrease in the revalued amounts of assets and liabilities denominated in US Dollars.The table below shows the impact on the Group’s proﬁt or loss and statements of ﬁnancial position size if the exchange ratebetween the US Dollars, and Nigerian Naira had increased or decreased by 6% (31 December 2020: 9%, with all other variables held constant.31-Dec-2131-Dec-20US Dollar eﬀect of 6% (31 December 2020: 9%) up or (down) movement on proﬁt before tax and statement of ﬁnancial position size (in millions of Naira)32,35157,148US Dollar eﬀect of 6% (31 December 2020: 9%) up or (down) movement on proﬁt before tax and statement of ﬁnancial position size (in millions of Naira)32,35157,14831-Dec-2131-Dec-20US Dollar eﬀect of 6% (31 December 2020: 9%) up or (down) movement on OCI and statement of ﬁnancial position size (in millions of Naira)4,8951,193US Dollar eﬀect of 6% (31 December 2020: 9%) up or (down) movement on OCI and statement of ﬁnancial position size (in millions of Naira)4,8951,193159FinancialsZenith Bank Plc Annual Report December 31, 2021BankThe table below summarizes the Bank’s exposure to foreign currency exchange rate risk at 31 December 2021 and 31 December 2020. Included in the table are the Bank’s ﬁnancial instruments at carrying amounts, categorised by currency.In millions of NairaAt 31 December, 2021NairaDollarGBPEuroOthersTotalAssetsCash and balances with central bank1,382,7513,7031,8469,367-1,397,667Treasury bills1,577,647----1,577,647Assets pledged as collateral357,000----357,000Due from other banks-458,0618,54251,111339518,053Derivative assets4,00352,847184144157,476Loans and advances to customers1,845,8371,222,6576022,7568,1423,099,452Investment securities462,07114,933---477,004Other ﬁnancial assets11,275123,501-18-134,794LiabilitiesCustomer deposits4,062,0401,019,43417,07267,8282,8255,169,199Derivative liabilities3,82010,438-47044215,170Other ﬁnancial liabilities256,490135,8045789,2526,979409,103On-lending facilities369,241----369,241Borrowings-769,395---769,395Debt securities issued-45,799---45,799As at 31 December 2021, the Group had outstanding SWAP transactions with various counterparties. The SWAP transactions create for the Group both a right to receive US dollars of the notional SWAP amount at diﬀerent maturities and an obligation to deliver NGN of the notional SWAP amount at diﬀerent maturities. The total USD receivables at various maturity dates is USD 1.66 billion while the total Naira payable at various maturities is N679billion.In millions of NairaAt 31 December, 2020NairaDollarGBPEuroOthersTotalAssetsCash and balances with central bank1,477,07225,038858277-1,503,245Treasury bills1,393,421----1,393,421Assets pledged as collateral298,530----298,530Due from other banks3,000479,6367,39640,5281,817532,377Derivative assets9,86231,0072615316841,729Loans and advances to customers1,477,4481,141,2715621,021-2,639,796Investment securities251,79081,336---333,126Other ﬁnancial assets126,45016,851---143,301LiabilitiesCustomer’s deposits3,483,784769,95713,86329,5021,1524,298,258Derivative liabilities9,5141,497-56011,076Other ﬁnancial liabilities478,90969,41834513,1262,760564,558On-lending facilities384,573----384,573Borrowings-874,090---874,090Debt securities issued-43,177---43,177160Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The Bank’s exposure to foreign currency risk is largely concentrated in US Dollar. Movement in exchange rate between the US Dollar, and the Nigerian Naira aﬀects reported earnings through revaluation gain or loss and statement of ﬁnancial position size through increase or decrease in the revalued amounts of assets and liabilities denominated in US Dollars. The Group’s closing Dollar rate as at 31 December 2021 was N424.11/USD.The table below shows the impact on the Bank’s proﬁt and statement of ﬁnancial position size if the exchange rate between the US Dollars, and Nigerian Naira had increased or decreased by 6% (31 December 2020: 9%), with all other variables held constant.31-Dec-2131-Dec-20US Dollar eﬀect of 6% (31 December 2020: 9%) up or (down) movement on proﬁt before tax and balance sheet size28,04741,163US Dollar eﬀect of 6% (31 December 2020: 9%) up or (down) movement on proﬁt before tax and statement of ﬁnancial position size (in millions of Naira)28,04741,16331-Dec-2131-Dec-20US Dollar eﬀect of 6% (31 December 2020: 9%) up or (down) movement on OCI and statement of ﬁnancial position size (in millions of Naira)4,8951,193US Dollar eﬀect of 6% (31 December 2020: 9%) up or (down) movement on OCI and statement of ﬁnancial position size (in millions of Naira)4,8951,1933.3.4 Interest Rate RiskThe Group is exposed to a considerable level of interest rate risk especially on the banking book (i.e. the risk that the future cash ﬂows of a ﬁnancial instrument will ﬂuctuate because of changes in market interest rates). The Group has a signiﬁcant portion of its liabilities in non-rate sensitive liabilities. This helps it in minimizing the impact of the exposure to interest rate risks. The Group also enjoys some form of ﬂexibility in adjusting both lending and deposits rates to reﬂect market realities.GroupThe table below summarizes the Group’s interest rate gap position:At 31 December, 2021In millions of NairaNoteCarrying AmountRate sensitiveNon rate sensitiveAssetsCash and balances with central banks151,488,363-1,488,363Treasury and other eligible bills (Amortized cost)16940,723-940,723Assets pledged as collateral (Amortised cost)17157,907-157,907Due from other banks18691,244-691,244Loans and advances to customers203,355,7281,539,7001,816,028Investment securities (Amortized cost and Fair value through OCI)211,195,814-1,195,814Other ﬁnancial assets25148,821-148,8217,978,6001,539,7006,438,900LiabilitiesCustomer deposits286,472,0541,194,2215,277,833Other ﬁnancial liabilities29455,776-455,776On-lending facilities30369,241-369,241Borrowings31750,469352,332398,137Debt securities issued3245,799-45,7998,093,3391,546,5536,546,786Total interest rate gap(114,739)(6,853)161FinancialsZenith Bank Plc Annual Report December 31, 2021 The table shows the maturity proﬁle of ﬁnancial instruments that are rate sensitive.At 31 December, 2021In millions of NairaUp to 1 month1 - 3 months 3 - 6 months 6 - 12 months Over 1 yearTotal rate sensitiveAssetsLoans and advances to customers524,25539,430155,21236,113784,6901,539,700524,25539,430155,21236,113784,6901,539,700LiabilitiesCustomer deposits1,194,221----1,194,221Borrowings42,739278,7689,60621,219-352,3321,236,960278,7689,60621,219-1,546,553Total interest repricing gap(712,705)(239,338)145,60614,894784,690(6,853)Impact of interest rate sensitivity on cash flows - Liabilities:For its liabilities, the group is primarily exposed to changes in interest rate on Libor based borrowings. Impact on cash ﬂow due to +/- 2 bps movement in Libor (holding all other variables constant) has been estimated to be N150 million.At 31 December, 2020In millions of NairaNoteCarrying AmountRate sensitiveNon rate sensitiveAssetsCash and balances with central banks151,591,768-1,591,768Treasury and other eligible bills (Amortized cost)16879,382-879,382Assets pledged as collateral (Amortised cost)17226,928-226,928Due from other banks18810,494167,855642,639Loans and advances to customers202,779,0272,771,8837,144Investment securities (Amortized cost and Fair value through OCI)21867,664-867,664Other ﬁnancial assets25149,568-149,5687,304,8312,939,7384,365,093LiabilitiesCustomer deposits285,339,9114,507,005832,906Other ﬁnancial liabilities29610,061-610,061On-lending facilities30384,573-384,573Borrowings31870,080290,964579,116Debt securities issued3243,177-43,1777,247,8024,797,9692,449,833Total interest repricing gap57,029(1,858,231)-162Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The table shows the maturity proﬁle of ﬁnancial instruments that are rate sensitive. In millions of Naira At 31 December, 2020Up to 1 month1 - 3 months 3 - 6 months 6 - 12 months Over 1 yearTotal rate sensitiveAssetsDue from other banks-167,855---167,855Loans and advances to customers337,128154,416127,457452,9581,699,9242,771,883337,128322,271127,457452,9581,699,9242,939,738LiabilitiesCustomer deposits1,401,72879,696448,06082,0362,495,4854,507,005Borrowings--229,35061,614-290,9641,401,72879,696677,410143,6502,495,4854,797,969Total interest repricing gap(1,064,600)242,575(549,953)309,308(795,561)(1,858,231)GroupInterest rate sensitivity showing fair value interest rate riskIn millions of Naira31-Dec-2131-Dec-20Financial assets at FVPL Treasury bills824,222698,493Government bonds22,33849,277Assets pledged as collateral234,68771,602Total1,081,247819,372Impact on income statement:Favourable change at 2% reduction in interest rate21,62514,955Unfavourable change at 2% increase in interest rate(21,625)(14,955)FVOCI investment securities Government bonds541,629392,150Impact on other comprehensive income statement: Favourable change at 2% reduction in interest rate10,8337,843Unfavourable change at 2% increase in interest rate(10,833)(7,843)The management of interest risk against interest rate gap limits is supplemented by monitoring the sensitivity of the Group’s ﬁnancial assets and liabilities to various scenarios. Interest rate movement aﬀects reported income by causing an increase or decrease in net interest income and fair value changes.163FinancialsZenith Bank Plc Annual Report December 31, 2021BankThe table below summarizes the Bank’s interest rate gap position: At 31 December, 2021In millions of NairaNoteCarrying AmountRate sensitiveNon rate sensitiveAssetsCash and balances with central banks151,397,666-1,397,666Treasury and other eligible bills (Amortized cost)16753,756-753,756Assets pledged as collateral17157,907-157,907Due from other banks18518,053-518,053Loans and advances to customers203,099,4521,253,6151,845,837Investment securities (Amortized cost and Fair value through OCI)21379,533-379,533Other ﬁnancial assets25134,794-134,7946,441,1611,253,6155,187,546LiabilitiesCustomer deposits285,169,1991,194,2213,974,978Other ﬁnancial liabilities29409,103-409,103On-lending facilities30369,241-369,241Borrowings31769,395341,463427,932Debt securities issued3245,799-45,7996,762,7371,535,6845,227,053Total interest rate gap(321,576)(282,069)(39,507)The table below shows the maturity proﬁle of ﬁnancial instruments that are rate sensitive.At 31 December, 2021Up to 1 month1 - 3 months 3 - 6 months 6 - 12 months Over 1 yearTotal rate sensitiveIn millions of NairaAssetsLoans and advances to customers469,345-120,84717,064646,3591,253,615469,345-120,84717,064646,3591,253,615LiabilitiesCustomer deposits1,194,221----1,194,221Borrowings42,739267,8999,60621,219-341,4631,236,960267,8999,60621,219-1,535,684Total interest rate gap(767,615)(267,899)111,241(4,155)646,359(282,069)Impact of interest rate sensitivity on cash ﬂows - Liabilities:For its liabilities, the group is primarily exposed to changes in interest rate on Libor based borrowings. Impact on cash ﬂow due to +/- 2 bps movement in Libor (holding all other variables constant) has been estimated to be N150 million.164Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021At 31 December 2020NoteCarrying AmountRate sensitiveNon rate sensitiveIn millions of NairaAssetsCash and balances with central banks151,503,245-1,503,245Treasury and other eligible bills (Amortized cost)16695,222-695,222Assets pledged as collateral17226,928-226,928Due from other banks18532,377167,855364,522Loans and advances to customers (Gross)202,639,7972,632,6527,144Investment securities (Amortized cost and Fair value through OCI)21208,218-208,218Other ﬁnancial assets25143,301-143,3015,949,0882,800,5073,148,580LiabilitiesCustomer deposits284,298,2583,465,351832,907Other ﬁnancial liabilities13564,558-564,558On-lending facilities33384,573-384,573Borrowings30874,090290,964583,126Debt securities issued3143,177-43,1776,164,6563,756,3152,408,341Total interest rate gap(215,568)(955,808)740,239The table below shows the maturity proﬁle of ﬁnancial instruments that are rate sensitive.At 31 December 2020Up to 1 month1 - 3 months 3 - 6 months 6 - 12 months Over 1 yearTotal rate sensitiveIn millions of NairaAssetsDue from other banks-167,855---167,855Loans and advances to customers 293,913146,030124,629449,4471,618,6332,632,652Investment securities (Amortized cost and fair value through OCI)-40,462-39,886127,870208,218293,913354,347124,629489,3331,746,5033,008,725LiabilitiesCustomer deposits1,034,31334,864545282,395,5923,465,351Derivative liabilities2,9315,7097161,720-11,076Borrowings--229,35061,614-290,9641,037,24440,573230,12063,8622,395,5923,767,391Total interest repricing gap(743,331)313,774(105,491)425,471(649,089)(758,666)165FinancialsZenith Bank Plc Annual Report December 31, 2021BankInterest rate sensitivity showing fair value interest rate riskIn millions of Naira31-Dec-2031-Dec-20Financial assets at FVPL Treasury bills823,891698,199Government bonds11,89744,933Assets pledged as collateral199,09371,602Total1,034,881814,734Impact on income statement:Favourable change at 2% reduction in interest rate20,69814,863Unfavourable change at 2% increase in interest rate(20,698)(14,863)The management of interest risk against interest rate gap limits is supplemented by the monitoring of the sensitivity of the Group’s ﬁnancial assets and liabilities to various scenarios. Interest rate movement aﬀects reported income by causing an increase or decrease in net interest income and fair value changes.The eﬀect of 200 basis points movement on proﬁt is considered moderate and we do not expect all the rates to move at the same time and in the same direction. This risk can largely be handled by the ﬂexibility in the changing/adjusting rates on loans and deposits.3.3.5 Equity and commodity price riskThe group is exposed to equity price risk as a result of holding non-quoted equity investments. Unquoted equity securities held by the group is composed mainly of the following:(i) 8.64% equity holding in African Finance Corporation (AFC) valued at N81.6 billion and cost N40 billion.(ii) 3.6% equity holding in Nigerian Interbank Settlement Scheme (NIBBS) valued at N1.6 billion and cost N50 million.(iii) 2.31% equity holding in FMDQ holdings plc valued at N2.26 billion.(iv) 0.88% equity holding in Uniﬁed Payment Services (UPS) valued at N71.8 million.The AFC is a private sector-led investment bank and development ﬁnance institution which has the Central Bank of Nigeria (CBN) as the single major shareholder (42.39%) with other African ﬁnancial institutions and investors holding the remaining shares. The AFC operates a US Dollar-denominated statement of ﬁnancial position and provides ﬁnancing in this currency.NIBSS was incorporated in 1993 and is owned by all licensed banks including the Central Bank of Nigeria (CBN). The Company is responsible for handling inter-bank payments, funds transfer and settlement, and it also operates the Nigerian Automated Clearing System (NACS).The Group does not deal in commodities and is therefore not exposed to any commodity price risk. The sensitivity analysis of unquoted equity is stated in section 3.5 (c).3.4 Liquidity riskLiquidity risk is the potential loss arising from the Group’s inability to meet its obligations as they fall due or its inability to fund increases in assets without incurring unacceptable cost or losses. Liquidity risk is not viewed in isolation, because ﬁnancial risks are not mutually exclusive and liquidity risk is often triggered by consequences of other bank risks such as credit, market and operational risks.3.4.1 Liquidity risk management processThe Group has a comprehensive liquidity risk management framework that ensures that adequate liquidity, including a cushion of unencumbered and high quality liquid assets is maintained at all times, to enable the Group withstand a range of stress events, including those that might involve loss or impairment of funding sources.The Group’s liquidity risk exposure is monitored and managed by the Asset and Liability Management Committee (ALCO) on a regular basis. This process includes:a. Projecting cash ﬂows and considering the level of liquid assets necessary in relation thereto;b. Monitoring balance sheet liquidity ratios against internal and regulatory requirements;c. Maintaining a diverse range of funding sources with adequate back-up facilities;d. Managing the concentration and proﬁle of debt maturities;166Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021e. Monitoring deposit concentration in order to avoid undue reliance on large individual depositors and ensure a satisfactory overall funding mix;f. Maintaining up-to-date liquidity and funding contingency plans. These plans identify early indicators of stress conditions and describe actions to be taken in the event of diﬃculties arising from systemic or other crises while minimizing any adverse long-term implications for the business;g. Regular conduct of stress testing, coupled with testing of contingency funding plans from time to time.The Maximum Cumulative Outﬂow has remained positive all through the short tenor maturity buckets. Assessments are carried out on contractual basis. These reveal very sound and robust liquidity position of the Group.The Group maintains liquid assets and marketable securities adequate, within regulatory limits, to manage liquidity stress situation.3.4.2 Stress testing and contingency funding Stress testingThe Group considers diﬀerent liquidity risk mitigation tools, including a system of limits and liquidity buﬀers in order to be able to withstand a range of diﬀerent stress events and adequately diversify funding structure and access to funding sources. Those events are regularly reviewed and monitored by the Asset and Liability Committee (ALCO). Alternative scenarios on liquidity positions and on risk mitigants are considered. In line with standard risk management practice and global best practice, the Group:(a). Conducts on a regular basis appropriate stress tests so as to;(i) Identify sources of potential liquidity strain; and(ii) Ensure that current liquidity exposures continue to conform to the liquidity risk tolerance established by the board. (b). Analyses the separate and combined impact of possible future liquidity stresses on:(i) Cash ﬂows;(ii) Liquidity position; and(iii) Proﬁtability.The Board and the Asset and Liability Committee (ALCO) regularly review the stresses and scenarios tested to ensure that their nature and severity remain appropriate and relevant to the Bank. These reviews take into the account the following;a. Changes in market condition;b. Changes in the nature, scale or complexity of the Bank’s business model and activities; andc. The Group’s practical experience in periods of stress.The Group considers the potential impact of idiosyncratic Institution-Speciﬁc, market-wide and combined alternative scenarios while carrying out the test to ensure that all areas are appropriately covered. In addition, the Group also considers the impact of severe stress scenarios.Contingency Funding PlanThe Group maintains a contingency funding plan which sets out strategies for addressing liquidity. The Plan:a. outlines strategies, policies and plans to manage a range of stresses;b. establishes a clear allocation of roles and clear lines of management responsibility;c. is formally documented;d. includes clear invocation and escalation procedures;e. is regularly tested and the result shared with the ALCO and Board;f. outlines that Group’s operational arrangements for managing a huge funding run;g. is suﬃciently robust to withstand simultaneous disruptions in a range of payment and settlement;h. outlines how the Group will manage both internal communications and those with its external stakeholders; andAs part of the contingency funding plan process, the Group maintains committed credit lines that can be drawn in case of liquidity crises. These lines are renewed as at when due.167FinancialsZenith Bank Plc Annual Report December 31, 20213.4.3 Funding approachOur sources of liquidity are regularly reviewed by both the ALCO and the Treasury Group in order to avoid undue reliance on large individual depositors and to ensure that a satisfactory overall funding mix is maintained at all times. The funding strategy is geared toward ensuring eﬀective diversiﬁcation in the sources and tenor of funding. The Group however places greater emphasis on demand and savings deposits as against purchased funds in order to minimize the cost of funding.As part of the management of liquidity risk arising from ﬁnancial liabilities, the Group holds liquid assets comprising cash and cash equivalents, and debt securities issued by sovereigns, which can be readily sold to meet liquidity requirements. In addition, the Group maintains agreed lines of credit with other banks.