Contents1.Directors, Officers and Professional Advisers42.Results at a Glance/Key Performance Indices53.Group Financial Highlights64.Corporate Profile and Strategy95.Notice of Annual General Meeting225.Awards246.Founder and Chairman’s Statement267.Chief Executive Officer’s Review308.Board of Directors349.Directors’ Report4210.Statement of Corporate Responsibility500111.Corporate Governance Report5212.Report of the Independent Consultant to the Board of Directors on their Appraisal6713.Corporate Responsibility and Sustainable Banking Practices6814.Independent Auditor’s Limited Sustainability Assurance Report74Governance & Sustainability0215.Statement of Directors’ Responsibilities in Relation to the Financial Statements8416.Report of the Audit Committee8517.Independent Auditor’s Report8618.Consolidated and Separate Statement of Profit or Loss and Other Comprehensive Income9419.Consolidated and Separate Statements of Financial Position9520.Consolidated and Separate Statement of Changes in Equity9621.Consolidated and Separate Statements of Cash Flows9822.Notes to the Consolidated and Separate Financial Statements102Financials0323.Value Added Statement24224.Five Year Financial Summary24425.Share Capital History24826.Forms249Other National Disclosures042 (cid:59)en(cid:74)t(cid:73)(cid:3)(cid:35)(cid:66)n(cid:76)(cid:3)(cid:49)(cid:77)(cid:68)(cid:3)(cid:3)(cid:34)nn(cid:86)(cid:66)(cid:77)(cid:3)(cid:51)e(cid:81)o(cid:83)t(cid:3)(cid:37)e(cid:68)e(cid:78)(cid:67)e(cid:83)(cid:3)(cid:20)(cid:18)(cid:13)(cid:3)2022
Co(cid:83)(cid:81)o(cid:83)(cid:66)te(cid:3)(cid:42)n(cid:71)o(cid:83)(cid:78)(cid:66)t(cid:74)on
4
01 Zenith Bank Plc Annual Report December 31, 2022
Directors, Officers and Professional Advisers
Directors
Jim Ovia, CFR.
Prof. Chukuka Enwemeka**
Mr. Jeffrey Efeyini**
Mr. Chuks Emma Okoh*
Mr. Gabriel Ukpeh
Engr. Mustafa Bello
Dr. Al-Mujtaba Abubakar, MFR
Dr. Omobola Ibidapo-Obe Ogunfowora
Dr. Peter Olatunde Bamkole*
Dr. Ebenezer Onyeagwu
Dr. Adaora Umeoji,OON****
Mr. Umar Shuaib Ahmed***
Dr. Temitope Fasoranti
Mr. Dennis Olisa***
Mr. Henry Oroh
Mrs Adobi Nwapa*
Mr. Akindele Ogunranti*
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director/Independent
Non-Executive Director
Non-Executive Director/Independent
Non-Executive Director/Independent
Non-Executive Director/Independent
Group Managing Director/CEO
Deputy Managing Director
Executive Director
Executive Director
Executive Director
Executive Director
Executive Director
Executive Director
*Appointed to the Board effective 12 April 2022
**Retired from the Board effective 1 July 2022
***Retired from the Board effective 28 December 2022
****Retired from the Board effective 24 February 2023
COMPANY SECRETARY
Michael Osilama Otu
REGISTERED OFFICE
AUDITOR
REGISTRAR AND TRANSFER OFFICE
4
Zenith Bank Plc
Zenith Heights
Plot 84/87, Ajose Adeogun Street,
Victoria Island, Lagos
PricewaterhouseCoopers (PwC) Chartered Accountants
Landmark Towers, 5B Water Corporation Road
Victoria Island,
Lagos
Veritas Registrars Limited (formerly Zenith Registrars Limited)
Plot 89 A, Ajose Adeogun Street,
Victoria Island,
Lagos
Results at a Glance/ Key Performance Indices
Financial Highlights
In millions of Naira
31-Dec-22
31-Dec-21
% Change
Income statement Highlights
Interest and similar income
Net interest income
Impairment charge
Operating income
Operating expenses
Profit before tax
Profit after tax
Earnings Per Share (N)
Balance sheet Highlights
Gross loans and advances
Customers' deposits
Total assets
Shareholders' fund
Key ratios
Return on average equity (ROAE)
Return on average assets (ROAA)
Net Interest Margin (NIM)
Cost of funds
Cost of risk
Cost-to-income
Liquidity ratio
Loan to deposit ratio
Capital adequacy ratio (CAR)
Non-performing loans
540,166
366,627
(123,252)
624,342
(339,692)
284,650
223,911
7.14
4,123,966
8,975,653
12,285,629
1,378,940
16.8%
2.1%
7.3%
1.9%
3.2%
54.4%
75.0%
45.9%
1.93%
4.30%
427,597
320,804
(59,932)
569,907
(289,533)
280,374
244,558
7.78
3,501,878
6,472,054
9,447,843
1,279,662
20.4%
2.7%
6.7%
1.5%
1.9%
50.8%
71.6%
54.1%
21.0%
4.19%
26%
14%
106%
10%
17%
2%
-8%
-8%
18%
39%
30%
8%
-18%
-22%
9%
27%
68%
7%
5%
-15%
-6%
-53%
5
Zenith Bank Plc Annual Report December 31, 2022
Group Financial Highlights
Marginal growth of 2% in PBT attributable to significant
impairment charge on the back of debt restructuring
programme in Ghana.
Profit after tax dropped by 8% due to increase in
income tax expense from the Nigerian operations.
Profit before tax - Group (N'bn)
232
243
256
280
285
Profit after tax - Group (N'bn)
245
231
224
209
193
250
200
150
100
50
0
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
300
250
200
150
100
50
0
Return on Average Equity (RoAE) and Return on Average Asset (RoAA) dropped year-on-year on the back of
drop in profit after tax (PAT), increased shareholders’ funds and total assets.
ROAE/ROAA
30.00%
20.00%
10.00%
0.00%
23.80%
23.80%
22.40%
20.40%
3.30%
3.40%
3.10%
2.70%
16.80%
2.10%
2018
2019
2020
2021
2022
ROAE
ROAA
6
Total deposits grew by 39% (N2,(cid:13)0(cid:12)bn) reflecting public
confidence in the (cid:28)enith brand. The funding mix was also
rebalanced towards more stable retail deposits.
Total assets grew by 30% (N2,838bn) to close at
N12.3trn enhancing the Group’s revenue generating
capacity.
(cid:28)ota(cid:36) (cid:31)epo(cid:41)it(cid:41) - Group (N'bn)
(cid:21)i(cid:44)i(cid:31)en(cid:31) (N)
(cid:28)ota(cid:36) a(cid:41)(cid:41)et(cid:41) - Group (N'bn)
3.20
3.00
2.80
3(cid:6)690
2.60
9(cid:6)000
8(cid:6)000
7(cid:6)000
6(cid:6)000
5(cid:6)000
4(cid:6)000
3(cid:6)000
2(cid:6)000
1(cid:6)000
0
8(cid:6)976
3.10
3.00
6(cid:6)472
3.20
14(cid:6)000
12(cid:6)000
10(cid:6)000
12(cid:6)286
9(cid:6)448
8(cid:6)481
2.80
2.80
5(cid:6)340
4(cid:6)262
2018
2019
2020
2021
2022
5(cid:6)956
6(cid:6)347
8(cid:6)000
6(cid:6)000
4(cid:6)000
2(cid:6)000
0
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
(cid:26)hareholders’ funds grew year-on-year by 8%
to N1,3(cid:14)9bn providing adequate buffer for
business expansion.
(cid:19)onsistent growth in dividend per share reflecting the Group’s
ability to deliver superior returns to shareholders.