(a) Exposure to liquidity riskThe key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers. For this purpose, ‘net liquid assets’ includes cash and cash equivalents and investment-grade debt securities for which there is an active and liquid market less any balances with foreign banks and regulatory restricted cash. Customers’ deposit excludes deposit denominated in foreign currencies. Details of the reported Group ratio of net liquid assets to deposits from customers at the reporting date and during the reporting period were as follows.GroupBank31-Dec-2131-Dec-2031-Dec-2131-Dec-2 0At year end71.19%66.23%59.73%62.45%Average for the period/year70.43%59.69% .57.96%48.49%Maximum for the period/year72.18%71.80%61.14%62.45%Minimum for the period/year68.72%48.42%52.37%35.99%(b) Liquidity reserve The table sets out the component of the Group’s liquidity reserve. These are liquid instruments the Group uses to settle short term or current obligations.In millions of naira31-Dec-2131-Dec-20GroupGross valueGross valueCash and balances with central banks 157,466180,346Treasury bills1,765,7601,579,450Balances with other banks668,425783,866Investment securities1,123,565819,476Total3,715,2163,363,138BankCash and balances with central banks 122,465132,626Treasury bills1,578,0421,394,097Balances with other banks432,139445,059Investment securities293,733155,612Total2,426,3792,127,394 168Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(c) Financial assets available to support fundingThe table below sets out the availability of the Group’s ﬁnancial assets to support future funding Group 31-Dec-2131-Dec-20In millions of NairaNote Encum-beredUnenc-umbered TotalEncum-beredUnenc-umberedTotalCash and balances with central banks 151,330,897157,4661,488,3631,370,619221,1491,591,768Treasury bills16-1,764,9451,764,945-1,577,8751,577,875Assets pledged as collateral17392,594-392,594298,530-298,530Due from other banks1823,543667,701691,244-810,494810,494Loans and advances -3,355,7283,355,728-2,779,0272,779,027Investment securities21-1,303,7261,303,726-996,916996,916Other ﬁnancial assets25-148,821148,821-149,568149,568Bank31-Dec-2131-Dec-21 In millions of NairaNote Encum-beredUnenc-umbered TotalEncum-beredUnenc-umberedTotalCash and balances with central banks 151,275,201122,4651,397,6661,370,619132,6261,503,245Treasury bills16-1,577,6471,577,647-1,393,4211,393,421Assets pledged as collateral17357,000-357,000298,530-298,530Due from other banks1885,972432,081518,053-532,377532,377Loans and advances -3,099,4523,099,452-2,639,7972,639,797Investment securities21-477,004477,004-333,126333,126Other ﬁnancial assets25-134,794134,794-143,301143,301(d) Financial assets pledged as collateralThe total ﬁnancial assets recognized in the statement of ﬁnancial position that have been pledged as collateral for liabilities as at 31 December 2021 and 31 December 2020 are shown above. Financial assets are pledged as collateral as part of sales and repurchases, borrowing transaction and collection agency transactions under terms that are usual for such activities.The Group does not hold any ﬁnancial assets accepted as collateral that the Group is permitted to sell or re-pledge in the absence of default.3.4.4 Liquidity gap analysisThe table below presents the cash ﬂows of the Group’s ﬁnancial assets and liabilities and other liabilities by their remaining contractual maturities at the statement of ﬁnancial position date. The amounts disclosed in the table are the contractual undiscounted cash ﬂows, whereas the Group manages the inherent liquidity risk based on expected undiscounted cash ﬂows.The Group’s loan disbursement processes are centralized and controlled by Credit Risk Management Group (CRMG) of each banking subsidiary. All loan commitments advised to customers in oﬀer letters are contingent on the satisfaction of conditions precedent to draw down and availability of funds. Additionally, the Group retains control of drawings on approved loan facilities, through a referral method, where any such drawings must be sanctioned before it is processed. This ensures that the Group’s commitments on any loan is to the extent of the drawn amount at any point in time.The liquidity analysis of lease liability is disclosed in note 29c.169FinancialsZenith Bank Plc Annual Report December 31, 2021Group At 31 December, 2021NoteUp to 1 month1 - 3 months 3 - 6 months 6 - 12 months Over 1 yearGross nominal inflow/ (outflow) Carrying amount In millions of nairaAssets Non-derivative assets Cash and balances with central banks15157,466---1,330,8971,488,3631,488,363Treasury bills16331,777386,797458,851621,404-1,798,8291,764,945Assets pledged as collateral176,7247,255108,864152,604309,561585,008392,594Due from other banks18645,65122,3361,8533,90217,583691,325691,244Loans and advances to customers 201,254,367300,139281,086237,5611,360,1623,433,3153,355,728Investment securities 2130,197157,472121,644168,2471,302,3031,779,8631,303,726Other ﬁnancial assets 25117,750105--40,888158,743148,8212,543,932874,104972,2981,183,7184,361,3949,935,4469,145,421LiabilitiesNon-derivative liabilitiesCustomer’s deposits285,911,598268,589118,299113,52861,2616,473,2756,472,054Other ﬁnancial liabilities29334,84397,79554410,57620,027463,785455,776On-lending facilities302,4082,0363,1286,418442,932456,922369,241Borrowings3162,078211,953189,444264,86428,814757,153750,469Debt securities issued32--47,231--47,23145,7996,310,927580,373358,646395,386553,0348,198,3668,093,339Derivative assets 193,182,135Gross settled: Receivable202,006169,887304,628350,156-1,026,67752,874Payable(190,367)(153,433)(297,946)(339,275)-(981,021)52,874Net settled8701,296777370-3,3133,313Derivative liabilities333,182,135Gross settled: Receivable99,58081,21681,01113,359-275,16610,167Payable(460,439)(412,973)(27,726)(13,611)-(914,749)10,167Net settled158,159121,745(69,492)(205,906)-4,5064,506170Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021At 31 December 2020 NoteUp to 1 month1 - 3 months 3 - 6 months 6 - 12 months Over 1 yearGross nominal inflow/ (outflow) Carrying amount In millions of nairaAssetsNon-derivative assetsCash and balances with central banks15221,149---1,370,6191,591,7681,591,768Treasury bills16109,117473,95197,6161,014,333-1,695,0171,577,675Assets pledged as collateral1747,84533,40933271,316461,220614,122298,530Due from other banks18642,639171,795---814,434810,494Loans and advances to customers 20396,242154,998129,824490,7041,716,0872,887,8552,779,027Investment securities 2129,865101,658110,864175,504707,2611,125,152996,916Other ﬁnancial assets 25120,602-111-30,996149,568149,5681,567,459935,811338,7471,751,8574,286,183 8,880,0578,203,978Derivative assets Trading: -------Gross settled98,19121,46316,589363,850-500,09334,634Net settled2,3775,1455911,749-9,8629,862100,56826,60817,180365,599-509,95544,496LiabilitiesNon-derivative liabilitiesCustomer's deposits282,605,785104,55492,13582,0352,495,502 5,380,0115,339,911Other ﬁnancial Liabilities29575,2341,6161,3502,54238,029618,771610,061On-lending facilities301,777330-244491,853494,204384,573Borrowings3149,250374,899160,259197,615102,773884,796870,080Debt securities issued32--1,5941,62144,59147,80643,1773,232,046481,399255,338284,0573,172,748 7,425,5887,247,802Derivative liabilities Trading: -------Gross settled13,57921,46916,526--51,5741,562Net settled2,3315,0518201,312-9,5149,51415,91026,52017,3461,312-61,08811,076171FinancialsZenith Bank Plc Annual Report December 31, 2021Bank At 31 December, 2021NoteUp to 1 month1 - 3 months 3 - 6 months 6 - 12 months Over 1 yearGross nominal inflow/ (outflow) Carrying amount In millions of nairaAssetsNon-derivative assetsCash and balances with central banks15122,465---1,275,2011,397,6661,397,666Treasury bills16287,459274,343454,208591,367-1,607,3771,577,647Assets pledged as collateral176,7247,255108,864152,536275,790551,169357,000Due from other banks18509,8854,283-3,902-518,070518,053Loans and advances to customers 201,199,643260,927246,931218,8261,222,0923,148,4193,099,452Investment securities 2120,6765,6818,50423,683739,387797,931477,004Other ﬁnancial assets 25103,636105--40,888144,629134,7942,250,488552,594818,507990,3143,553,3588,165,2617,561,616LiabilitiesNon-derivative liabilitiesCustomer's deposits285,083,36775,9828,1112,786865,170,3325,169,199Other ﬁnancial Liabilities29287,95097,63454410,57612,884409,588409,103On-lending facilities302,4082,0363,1286,418442,932456,922369,241Borrowings3162,078200,950219,239264,86428,814775,945769,395Debt securities issued32--47,231--47,23145,7995,435,803376,602278,253284,644484,7166,860,0186,762,737Derivative assets 19Gross settled:-------Receivable183,399105,119267,385402,905-958,80853,473Payable(172,082)(101,564)(260,841)(393,450)-(927,937)53,473Net settled8701,986777370-4,0034,003Derivative liabilities 33Gross settled:-------Receivable72,203112,51760,007--244,72711,350Payable(432,890)(443,252)(6,040)--(882,182)11,350Net settled8321,928736323-3,8193,819 172Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021At 31 December 2020 NoteUp to 1 month1 - 3 months 3 - 6 months 6 - 12 months Over 1 yearGross nominal inflow/ (outflow) Carrying amount In millions of nairaAssetsNon-derivative assetsCash and balances with central banks15132,626---1,370,6191,503,2451,503,245Treasury bills16100,588450,49651,227771,723-1,374,0341,393,421Assets pledged as collateral1747,84533,40933271,316461,220614,122298,530Due from other banks18364,522171,795---536,317532,377Loans and advances to customers 20353,027146,612126,997487,1931,662,1482,775,9772,639,797Investment securities 214,60846,5684,16845,414370,944471,702333,126Other ﬁnancial assets 25111,474-111-31,716143,301143,3011,114,690848,880182,8351,375,6463,896,6477,418,6986,843,797Derivative assets Trading: 19-------Gross settled98,19121,46316,589363,850-500,09334,634Net settled2,3775,1455911,749-9,8629,862100,56826,60817,180365,599-509,95544,496LiabilitiesNon-derivative liabilitiesCustomer's deposits281,867,22634,878545362,395,5934,298,2874,298,258Other ﬁnancial Liabilities29545,2231,1581,3501,43927,246576,416564,558On-lending facilities301,777330-244491,853494,204384,573Borrowings3149,250374,899164,506197,615102,773889,043874,090Debt securities issued32--1,5941,62144,59147,80643,1772,463,476411,265167,504201,4553,062,0566,305,7566,164,656Derivative liabilities Trading: 33-------Gross settled13,57921,46916,526--51,5741,562Net settled2,3315,0518201,313-9,5159,51415,91026,52017,3461,313-61,08911,076173FinancialsZenith Bank Plc Annual Report December 31, 2021The amounts in the table above have been compiled as follows.Type of financial instrumentBasis on which amounts compiledNon-derivative ﬁnancial liabilities and ﬁnancial assetsIssued ﬁnancial guarantee contractsDerivative ﬁnancial liabilities and ﬁnancial assetsUndiscounted cash ﬂows, which include estimated interest payments.Earliest possible contractual maturity. For issued ﬁnancial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called.Contractual undiscounted cash ﬂows. The amounts shown are the gross nominal inﬂows and outﬂows for derivatives that have simultaneous gross settlement (e.g. forward exchange contracts and currency swaps) and the net amounts for derivatives that are net settled.The Group’s expected cash ﬂows on some ﬁnancial assets and ﬁnancial liabilities vary signiﬁcantly from the contractual cash ﬂows. The principal diﬀerence is on demand deposits from customers which are expected to remain stable or increase.As part of the management of liquidity risk arising from ﬁnancial liabilities, the Group holds liquid assets comprising cash and cash equivalents, and debt securities issued by sovereigns, which can be readily sold to meet liquidity requirements. In addition, the Group maintains agreed lines of credit with other banks and holds unencumbered assets that are eligible for use as collateral with central banks (these amounts are referred to as the ‘Group’s liquidity reserves’).Residual contractual maturities of off-balance sheet exposures.Group At 31 December, 2021Carrying amount Less than 3 months 3 -6 months 6 - 12 months 1 to 5 Years More than 5 years In millions of Naira Financial guarantees Usance 195,3548,211119,99467,149--Letters of Credit 554,48655,399451,01947,782455-Performance bonds and Guarantees 364,63244,09957,28668,951109,70084,427Total1,114,472107,709628,299183,882110,15584,427 At 31 December, 2020Carrying amount Less than 3 months 3 -6 months 6 - 12 months 1 to 5 Years More than 5 years In millions of Naira Financial guarantees Usance 50,77041,6571148,999--Letters of Credit 172,90593,38910,98656,71011,819-Performance bonds and Guarantees 376,25274,78663,87184,28791,86391,863Total599,927209,83274,971149,996103,68291,863174Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021BankAt 31 December, 2021Carrying amount Less than 3 months 3 -6 months 6 - 12 months 1 to 5 Years More than 5 years In millions of Naira 299,445102,9379,6721,602-Financial guarantees 55,35714,03231,70878,29282,106Usance 195,3548,211119,99467,149--Letters of Credit 398,605462359,58138,562169-Performance bonds and Guarantees 335,83341,60450,74668,91689,97184,427Total929,79250,277530,321174,62790,14084,427At 31 December, 2020Carrying amount Less than 3 months 3 -6 months 6 - 12 months 1 to 5 Years More than 5 years In millions of Naira 299,445102,9379,6721,602-Financial guarantees 55,35714,03231,70878,29282,106Usance 49,56940,4561148,999--Letters of Credit 84,18368,70519415,284--Performance bonds and Guarantees 325,24974,29163,56239,00486,94861,444Total459,001183,45263,87063,28786,94861,4443.5 Fair value of financial assets and liabilitiesIFRS 7 speciﬁes a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reﬂect market data obtained from independent sources; unobservable inputs reﬂect the Group’s market assumptions. These two types of inputs have created the following fair value hierarchy.(i) Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.(ii) Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).(iii) Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market prices in its valuations where possible.175FinancialsZenith Bank Plc Annual Report December 31, 20213.5.a Classification of financial assets and liabilities and fair value hierarchy GroupThe table below sets out the Group’s classiﬁcation of each class of its ﬁnancial assets and liabilities and fair value heirachy.At 31 December, 2021In millions of Naira Note Carrying Value Total Fair valueLevel 1Level 2Level 3Assets Carried at FVTPL: Treasury bills 16 824,222824,222270,914553,308-Investment securities (FGN bonds) 21 22,33822,33816,5485,790-Derivative assets 19 56,18756,187-56,187-Asset pledged as collateral 17 234,687234,68733,340201,347-Carried at FVOCI : Equity securities (unquoted)2185,57485,574--85,574Debt securities21541,629541,629541,629--Carried at amortized cost: Treasury bills 16 940,723935,838599,325 336,513-Assets pledged as collateral 17157,907163,406161,2282,178-Investment securities 21 654,185655,481437,731217,750-Liabilities Carried at FVTPLDerivative liabilities 33 14,67414,674-14,674-Carried at Amortised costOn-lending facilities 30369,241369,241-369,241-Borrowings 31750,469750,469-750,469-Debt securities issued 3245,79946,65646,656--The carrying values of the following assets and liabilities are assumed to be their fair values:• Cash and balances with central banks• Due from other banks• Other ﬁnancial assets• Loans and advances to customers• Customers deposits• Other ﬁnancial liabilities176Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The table below sets out the Bank’s classiﬁcation of each class of its ﬁnancial assets and liabilities.31 December 2020In millions of Naira Note Carrying Value Total Fair valueLevel 1Level 2Level 3Assets Carried at FVTPL: Treasury bills 16 698,493698,493421,836276,657-Investment securities (FGN bonds) 21 49,27749,27749,277--Derivative assets 19 44,49644,496-44,496-Asset pledged as collateral 17 71,60271,60226,73744,865-Carried at FVOCI : Equity securities (Unquoted)21 79,97579,975--79,975Debt securities21392,150392,150-392,150-Carried at amortized cost: Treasury bills 16879,382893,72156,458837,263-Assets pledged as collateral17 226,928304,946282,35622,590-Loans and advances to customers202,779,0272,191,000---Investment securities21 475,514511,798392,520119,278-Liabilities Carried at FVTPL :Derivative liabilities 3311,07611,076-11,076-Carried at amortized cost:On-lending facilities 30384,573384,573-384,573-Borrowings 31870,080870,080-870,080-Debt securities issued 3243,17749,410---177FinancialsZenith Bank Plc Annual Report December 31, 2021BankThe table below sets out the Bank’s classiﬁcation of each class of its ﬁnancial assets and liabilities.At 31 December, 2021In millions of Naira Note Carrying Value Total Fair valueLevel 1Level 2Level 3Assets Carried at FVTPL: Treasury bills 16 823,891823,891270,914552,977-Investment securities (FGN bonds) 21 11,89711,89711,79998-Derivative assets 19 57,47657,476-57,476-Asset pledged as collateral 17 199,093199,09333,340165,753-Carried at FVOCI : Equity securities (unquoted)2185,57485,574--85,574Carried at amortized cost: Treasury bills 16 753,756748,633589,834158,799-Assets pledged as collateral 17157,908163,406161,2282,178-Investment securities 21 379,533377,323340,27437,049-Liabilities Carried at FVTPLDerivative liabilities 33 15,17015,170-15,170-Carried at Amortised costOn-lending facilities 30369,241369,241-369,241-Borrowings 31769,395769,395-769,395-Debt securities issued 3245,79946,65646,656--The carrying values of the following assets and liabilities are assumed to be their fair values:• Cash and balances with central banks• Due from other banks• Other ﬁnancial assets• Loans and advances to customers• Customers deposits• Other ﬁnancial liabilities178Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The table below sets out the Bank’s classiﬁcation of each class of its ﬁnancial assets and liabilities.31 December 2020In millions of Naira Note Carrying Value Total Fair valueLevel 1Level 2Level 3Assets Carried at FVTPL: Treasury bills 16 698,199698,199421,836276,363-Investment securities (FGN bonds) 21 44,93344,93344,933--Derivative assets 19 41,72941,729-41,729-Asset pledged as collateral 17 71,60271,60226,73744,865-Carried at FVOCI : Equity securities (Unquoted)21 79,97579,975-79,975-Carried at amortized cost: Treasury bills 16695,222709,56156,458653,103-Assets pledged as collateral17 226,928304,946282,35622,590-Loans and advances to customers202,639,7972,051,770---Investment securities21 208,218247,178127,900119,278-Liabilities Carried at FVTPL :Derivative liabilities 3311,07611,076-11,076-Carried at amortized cost:On-lending facilities 30384,573384,573-384,573-Borrowings 31874,090874,090-874,090-Debt securities issued 3243,17749,410---179FinancialsZenith Bank Plc Annual Report December 31, 20213.5.b Financial instruments measured at fair value and reconciliation of level 3 itemsGroup and BankIn millions of NairaAt 1 January 202063,680Transfer to level 2 due to availability of observable data 21(76,063)Gain recognised through other comprehensive income of equity investments16,295At 31 December, 20203,912Reconciliation of Level 3 items At 1 January 20213,912Transfer due to non-availability of observable data76,063Gain recognised through other comprehensive income of equity investments5,599At 31 December, 202185,574There was a transfer between fair value heirarchy during the year from level 2 to level 3. In prior period, the Bank’s investment in AFC was valued as a level 2 hierarchy because of the availability of observable market data arising from issue of AFC shares during that period. However, as there were no additional issue during 2021 ﬁnancial year, hence the absence of observable market data, the Bank valued its investment in AFC as a level 3 heirarchy.3.5.c Level 3 fair value measurements(i) Unobservable inputs used in measuring fair valueThe table below sets out information about signiﬁcant unobservable inputs used at 31 December 2021 and 31 December 2020 in measuring ﬁnancial instruments categorized as level 3 in the fair value hierarchyType of financialinstrumentFair values at 31 December, 2021ValuationtechniqueSignificantunobservable inputUnquoted equityinvestmentN85.57 billionEquity DCF model.- Cost of equity.- Terminal growth rate.Risk premium is determined by adding country risk premium to the product of market premium and equity beta.(ii) The effect of unobservable inputs on fair value measurementsAlthough the Group believes that its estimates of fair value are appropriate, the use of diﬀerent methodologies or assumptions could lead to diﬀerent measurements of fair value. For fair value measurement in Level 3, changing one or more of the assumptions would have the following eﬀects.At 31 December 2021 The lowest and highest values if the cost of equity and terminal growth rate decrease or increase by 1% and 0.25%respectivelyIn millions of NairaLowestvalueHighestvalueActual valueAFC76,07687,83581,588FMDQ2,0892,3862,257NIBSS1,5061,7081,602UPSL697572The table below shows the eﬀect of changes in cost of equity and terminal growth rate on other comprehensive income.In millions of Naira31-Dec-2131-Dec-20Eﬀect of 1% decrease in cost of equity and 0.25% increase in terminal growth rate1,12655Eﬀect of 1% increase in cost of equity and 0.25% decrease in terminal growth rate(1,099)(53)3.5.d Fair valuation methods and assumptions(i) Cash and balances with central banks Cash and balances with Central banks represent cash held with Central banks of the various jurisdictions in which the Group operates. The fair value of these balances is their carrying amounts.(ii) Due from other banks Due from other banks represents balances with local and correspondence banks, inter-bank placements and items in the course of collection. The fair value of the current account balances, ﬂoating placements and overnight deposits are their carrying amounts.180Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(iii) Treasury bills, assets pledged as collateral and investment securities Treasury bills represent short term instruments issued by the Central banks of the jurisdiction where the Group has operations. The fair value of treasury bills and bonds are determined with reference to quoted prices (unadjusted) in active markets for identical assets. The fair values of quoted equity securities are determined by reference to quoted prices (unadjusted) in active markets for identical instruments. The fair value of the unquoted equity is determined on the basis of the discounted cashﬂow methodology which takes into account the discounted stream of estimated future income and free cashﬂows of the investment. Subsequently, the percentage holding of the Bank is then applied on the derived company value. Where available the fair value of unquoted equity is determined using recent market observable data.