(cid:28)ota(cid:36) (cid:41)(cid:34)are(cid:34)o(cid:36)(cid:31)er(cid:41)' fun(cid:31) - Group
(N'bn)
1(cid:6)379
1(cid:6)280
1(cid:6)117
942
816
1400
1200
1000
800
600
400
200
0
(cid:21)i(cid:44)i(cid:31)en(cid:31) (N)
3.20
3.10
3.00
2.80
2.80
3.20
3.10
3.00
2.90
2.80
2.70
2.60
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
7
Zenith Bank Plc Annual Report December 31, 2022
Group Financial Highlights
8
IntroductionZenith Bank Plc has continued to win accolades both on the local and international fronts. Zenith Bank was recently named the Bank of the year by The Banker, Financial Times of London.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 The Gambia. In Nigeria, we have a strong franchise and reputation anchored on three pillars: people, technology, and service. Within thirty-two years of its existence, Zenith Bank has demonstrated 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 robust risk management framework. 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:9ServiceTechnologyPeopleAt 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 infrastructure.For 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 operations.Corporate Profile & Strategy Highly Skilled PersonelInnovationGood financial performanceStable and dedicated management teamLeadership in the use of Informationand Communication TechnologyStrategic distribution channelsRobust risk management framework“To build the Zenith brand into a reputableinternational financial institution recognized for innovation, superior customer service and performance while creating premium value for all stakeholders”.“ establish a presence in all major economicand financial centres in Nigeria, Africa and indeed all over the world; creating premium value for all stakeholders”.. Integrity. Professionalism. Excellence. Ethics. Commitment· Transparency· ServiceOur VisionOur MissionOur Value10Zenith Bank Plc Annual Report December 31, 2022Corporate Profile & Strategy Business Focus
Zenith Bank Group is a customer centric, innovation and
technology enabled financial services organisation that
is
geared towards surpassing its customers’ expectations. Zenith
has clearly defined its strategic business focus and that forms
basis of resource allocation.
The Group operations are managed through the following:
Core business segments
Operations outside Nigeria
Operations in other sectors
a)
Core Business Segments
The 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 Banking
Institutional and Investment Banking
The 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 through
subsidiary four units: the Liability and Deposit Management
Unit, Bonds Trading Unit, Foreign Currency Trading Unit and the
Correspondent Banking Unit.
Corporate Banking
The 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.
It 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.
11
Zenith Bank Plc Annual Report December 31, 2022
Corporate Profile & Strategy
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;
SME grow my business
i)
ii)
iii)
iv)
v)
vi)
Transport and Aviation,
Conglomerates
Breweries & Beverages
Oil and Gas
Power, Infrastructure and Construction.
Telecommunications and Fintechs
Commercial/SMEs
The 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).
The Group’s MSME business has continued to grow on the
upward trajectory.
MSMEs remain the growth engine of any developing economy
especially, contributing significantly to the Nigerian 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.
loans and advances
It offers
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.
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.
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.
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.
Also, within the year, leveraging on our partnership with Google,
Zenith Bank trained 590 SME business owners in two separate
cohorts on different subjects including – business growth
strategies; digital marketing; increasing your sales, effective
financial planning and pitching for success and certificates were
duly awarded. In another collaborative efforts with Google, we
visited 10 Universities within the year, where final year students
12
were taught the act of entrepreneurship, brand building and how
to own and run a successful enterprise and staying productive
online In partnership with VISA, we launched the Zenith Bank
SME Visa Business Card, a customized card solution embedded
with several offerings including Business Expense Management,
Card Controls features and other merchant solution offerings.
Within the year, we also launched our SME Arena, an avenue
where platform owners and solution providers can showcase
their various offerings to Zenith SME Business communities. We
hope to build the SME Arena into a huge market place to serve
as a catalyst to achieve the Bank’s objective as a leading SME
Bank in Nigeria.
Retail Banking
The Group’s strategic objective is to become the leading retail
bank in Nigeria. To this end, our key strategic drivers are; customer
engagement and value innovation. 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,
core middle, 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),
Aspire 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 employs
advanced 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.
The Bank has deployed agency banking services across the 36
states as well as 774 Local Government Areas of the federation
to ensure the bank has a touch point at every location in the
country. The Bank has on-boarded about 93,257 agents as at
31st December 2022. 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 with a view to tracking key retail performance metrics
on the journey to becoming the leader in the retail space 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 Banking
The 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
13
Zenith Bank Plc Annual Report December 31, 2022
Corporate Profile & Strategy
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 Subsidiaries
systems, offshore remittances and foreign exchange and project
finance.
b) Operations outside Nigeria
The 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 Limited
Zenith 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
14
Zenith 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) Operations in other sectors
The 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 2022,
total funds under its custody amounted to approximately N6,266
trillion. Zenith Pensions has 132 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.
trustees,
Zenith Nominees Limited provides nominees,
administrators, and executorship services for non-pension
assets. It started operations in 2018. As at 31 December 2022,
total funds under its custody amounted to approximately N514
billion
Strategic objectives
and service delivery
The 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 network
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 practices Locally, 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.
2.
3.
4.
5.
Continue to deliver superior and tailor- made service
experience to all our customers at all times
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
base
Continue to expand our operations by adding new
distribution channels especially in the digital space
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 expansion
Continually enhance our processing and systems
platforms to deliver new capabilities and improve
operational efficiencies and achieve economies of scale.
15
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.”
17.
18.
Investment in core banking infrastructure and other
banking systems infrastructure to position the bank for
the future as it expands and grows its business across
the commercial and retail segments.
The lending businesses in all our subsidiaries will focus
primarily on international and export trade transactions.
It will
international trade bills
for companies and also providing short-term credits
to financial institutions that use the bank as their
correspondent bank.
involve discounting
During the year the Bank hosted its second edition of the
Zenith Bank Tech fair on the 22nd and 23rd November 2022,
with the theme, “Future Forward 2.0”. The major objective of the
tech fair is to provide global and local technology brands the
platform to showcase their leading and disruptive technologies.
The Technology fair comprised of 3 major events namely,
presentations and discussions by participants, tech exhibitions,
and hackathon (christened “Zecathon”).
Zenith Bank Plc Annual Report December 31, 2022
Corporate Profile & Strategy
Maintain strong risk management and corporate
governance culture
Ensure proper pricing of our products and services
Increase our market share of retail banking customers
and deploy our E-business tools and enhanced customer
service
Develop compelling customer value proposition (CVP)
for our various customer segments that ensures we can
optimize our average revenue per customer.
Continuous investment in technology infrastructure that
is essential to support our growing retail customer base
and further strengthen our existing payment platforms
to increase digital banking and respond appropriately to
the cashless policy necessitated by the naira redesign.
Increasing corporate finance activities to boost fee
income.
Leveraging on our existing branch network to drive our
product delivery and deposit liability growth.
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.
Generating more foreign exchange to support our
trade business by focusing on non-oil export customers’
business in view of the Central Bank of Nigeria’s initiative
to generate $200 billion from non-oil exports in three to
five years.
leadership of the corporate banking
Continue
business in its chosen territories, ensuring our customers
receive best-in-class services and maximize returns of all
stakeholders.
Our foreign subsidiaries will target companies that
currently have trade partners in Nigeria and other
its
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
16
Market and
business strategy
The 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.
Exploring viable market entry/expansions
into European and Sub-saharan African
markets to further provide a bridge/platform
for consummating our existing customers’
transactions across Africa and Europe while
also acquiring new customers in the new geographical regions.
Creating a digital one-stop payment ecosystem that can service the payments and collection needs of our teaming MSMEs in
the Sub-Saharan African markets.
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 costs
The 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:
Business Locations
As at 31 December 2022, the geographical spread of the Group’s business locations is as follows:
Geographical Locations
Federal Republic of Nigeria
Republic of Ghana
United Kingdom
Sierra Leone
The Gambia
China Representative Office
Total
Branches
Cash Centres
Non-Banking Operations
396
30
2
7
7
1
443
155
10
-
1
7
-
173
3
-
-
-
-
-
3
17
Zenith Bank Plc Annual Report December 31, 2022
Corporate Profile & Strategy
As 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 network
The Group has a total of 2,108 ATM at 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 Channels
Other 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
18
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
range 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 *966# EazyBanking
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.
allows
(Customised Branch Collections)
Xpath
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.
GlobalPay - 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 the Group on this platform.
The platform provides additional benefits to customers
as it enables merchants 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.
Aspire Lite is a new product specifically designed for
customers who are between 16 - 25years and are willing
to open an Aspire account but unable to provide the
necessary documents (valid ID/Admission letter/school
ID).
Wallet on CEVA is an additional service to agency
banking platform. Customers without BVN are allowed
to open wallet and perform banking transactions. The
services are available are; withdrawal on wallet, and
deposit on wallet at agent locations. As 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.