(iv) Loans and advances to customers Loans and advances are carried at amortized cost net of provision for impairment. The estimated fair value of loans and advances represents the discounted amount of amortised cost balance net of provision for impairment. The balance is discounted at current market rates to determine the fair value.(v) Other financial assets/financial liabilities Other ﬁnancial assets/ﬁnancial liabilities represent monetary assets, which usually have a short recycle period and as such, whose fair values approximate their carrying amount.(vi) Customer deposits, on-lending and borrowings The estimated fair value of deposits with no stated maturity, which includes non-interest-bearing deposits, is the amount repayable on demand.(vii) Derivatives The Group uses widely recognised valuation models for determining the fair value of common and simple ﬁnancial instruments, such as interest rate and currency swaps that use only observable market data and require little management judgement and estimation. Observable prices or model inputs are usually available in the market for listed debt and equity securities, exchange-traded derivatives and simple OTC derivatives such as interest rate swaps. Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determining fair values. Availability of observable markets prices and inputs varies depending on the products and markets and is prone to changes based on speciﬁc events and general conditions in the ﬁnancial markets.3.6 Capital managementThe strategy for assessing and managing the impact of our business plans on present and future regulatory capital forms an integral part of the Group’s strategic plan. Speciﬁcally, the Group considers how the present and future capital requirements will be managed and met against projected capital requirements. This is based on the Group’s assessment and against the supervisory/regulatory capital requirements taking account of the Group business strategy and value creation to all its stakeholders.The Group prides itself in maintaining very healthy capital adequacy ratio in all its areas of operations. Capital levels are determined either based on internal assessments or regulatory requirements. The Group maintained capital levels above the regulatory minimum prescribed in all its operating jurisdictions.The Group’s Capital Adequacy is reviewed regularly to meet regulatory requirements and standard of international best practices. The Group adopts and implements the decisions necessary to maintain the capital at a level that ensures the realisation of the business plan with a certain safety margin.The Group undertakes a regular monitoring of capital adequacy and the application of regulatory capital by deploying internal systems based on the guidelines provided by the Central Bank of Nigeria (CBN) and the regulatory authorities of the subsidiaries for supervisory purposes.The Group has consistently met and surpassed the minimum capital adequacy requirements applicable in all areas of operations.Most of the Group’s capital is Tier 1 (Core Capital) which consists of essentially share capital and reserves created by appropriations of retained earnings.Banking subsidiaries in the Group, which are not incorporated in Nigeria, are directly regulated and supervised by their local banking regulators and are required to meet the capital requirement directive of the local regulatory jurisdiction. The Group meet all capital requests from these regulatory 181FinancialsZenith Bank Plc Annual Report December 31, 2021jurisdictions and determines the adequacy based on its expansion strategies and internal capital assessments.The Group’s capital plan is linked to its business expansion strategy, which anticipates the need for growth and expansion in its branch network and IT infrastructure. The capital plan suﬃciently meets regulatory requirements as well as providing adequate cover for the Group’s risk proﬁle. The Group’s capital adequacy remains strong and the capacity to generate and retain reserves continues to grow.The Group will only seek additional capital where it ﬁnds compelling business need for it and with the expectation that the returns would adequately match the eﬀorts and risks undertaken.The following sources of funds are available to the Group to meet its capital growth requirements:a. Proﬁt from Operations: The Group has consistently reported good proﬁt, which can easily be retained to support the capital base.b. Issue of Shares: The Group has successfully assessed the capital market to raise equity and debt. With such experiences, the Group is conﬁdent that it can access the capital market when the need arises.c. Bank Loans (long term/short term): In 2014 ﬁnancial year, Zenith Bank commenced capital computations in accordance with Basel II standard under the guidelines issued by the Central Bank of Nigeria. The guidelines require capital adequacy computations based on the Standardized Measurement Approach for Credit Risk and Market Risk while Basic Indicator Measurement Approach was advised for Operational Risk. The capital requirement for the Bank has been set at 15% and an addition of 1% as a Systemically Important Bank (SIB) in accordance with the guidelines.The table below shows the computation of the Group’s capital adequacy ratio for the year ended 31 December 2021 as well as the 31 December 2020 comparatives. During those two periods, the individual entities within the Group complied with all of the externally imposed capital requirements to which they are subject.182Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The Group and Bank’s capital adequacy ratio are above the minimum statutory requirement.GroupBank31-Dec-2131-Dec-2031-Dec-21 31-Dec-20In millions of Naira Basel II Basel II Basel IIBasel IITier 1 capitalShare capital 15,69815,69815,69815,698Share premium 255,047255,047255,047255,047Statutory reserves 275,993231,307243,414208,443SMEIES reserve 3,7293,7293,7293,729Retained earnings 607,203521,293466,249382,292Total qualifying Tier 1 capital 1,157,6701,027,074984,137865,209Deferred tax assets (1,837)(5,786)-(4,733)Intangible assets (25,001)(16,243)(23,542)(14,699)Investment in capital of ﬁnancial subsidiaries--(17,313)(17,313)Unsecured lending to subsidiaries within the same group--14,343-Adjusted Total qualifying Tier 1 capital1,130,8321,005,045957,625828,464Tier 2 capital Other comprehensive income (OCI) 99,00287,15945,62240,023Total qualifying Tier 2 capital 99,00287,15945,62240,023Investment in capital and ﬁnancial subsidiaries--(17,313)(17,313)Net Tier 2 Capital 99,00287,15928,30922,710Total regulatory capital 1,229,8341,092,204985,934851,174Risk-weighted assets Credit risk 4,756,2673,734,2224,053,986 3,250,187Market risk 154,846175,62563,90889,635Operational risk 1,042,189921,168914,227813,499Total risk-weighted assets 5,953,3024,831,0155,032,121 4,153,321Risk-weighted Capital Adequacy Ratio (CAR)21 %23 %20 %20 %3.7 Operational riskOperational Risk is the risk of loss resulting from inadequate and /or failed internal processes, people and systems or from external events, including legal risk and any other risks that is deemed ﬁt on an ongoing basis but exclude reputation and strategic risks. Operational risk exists in all products and business activities.183FinancialsZenith Bank Plc Annual Report December 31, 2021The Group has a broad Operational Risk management framework which deﬁnes the set of activities designed to proactively identify, assess and manage all operational risk components by aligning the people, technology and processes with best risk management practices towards enhancing stake holders’ value and sustaining industry leadership.Operational risk objectives include the following:a. To provide clear and consistent direction in all operations of the group;b. To provide a standardised framework and appropriate guidelines for creating and managing all operational risk exposures; andc. To enable the group, identify and analyse events (both internal and external) that impact on its business.The Operational Risk unit constantly conducts reviews to identify and assess the operational risk inherent in all material products, activities, processes and systems. It also ensures that all business units within the Bank monitor their operational risks using set standards and indicators. Signiﬁcant issues and exceptions are reported to Risk Management and are also identiﬁed by the independent risk function for discussion at the risk management committee.Disaster recovery procedures, business continuity planning, self-compliance assurance and internal audit also form an integral part of our operational risk management process.The Bank uses the following tools and methodologies in the implementation of its Operational risk Management.Risk and Control Self-Assessment (RCSA) - This is the process whereby risks that are inherent in Business Units strategies, objectives and activities are identiﬁed and the eﬀectiveness of the controls over those risks evaluated and monitored bank wide. The Risk and Control Self-Assessment process address risks and controls comprehensively. It incorporates the process for evaluating and managing all aspects of risk that is inherent in how and where the business is done.Key Risk Indicators (KRI) - Key Risk Indicator is measures which indicate the risk proﬁle of the bank and any change thereof. KRIs act as early warning indicators and are used to monitor and predict potential operational loss events. KRIs are used in conjunction with system of thresholds. When the threshold or tolerance level for any KRI is breached, it triggers review, escalation or management action. Risk indicators help keep the operational risk management dynamic and risk proﬁle current.Loss Incident Reporting – Loss incidents are reported by all business units using the Loss incident reporting template. The discipline of collecting loss data is not only needed to understand the dimensions of risk the Bank faces but also used to motivate staﬀ to consider and more actively control key elements of risk. The Bank-wide data collection promotes a dialogue within the Bank about determining the major operational risk exposures and reinforces more qualitative eﬀorts to manage operational risk within each of the business lines.Operational Risk Capital Computation – The bank, based on Central Bank of Nigeria guideline, adopted basic indicator approach (BIA) in the calculation of its Operational Risk Capital adequacy. The estimated operational Risk Capital Charge is reported to the Board and management for capital planning and decision making.Business Continuity Management (BCM)In line with ISO 22301 Standards, the bank has a robust documented Business Continuity Plan. The primary objective of this plan is to protect the bank in the event of an undesired event in the form of ﬁre outbreak, ﬂood, theft or robbery, thunderstorm, unexpected breakdown of systems, networks, equipment, etc or any other form of disaster. This plan ensures that the bank recover from disasters resulting in the partial or total loss of IT infrastructure and applications to normal business operations, in a timely, eﬀective and eﬃcient manner. The business continuity test is conducted at least once in a year. The process is driven at a committee level but ably championed by the Risk Management Group.Operational Risk ReportingPeriodic Operational Risk report highlighting key Operational risk identiﬁed are rendered to the Board, Management and other relevant stakeholders for awareness and prompt implementation of mitigation plans.3.8 Strategic riskStrategic risk is a possible source of loss that might arise from the pursuit of an unsuccessful business plan. Strategic risk examines the impact of design and implementation of business models and decisions on earnings and capital as well as the organisation’s responsiveness to industry changes. Processes and procedures have been established to ensure that the right models are employed and appropriately communicated to all decision makers in the Group on issues relating to strategic risk management. This has essentially driven the Group’s sound banking culture and performance record to date.184Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 20213.9 Legal riskLegal risk is deﬁned as the risk of loss due to defective contractual arrangements, legal liability (both criminal and civil) incurred during operations by the inability of the organisation to enforce its rights, or by failure to address identiﬁed concerns to the appropriate authorities where changes in the law are proposed.The Group manages this risk by monitoring new legislation, creating awareness of legislation among employees, identifying signiﬁcant legal risks as well as assessing the potential impact of these.Legal risks management in the Group is also being enhanced by appropriate product risk review and management of contractual obligations via well documented Service Level Agreements and other contractual documents. 3.10 Reputational riskReputational risk is deﬁned as the risk of indirect losses arising from a decline in the bank’s reputation among one or multiple bank stakeholders. The risk can expose the Group to litigation, ﬁnancial loss or damage to its reputation. The Group’s reputation risk management philosophy involves anticipating, acknowledging and responding to changing values and behaviours on the part of a range of stakeholders. Accordingly, the following are the roles and responsibilities:a. Board and senior management oversee the proper set-up and eﬀective functioning of the reputational risk management framework;b. Enterprise Risk Management Policy/Strategy (ERSP) is responsible for supporting the Board and senior management in overseeing the implementation of reputational risk management framework; andc. Corporate Communications is responsible for managing both the internal and external communications that may impact the reputation of the Bank. The process of reputation risk management within the Bank encompasses the following steps:i. Identiﬁcation: Recognizing potential reputational risk as a primary and consequential risk;ii. Assessment: Conducting qualitative assessment of reputational risk based on the potential events that have been identiﬁed as reputational risk;iii. Monitoring: Undertaking frequent monitoring of the reputational risk drivers;iv. Mitigation and Control: Establishing preventive measures and controls for management of reputational risk and tracking mitigation actions;v. Independent review: Subjecting the reputational risk measures and mitigation techniques to regular independent review by internal auditors and/or external auditors; andvi. Reporting: Generating regular, action-oriented reports for management review.3.11 Taxation riskTaxation risk refers to the risk that new taxation laws will adversely aﬀect the Group and/or the loss as a result of non- compliance with tax laws.The taxation risk is managed by monitoring applicable tax laws, maintaining operational policies that enable the Group to comply with taxation laws and, where required, seeking the advice of tax specialists.3.12 Regulatory riskThe Group manages the regulatory risk to which it is potentially exposed by monitoring new regulatory rules and applicable laws, and identifying signiﬁcant regulatory risks. The Group strives to maintain appropriate procedures, processes and policies that enable it to comply with applicable regulation.The Group maintains zero tolerance posture for any regulatory breach in all its area of operations.4. Critical accounting estimate and judgementsThe Group makes estimates and assumptions that aﬀect the reported amounts of assets and liabilities within the next ﬁnancial year. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.185FinancialsZenith Bank Plc Annual Report December 31, 20214.1 Impairment losses on loans and advancesMeasurement of the expected credit loss allowance for financial assets.The measurement of the expected credit loss allowance for ﬁnancial assets measured at amortised cost and FVOCI is an area that requires the use of complex models and signiﬁcant assumptions about future economic conditions and credit behaviour (e.g. the likelihood of customers defaulting and the resulting losses). Explanation of the inputs, assumptions and estimation techniques used in measuring ECL is further detailed in note 3.2.10 to 3.2.17.A number of signiﬁcant judgements are also required in applying the accounting requirements for measuring ECL, such as:i Input assumptions applied in estimating probability of default, loss given default and exposure at default;ii Incorporation of forward-looking information;Detailed information about the judgements and estimates made by the Group in the above areas is set out in note 3.2.10 to 3.2.17.The table below shows the impact on expected credit losses of changes in macroeconomic risk drivers and how credit losses responds to 10% decrease and increase in macro-variables.31 December 2021In millions of Naira10% increaseNo change10% decreaseGross exposure3,237,9733,237,9733,237,973Loss allowance139,774138,521137,1484.2 Determining fair valuesThe determination of fair value for ﬁnancial assets and liabilities for which there is no observable market prices requires the use of valuation techniques as described in note 3.5(c). For ﬁnancial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks aﬀecting the speciﬁc instrument.The Group measures fair values using the following fair value hierarchy that reﬂects the signiﬁcance of the inputs used in making the measurements.i) Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.ii) Level 2: Valuation techniques based on observable inputs, either directly - i.e, as prices - or indirectly - i.e derived from prices. This category includes instruments such as forward contracts, swaps etc. valued using; quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all signiﬁcant inputs are directly or indirectly observable from market data.iii) Level 3: Valuation techniques using signiﬁcant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a signiﬁcant eﬀect on the instrument’s valuation. This category includes instrument that are valued based on quoted prices for similar instruments where signiﬁcant unobservable adjustments or assumptions are required to reﬂect diﬀerences between the instruments. See note 3.5c for sensitivity analysis on unquoted equity investments.4.3 Deferred Tax Assets and LiabilitiesThe deferred tax assets and liabilities recognized by the Group is dependent on the availability of taxable proﬁt in the foreseeable future to utilize the deferred tax. The Group reviews the carrying amount of the deferred tax at the end of each reporting period and recognizes an amount such that it is probable that suﬃcient taxable proﬁt will be available which the Group can use the beneﬁt therefrom.In determining the deferred tax assets recognized in the ﬁnancial statements, the Group has applied judgement in estimating the deferred tax recoverable in the foreseeable future. This involves the estimation of future income and expenses, and the consideration of non-taxable income and disallowable expenses in order to arrive at the future taxable proﬁt / loss.186Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 20215. Segment analysisThe Group’s strategic divisions oﬀer diﬀerent products and services, and are managed separately based on the Group’s management and internal reporting structure.The Group’s operations are primarily organised on the basis of its products and service oﬀerings in Nigeria, while the banking operations outside Nigeria are reported separately for Africa and Europe. The following summary describes each of the Group’s reportable segments:(a) Corporate, Public, Retail Banking, Pension Custodial services and Nominee - Nigeria This segment provides a broad range of banking and pension custodial services to a diverse group of corporations, ﬁnancial institutions, investment funds, governments and individuals.(b) Outside Nigeria Banking - Africa and Europe These segments provide a broad range of banking services to a diverse group of corporations, ﬁnancial institutions, investment funds, governments and individuals outside Nigeria. The reportable segments covers banking operations in other parts of Africa (Ghana, Sierra Leone and The Gambia) and in Europe (the United Kingdom) respectively. Segment proﬁt before tax, as included in internal management reports reviewed by the Group’s Executive Management, is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate within the same industries. Inter-segment pricing is determined on arm’s length basis. No single external customer accounts for 10% or more of the Group’s revenue. The measurement policies the Group uses for segment reporting are the same as those used in its ﬁnancial statements. There have been no changes from prior periods in the measurement methods used to determine reported segment proﬁt or loss.187FinancialsZenith Bank Plc Annual Report December 31, 2021Information regarding each reportable segment is included in the tables below. The tables also show the reconciliation of the amounts in the statement of proﬁt or loss and statement of ﬁnancial position for the reportable segments to the amounts in the Group’s statement of proﬁt or loss and statement of ﬁnancial position.NigeriaOutside NigeriaIn millions of Naira31 December, 2021Corporate retail and pensions custodian servicesAfricaEuropeTotal reportable segmentsEliminationsConsolidatedInterest and similar income342,51768,95516,309427,781(184)427,597Total income on fee and commission120,6488,5903,646132,884-132,884Other operating income53,5281,599(1,101)54,026(16,432)37,594Trading gains171,469(4,447)461167,483-167,483Total revenue688,16274,69719,315782,174(16,616)765,558Revenue:Derived from external customers671,54174,70219,315765,558-765,558Derived from other business segments16,621(5)-16,616(16,616)-Total revenue688,16274,69719,315782,174(16,616)765,558Interest expense(82,723)(22,152)(2,102)(106,977)184(106,793)Impairment loss on ﬁnancial assets(56,167)(2,033)(1,732)(59,932)-(59,932)Depreciation charge(23,316)(1,701)(288)(25,305)-(25,305)Amortisation charge(3,195)(312)(272)(3,779)-(3,779)Fees and commission expense(27,975)(951)-(28,926)-(28,926)Admin and operating expenses(228,877)(20,302)(9,996)(259,175)(1,274)(260,449)Proﬁt before tax265,90927,2464,925298,08017,706280,374Tax expense(26,033)(8,937)(846)(35,816)-(35,816)Profit after tax239,87618,3094,079262,26417,706244,558Zenith Bank Plc Annual Report December 31, 2021Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021188NigeriaOutside NigeriaIn millions of Naira31 December, 2021Corporate retail and pensions custodian servicesAfricaEuropeTotal reportable segmentsEliminationsConsolidatedExpenditure on non-current assets47,8053,48420551,494-51,494NigeriaOutside NigeriaIn millions of Naira31 December, 2021Corporate retail and pensions custodian servicesAfricaEuropeTotal reportable segmentsEliminationsConsolidatedTotal assets7,901,589688,0401,218,8149,808,443(360,600)9,447,843Other measures of assets:Loans and advances to customers3,099,567109,003176,9543,385,524(29,796)3,355,728Treasury bills1,583,253181,692-1,764,945-1,764,945Investment securities498,235180,567624,9241,303,726-1,303,726Total liabilities6,825,424564,8971,103,8328,494,153(325,972)8,168,181Other measures of liabilitiesCustomer deposits5,169,199497,6651,097,4516,764,315(292,261)6,472,054Borrowings769,39510,869-780,264(29,795)750,469NigeriaOutside NigeriaIn millions of Naira31 December, 2020Corporate retail and pensions custodian services AfricaEuropeTotal reportable segmentsEliminationsConsolidatedInterest and similar income345,16361,72717,522424,412(3,599)420,813Total income on fee and commission91,7208,4463,058103,224-103,224Other operating income50,4564,434(555)54,335(3,600)50,735Trading gains118,601683,009121,678-121,678Total revenue605,94074,67523,034703,649(7,199)696,450Revenue:Derived from external customers601,60471,81223,034696,450-696,450Derived from other business segments4,3362,863-7,199(7,199)-Total revenue605,94074,67523,034703,649(7,199)696,450Interest expense(102,111)(18,892)(3,727)(124,730)3,599(121,131)Impairment loss on ﬁnancial assets(37,277)(734)(1,523)(39,534)-(39,534)Depreciation charge(22,817)(1,876)(432)(25,125)-(25,125)Amortisation charge(2,918)(231)(388)(3,537)-(3,537)Admin and operating expenses(222,519)(18,986)(9,357)(250,862)(400)(251,262)Proﬁt before tax218,29833,9567,607259,8614,000255,861Tax expense(14,404)(9,379)(1,513)(25,296)-(25,296)Profit after tax203,89424,5776,094234,5654,000230,565FinancialsZenith Bank Plc Annual Report December 31, 2021189NigeriaOutside NigeriaIn millions of Naira31 December, 2020Corporate retail and pensions custodian servicesAfricaEuropeTotal reportable segmentsEliminationsConsolidatedExpenditure on non-current assets29,4672,38140132,24932,249Total assets7,153,478605,879920,5228,679,879(198,607)8,481,272Other measures of assets: Loans and advances to customers2,639,89776,03863,0922,779,027-2,779,027Treasury bills1,393,476184,399---1,577,875Investment securities359,134172,327465,455--996,916Total liabilities6,222,600494,943810,2337,527,776(163,977)7,363,799Other measures of liabilitiesCustomer deposits4,298,258396,874644,7795,339,911-5,339,911Borrowings874,090--874,090(4,010)870,080190Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021GroupBankIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-206. Interest and similar incomeLoans and advances to customers292,224250,812272,942236,064Placement with banks and discount houses6,76626,3981,89825,205Treasury bills40,42653,79719,52031,147Promissory note1,3447,7421,3417,742Commercial papers168553168553Government and other bonds86,66981,51144,51941,781427,597420,813340,388342,492Interest and similar income represents interest income on ﬁnancial assets measured at amortised cost.Interest income accrued on impaired ﬁnancial assets amount to N6,505 million and N6,505 million (31 December 2020: N6,016 million and N3,644 million) for Group and Bank respectively.7. Interest and similar expenseCurrent14,29229,6577,14826,997Savings accounts16,65322,13016,34821,888Time deposits29,37729,27414,06110,806Borrowed funds43,04436,65842,27639,616Leases3,4273,4122,8852,804106,793121,13182,718102,111Total interest expense is calculated using the eﬀective interest rate method reported above and does not include interest expense on ﬁnancial liabilities carried at fair value through proﬁt or loss.8. Impairment loss/(write back) on financial and non-financial instrumentsECL on financial instruments:Loans and advances( see note 3.2.18)48,87337,43948,35735,495Investment securities (see note 3.2.18)2,993217(90)217Treasury Bills (see note 3.2.18)(781)972(281)659Other ﬁnancial assets (see note 3.2.18)7,7811,3667,7891,326Due from other Banks (see note 3.2.18)666(83)-(83)Assets pledged as collateral (see note 3.2.18)(158)286(158)286Total ECL on ﬁnancial instruments 59,37440,19755,61737,900Impairment (credit)/charge on non-financial instruments:Oﬀ balance sheet (see note 3.2.18)784(706)784(706)Other non ﬁnancial assets (see note 25)(226)43(226)4359,93239,53456,17537,237191FinancialsZenith Bank Plc Annual Report December 31, 2021GroupBankIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-209. Net income on Fee and commissionCredit related fees18,05413,91313,6169,110Commission on turnover1,6132,491--Account maintenance fee31,39021,98830,86721,988Income from ﬁnancial guarantee contracts issued8,8946,8026,6296,300Fees on electronic products37,47027,07835,44325,559Foreign currency transaction fees and commission3,2982,1352,5901,685Asset based management fees8,2767,612--Auction fees income517524517524Corporate ﬁnance fees18614811892Foreign withdrawal charges9,1298,0619,1298,061Commissions on agency and collection services14,05712,47213,25111,059Total fee and Commission income132,884103,224112,16084,378Fees and commission expense(28,926)(23,892)(27,975)(22,961)103,95879,33284,18561,417The fees and commission income reported above excludes amount included in determining eﬀective interest rates on ﬁnancial assets that are not carried at fair value through proﬁt or loss.Total fee and commission income recognised at a point in time amount to N91,291 million and N71,092 million for Group and Bank (December 31, 2020: N70,556 million and N52,446 million) respectively while an amount of N41,593 million and N41.068 million (December 31, 2020: N32,669 million and N31,932 million) was recognised over the year.10. Other operating incomeDividend income from equity investments (see note a below)2,7541,70719,1865,307Gain on disposal of property and equipment (see note 44(vii))7834769348Income on cash handling999306383193Loan recovery (see note c below)7,9754,0437,6164,043Gain on disposal of ﬁnancial instrument (see note d below)251891-891Foreign currency revaluation gain (See note b below)25,53743,44126,01239,66837,59450,73553,26650,450(a) Dividend income from equity investments represent dividend received from subsidiaries of N16,432 million and N2,754 million received from other equity instruments held for strategic purposes and for which the Group has elected to present the fair value and loss in other comprehensive income.(b) Foreign currency revaluation gain represent unrealised gains from the revaluation of foreign currency-denominated assets and liabilities held in the non-trading books.(c) This represents amount recovered for previously written-oﬀ facilities. The amount is recognised on a cash basis only.192Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(d) This represents gain on one-oﬀ disposal of debt security measured at amortised cost and equity investment not designated as FVTOCI.11. Trading gainsGain/(loss) on other trading books42,438(18,735)46,368(18,735)Gain on treasury bills FVTPL127,613123,097127,556123,029(Loss)/gain on bonds FVTPL(3,232)14,448(3,119)11,439Interest income on trading bonds6642,8686642,868167,483121,678171,469118,601Included in gain/(loss) on other trading books is a net gain on derivatives instruments of N42.60 and N42.31 billion for Group and Bank respectively (31 December 2020: Group and Bank N30.65 billion).GroupBankIn millions of Naira31-Dec-21 31-Dec-20 31-Dec-21 31-Dec-20 12. Operating expensesDirectors' emoluments (see note 37 (b))1,6631,4121,3621,213Auditors' remuneration1,060786500380Deposit insurance premium17,27314,40517,27314,405Professional fees5,3474,3384,4583,747Training and development1,5881,1911,4191,057Information technology28,71620,44027,54019,572Lease expense9856644613Advertisement7,1007,6566,9197,411Outsourcing services14,77311,50014,75411,500Bank charges7,7256,6356,7296,259Fuel and maintenance20,65617,77816,80414,555Insurance2,3471,8651,9901,702Licenses, registrations and subscriptions4,1426,4963,3795,815Travel and hotel expenses2,6281,8831,4171,102Printing and stationery2,7422,5801,9601,872Security and cash handling4,7663,9804,2653,545Fines & Penalties (see note 42)411411Donations4,4503,4144,3723,285AMCON levy37,92030,94837,92030,948Telephone and postages7,1893,8666,6253,435Corporate promotions4,6984,1794,5514,077Others2,7921,8231,570724180,564147,850165,857136,628For the year ended 31 December 2021 an amount of N985 million and N46 million for Group and Bank (December 31, 2020: N664 million and N13 million) respectively represent the amount of straight line amortisation on short term lease in which the Group/Bank has applied the recognition exception.193FinancialsZenith Bank Plc Annual Report December 31, 2021The Bank paid the external auditors’ professional fees for the provision of non-audit services. The total amount of non-audit services provided to the external auditors during the year was N137 million. These non-audit services were for assessment of risk management practices (N69.9 million), assessment of compliance with whistle blowing guidelines (N7.9 million), review of the Bank’s corporate governance (N45.2 million), sustainability assurance (N10.8 million), and induction for new directors (N3.2 million). These services in the Bank’s opinion, did not impair the independence and objectivity of the external auditors.The Group auditors did not engage in any non-audit service for any of the Bank’s subsidiaries. The bank paid a total of N600 million as contribution to the industrial training fund.GroupBankIn millions of Naira31-Dec-21 31-Dec-2031-Dec-21 31-Dec-2013. Taxation(a) Major components of the tax expenseIncome tax expense Corporate tax 12,22313,5571,905-Minimum tax expense-1,479-1,479Information technology tax2,6262,1032,5462,103Tertiary Education tax2,7162,0722,5982,072Police trust fund levy13111311NASENI Levy643-643-National Fiscal Stabilization Levy & Financial Sector Recovery2,043---Current income tax20,26419,2227,7055,665Deferred tax expense:Origination of temporary diﬀerences15,5526,07416,3296,490Income tax expense 35,81625,29624,03412,155Total tax expense35,81625,29624,03412,155194Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(b) Reconciliation of eﬀective tax rateGroupBankIn millions of Naira31-Dec-21 31-Dec-2031-Dec-21 31-Dec-20Proﬁt before income tax280,374255,861257,167210,007Tax calculated at the weighted average Group rate of 30% (2020: 30%)84,11276,75877,15063,002Tax effect of adjustments on taxable incomeEﬀect of tax rates in other jurisdictions(1,786)---Non-deductible expenses40,20852,28634,30350,402Tax exempt income(80,934)(85,396)(80,274)(83,313)Balancing charge4614346143Tax loss utilised(8,114)(9,506)(8,533)(9,506)Minimum tax-1,479-1,479Information technology levy2,6262,1032,5462,103NASENI643-643-Capital allowance utilised(21,298)(20,728)(20,787)(20,728)Tertiary education tax2,7052,0722,5982,072National Fiscal Stabilization Levy & Financial Sector Recovery Levy2,043---Origination of temporary diﬀerences15,5526,07416,3296,490Police trust fund levy13111311Total tax expense35,81625,29624,03412,155In millions of Naira31-Dec-21 31-Dec-20 31-Dec-21 31-Dec-20(c) The movement in the current income tax payable balance is as follows:At start of the year 11,6909,7119,1176,627Tax paid (15,045)(17,243)(2,581)(3,175)Current income tax charge (see note 13a) 20,26419,2227,7055,665At end of the year 16,90911,69014,2419,117195FinancialsZenith Bank Plc Annual Report December 31, 202114. Earnings per shareBasic earnings per shareBasic earnings per share (EPS) is calculated by dividing the net proﬁt attributable to shareholders by the weighted average number of ordinary shares in issue during the year. Where a stock split or bonus share issue has occurred, the number of shares in issue in the prior year is adjusted to achieve comparability.GroupBankIn millions of Naira31-Dec-2131-Dec-2031-Dec-21 31-Dec-20Proﬁt attributable to shareholders of the Bank (N'million) 244,402230,374233,133197,852Number of shares in issue at end of the year (millions) 31,39631,39631,39631,396Weighted average number of ordinary shares in issue (millions)31,39631,39631,39631,396Basic and diluted earnings per share (Naira) 7.787.347.436.30Basic and diluted earnings per share are the same, as the Bank has no potentially dilutive ordinary shares.15. Cash and balances with central banks Cash and balances with central banks consist of: Cash 84,077104,54455,89966,834Operating accounts and deposits with Central Banks 73,38975,80266,56665,792Mandatory reserve deposits with central bank (cash reserve)1,250,2081,330,7331,194,5121,289,930Special Cash Reserve Requirement 80,68980,68980,68980,6891,488,3631,591,7681,397,6661,503,245Current 157,466221,149122,465132,626Non current 1,330,8971,370,6191,275,2011,370,6191,488,3631,591,7681,397,6661,503,24516 Treasury bills Treasury bills (FVTPL)824,222698,493823,891698,199Treasury bills (Amortized cost)941,538880,957754,151695,898ECL Allowance on treasury bills (Amortized cost) (see note 3.2.18)(815)(1,575)(395)(676)1,764,9451,577,8751,577,6471,393,421Classified as:Current 1,764,9451,577,8751,577,6471,393,4211,764,9451,577,8751,577,6471,393,421Treasury bills measured at fair value through proﬁt and loss are held for trading.196Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021GroupBankIn millions of Naira31-Dec-2131-Dec-2031-Dec-21 31-Dec-20The following treasury bills have maturities less than three months and are classiﬁed as cash and cash equivalents for purposes of the statements of cash ﬂows (Note 41).315,795396,924230,213396,924315,795396,924230,213396,92417. Assets pledged as collateralTreasury bills pledged as collateral-1,962-1,962Bonds pledged as collateral139,458117,290103,864117,290Treasury bills under repurchase agreement253,334122,870253,334122,870Bonds under repurchase agreement-56,763-56,763ECL Allowance on assets pledged and under repo(198)(355)(198)(355)392,594298,530357,000298,530Included in assets pledged as collateral for Group/Bank are treasury bills at amortised cost of N54,241 million and bonds at amortised cost of N103,864 million (31 December 2020: treasury bills N53,231 million and bonds N174,052 million). All other assets pledged as collateral for Group/Bank are treasury bills at fair value.Some of the balances are restricted (see note 3.4.3c).The assets pledged as collateral were given to the counter parties without transferring the ownership to them. These are held by the counterparty for the term of the transaction being collateralized. These assets were pledged as collateral to Nigeria Interbank Settlement System (NIBBS) N3.63 billion (31 December 2020: N3.62 billion), Federal Inland Revenue Services N8.18 billion (31 December 2020: N8.14 billion), V-Pay N45.46 million (31 December 2020: N45.24 million), Interswitch Limited N2.18 billion (31 December 2020: N2.17 billion), the Bank of Industry (Nigeria) N32.89 billion (31 December 2020: N35.20 billion), E- Tranzact N45.46 million (31 December 2020: N45.22 million), CBN Real Sector Support Fund (RSSF) N22.22 billion (31 December 2020: N39.74 billion),CBN settlement clearing N14.78 billion (31 December 2020: N14.59 billion), System Specs/REMITA N2.27 billion (31 December 2020: N2.68 billion) and Financial Market dealers Quotation (FMDQ) N17.62 billion (December 31, 2020: N27.61 billion), pension funds management companies, institutional investors and high net worth customers related to Zenith Bank Ghana totals N35.59 billion.Assets exchanged under repurchase agreement as at 31 December, 2021 are with the following counterparties (note 31):CounterpartiesCarrying valueCarrying valueCarrying valueCarrying valueof assetof liabilityof assetof liabilityABSA (see note 31)113,80984,922113,80984,922JP Morgan Chase (see note 31)50,47731,80850,47731,808First Abu Dhabi Bank (see note 31)61,38842,44861,38842,448Mashreq Bank (see note 31)27,66063,73927,66063,739253,334222,917253,334222,917197FinancialsZenith Bank Plc Annual Report December 31, 2021Assets exchanged under repurchase agreement as at 31 December, 2020 are with the following counterparties (note 31):CounterpartiesCarrying valueCarrying valueCarrying valueCarrying valueof assetof liabilityof assetof liabilityABSA110,497100,457110,497100,457Standard Bank London32,08520,15932,08520,159Mashreq Bank37,05128,11337,05128,113179,633148,729179,633148,729Classified as:Current253,306129,299253,306129,299Non-current139,288169,231103,695169,231392,594298,530357,001298,530GroupBankIn millions of Naira31-Dec-21 31-Dec-2031-Dec-21 31-Dec-20 18. Due from other banksCurrent balances with banks outside Nigeria377,238333,466501,450305,872Placements with banks314,730477,08616,661226,563ECL allowance(724)(58)(58)(58)691,244810,494518,053532,377Classified as:Current691,244810,494518,053532,377Included in balances with banks outside Nigeria is the amount of N23.54 billion and N85.97 billion for the Group and Bank respectively (31 December 2020: N50.28 billion and N86.27 billion for the Group and Bank respectively) which represents the Naira value of foreign currency balances held on behalf of customers in respect of letters of credit. The corresponding liabilities are included in other liabilities (See Note 29).Some of the balances are restricted (see note 3.4.3c).198Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021GroupBankIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-20 Due from banks with maturity greater than 3 months and restricted balances:29,986179,24494,157179,24419. Derivative assetsInstrument types (fair value):Forward and Swap Contracts52,87434,63453,47331,867Futures contracts 3,3139,8624,0039,862Total56,18744,49657,47641,729Instrument types (Notional amount) :Forward and Swap Contracts867,926481,886909,300481,886Futures contract109,503222,730180,571222,730Total977,429704,6161,089,871704,616There are no derivative assets and liabilities that are designated as fair value through proﬁt or loss on initial recognition.Non-hedging derivative assets and liabilitiesThe Group enters into currency forward contracts with counterparties. On initial recognition, the Group estimates the fair value of derivatives transacted with the counterparties using the discounted mark-to-market technique. In many cases, all signiﬁcant inputs into the valuation techniques are wholly observable (e.g with reference to similar transactions in the wholesale dealer market.)During the year, various derivative contracts entered into by the Group generated a net gain which was recognized in the statement of proﬁt or loss and other comprehensive income (see note 11).All derivative assets are current.GroupBankIn millions of Naira31-Dec-2131-Dec-20 31-Dec-2131-Dec-2020. Loans and advances Overdrafts 439,459248,003419,219230,288Term loans 2,522,2782,142,7272,278,6132,013,763On-lending facilities 540,141528,612540,141528,612Gross loans and advances to customers 3,501,8782,919,3423,237,9732,772,663Less: ECL Allowance (see note 3.2.18)(146,150)(140,315)(138,521)(132,866)3,355,7282,779,0273,099,4522,639,797Net Loans classified as:Current1,456,0941,066,6751,376,2481,013,234Non-current1,899,6341,712,3521,723,2041,626,5633,355,7282,779,0273,099,4522,639,797Movement in ECL Allowance as at 31 December 2021 is presented in Note 3.2.18.199FinancialsZenith Bank Plc Annual Report December 31, 2021GroupBankIn millions of Naira31-Dec-2131-Dec-2031-Dec-21 31-Dec-20 21. Investment securitiesDebt securitiesAt amortised cost (see note iii)657,951476,287380,199208,973At FVTOCI541,629392,150--ECL Allowance (see note 3.2.18)(3,766)(773)(666)(755)Net debt securities measured at amortised cost and FVTOCI1,195,814867,664379,533208,218Debt securities (measured at fair value through proﬁt or loss) (see note ii)22,33849,27711,89744,933Net debt securities1,218,152916,941391,430253,151Equity securitiesAt fair value through other comprehensive income (see note (i) below)85,57479,97585,57479,9751,303,726996,916477,004333,126Movement in impairment allowance on investment securities is presented in Note 3.2.18Classified as: Current53,960718,81821,47680,444Non-current1,249,766278,098455,528252,6821,303,726996,916477,004333,126(i) The Group holds equity investments in unquoted entities which the Group has elected to carry at fair value through other comprehensive income. These investments are held for strategic purposes rather than for trading purposes see note 3.3.5.(ii) The Group and Bank debt securities measured at FVTPL comprise FGN bonds (31 December 2021: N22.3 billion and N11.9 billion respectively; 31 December 2020; N49.3 and N44.9 billion respectively).(iii) The Group’s debt securities measured at amortised cost can be analysed as follows:GroupBankIn millions of Naira31-Dec-2131-Dec-20 31-Dec-21 31-Dec-20 Sovereign (Federal)559,585378,026281,833110,712Sub-sovereign (State)19,16322,15419,16322,154Corporate bonds52,23013,37152,23013,371Promissory note17,09652,97617,09652,976Commercial papers9,8779,7609,8779,760657,951476,287380,199208,973200Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202122. Investment in subsidiariesThe following table lists the entities which are controlled by the Group, either directly or indirectly through subsidiaries. Bank31-Dec-2131-Dec-2031-Dec-21 31-Dec-20Name of companyOwnership interest % Ownership interest % Carrying amount Zenith Bank (Ghana) Limited (see (i) below)99.42 %99.42 %7,0667,066Zenith Bank (UK) Limited100.00 %100.00 %21,48221,482Zenith Bank (Sierra Leone) Limited99.99 %99.99 %2,0592,059Zenith Bank (Gambia) Limited99.96 %99.96 %1,0381,038Zenith Pensions Custodian Limited99.00 %99.00 %1,9801,980Zenith Nominee Limited99.00 %99.00 %1,0001,00034,62534,625All investments in subsidiaries are non-current201FinancialsZenith Bank Plc Annual Report December 31, 2021Zenith Bank Plc Annual Report December 31, 2021Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(b) Condensed results of consolidated entities 31 December 2021Zenith GroupIntra-group transactionsand balanceZenith BankPlcZenith BankGhanaZenith BankUK Zenith Bank Sierra Leone Zenith Bank Gambia Zenith Pension CustodianZenith Nominee LimitedCondensed statement of profit or lossOperating income765,558(16,616)677,28366,96019,3155,0882,64910,521358Expenses(425,252)(1,090)(363,941)(41,655)(12,658)(2,434)(1,329)(1,963)(182)Inpairment charge for ﬁnancial and non-ﬁnancial assets(59,932)-(56,175)(1,954)(1,732)(52)(27)8-Proﬁt before tax· 280,374(17,706)257,16723,3514,9252,6021,2938,566176Taxation (35,816)-(24,034)(7,972)(846)(651)(314)(1,953)(46)Profit for the year 244,558(17,706)233,13315,3794,0791,9519796,613130Condensed statement of financial position AssetsCash and balances with central banks1,488,363-1,397,66685,498121,0533,82628622Treasury bills1,764,945-1,577,647165,906--15,7865,478128Assets pledged as collateral392,594-357,00035,594-----Due from other banks691,244(292,261)518,05339,437412,5097,5075,999--Derivative asset held for risk management56,187(2,736)57,476-1,447----Loans and advances3,355,728(29,796)3,099,452105,423176,9542,3961,1841141Investment securities1,303,726-477,004155,824624,92421,3103,43319,3351,896Investment in subsidiaries-(34,625)34,625------Deferred tax asset1,837--1,65486952--Other assets168,210(1,182)152,32613,8288734973021,52343Property and equipment200,008-177,50118,6701,5658211,26517016Intangible assets25,001-23,5425774448865265209,447,843(360,600)7,872,292622,4111,218,81433,76731,86227,1712,12620231 December 2021 Zenith GroupIntra-group transactionsand balanceZenith BankPlcZenith BankGhanaZenith BankUKZenith Bank Sierra LeoneZenith Bank GambiaZenith Pension CustodianZenith Nominee LimitedLiabilities & Equity Customer deposits 6,472,054(292,261)5,169,199448,2561,097,45125,59323,816--Derivative liabilities 14,674(2,737)15,1702,241-----Current income tax 16,909-14,241-2761272761,94247Deferred income tax liabilities 11,603-11,596----52Other liabilities 487,432(1,179)427,87651,7386,1059731,008733178On-lending facilities 369,241-369,241------Borrowings 750,469(29,795)769,39510,869-----Debt securities issued 45,799-45,799------Equity and reserves 1,279,662(34,628)1,049,775109,307114,9827,0746,76224,4911,8999,447,843(360,600)7,872,292622,4111,218,81433,76731,86227,1712,126Condensed statement of cash flowNet cash (used in)/from operating activities 386,185(202,637)457,857102,1804,4016,8828,2249,143134Net cash (used in)/from ﬁnancing activities (262,648)(24,891)(246,974)19,542(4,324)--(6,000)-Net cash (used in)/from investing activities (239,884)130,180(358,474)1,854(81)(6,046)(4,200)(2,960)(158)Increase / (decrease) in cash and cash equivalents(116,347)(97,348)(147,591)123,576(4)8364,024183(24)Cash and cash equivalents At start of year 1,208,520268,875882,6831,33148,2708445,0601,303154Exchange rate movements on cash and cash equivalents42,346-41,482864-----At end of year1,134,519171,527776,574125,77148,2661,6809,0841,486131Increase / (decrease) in cash and cash equivalents(116,347)97,348(147,591)123,576(4)8364,024183(23)FinancialsZenith Bank Plc Annual Report December 31, 2021203Zenith Bank Plc Annual Report December 31, 2021Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202131 December 2020Zenith GroupIntra-group transactionsand balanceZenith BankPlcZenith BankGhana LimitedZenith BankUK Limited Zenith Bank Sierra Leone Limited Zenith Bank Gambia Limited Zenith Pension Custodian LimitedZenith Nominee LimitedCondensed statement of profit or lossOperating income696,450(7,199)595,92168,44223,0344,0202,2139,647372Expenses(401,055)3,199(348,677)(36,178)(13,904)(2,460)(1,347)(1,609)(79)Impairment charge for ﬁnancial assets(39,534)-(37,237)(652)(1,523)(55)(27)(40)-Proﬁt before tax· 255,861(4,000)210,00731,6127,6071,5058397,998293Taxation (25,296)-(12,155)(8,728)(1,513)(398)(253)(2,179)(70)Profit for the year 230,565(4,000)197,85222,8846,0941,1075865,819223Condensed statement of financial position AssetsCash and balances with central banks1,591,768-1,503,24582,662152,7812,92310735Treasury bills1,577,875-1,393,421156,881-16,11511,40357(2)Assets pledged as collateral298,530-298,530------Due from other banks810,494(126,943)532,37744,768349,8365,2045,252--Derivative asset held for risk management44,496-41,729-2,767----Loans and advances2,779,027-2,639,79772,48763,0922,3701,181973Investment securities996,916-333,126171,344465,455-98324,2271,781Investment in subsidiaries-(34,625)34,625------Deferred tax asset5,786-4,733586421425-(1)Other assets169,967(37,039)159,6258,21236,5764125561,57550Property and equipment190,170-169,08017,4021,82798371314916Intangible assets16,243-14,69940653312781358398,481,272(198,607)7,124,987554,748920,52228,03423,09726,5701,92120431 December 2020Zenith GroupIntra-group transactionsand balanceZenith BankPlcZenith BankGhana Ltd LimitedZenith BankUK LimitedZenith Bank Sierra Leone LimitedZenith Bank Gambia LimitedZenith Pension Custodian LimitedZenith Nominee LimitedLiabilities & Equity Customer deposits5,339,911-4,298,258358,930644,77921,99515,949--Derivative liabilities11,076-11,076------Current income tax11,690-9,117(84)102912322,16270Deferred income tax liabilities--------1Other liabilities703,292(159,967)599,46496,039165,3525031,28853182On-lending facilities384,573-384,573------Borrowings870,080(4,010)874,090------Debt securities issued43,177-43,177------Equity and reserves1,117,473(34,630)905,23299,863110,2895,4455,62823,8771,7698,481,272(198,607)7,124,987554,748920,52228,03423,09726,5701,922Condensed cash flowNet cash (used in)/from operating activities105,811(44,130)65,92035,86842,765(2)3,3062,08485Net cash (used in)/from ﬁnancing activities 422,84750,652418,902(42,613)--(94)(4,000)-Net cash (used in)/from investing activities(25,946)27,244(20,488)(8,906)(24,698)1(1,469)2,370(1,309)Increase/ (Decrease) in cash and cash equivalents502,71233,766464,334(15,651)18,067(1)1,743454(1,224)Cash and cash equivalentsAt start of year 947,038510,053388,85316,01927,3007893,1758491,378Exchange rate movements on cash and cash equivalents35,09331,029-9632,90356142- -At end of year 1,484,843574,848853,1871,33148,2708445,0601,303154Increase/ (decrease) in cash and cash equivalents502,71233,766464,334(15,651)18,067(1)1,743454(1,224)FinancialsZenith Bank Plc Annual Report December 31, 2021205Apart from Zenith Bank Pensions Custodian Limited and Zenith Nominees Limited, which are incorporated in Nigeria, the remaining subsidiaries are incorporated in their respective countries.Zenith Bank (Ghana) Limited provides Corporate and Retail Banking services. It was incorporated on April 15, 2005 and commenced operations on September 16, 2005.Zenith Pensions Custodian Limited provides pension funds custodial services to Licensed Pension Fund Administrators (PFAs) and Closed Pension Funds Administrators under the Pension (Reform) Act, 2004. It was incorporated in Nigeria on March 1, 2005. The name was changed from “Zenith Pensions Limited” to “Zenith Pensions Custodian Limited” on September 20, 2005. It was licensed by the National Pension Commission as a custodian of pension funds and assets on December 7, 2005 and commenced operations in December 2005.Zenith Bank (UK) Limited provides wholesale and investment banking services in the United Kingdom. It was incorporated on February 17, 2006 and commenced operations on March 30, 2007.Zenith Bank (Sierra Leone) Limited provides corporate and retail banking services. It was incorporated in Sierra Leone on September 17, 2007 and granted an operating license by the Bank of Sierra Leone on September 10, 2008. It commenced banking operations on September 15, 2008.Zenith Bank (Gambia) Limited provides corporate and retail banking services. It was incorporated in The Gambia on October 24, 2008 and granted an operating licence by the Central Bank of Gambia on December 30, 2009. It commenced banking operations on January 18, 2010.Zenith Nominees Limited which is incorporated in Nigeria provides nominees, trustees, administrators and executorship services for non-pension assets. It was incorporated in Nigeria on April 6, 2006.There are no signiﬁcant restrictions on the ability of subsidiaries to transfer funds to the Group in the form of cash dividends or repayment of loans and advances.23. Investment in associatesThe Group’s investments under the Small and Medium Enterprises Equity Investment Scheme (“SMEEIS”) is in compliance with the Policy Guidelines for 2001 Fiscal Year (Monetary Policy Circular No. 35). The Group generally holds 20 percent or more of the voting power of the investee and is therefore presumed to have signiﬁcant inﬂuence over the investee. In instances where the Group holds less than 20 percent of the voting power of the investee, the Group concluded that it has signiﬁcant inﬂuence due to the Group’s representation on the Board of the relevant investee, with such Board generally limited to a small number of Board members.There were no published price quotations for any associates of the Group. Furthermore, there are no signiﬁcant restrictions on the ability of associates to transfer funds to the Group in the form of cash dividends or repayment of loans and advances. The investment in associates have been fully impaired. Hence the carrying amount of the investment in associates is Nil as at 31 December 2021 (31 December 2020: Nil).206Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202124. Deferred tax balances(i) Deferred tax assetGroupBankIn millions of Naira31-Dec-2131-Dec-20 31-Dec-21 31-Dec-20 Unutilised capital allowances15,05711,75615,10011,756ECL allowance on not-credit impaired ﬁnancial11,0174,3018,9143,066InstrumentsTax loss carry forward(8)4,692-4,692Other assets1,071923--Lease liability2,325-2,325-Total deferred tax asset29,46221,67226,33919,514Set-oﬀ of deferred tax asset against deferred tax liabilities pursuant to set-oﬀ provisions (see (ii) below)(27,625)(15,885)(26,339)(14,781)Net deferred tax asset1,8375,787-4,733(ii) Deferred tax liabilityGroupBankIn millions of Naira31-Dec-2131-Dec-20 31-Dec-21 31-Dec-20 Property and equipment16,86168315,989-Right of use asset4,1512,0874,1512,087Foreign exchange diﬀerences17,79512,69417,79512,694Fair value reserves421422--Total deferred tax liability39,22815,88637,93514,781Set-oﬀ of deferred tax asset against deferred tax liabilities pursuant to set-oﬀ provisions (see (i) above)(27,625)(15,885)(26,339)(14,781)Net deferred tax liability11,603111,596-Group31 December 2021Movements in temporary differences during the year01-Jan-21Recognised in profit or loss31-Dec-21AssetOther assets9221491,071Unutilized capital allowances11,7563,30115,057ECL Allowance on not-credit impaired ﬁnancial instruments4,3016,71611,017Tax loss carry forward4,692(4,700)(8)Lease liability-2,3252,32521,6717,79129,462207FinancialsZenith Bank Plc Annual Report December 31, 202131 December 2021Movements in temporary differences during the year01-Jan-21Recognised in profit or loss31-Dec-21LiabilitiesProperty and equipment68316,17816,861Right of use asset2,0872,0644,151Fair value reserve421-421Foreign exchange diﬀerences12,6945,10117,79515,88523,34339,228Bank31 December 2021Movements in temporary differences during the year01-Jan-21Recognised in profit or loss31-Dec-21AssetECL Allowance on not-credit impaired ﬁnancial instruments3,0665,8488,914Unutilized capital allowances11,7563,34415,100Tax loss carried forward4,692(4,692)-Lease liability-2,3252,32519,5146,82526,339Bank31 December, 2021Movements in temporary differences during the year01-Jan-21Recognised in profit or loss31-Dec-21LiabilitiesProperty and equipment-15,98915,989Right of use asset2,0872,0644,151Foreign exchange diﬀerences12,6945,10117,79514,78123,15437,935The Group and Bank deferred tax assets and deferred tax liabilities have been oﬀset in the consolidated and separate ﬁnancial statements.All deferred tax are non current.208Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202125. Other assetsGroupBankIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-20Non-financial assetsPrepayments9,62620,2897,71716,214Other non-ﬁnancial assets9,7633369,815336Gross other non-ﬁnancial assets19,38920,62517,53216,550less impairment (see note (i) below)-(226)-(226)Net other non-ﬁnancial assets19,38920,39917,53216,324Other financial assetsE-card and settlement receivables101,520115,16188,601107,848Intercompany receivables--458329Deposit for investment in AGSMEIS40,88830,99640,88830,996Other receivables16,3385,55213,9625,454Deposits for shares--720720Gross other ﬁnancial assets158,746151,709144,629145,347Less: ECL allowance(see note 25(ii))(9,925)(2,141)(9,835)(2,046)Net other ﬁnancial assets148,821149,568134,794143,301Total other assets (Net)168,210169,967152,326159,625Deposit for investment in AGSMEIS represents funds deposited with the CBN for future equity investments in agricultural, small and medium enterprises in line with the CBN directives.Other non-ﬁnancial assets comprises of balances on settlement accounts such as: withholding tax, revenue collection, sundry receivables. These assets are short tenured and are quickly settled.Classified as:Current127,322138,971111,438128,629Non-current40,88830,99640,88830,996168,210169,967152,326159,625See note 3.2.18 for movement in impairment allowance for other ﬁnancial assets as at 31 December 2021.(i) Movement in impairment allowance for non ﬁnancial assetsGroupBankIn millions of Naira31-Dec-2131-Dec-20 31-Dec-21 31-Dec-20 At start of the year226183226183Charge for the year (see note 8)(226)43(226)43At end of the year-226-226209FinancialsZenith Bank Plc Annual Report December 31, 2021(ii) Provision matrixThe table below summarises the provision matrix of the Bank as at 31 December 2021 and 31 December 2020. The loss allowance recorded by the other subsidiaries on their other ﬁnancial assets is considered insigniﬁcant to the Group. Loss allowance for the Bank as at 31 December 2021 and 31 December 2020 was determined as follows for other ﬁnancial assets.31 December, 20210-30 days31-60 days61-90 days91-180 daysAbove 180 daysTotalReceivables84,6022788401,8065,22392,749Expected loss rate3.20 %6.40 %9.60 %100.00 %100.00 %-ECL2,70718811,8065,2239,83531 December, 20200-30 days31-60 days61-90 days181-365 daysTotalReceivables113,189--113113,302Expected loss rate1.70 %10.95 %24.35 %100.00 %-ECL1,924--1132,037The receivables exclude the deposit for shares and deposit for AGSMEIS and N10.3 billion deposit for investment which are not subject to impairment by the simpliﬁed approach.210Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202126. Property and equipment(a) Property and equipment movement Group31 December 2021LandBuildingLeaseholdimprovementsFurniture,fittings andequipmentComputerequipmentRight of use assest - AircraftMotorVehiclesRight of use asset - buildingsWork in progressTotalCostAt 1 January, 202136,08764,84926,36698,10336,59012,60024,46424,28023,939347,278Additions3432,3921,2287,6413,889-3,51173915,10534,848Reclassiﬁcation/transfer from WIP1653(1,758)1,694749-291,800(3,236)(68)Disposals / write oﬀ-(259)(933)(3,533)(404)-(1,266)--(6,395)Exchange diﬀerence-25342342-2228590737At 31 December 202136,43167,88824,945103,90840,86612,60026,76027,10435,898376,400Accumulated DepreciationAt 1 January 2021-9,01420,56369,92831,1953,99018,9623,456-157,108Charge for the year-1,3622,07111,9313,9201,2602,7951,966-25,305Reclassiﬁcations/transfer from WIP-162(788)75(27)--578--Disposals-(168)(913)(3,302)(403)-(1,239)--(6,025)Exchange diﬀerence-28171442-36(133)-4At 31 December 2021-10,39820,95078,64634,7275,25020,5545,867-176,392Net book amountAt 31 December 202136,43157,4903,99525,2626,1397,3506,20621,23735,898200,008Expenses relating to short term lease and low value lease assets can be seen in note 12 as lease expense.There were no impairment losses on any class of property and equipment during the year (31 December 2020: Nil)There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (31 December 2020: Nil).All property and equipment are non-current. None of the Bank’s assets were ﬁnanced from borrowings, consequently no borrowing cost has been capitalized as part of asset cost.211FinancialsZenith Bank Plc Annual Report December 31, 2021Zenith Bank Plc Annual Report December 31, 2021Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021For accounting policy and judgements on right of use see note 2.14. The Group has no leases that are yet to commence.Group31 December 2020LandBuildingLeaseholdimprovementsFurniture,fittings andequipmentComputerequipmentRight of use assest - AircraftMotorVehiclesRight of use asset - buildingsWork in progressTotalCostAt 1 January, 202034,66860,74025,01694,29637,09812,60023,38718,13817,201323,144Additions1,3882,4961,1535,8101,350-2,5165,8269,23729,776Reclassiﬁcation/transfer from WIP311,045523756(40)-45-(2,360)-Disposals / write oﬀ-(7)(761)(2,997)(2,005)-(1,622)-(169)(7,561)Exchange diﬀerence-575435238187-138316301,919At 31 December 202036,08764,84926,36698,10336,59012,60024,46424,28023,939347,278Accumulated DepreciationAt 1 January 2020-7,64618,74060,89829,2532,73017,2121,449-137,928Charge for the year-1,2392,47611,2983,8491,2603,1671,836-25,125Reclassiﬁcations/transfer from WIP-104(164)98(38)-----Disposals-(7)(755)(2,516)(2,005)-(1,512)--(6,795)Exchange diﬀerence-32266150136-95171-850At 31 December 2020-9,01420,56369,92831,1953,99018,9623,456-157,108Net book amountAt 31 December 202036,08755,8355,80328,1755,3958,6105,50220,82423,939190,170212Bank31 December 2021LandBuildingLeaseholdimprovementsFurniture,fittings andequipmentComputerequipmentRight of use assest - AircraftMotorVehiclesRight of use asset - buildingsWork in progress (WIP)TotalCostAt 1 January 202136,08755,20121,28895,15134,90312,60022,74916,35223,097317,428Additions3431,7611,0947,3223,561-3,12340914,38031,993Reclassiﬁcation/transfer from WIP1455531,559732---(2,800)-Disposals-(259)(804)(3,532)(401)-(1,200)--(6,196)At 31 December 202136,43157,15821,631100,50038,79512,60024,67216,76134,677343,225Accumulated DepreciationAt 1 January 2021-8,33317,59367,91129,9753,99017,9492,597-148,348Charge for the year-1,1021,86311,4943,6651,2602,4281,392-23,204Reclassiﬁcations/transfer from WIP-162(210)75(27)-----Disposals-(168)(767)(3,301)(400)-(1,192)--(5,828)At 31 December 2021-9,42918,47976,17933,2135,25019,1853,989-165,724Net book amountAt 31 December 202136,43147,7293,15224,3215,5827,3505,48712,77234,677177,501Expenses relating to short term lease and low value lease assets can be seen in note 12 as lease expense.There were no impairment losses on any class of property and equipment during the year (31 December 2020 :Nil)There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (31 December 2020:Nil).All property and equipment are non-current. None of the Bank’s assets were ﬁnanced from borrowings, consequently no borrowing cost has been capitalized as part of asset cost. For accounting policy and judgements on right of use see note 2.14.FinancialsZenith Bank Plc Annual Report December 31, 2021213Zenith Bank Plc Annual Report December 31, 2021Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The Bank has no ROU assets in respect of leases that are yet to commence.Bank31 December 2020LandBuildingLeaseholdimprovementsFurniture,fittings andequipmentComputerequipmentRight of use assest - AircraftMotorVehiclesRight of use asset - buildingsWork in progress (WIP)TotalCostAt 1 January, 202034,66851,66720,03390,39934,41012,60021,19111,65016,691293,309Additions1,3882,4967415,595563-2,3034,7028,76726,555Reclassiﬁcation/transfer from WIP311,045523756(40)-46-(2,361)-Disposals-(7)(9)(1,599)(30)-(791)--(2,436)At 31 December 202036,08755,20121,28895,15134,90312,60022,74916,35223,097317,428Accumulated DepreciationAt 1 January 2020-7,18715,91158,12826,9072,73015,8021,188-127,853Charge for the year-1,0491,84811,2123,1371,2602,7711,409-22,686Reclassiﬁcations/transfer from WIP-104(164)98(38)-----Disposals-(7)(2)(1,527)(31)-(624)--(2,191)At 31 December 2020-8,33317,59367,91129,9753,99017,9492,597-148,348Net book amountAt 31 December 202036,08746,8683,69527,2404,9288,6104,80013,75523,097169,080(b) Right of use amounts recognised in the statement of financial postionIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-20Right-of-use assetsAircraft (see note 26)7,3508,6107,3508,610Buildings (see note 26)21,23720,82412,77213,75528,58729,43420,12222,365214Additions to the right-of-use asset for Group and Bank during the year 31 December 2021 was N739 million and N409 million respectively (31 December 2020: N5,826 million and N4,702 million respectively).In millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-20Lease liabilitiesCurrent3,4066,2752,5774,158Non-current20,69618,18114,13113,36324,10224,45616,70817,521(c) Amounts recognised in the income statementIn millions of Naira31-Dec-2031-Dec-2031-Dec-2031-Dec-20Depreciation charge of right-of-use assetAircraft (see note 26)1,2601,2601,2601,260Buildings (see note 26)1,9661,8361,3921,4093,2263,0962,6522,669Interest expense (included in ﬁnance cost)3,4273,1072,8852,804Lease expense9856644613The total cash outﬂow of leases for Group and bank as at 31 December 2021 was N4,805 million and N3,957 million respectively (31 December 2020: N3,427 million and N3,212 million respectively)FinancialsZenith Bank Plc Annual Report December 31, 2021215Group BankIn millions of Naira31-Dec-2131-Dec-2031-Dec-21 31-Dec-2027. Intangible assetsComputer software CostAt start of the year 35,60932,47229,74727,381Exchange diﬀerence 246664--Reclassiﬁcation from PPE68---Additions 14,8842,47314,3612,366Write oﬀ(2,454)-(2,454)-At end of the year48,35335,60941,65429,747 Accumulated amortizationAt start of the year19,36615,97515,04812,272Exchange diﬀerence 207(146)--Charge for the year 3,7793,5373,0642,776At end of the year23,35219,36618,11215,048Carrying amount at end of the year25,00116,24323,54214,699All intangible assets are non-current. All intangible assets of the Group have ﬁnite useful life and are amortised over 5 years.The Group does not have internally generated intangible assets.28. Customers’ deposits Demand 3,530,5212,986,7242,561,7362,181,524Savingss 1,236,2811,155,0261,194,2211,112,914Term 452,193323,149306,084188,480Domiciliary 1,253,059875,0121,107,158815,340 6,472,0545,339,9115,169,1994,298,258Classified as:Current6,472,0545,339,9115,169,1994,298,258216Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Group BankIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-2029. Other liabilitiesOther financial liabilities Customer deposits for letters of credit86,87250,27686,87286,266Managers’ cheques18,27919,31817,70718,728Collections accounts154,728269,709154,694269,711Unclaimed dividend28,64728,03528,64728,035Lease liability (see note (c) below)24,10224,45716,70817,522AMCON payable3,8175,7253,8175,725Electronic card and settlement payables60,82971,99658,00071,849Customers’ foreign transactions payables8,65367,2848,65312,014Account payables69,84973,26134,00554,708Total other financial liabilities455,776610,061409,103564,558Non financial liabilities Tax collections 5,3392,3175,0032,136Deferred income on ﬁnancial guarantee contracts1,2061,2341,1861,234Other payables19,49584,8486,96826,704Oﬀ Balance Sheet exposures impairment allowance5,6164,8325,6164,832Total other non ﬁnancial liabilities 31,65693,23118,77334,906Total other liabilities 487,432703,292427,876599,464Classified as: Current 474,070685,111413,624586,101Non-current 13,36218,18114,25213,363487,432703,292427,876599,464(a) ECL allowance for oﬀ balance sheet exposureIn millions of NairaBonds and guarantee contracts433,424433,424Undrawn portion of loan commitments1,2158861,215886Letters of credit4,3585224,3585225,6164,8325,6164,832See note 3.2.18 for movement in ECL allowance for oﬀ balance sheet exposure.(b) The amounts above for ﬁnancial guarantee contracts represents the deferred income initially recognised less cumulative amortisation217FinancialsZenith Bank Plc Annual Report December 31, 2021Group BankIn millions of Naira31-Dec-2131-Dec-2031-Dec-21 31-Dec-20(c) Lease liabilityThis relates to lease rental for aircraft and properties used by the Group. The net carrying amount of leased assets, included within property and equipment is N28.55 billion and N20.12 billion as at 31 December 2021. (31 December 2020: N29.43 billion and N22.37 billion) for both Group and Bank respectively.The future minimum lease payments on the lease liabilities extend over a number of years. This is analysed as follows:Not more than one year4,5615,8034,3114,158Over one year but less than ﬁve years19,53127,86719,22621,112More than ﬁve years11,68110,1624,8436,113At end of the year35,77343,83228,38031,383The table below shows the movement in lease liability during the year.As at 1 January24,45622,19417,52116,297Additions4992,5822591,632Principal repayment(2,802)(742)(2,007)(684)Modiﬁcation353---Interest expense3,4273,1072,8852,804Interest paid(2,003)(2,685)(1,950)(2,528)Foreign exchange diﬀerence172---At end of the year24,10224,45616,70817,521The Group does not face any signiﬁcant risk with regards to the lease liability. Also the Bank’s exposure to liquidity risk as a result of leases are monitored by the Bank’s enterprise risk management unit.218Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Group BankIn millions of Naira31-Dec-2131-Dec-2031-Dec-21 31-Dec-2030. On-lending facilities(a) This comprises:Central Bank of Nigeria (CBN) Commercial Agri-culture Credit Scheme Loan (i)43,63149,46943,63149,469Bank of Industry (BOI) Intervention Loan (ii)32,26635,17132,26635,171Central Bank of Nigeria (CBN) / Bank of Indus-try(BOI) - Power & Aviation intervention Funds (iii)3,8937,0703,8937,070CBN MSMEDF Deposit (iv)1,2339651,233965FGN SBS Intervention Fund (v)136,605134,115136,605134,115Excess Crude Loan Facilty Deposit (vi)83,03081,93383,03081,933Real Sector Support Facility (vii)40,39841,90240,39841,902Non-Oil Export Stimulation Facility (viii)19,59323,32519,59323,325Creative Industry Financing Initiative (x)229256229256Accelerated Agricultural Development Scheme (xii)8,36310,3678,36310,367369,241384,573369,241384,573Classified as:Current8,3638,3128,3638,312Non-current360,878376,261360,878376,261369,241384,573369,241384,573(b) Movement in on-lending facilitiesIn millions of Naira31-Dec-2131-Dec-2031-Dec-21 31-Dec-20At beginning of the period/year384,573392,871384,573392,871Principal addition during the period/year14,48232,26414,48232,264Principal repayment during the period/year(33,011)(39,758)(33,011)(39,758)Interest expense during the period4,8811,8344,8811,834Interst paid during the period(1,684)(2,638)(1,684)(2,638)At end of the period/year369,241384,573369,241384,573(i) The fund received under the Central Bank of Nigeria (CBN) Commercial Agriculture Credit Scheme represents a credit line granted to the Bank for the purpose of providing concessionary funding to the agricultural sector. The facility has a tenor of 16 years with eﬀect from 2009 and will expire in September 2025. The facility attracts an interest rate of 2% per annum and the Bank is under obligation to on-lend to customers at an all-in interest rate of not more than 9% per annum. Based on the structure of the facility, the Bank assumes the default risk of all amounts lent to the Bank’s customers. This facility is not secured.219FinancialsZenith Bank Plc Annual Report December 31, 2021(ii) The Central Bank of Nigeria (CBN) / Bank of Industry (B0I) - SME / Manufacturing Intervention Fund represents an intervention credit granted to the Bank for the purpose of reﬁnancing / restructuring existing loans to Small and Medium Scale Enterprises (SMEs) and Manufacturing Companies. The total facility is secured by Nigerian Government Securities. The value of Government securities pledged as collateral is N50.63 billion (31 December 2018). The maximum tenor for term loans under the programme is 15 years while the tenor for working capital is one year, renewable annually subject to a maximum tenor of ﬁve years. A management fee of 1% per annum is deductible at source in the ﬁrst year, and quarterly in arrears thereafter, is paid by the Bank under the Intervention programme and the Bank is under obligation to on-lend to customers at an all-In interest rate of 7% per annum. The Bank is the primary obligor to CBN / BOI and assumes the risk of default.(iii) The purpose of granting new loans and reﬁnancing / restructuring existing loans to companies in the power and aviation industries is to support Federal Government’s focus on the sectors. The facility is secured by Irrevocable Standing Payment Order (ISPO). The maximum tenor for term loans under the programme is 15 years while the tenor for working capital is one year, with option to renew the facility annually subject to a maximum tenor of ﬁve years. The facility attracts an interest rate of 2% per annum payable quarterly in arrears and the Bank is under obligation to on-lend to customers at an all-in interest rate of 9% per annum. This facility is not secured.(iv) The Micro Small & Medium Scale Enterprises Development Fund (MSMEDF) is an intervention fund established to support the channeling of low interest funds to the MSME sub-sector of the Nigerian economy. The facility attracts an interest rate of 2% per annum and the Bank is obligated to on-lend to SMEs at 9% per annum. The maximum tenor is 5 years while the tenor for working capital is 1 year. This facility is not secured.(v) The Salary Bailout Scheme was approved by the Federal Government to assist State Governments in the settlement of outstanding salaries owed their workers. Funds are disbursed to Banks nominated by beneﬁciary States at 2% for on- lending to the beneﬁciary states at 9%. The loans have a tenor of 20 years. Repayments are deducted at source, by the Accountant General of the Federation, as a ﬁrst line charge against each beneﬁciary state’s monthly statutory allocation. This facility is not secured.(vi) Excess Crude Account (ECA) facilities are loans of N10 billion to each State with a tenor of 10-years priced at 9% per annum interest rate to the beneﬁciaries. Repayments are deducted at source, by the Accountant General of the Federation, as a ﬁrst line charge against each beneﬁciary state’s monthly statutory allocation. This facility is not secured. The fund is disbursed to the bank at 2% interest rate.(vii) The Real Sector Support Facility (RSSF): The Central Bank of Nigeria, as part of the eﬀorts to unlock the potential of the real sector to engender output growth, productivity and job creation has established a N300 billion Real Sector Support Facility (RSSF). The facility is disbursed to large enterprises and startups with ﬁnancing needs of N500 million up to a maximum of N10.0 billion. The activities targeted by the Facility are manufacturing, agricultural value chain and selected service subsectors. The funds are received from the CBN at 2%, and disbursed at 9% to the beneﬁciary.(viii) Non-oil Export Stimulation Facility (NESF): This Facility was established by the Central Bank of Nigeria to diversify the economy away from the oil sector, after the fall in crude prices. The Central Bank invested N500billion debenture, issued by Nigerian Export-Import Bank (NEXIM). The facility disbursed per customer shall not exceed 70% of total cost of project, or subject to a maximum of N5billion. Funds disbursed to the Bank from CBN are at a cost of 2% which are then disbursed to qualifying customers at the rate of 9% per annum. (ix) Creative Industry Financing Initiative (CIFI) is a scheme established by the Central Bank of Nigeria to provide long term and low interest funding to players in the creative industry. Areas of interest include Information Technology, Fashion, Movie Production/Distribution and Music. Loans are disbursed to beneﬁciaries for up to 10 years at 9% per annum. The fund is disbursed to the bank at 5% interest rate.(x) Accelerated Agricultural Development Scheme (AADS) was established by the Central Bank of Nigeria to help states develop at least 2 crops/agricultural commodities in which they have comparative advantage. The fund is disbursed to the Bank at 2% per annum. Each state is allowed a facility of N1.5billion at 9% per annum and repayments are made via ISPO deductions.220Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Due to the COVID 19 pandemic, the CBN approved a concessionary rate of 5%p.a. (all in rate to customers) until February 28, 2022 and 9%p.a. eﬀective March 1, 2022. Consequently, all intervention funds disbursed to the bank are priced at 1%p.a. until February 28, 2022.31. BorrowingsGroup BankFigures in of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-20Long term borrowing comprise:Due to ADB (i)-5,841-5,841Due to KEXIM (ii)2,7486702,748670Due to Afrexim (iii)65,93680,29365,93680,293Due to PROPARCO (iv)-1,830-1,830Due to ABSA Bank (v)84,922100,45784,922100,457Due to ICBC (Standard Bank London)-20,159-20,159Due to Mashreq Bank (vii)63,73928,11363,73928,113Due to IFC (viii)49,86353,63049,86353,630Due to First Abu Dhabi Bank (ix)42,447-42,447-Due to Zenith Bank Ghana (x)---4,010Due to J P Morgan Chase Bank (xi)31,808-31,808-Due to Standard Chartered Bank (xii)10,869---Due to banks for clean letters of credit398,137579,087427,932579,087750,469870,080769,395874,090The Group has not defaulted in the payment of principal or interest neither has the Group been in breach of any covenant relating to the liabilities during the year (31 December 2020: nil). The assets exchanged under repurchase agreements with counterparties are disclosed in note 17.Classified as: Current724,548783,520743,474787,530Non-current25,92186,56025,92186,560750,469870,080769,395874,090Movement in borrowingsAt beginning of the year870,080322,479874,090329,778Addition during the year712,420872,332693,944872,332Interest expense34,77830,70634,01133,510Interest paid(41,325)(29,843)(40,788)(34,104)Repayments (principal)(860,123)(353,338)(826,805)(357,341)Foreign exchange diﬀerence34,63927,74434,94329,915At end of the year750,469870,080769,395874,090221FinancialsZenith Bank Plc Annual Report December 31, 2021(i) Due to ADB The outstanding balance of N6.3 billion (US $15.6 million) was paid in February 2021.(ii) Due to KEXIM The amount of N2.74 billion (US $6.47 million) represents the outstanding balance from three (3) short term loan facilities of US $2.52m, US $2.53million and US $10million, granted by KEXIM in March 2021, April 2021 and June 2021 respectively. Interest is payable monthly at 3 months LIBOR+1.6% for all running obligations. Final repayments on these facilities are due in March 2022, April 2022, and June 2022 respectively.(iii) Due to Afrexim The outstanding balance of N65.94 billion (US $155.55 million) due to AFREXIM represents the amount payable by the Bank from 3year term loan, with a one-year moratorium. The facilities are priced at 3 months LIBOR+3.34% per annum for $150m and LIBOR+4.34% per annum for the balance $50m and will mature in August 2023. Interest on the facility is payable quarterly.(iv) Due to Proparco The outstanding balance was paid in April 2021.(v) Due to ABSA The amount of N84.92 billion (US $200 million) represents the amount payable by the Bank on dollar repurchase facilities of US$150 million and US$50 million, granted by ABSA in September 2021 and December 2021 respectively. Interest is payable quarterly and are priced at 3 months LIBOR+2.4% & 2.3% per annum respectively. These two facilities will mature in June 2022.(vi) Due to ICBC (STANDARD BANK LONDON) The facilities matured during the year.(vii) Due to Mashreq Bank The amount of N63.74 billion (US $150 million) represents the total amount payable to MASHREQ as at 31 December 2021. This obligation arose from two borrowing facilities with details below:• US $ 50 million repurchase facilities granted in December 2021. Interest is payable at maturity on this facility, and it is priced at 12 months LIBOR+2.2% per annum. The facility will mature in December 2022.• US $ 100 million syndicated loan granted in February 2021. This facility has MASHREQ as the Lead Arranger, Book runner and Coordinator. Interest is payable quarterly and is priced at 3 months LIBOR+2.75% per annum and will mature February 2022.(viii) Due to IFC The amount of N49.86 billion (US $116.66 million) represents the amount payable by the Bank from a term loan facility of US$100million, with a 1.5-year moratorium, and another USD 100m loan granted by IFC in June 2015 and June 2021 respectively. Interest is payable semiannually at 6 months LIBOR plus 4.5% and 2.5% per annum and the facility will mature in September 2022 and June 2022 respectively(ix) Due to FAB (First Abu Dhabi) The amount of N42.44 billion (US $100 million) represents the amount payable by the Bank on dollar repurchase facilities of two tranches of US$50 million granted by FAB in March 2021. Interest is payable quarterly and are priced at 3 months LIBOR+2.65% per annum each. The facilities will mature in March 2022. (x) Due to Zenith Bank Ghana The outstanding balance was paid in 2021.(xi) Due to JP Morgan Chase Bank The amount of N31.80 billion (US $75 million) represents the amount payable by the Bank on dollar repurchase facility of US$75 million, granted by JP Morgan in December 2021. Interest is payable quarterly and is priced at 3 months LIBOR+2.2% per annum. The facility will mature in December 2022.(xii) Due to Standard Chartered Bank Ghana The amount of $25 million represents the outstanding balance on a dollar short-term facility of US $25 million granted to Zenith Bank Ghana in March 2021. The facility is priced at 3.78% per annum and is due to mature in March 2022.222Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(xiii) The amount represents clean line obtained from various international banks for letters of credit and trade loans from international banks.32. Debt securities issuedGroup Bank in Millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-20Due to Euro bond holders45,79943,17745,79943,17745,79943,17745,79943,177The amount of N45.79 billion (US$107.40 million) represents the outstanding balance due on the second tranche of US$500 million Eurobond notes issued by Zenith Bank Plc in May 2017 with a maturity date of May 2022. Interest is priced at 7.375%, payable semiannually with a bullet repayment of the principal sum at maturity.In September 2019, the Bank repurchased US 392 million out of the outstanding US $500 million Eurobond notes for cash, pursuant to its tender oﬀer.The Group has not had any defaults of principal, interest or other breaches with respect to the debt securities during the year (December 31, 2021: Nil).Movement in debt securities issuedAt start of the year43,17739,09243,17739,092Revaluation loss for the year2,4912,9282,4912,928Interest expense3,3854,2713,3854,271Interest paid(3,254)(3,114)(3,254)(3,114)At end of the period/year45,79943,17745,79943,177Classified as: Current45,7993,28945,7993,289Non-current-39,888-39,88845,79943,17745,79943,17733. Derivative liabilitiesInstrument types (Fair value):Forward and Swap Contracts10,1671,56211,3501,562Futures contracts4,5079,5143,8209,51414,67411,07615,17011,076Instrument types (Notional Amount):Forward and Swap Contracts226,47151,574257,53651,574Futures contracts243,110222,730133,919222,730469,581274,304391,455274,304223FinancialsZenith Bank Plc Annual Report December 31, 2021Classified as:Current14,67411,07615,17011,076Non-current----14,67411,07615,17011,07634. Share capitalAuthorised40,000,000,000 ordinary shares of 50k each (31 Dec 2020: 40,000,000,000 )20,00020,00020,00020,000Issued and fully paid31,396,493,787 ordinary shares of 50k each (31 Dec 2020: 31,396,493,787)15,69815,69815,69815,698Issued Ordinary 15,69815,69815,69815,698There was no movement in the share capital account during the year. The holders of ordinary shares are entitled to receive dividends, which are declared from time to time, also each shareholder is entitled to a vote at the meetings of the Bank. All ordinary shares rank equally with regards to the Group’s residual assets.35. Share premium, retained earnings and other reserves(a) There was no movement in the Share premium account during the current and prior year.Group Bank in Millions of Naira31-Dec-2131-Dec-2031-Dec-21 31-Dec-20Share premium255,047 255,047 255,047 255,047The nature and purpose of the reserves in equity are as follows:(b) Share premium: Premiums from the issue of shares are reported in share premium.(c) Retained earnings: Retained earnings represent undistributed proﬁts, net of statutory appropriations attributable to the ordinary shareholders. (d) Statutory reserve: This represents the cumulative amount set aside from general reserves/retained earnings by the Bank and its subsidiaries. This amount is non-distributable. The Bank’s appropriation is in line with BOFIA 2020 which stipulates that an appropriation of 30% of proﬁt after tax be made if the statutory reserve is less than the paid-up share capital and 15% of proﬁt after tax if the statutory reserve is greater than the paid-up share capital. In the current year, a total of N34.97 billion (31 December 2020: N29.68 billion) representing 15% of Zenith Bank’s proﬁt after tax was appropriated. Other Non-Nigerian subsidiaries also make appropriation which is based on their proﬁt and in line with the requirement of their Central Bank.(e) SMIEIS reserves: This reserve represents the aggregate amount of appropriations from proﬁt after tax to ﬁnance equity investments in compliance with the directives issued by the Central Bank of Nigeria (CBN) through its circulars dated July 11, 2006 (amended).224Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021 The SMIEIS reserve was maintained in compliance with the Central Bank of Nigeria’s requirement that all licensed banks set aside a portion of the proﬁt after tax in a fund to be used to ﬁnance equity investments in qualifying small and medium scale enterprises. Under the terms of the guideline issued in July 2006, the contributions were 10% of proﬁt after tax and were expected to continue after the ﬁrst 5 years after which banks’ contributions were to reduce to 5% of proﬁt after tax. The small and medium scale industries equity investment scheme reserves are non-distributable.(f) Fair value reserve: Comprises fair value movements on equity and debt instruments that are carried at fair value through other comprehensive income.(g) Foreign currency translation reserve: Comprises exchange diﬀerences resulting from the translation to Naira of the results and ﬁnancial position of Group companies that have a functional currency other than Naira.(h) Credit risk reserve: This reserve represents the cumulative diﬀerence between the loan loss provision determined per the Prudential Guidelines of the Central Bank of Nigeria and the Central Bank of other subsidiaries vis-a-viz the allowance/reserve for loan losses as determined in line with the principles of IFRS 9. As at December 31, 2021, the Bank has made a cumulative credit risk reserve of N20.02 billion, while the cumulative amount made by the group is N21.85 billion (31 December, 2020: Group N2.3 billion and Bank Nil).(i) Non-controlling interest: This is the component of shareholders’ equity as reported on the consolidated statement of ﬁnancial position which represents the ownership interest of shareholders other than the parent of the subsidiary. See note below for the changes in non-controlling interest during the year.In millions of Naira31-Dec-2131-Dec-20Movement in Non-controlling interestAt start of the year974754Proﬁt for the year156191Foreign currency translation diﬀerences1429At end of year1,14497436. Pension contributionIn accordance with the provisions of the Pensions Reform Act 2014, the Bank and its subsidiaries commenced a contributory pension scheme in January 2005. For entities operating in Nigeria, the contribution by employees and the employing entities are 8% and 10% respectively of the employees’ basic salary, housing and transport allowances. Entities operating outside Nigeria contribute in line with the relevant pension laws in their jurisdictions. The contribution by the Group and the Bank during the year were N4.07 billion and N2.80 billion respectively (31 Decem-ber 2020: N3.78 billion and N2.68 billion).225FinancialsZenith Bank Plc Annual Report December 31, 2021Group BankIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-2037. Personnel expensesCompensation for the staﬀ are as follows:Salaries and wages69,91067,82053,46652,485Other staﬀ costs5,9037,9224,8606,354Pension contribution4,0723,7782,7972,67679,88579,52061,12361,515(a) The average number of persons employed during the year by category:NumberNumberNumber NumberExecutive directors6666Management420419368349Non-management7,0917,1195,9245,9827,5177,5446,2986,337The table below shows the number of employees, whose earnings during the year, fell within the ranges shown below:NumberNumberNumber NumberN300,001 - N2,000,000801,747-1,593N2,000,001 - N2,800,000 1,8191241,73915N2,800,001 - N4,000,00014542619323N4,000,001 - N6,000,0001,106927985728N6,000,001 - - N8,000,0001,1641,3029861,132N8,000,001 - N9,000,000154181418N9,000,001 - and above3,0493,0002,5552,5287,5177,5446,2986,337(b) Directors’ emolumentsThe remuneration paid to directors are as follows:NumberNumberNumber NumberExecutive compensation1,0869921,086992Fees and sitting allowances568409267210Retirement Beneﬁt costs9119111,6631,4121,3621,213Fees and other emoluments disclosed above include amounts paid to:The Chairman3828The highest paid director246230226Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021The number of directors who received fees and other emoluments (excluding pension contributions and reimbursable expenses) in the following ranges was:NumberNumberNumber NumberN5,500,001 and above3546131338. Group subsidiaries and related party transactionsParent:The Group is controlled by Zenith Bank Plc (incorporated in Nigeria) which is the parent company and whose shares are widely held.Subsidiaries:The amount of N5,568 billion (31 December 2020: N5,643 billion) represents the total pension assets under custody held by the Bank’s subsidiary, Zenith Pensions Custodian Limited under the custodial business. Included in the amount above is N94.4 billion which represents the amount of the Group’s guarantee for the assets held by the subsidiary as required by the National Pensions Commission of Nigeria. Aside from the Guarantee on the asset held by our subsidiary, Zenith Pension Custodian Limited, the Group does not have any contingent liabilities in respect of related parties.Transactions between Zenith Bank Plc and its subsidiaries are entered into, in the normal course of business. These transactions are eliminated on consolidation and are not separately disclosed in the consolidated ﬁnancial statements. The Group’s eﬀective interests and investments in subsidiaries as at 31 December 2021 are shown below.EntityEffective holding %Nominal share capital heldForeign/banking subsidiaries:Zenith Bank (Ghana) Limited99.42 %7,066Zenith Bank (UK) Limited100.00 %21,482Zenith Bank (Sierra Leone) Limited99.99 %2,059Zenith Bank (Gambia ) Limited99.96 %1,038Zenith Pensions Custodian Limited99.00 %1,980Zenith Nominee Limited99.00 %1,00031 December, 2021Transactions and balances with subsidiaries Receivable fromPayable toIncome received from Expense paid toIn millions of NairaZenith Bank (UK) Limited284,45334,9243,445-Zenith Bank (Ghana) Limited1,4511168,247-Zenith Bank (Sierra leone) Limited353---Zenith Bank (Gambia) Limited803---Zenith Pensions Custodian Limited4-6,000-227FinancialsZenith Bank Plc Annual Report December 31, 202131 December 202031 December 2020Transactions and balances with subsidiaries In millions of NairaReceivable fromPayable toIncome received from Expense paid toZenith Bank (UK) Limited114,93935,900130-Zenith Bank (Ghana) Limited24,010-2,805Zenith Bank (Sierra leone) Limited256---Zenith Bank (Gambia) Limited791---Zenith Pensions Custodian Limited--3,600-Significant restrictionsThe Group does not have signiﬁcant restrictions on its ability to access or use its assets and settle its liabilities other than those resulting from the supervisory frameworks within which banking subsidiaries operate. The supervisory frameworks require banking subsidiaries to keep certain levels of regulatory capital and liquid assets, limit their exposure to other parts of the Group and comply with other ratios. See notes 3.4 and 3.6 and for disclosures on liquidity and capital adequacy requirements respectively. The carrying amounts of banking subsidiaries’ assets and liabilities are N1,907 billion and N1,669 billion respectively (31 December 2020: N1,526 billion and N1,305 billion respectively).Non controlling interest in subsidiariesThe Group does not have any subsidiary that has material non-controlling interest. Key management personnelKey management personnel is deﬁned as the Group’s directors and chief oﬃcers, including their close members of family and any entity over which they exercise control. Close members of family are those family members who may be expected to inﬂuence, or be inﬂuenced by that individual in their dealings with the Group.Group BankIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-20Key management compensation Short term beneﬁts1,7161,5767871,194Post employment beneﬁts47231311Fees and sitting allowances 3754092672102,1382,0081,0671,415Loans and advances to key management personnelAt start of the year 1,7971,7641,4761,642Granted during the year 2,167366--Repayment during the year (1,062)(333)(44)(166)At end of of the year 2,9021,7971,4321,476Interest earned 123696563Loans to key management personnel include mortgage loans and other personal loans. The loans are repayable from various repayment cycles, ranging from monthly to annually over the tenor and have an average interest rate of 4%. Loans granted to key management personnel are performing.228Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Insider related transactions:These have been disclosed in accordance with CBN circular BSD/1/200431 December, 2021 Name of companyRelationship/NameLoansDepositsInterest receivedInterest paidDirectors1,6922,6996015Quantum Fund ManagementCommon signiﬁcant shareholder/Jim Ovia-18--Zenith General Insurance Company Ltd Common directorship/Jim Ovia -1,316--Cyberspace NetworkCommon signiﬁcant shareholder /Jim Ovia-484--Zenith Trustees LtdCommon signiﬁcant shareholder /Jim Ovia-12--Oviation limitedCommon directorship /Jim Ovia-2,358--Sirius Lumina LtdDirector / Prof. Sam Enwemeka -1-- 1,6926,8886024Insider related transactions:These have been disclosed in accordance with CBN circular BSD/1/200431 December, 2020Name of companyRelationshipLoansDepositsInterest receivedInterest paidDirectors1,6341,709--Cyberspace NetworkCommon shareholder /Jim Ovia-61--Quantum Fund ManagementCommon shareholder /Jim Ovia-189--Zenith General Insurance Company Ltd Common directorship/Jim Ovia -1,544--Zenith Trustees LtdCommon directorship-1--Oviation limited-844--Sirius Lumina LtdDirector / Prof. Sam Enwemeka -1-- 1,6344,349--Loans granted to related parties are secured over real estate and other assets of the respective borrowers. Loans granted to related parties are performing. No life time impairment has been recognised in respect of loans granted to related parties (31 December, 2020: Nil).During the year, Zenith Bank Plc paid N2.23 billion as insurance premium to Zenith General Insurance Limited (31 December 2020: N1.90 billion). These expenses were reported as operating expenses.The Bank entered into a lease contract in October 2017 with Oviation Limited. Oviation Limited has two common Directors with Zenith Bank. The ﬁnance lease agreement has Zenith Bank as lessee for a Gulfstream jet over a tenor of 10 years with annual lease payments of N2.76 billion Naira.The Bank paid N3.89 billion (31 December, 2020 N2.58 billion) to Cyberspace Network for various Information technology services rendered during the year.229FinancialsZenith Bank Plc Annual Report December 31, 202139. Contingent liabilities and commitments(a) Legal proceedingsThe Group is presently involved in several litigation suits in the ordinary course of business. The total amount claimed against the Group is estimated at N143.5 billion (31 December 2020: N78.8 billion). The actions are being contested and the Directors are of the opinion that no signiﬁcant liability will crystalise from these cases, and they are not aware of any other pending or threatened claims and litigations.In arriving at this conclusion, the Group has relied on evidence and recommendations from its internal litigation group and its team of external solicitors.(b) Capital commitmentsAt the reporting date, the Group had capital commitments amounting to N1,930 billion (31 December 2020: N4.94 billion) in respect of authorized and contracted capital projects.Group Break down of capital commitments31-Dec-2131-Dec-20Property and equipment:Motor vehicles, Furniture and equipments81150Property7481,135Intangible assets:Information tecnology3713,7561,9304,941(c) Confirmed credits and other obligations on behalf of customersIn the normal course of business, the Group is a party to ﬁnancial instruments with oﬀ-balance sheet risk. These instruments are issued to meet the credit and other ﬁnancial requirements of customers. The contractual amounts of the oﬀ-balance sheet ﬁnancial instruments are:Group Bank31-Dec-2131-Dec-2031-Dec-2131-Dec-20Performance bonds and guarantees (see note i below)364,632376,252335,833325,249Usance (see note ii below)195,35450,770195,35449,569Letters of credit (see note ii below)554,486172,905398,60584,1831,114,472599,927929,792459,001Pension Funds (See Note iii below)5,568,3415,642,7185,568,3415,642,718(i) The transaction related performance bonds and guarantees are, generally, short-term commitments to third parties which are not directly dependent on the customer’s creditworthiness. As at 31 December 2021, performance bonds and guarantees worth N322 billion (31 December 2020: N73 billion) are secured by cash while others are otherwise secured.230Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(ii) Usance and letters of credit are agreements to lend to a customer in the future, subject to certain conditions. Such commitments are either made for a ﬁxed period, or have no speciﬁc maturity dates, but are cancellable by the Group (as lender) subject to notice requirements. These Letters of credit are provided at market-related interest rates. Usance and letters of credit are secured by diﬀerent types of collaterals similar to those accepted for actual credit facilities.(iii) The amount of N5,568 billion (December 31, 2020: N5,643 billion) represents the total pension assets under custody held by the Bank’s subsidiary, Zenith Pensions Custodian Limited under the latter’s custodial business. Included in the amount above is N94.4 billion (December 31, 2020: N105.7 billion) which represents the amount of the Group’s guarantee for the assets held by the subsidiary as required by the National Pensions Commission of Nigeria. Aside from the Guarantee on the pension asset held by our subsidiary, Zenith Pension Custodian Limited, the Group does not have any contingent liabilities in respect of related parties.40. Dividend per shareGroup BankIn millions of Naira31-Dec-2131-Dec-2031-Dec-2131-Dec-20Dividend proposed97,32894,18897,32894,188Number of shares in issue and ranking for dividend31,39631,39631,39631,396Proposed dividend per share (Naira)3.103.003.103.0Interim dividend per share paid (Naira)0.300.300.300.30Final dividend per share proposed2.802.702.802.70Final dividend paid during the year84,80878,49184,77178,491Interim dividend paid during the year9,4189,4199,4189,419Total dividend paid during the year94,22687,91094,18987,910The Board of Directors, pursuant to the powers vested in it by the provisions of Section 426 of the CAMA 2020, paid an interim dividend of N0.30 per share and proposed a ﬁnal dividend of N2.80 per share (31 December 2020: interim; N0.30, ﬁnal; N2.70) from the retained earnings account as at 31 December 2021. This is subject to approval by shareholders at the next Annual General Meeting.The number of shares in issue and ranking for dividend represents the outstanding number of shares as at 31 December 2021 and 31 December 2020 respectively.Dividends are paid to shareholders’ net of withholding tax at the rate of 10% in compliance with extant tax laws.41. Cash and cash equivalentsFor the purposes of the statement of cash ﬂow, cash and cash equivalents include cash and non-restricted balances with central banks, treasury bills with original maturity of three months, operating account balances with other banks, unrestricted amounts due from other banks.231FinancialsZenith Bank Plc Annual Report December 31, 2021Group Bank31-Dec-2131-Dec-2031-Dec-2131-Dec-20Cash and cash balances with central bank (less mandatory reserve deposits)157,466180,346122,465132,626Treasury bills ((3 month tenor) (see note 16)315,795396,924230,213396,924Due from other banks 661,258631,250423,896353,1331,134,5191,208,520776,574882,68342. Compliance with banking regulationsDuring the year, the Bank incurred a penalty of N4 million for non-compliance with documentation required under guide to bank charges.43. Prudential AdjustmentsProvisions under prudential guidelines are determined using the time-based provisioning speciﬁed by the revised Prudential Guidelines issued by the Central Bank of Nigeria. This is at variance with the expected credit loss (ECL) model required under IFRS 9. As a result of the diﬀerences in the methodology/provision, there will be variances in the impairments provisions required under the two methodologies.Paragraph 12.4 of the revised Prudential Guidelines for Deposit Money Banks in Nigeria stipulates that Banks would be required to make provisions for loans as prescribed in the relevant IFRS when IFRS is adopted. However, Banks would be required to comply with the following:(a) Expenses for loan losses recognised in the proﬁt and loss account should be determined based on the relevant IFRS. However, the provisions for loan losses determined under the IFRS should be compared with the loan loss provisions determined under the Prudential Guidelines. The diﬀerences between both provisions should be treated as follows:(x) Where Prudential Provisions is greater than IFRS provisions, the resulting diﬀerence should be transferred from the general reserve account to a non-distributable regulatory credit risk reserve.(xi) Where Prudential Provisions is less than IFRS provisions, the IFRS determined provision is charged to the statement of comprehensive income. The cumulative balance in the regulatory risk reserve is thereafter transferred to the general reserve account.(b) The non-distributable reserve is classiﬁed under Tier 1 as part of the core capital for the purpose of determining capital adequacy.In the guidelines to IFRS implementation, the Central Bank of Nigeria (CBN) directed banks to maintain a regulatory credit risk reserve in the event that the impairment on loans determined using the CBN prudential guideline is higher than the impairment determined using IFRS principles. As a result of this directive, the Bank holds credit risk reserves of N20.02 billion as at 31 December 2021.232Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021Provision for loan losses per prudential guidelinesBank In millions of NairaNote 31-Dec-2131-Dec-20Loans and advances:-Lost16,65671,560- Doubtful7,8141,685- Substandard3,7904,567- Watchlist99,10911,952- Performing47,93641,089(a)175,305130,853Impairment assessment under IFRS Loans and advances12-months ECL credit17,70816,931Life-time ECL Not impaired26,6718,702Life- time ECL credit impaired94,142107,233(b)138,521132,866--Due from Banks- 12 months ECL (c)5858Treasury bills- 12 months ECL (d)395676Asset pledged as collateral- 12 months ECL (e)198355Investment securities- 12 months ECL (f)666755Other ﬁnancial assets- ECL allowance (g)9,8352,046Other non-ﬁnancial assets (h)-226Oﬀ Balance Sheet Exposures- 12 months ECL (i)5,6164,832(m)=(b)+(c)+(d)+(e)+(f)+(g)+(h)+(i)155,289141,814(n)=(a)-(m)20,016(10,961)Reversal from)/transfer to retained earnings at year end(20,016)-233FinancialsZenith Bank Plc Annual Report December 31, 2021In millions of NairaGroupBank44. Statement of cash flow reconciliation(i) Investment securities (see note 17 & 21)31 December 2021Investment securities (including pledged instruments) at amortised costInvestment securities (including pledged instruments) at FVTPL and FVTOCI Investment securities (including pledged instruments) at amortised costInvestment securities (including pledged instruments) at FVTPL and FVTOCI At 1 January 2021649,228521,402381,932124,910Change in ECL allowance(2,835)-248-Additions to Investment securities300,852-159,577-Disposal of Investment securities(230,056)-(75,928)-Unrealised gain from changes in fair value recognised in proﬁt or loss-(173)-(173)Fair value gain/loss OCI-3,372-5,599Interest income88,181-46,029-Interest received(47,834)-(28,973)-Foreign exchange diﬀerence314524314524Balance as at 31 December 2021757,850685,136483,19997,471Recognised in cash ﬂow statement-(160,011)-33,38931 December 2020Investment securities (including pledged instruments) at FVTPLInvestment securities including pledged instruments) at amortised cost and FVOCIInvestment securities (including pledged instruments) at FVTPLInvestment securities including pledged instruments) at amortised cost and FVOCIAt 1 January 202027,922796,30627,922394,567Unrealised gain from changes in fair value recognised in proﬁt or loss9,486-9,486-Interest accrued-17,921-16,295Gains from changes in fair value recog-nised in OCI-(503)-(503)Interest income-89,806-50,076Interest received-(42,990)-(42,990)Additions to Investment Securities-120,712-98,245Disposal to Investment Securities-(97,225)-(80,658)Foreign exchange diﬀerence-28,489-46849,2771,121,35344,935461,907Movement for cash ﬂow statement11,869208,8377,52726,407Recognised in cash ﬂow statement-(220,706)-(33,934)(iia) Treasury bills (Amortised cost) (see note 16& 17)234Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 202131 December 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Treasury bills (including pledged instruments) at amortised cost as at 1 January 535,673370,326351,511201,379Change in ECL allowance781(972)281(659)Interest income40,42653,79719,52031,147Additions2,652,0942,157,2232,346,8391,834,272Redemptions(2,449,816)(1,992,586)(2,056,995)(1,685,163)Interest received(31,136)(52,115)(12,519)(29,465)Balance as at 31 December748,022535,673648,637351,511(iib) Treasury bills (FVTPL) (see note 16)31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Treasury bills fair value through proﬁt or loss (Including pledged instruments) as at 1 January770,094807,967769,800807,970Unrealised fair value gain86,64443,33786,39341,491Balance as at end of year(954,462)(770,094)(952,131)(769,800)Recognised in Cashflow(97,724)81,210(95,938)79,661(iii) Loans and advances (see note 20)31 December 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Loans and advances at 1 January2,779,0272,305,5652,639,7972,239,472Changes in ECL allowance(48,873)(37,439)(48,357)(35,495)Interest income292,224250,812272,942236,064Interest received(270,343)(221,011)(241,912)(206,263)Foreign exchange diﬀerence67,67995,44967,67953,200Balance as at end of year(3,355,728)(2,779,027)(3,099,452)(2,639,797)Recognised in Cash flow(536,014)(385,651)(409,303)(352,819)235FinancialsZenith Bank Plc Annual Report December 31, 2021(iv) Customer deposits31 December 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20As at 1 January5,339,9114,262,2894,298,2583,486,887Interest expense60,32281,06037,55659,691Interest paid(58,785)(63,028)(36,019)(42,550)Foreign exchange diﬀerences39,31399,45245,55432,446Balance as at end of year(6,472,054)(5,339,911)(5,169,199)(4,298,258)Recognised in Cash flow1,091,293960,138823,850761,784(v) Other liabilities (see note 29)31 December 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20As at 1 January703,292363,764599,464386,061Changes in ECL allowance784(706)784(706)Lease modiﬁcation353---Lease liability additions4992,5822591,632Interest expense on lease liability3,4273,2602,8852,805Lease interest paid(2,003)(2,838)(1,950)(2,528)Principal repayment on lease liability(2,802)(742)(2,007)(684)Foreign exchange diﬀerence8,330-8,159-Unclaimed dividend received612-612-Balance as at end of year(487,432)(703,292)(427,876)(599,464)Net cash movement in operating activties(225,060)337,972(180,330)212,884(vi) Profit on disposal of property and equipment31 December 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Cost (see note 25)6,3957,5616,1962,436Accumulated depreciation (see note 25) (6,025)(6,795)(5,828)(2,191)Net book value370766368245Sales proceed(448)(1,113)(437)(593)Profit on Disposal (see note 10)7834769348236Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(vii) Due from Banks (greater than 90 days)31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20AS at 1 January179,244223,413179,244223,413Due to banks below 90 days(666)---Changes in ECL allowance-83-83Interest Income6,76626,3981,89825,205Interest received(16,297)(24,526)(11,429)(24,526)Foreign exchange diﬀerence-21,794-21,794Balance as at end of year(29,986)(179,244)(94,157)(179,244)Recognised in cash flow statement139,06167,91875,55666,725(viii) Other assets31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20As at 1 January169,96777,395159,62571,412Changes in ECL allowance(7,555)(1,409)(7,563)(1,369)Withholding tax receivable utilised-(497)-(497)Foreign exchange diﬀerence7,1605,8737,160-Balance as at end of year(168,210)(169,967)(152,326)(159,625)Net cash movement in operating activities1,362(88,605)6,896(90,079)(ix) Net movement in DerivativesDerivative Asset31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20At 1 January44,49692,72241,72992,722Balance as at end of year(56,187)(44,496)(57,476)(41,729)(11,691)48,226(15,747)50,993Derivative liabilities31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20At 1 January11,07614,76211,07614,762Balance as at end of year(14,674)(11,076)(15,170)(11,076)3,598(3,686)4,094(3,686)Recognised in cashflow(8,093)44,540(11,653)47,307 237FinancialsZenith Bank Plc Annual Report December 31, 2021(x) Restricted balances (Cash Reserve)31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Mandatory reserve deposit with central bank1,250,2081,330,7331,194,5121,289,930Special Cash Reserve80,68980,68980,68980,6891,330,8971,411,4221,275,2011,370,619Recognised in cash flow80,525(650,472)95,418(609,669)(xi) Interest paid31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Customer deposit (see note 44(iv) )(58,785)(63,028)(36,019)(42,550)Onlending facilities (see note 30b)(1,684)(2,638)(1,684)(2,638)Lease liabilities (see 44(v))(2,003)(2,838)(1,950)(2,528)Borrowings (see note 31)(41,325)(29,843)(40,788)(34,104)Debt securities (see note 32)(3,254)(3,114)(3,254)(3,114)(107,051)(101,461)(83,695)(84,934)(xii) Unrealised fair value change31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Investment securities (see note 44(i))(173)9,486(173)9,486Treasury bills (see note 44(ii))86,64443,33786,39341,491Derivatives (see note 44(ix))8,093(44,540)11,653(47,307)94,5648,28397,8733,670(xiiia) Interest received from operating activities31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Due from other banks (see note 41(vii))16,29724,52611,42924,526Loans and advances (see note 41(iii))270,343221,011241,912206,263286,640245,537253,341230,789xiiib) Interest received from treasury bills and investment securities31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Treasury bills (see note 41(ii))31,13652,11512,51929,465Investment securities (see note 41(i))47,83442,99028,97342,99078,97095,10541,49272,455238Notes to the Consolidated and Separate Financial Statements for the Year Ended 31 December 2021(xiv) Acquisition of Right of use asset31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Addition to right of use (see note 26)7395,8264094,702Lease liability addition (see note 44(v))(499)(2,582)(259)(1,632)2403,2441503,070(xivb) Additions to property,plant and equipment other than right of use31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20Addition to property, plant and equipment (see note 26)34,84829,77631,99326,555Addition to right of use asset (see note 26)(739)(5,826)(409)(4,702)34,10923,95031,58421,853(xv) Income Tax Payable (see note 13c)31 December, 202131-Dec-2131-Dec-2031-Dec-2131-Dec-20At the start of the year11,6909,7119,1176,627Current income tax charge20,26419,2227,7055,665Tax paid(15,045)(16,746)(2,581)(2,678)WHT utilized-(497)-(497)16,90911,69014,2419,11745. ComparativesCertain disclosures and some prior year ﬁgures have been presented to conform with current year presentation.During the period, management changed the presentation of the increase / decrease in investment securities in the statement of cash ﬂow from operating activities to investing activities. Management considers this presentation to be more relevant. Accordingly, the prior year comparative statements of cash ﬂow as at 31 December 2020 have been restated by reclassifying changes in investment securities from operating activities to investing activities.46. Events after the reporting periodFinance Act 2021The Finance Act was signed into Law on 31 December, 2021, with an eﬀective date of 1 January, 2022. The signing into law of the Finance bill on 31 December 2021 qualiﬁes as an adjusting event as the bill had been in existence at the end of the ﬁnancial year. In view of this development, the Bank has reviewed the provisions of the Act and have made appropriate adjustments to the ﬁnancial estimates disclosed in the Financial statement in line with the relevant provisions of the Finance Act.239FinancialsZenith Bank Plc Annual Report December 31, 2021Other National Disclosures04In millions of Naira31-Dec-2131-Dec-20 %31-Dec-21 31-Dec-20%GroupGross income 765,558696,450Interest expense - Local (110,698)(98,512)- Foreign (25,021)(22,619)629,839575,319Impairment loss on ﬁnancial and non-ﬁnancial instruments (59,932)(39,534)569,907535,785Bought-in materials and services - Local (167,921)(131,934)- Foreign (12,643)(39,808)Value added 389,343100364,043100Distribution EmployeesSalaries and beneﬁts 79,88521 79,52022 Government Income tax 35,816925,2967Retained in the Group Replacement of property and equipment/ intangible assets 29,0847 28,6628 To pay proposed dividend 87,9092384,76923Proﬁt for the year (including statutory reserves, small scale industry, and non-controling interest)156,64940145,79640Total Value Added 389,343100364,043100Value added represents the additional wealth which the Group has been able to create by its own and employees eﬀorts.242Zenith Bank Plc Annual Report December 31, 2021Value Added StatementIn millions of Naira31-Dec-2131-Dec-21 %31-Dec-2031-Dec-20 %BankGross income 677,283595,921Interest expense - Local (65,532)(62,041)- Foreign (45,161)(40,070)566,590493,810Impairment loss on ﬁnancial and non-ﬁnancial instruments (56,175)(37,237)510,415456,573Bought-in materials and services - Local (165,857)(159,589)Value added 344,558100 296,984100 Distribution EmployeesSalaries and benefits 61,1231861,51521Government Income tax 24,0347 12,1554 Retained in the Bank Replacement of property and equipment/ intangible assets 26,2687 25,4629 To pay proposed dividend 87,90926 84,769- Proﬁt for the year (including statutory reserves, and small scale industry)145,22442113,08366Total Value Added 344,558100 296,984100 Value added represents the additional wealth which the Bank has been able to create by its own and employees eﬀorts.243Other National DisclosuresIn millions of Naira 31-Dec-21 31-Dec-20 31-Dec-19 31-Dec-1831-Dec-17 GroupStatement of Financial PositionAssetsCash and balances with central banks 1,488,3631,591,768936,278954,416957,663Treasury bills1,764,9451,577,875991,3931,000,560936,817Assets pledged as collateral392,594298,530431,728592,935468,010Due from other banks691,244810,494707,103674,274495,803Derivative assets56,18744,49692,72288,82657,219Loans and advances3,355,7282,779,0272,305,5651,823,1112,100,362Investment securities1,303,726996,916591,097565,312330,951Investments in associates-----Deferred tax asset1,8375,78711,8859,5139,561Other assets168,210169,96777,39580,94892,494Property and equipment200,008190,170185,216149,137133,384Intangible assets25,00116,24316,49716,67812,989Total assets 9,447,8438,481,2736,346,8795,955,7105,595,253LiabilitiesCustomers deposits 6,472,0545,339,9114,262,2893,690,2953,437,915Derivative liabilities14,67411,07614,76216,99520,805Current income tax16,90911,6909,7119,1548,915Deferred tax liabilities11,6031256718Other liabilities487,432703,292363,764231,716243,023On-lending facilities369,241384,573392,871393,295383,034Borrowings750,469870,080322,479437,260356,496Debt securities issued45,79943,17739,092361,177332,931Total liabilities 8,168,1817,363,8005,404,9935,139,9594,783,137Net assets 1,279,6621,117,473941,886815,751812,116EquityShare capital 15,69815,698 15,69815,698 15,698 Share premium 255,047255,047255,047255,047255,047Retained earnings 607,203521,293412,948322,237356,837Other Reserves 400,570324,461257,439221,231183,217Attributable to equity holders of the parent 1,278,5181,116,499941,132814,213810,799Non-controlling interest 1,1449747541,5381,317Total shareholders' equity 1,279,6621,117,473941,886815,751812,116* See note 43Five Year Financial Summary 244Zenith Bank Plc Annual Report December 31, 2021In millions of Naira 31-Dec-21 31-Dec-20 31-Dec-19 31-Dec-1831-Dec-17 Statement of profit or loss and other comprehensive income Gross earnings 765,558696,450662,251630,344745,189Share of proﬁt / (loss) of associates-----Interest expense(106,793)(121,131)(148,532)(144,458)(216,637)Operating and direct expenses (318,459)(279,924)(246,393)(235,829)(231,006)Impairment charge for ﬁnancial and non-ﬁnancial assets(59,932)(39,534)(24,032)(18,372)(98,227)Profit before taxation 280,374255,861243,294231,685199,319Income tax (35,816)(25,296)(34,451)(38,261)(25,528)Profit after tax 244,558230,565208,843193,424173,791Foreign currency translation diﬀerences8,48515,011(8,498)4,8285,233Fair value movements on equity instruments5,59916,29513,8701,459(2,551)Fair value movements on debt securities at FVOCI(2,227)1,981518--Related tax-(355)(66)--11,85732,9325,8246,2872,682Total comprehensive income 256,415263,497214,667199,711176,473Earning per share: 214,667214,667199,711Basic and diluted 778 K734 K665 K319 K227 K245Other National DisclosuresIn millions of Naira 31-Dec-21 31-Dec-20 31-Dec-1931-Dec-18 31-Dec-17 BankStatement of Financial PositionAssetsCash and balances with central banks 1,397,6661,503,245879,449902,073907,265Treasury bills1,577,6471,393,421822,449817,043799,992Assets pledged as collateral357,000298,530431,728592,935468,010Due from other banks518,053532,377482,070393,466273,331Derivative assets57,47641,72992,72288,82657,219Loans and advances3,099,4522,639,7972,239,4721,736,0661,980,464Investment securities477,004333,126189,358156,673117,814Investments in subsidiaries34,62534,62534,62534,00334,003Investments in associates-----Deferred tax-4,73311,2239,1979,197Other assets152,326159,62571,41275,91056,052Assets classiﬁed as held for sale-----Property and equipment177,501169,080165,456133,854118,223Intangible assets23,54214,69915,10915,39912,088Total assets 7,872,2927,124,9875,435,0734,955,4454,833,658LiabilitiesCustomers deposits 5,169,1994,298,2583,486,8872,821,0662,744,525Derivative liabilities15,17011,07614,76216,99520,805Current tax payable14,2419,1176,6275,9546,069Deferred income tax liabilities11,596----Other liabilities427,876599,464386,061223,463229,332On-lending facilities369,241384,573392,871393,295383,034Borrowings769,395874,090329,778458,463418,979Debt securities issued45,79943,17739,092361,177332,931Total liabilities 6,822,5176,219,7554,656,0784,280,4134,135,675Net assets 1,049,775905,232778,995675,032697,983EquityShare capital 15,69815,698 15,698 15,698 15,698 Share premium255,047255,047255,047255,047255,047Retained earnings466,249382,292302,028238,635287,867Other reserves312,781252,195206,222165,652139,371Attributable to equity holders of the parent 1,049,775905,232778,995675,032697,983Total shareholders' equity 1,049,775905,232778,995675,032697,983Five Year Financial Summary 246Zenith Bank Plc Annual Report December 31, 2021In millions of Naira 31-Dec-21 31-Dec-20 31-Dec-1931-Dec-18 31-Dec-17 Statement of profit or loss and other comprehensive income Gross earnings677,283595,921564,687538,004673,636Interest expense(82,718)(102,111)(126,237)(124,156)(200,672)Operating and direct expenses(281,223)(246,566)(215,037)(206,428)(208,299)Impairment charge for ﬁnancial assets(56,175)(37,237)(23,393)(15,313)(95,244)Profit before tax257,167210,007200,020192,107169,421Income tax(24,034)(12,155)(22,017)(26,627)(16,418)Profit after tax 233,133197,852178,003165,480 155,003Other comprehensive income ---Fair value movements on equity instruments 5,59916,29513,8701,459(2,551)5,59916,29513,8701,459(2,551)Total comprehensive income 238,732214,147191,873166,939150,452Earning per share: Basic and diluted 743 K630 K567 K527 K487 K247Other National DisclosuresFinancial yearNominal value of Number of sharesNominal value per shares (=N=)(units)shares (=N=)30-Jun-91 24,839,000.00 24,839,000.00 130-Jun-92 54,407,000.00 54,407,000.00 130-Jun-93 57,897,352.00 57,897,352.00 130-Jun-94 90,062,000.00 90,062,000.00 130-Jun-95 178,744,000.00 178,744,000.00 130-Jun-96 242,830,000.00 242,830,000.00 130-Jun-97 244,054,000.00 244,054,000.00 130-Jun-98 512,513,000.00 512,513,000.00 130-Jun-99 512,513,000.00 512,513,000.00 130-Jun-00 513,329,000.00 513,329,000.00 130-Jun-01 1,026,658,000.00 1,026,658,000.00 130-Jun-02 1,026,658,000.00 1,026,658,000.00 130-Jun-03 1,548,555,000.00 1,548,555,000.00 130-Jun-04 1,548,555,000.00 3,097,110,000.00 0.530-Jun-05 3,000,000,000.00 6,000,000,000.00 0.530-Jun-06 4,586,744,450.00 9,173,488,900.00 0.530-Jun-07 4,632,762,150.00 9,265,524,300.00 0.530-Sep-08 8,372,398,343.00 16,744,796,686.00 0.531-Dec-09 12,558,597,514.50 25,117,195,029.00 0.531-Dec-10 15,698,246,893.00 31,396,493,786.00 0.531-Dec-11 15,698,246,893.00 31,396,493,786.00 0.531-Dec-12 15,698,246,893.00 31,396,493,786.00 0.531-Dec-13 15,698,246,893.00 31,396,493,786.00 0.531-Dec-14 15,698,246,893.00 31,396,493,786.00 0.531-Dec-15 15,698,246,893.00 31,396,493,786.00 0.531-Dec-16 15,698,246,893.00 31,396,493,786.00 0.531-Dec-17 15,698,246,893.00 31,396,493,786.00 0.531-Dec-18 15,698,246,893.00 31,396,493,786.00 0.531-Dec-19 15,698,246,893.00 31,396,493,786.00 0.531-Dec-20 15,698,246,893.00 31,396,493,786.00 0.531-Dec-21 15,698,246,893.00 31,396,493,786.00 0.5Share Capital History248Zenith Bank Plc Annual Report December 31, 2021PROXY  FORM  FOR THE  31  ANNUAL  GENERAL  MEETING  OF  ZENITH  BANK  PLC TO  BE  HELD AT THE  CIVIC  CENTRE,  OZUMBA  MBADIWE STREET, VICTORIA ISLAND, LAGOS STATE ON WEDNESDAY, APRIL 6, 2022 AT 9.AM. ST I/We, ……............................................……… being a member of Zenith Bank Plc hereby appoint........................................................................  ................................................................................................................................................................................................................................ .............................................................................................................................................................................................................................  as our proxy to act and vote for us and on our behalf at the Annual General Meeting of the Company   to be held at   the Civic Centre, Ozumba  Mbadiwe Street, Victoria Island, Lagos State on Wednesday, April 6, 2022 at 9.00 a.m. and at any adjournment thereof. I/We desire this proxy to be used in favour of/or against the resolution as indicated below (strike out whichever is not desired). 1.   2.   3.  4.   5.   6.   7.   8.   9.  To present and consider the Bank's Audited Accounts for the ﬁnancial year ended 31  December,   2021, the Reports of the Directors, Auditors and Audit Committee thereon. st To declare a ﬁnal dividend. To approve the appointment of Dr. Omobola Arike Ibidapo‑Obe Ogunfowora, as an Independent Non‑ Executive Director The appointment of the Director has been approved by the Central Bank of Nigeria. The Proﬁle of the  aforementioned  Director  is  available  in  the  Annual  Report  and  also  on  the  Bank’s  website  at  www.zenithbank.com  To elect the following Directors who retire by rotation at this meeting (i)  (ii)  (iii)  To authorize the Directors to ﬁx the remuneration of the Auditors. Engr. Mustafa Bello Dr.  Al‑Mujtaba Abubakar Mr. Dennis Olisa   Disclosure of the remuneration of Managers of the Bank. To elect members of the Audit Committee. That Mr. Jim Ovia, CON, who has attained the age of 70 years since the last general meeting be  re‑elected as a Non‑Executive Director of the Bank. To consider and if thought ﬁt, to pass the following as ordinary resolution: “That the remuneration of the Directors of the Bank for the year ending December 31, 2022 be  and is hereby ﬁxed at N25 million only” for each Director. 10.  (A)   To consider and if thought ﬁt pass the following resolution as an ordinary resolution: “That  pursuant  to  Articles  56(1)  (c)  and  56(2)  of  the  Company's  Memorandum  and  Articles  of  Association, the Directors be and are hereby authorized to take steps to comply with the requirements  of the Companies and Allied Matters Act (CAMA), 2020 S. 124 and the Companies Regulations, 2021  as it relates to unissued shares currently standing to the capital of the company including but not  limited to cancellation of such unissued shares of the company”.        (B)  “That the Directors be and are hereby authorized to enter into and execute any agreements, deeds,  notices and any other documents necessary for and or incidental to affecting resolution (A) above”.        (C)  “That the Directors of the Company or any one of them for the time being, be and are hereby authorized to  appoint such professional parties and advisers, and to perform all such other acts and do all such other   things as may be necessary for or incidental to affecting the above resolutions, including without  limitation, complying with directives of any regulatory authority”. 11.  (A)  Pursuant to section 51(1) of the Companies and Allied Matters Act (CAMA), 2020, the Memorandum  and Articles of the Association of the Bank be and are hereby altered in the following manner:  By adding a new clause 41(A) to the Memorandum of Association of the Bank as follows; “To act in conjunction with any relevant Exchanges as a Derivatives Clearing member for all exchange  traded or over the counter trades and in accordance with the Rules and Regulations of the Securities  and Exchange Commission (SEC) in place from time to time”.       (B)  That Article 90 of the Articles of Association of the Bank be and are hereby altered in the following  manner:   By deleting the words:  “Unless and until otherwise determined by the Bank by Ordinary Resolution, the Directors of the Bank  shall not be less than ﬁve or more than fifteen in number” and substituting thereto the following:  “Unless and until otherwise determined by the Bank by Ordinary Resolution, the Directors of the Bank  shall not be less than ﬁve or more than twenty in number.” Please indicate with “x” in the appropriate box how you wish your vote to be cast on the resolutions set out above.  Unless otherwise instructed, the  proxy will vote or abstain from voting on his/her discretion. Dated this 28th Day of February, 2022 Authorized Signatory   Name/Designation                                                                        NOTE Please  sign  the  Proxy  Form  and  stamp  at  the  Stamp  Duties  Ofﬁce  and  forward  by  return  email  to  enquiry@veritasregistrars.com, veritasregistrars@veritasregistrars.com and michael.otu@zenithbank.com or by  depositing it at the ofﬁce of the Company's Registrars, Veritas Registrars Limited, 89A, Ajose Adeogun Street, Victoria Island,  Lagos State not later than 24 hours before the time ﬁxed for the meeting. The Company will bear the cost of stamping of all the  duly completed and signed proxy forms submitted within the stipulated time. A member who is unable to attend the Annual General Meeting is allowed to vote by Proxy. In line with the Company's obligations to comply with the restriction on mass gatherings and social and/or physical distancing  guidelines prescribed by both the Federal Government of Nigeria and the Lagos State Government in the conduct of the  meeting,  members  may  appoint  any  of  the  following  Directors,  Audit  Committee  Chairman  and  Shareholders’  Representatives as their Proxy for the meeting: Mr. Jim Ovia, CON  Mr. Jeffrey Efeyini  Prof. Chukuka S. Enwemeka  Mr. Gabriel Ukpeh  Engr. Mustafa Bello  Dr. Al‑Mujtaba Abubakar    Dr. Omobola Ibidapo‑Obe Ogunfowora  Mr. Henry Oroh  Mr. Dennis Olisa    Dr. Temitope Fasoranti  Mr. Ahmed Umar Shuaib    Dame (Dr.) Adaora Umeoji   Mr. Ebenezer Onyeagwu    Mrs. Adebimpe Balogun    Sir. Sunny Nwosu  Chief Timothy Adesiyan  Dr. Umar Farouk    Mr. Nonah Awoh    Mr. Boniface Okezie  Mrs. Bisi Bakare    ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  ‑  Chairman Director Director Director Director Director Director Director Director Director Director Deputy Managing Director GMD/CEO Chairman,  Audit Committee Shareholder  Representative Shareholder  Representative Shareholder  Representative Shareholder  Representative Shareholder  Representative Shareholder  Representative  The meeting would also be accessible to all members virtually on the Bank's website and our social media  platforms to avoid the need for physical gathering involving large number of persons.  REGISTRAR VERITAS REGISTRARS LIMITED 89A, AJOSE ADEOGUN STREET VICTORIA ISLAND, LAGOS.                                                                                                                                                                                                                                    

Continue reading text version or see original annual report in PDF format above