19
Zenith Bank Plc Annual Report December 31, 2022
Corporate Profile & Strategy
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.
to
The Zenith Mobile App was more
recently upgraded
include
features that make banking more
interactive,
seamless,
intuitive,
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.
20
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.
SME Arena is a one stop shop for business owners to
enjoy product and services, discounted offerings from
selected partners from SME Arena
SME Business Card is a debit card that help SMEs
distinguish personal expenses from business expenses.
It also offers discounted prices at select merchant
locations.
Net Pos 2-in-1 is a portable dual function android
device that acts as a mobile phone and means of card
payment collections for SMEs. 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.
...
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FEATURES
&
BENEFITSwww.zenithbank.com/zecaOther
National
Disclosures04 Zenith Bank Plc Annual Report December 31, 2022
Notice of Annual General Meeting
NOTICE
IS HEREBY GIVEN that the Thirty-Second Annual
General Meeting of Zenith Bank Plc will hold virtually via www.
zenithbank.com/32AGM at 9.00 a.m. on Tuesday the 2nd day of
May, 2023 to transact the following business:
5.
To authorize the Directors to fix the remuneration of the
Auditors.
6.
To disclose the remuneration of Managers of the bank.
ORDINARY BUSINESS
7.
To elect members of the Audit Committee.
1.
To present and consider the Bank’s Audited Accounts for
the financial year ended 31st December, 2022, the Reports
of the Directors, Auditors and Audit Committee thereon.
2.
To declare a final dividend.
SPECIAL BUSINESS
8.
That Dr. Al-Mujtaba Abubakar, MFR, who has attained the
age of 70 years since the last general meeting be re-elected
as an Independent Non-Executive Director of the bank.
3.
To approve the appointment of the following Directors:
9.
(a) Peter Olatunde
Bamkole
as
Independent
Non-Executive Director
(b.) Mr. Chuks Emma Okoh as Non-Executive Director
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, 2023 be and is hereby fixed at
N30 million only” for each Director.
(c.) Mrs. Adobi Stella Nwapa as Executive Director
Dated this 31st day of March, 2023.
(d.) Mr. Anthony Akindele Ogunranti as Executive Director
NOTES:
The appointment of the Directors have been approved by
the Central Bank of Nigeria.
1 . PROXY:
The Profile of the aforementioned Directors are available in
the Annual Report and also on the Bank’s website at www.
zenithbank.com.
4.
To re-elect the following Directors who retire by rotation at
this meeting
(i) Dr. Omobola Ibidapo-Obe Ogunfowora
(ii) Mr. Gabriel Ukpeh
(iii) Dr. Temitope Fasoranti
22
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.
Additionally, Shareholders may nominate any of the
Directors as proxy.
Note however that a proxy need not be a member of the
company.
2
Virtual Meeting Link
6. Rights of Shareholders/Securities’ Holders to ask Questions
Further to the signing into law of the Business
Facilitation (Miscellaneous Provisions) Act, which
allows public companies to hold meetings
electronically, this AGM would be held virtually.
The Virtual Meeting Link for the Annual General
Meeting which will be live-streamed at www.
zenithbank.com/32AGM, will also be available on
the Company’s website at www.zenithbank.com
and other social media platforms for the benefit of
Shareholders.
3. Closure of Register of Members
The Register of Members and Transfer Books of
the Company will be closed on April 17th, 2023,
to enable the Registrar prepare for the payment of
dividend.
4. Dividend Warrants
If approved, dividend warrants for the sum of
N2.90K for every share of 50K (bringing the total
dividend for the financial year ended December
31, 2022 to N3.20K) will be paid via e-mandate on
the 2nd May, 2023, to shareholders whose names
are registered in the register of members at the
close of business on the 14th day of April, 2023.
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.
Shareholders/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 submitted to the Company on or
before the 28th day of April, 2023.
7. Unclaimed Dividend Warrants and Share Certificates
Shareholders 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.
8. E-Dividend
Notice 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 e-dividend and e-bonus
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.
9. Profile of Directors
The profile of all Directors are available for viewing on the
bank’s website, www.zenithbank.com.
This Notice supercedes our earlier Notice on this.
5. Audit Committee
By Order of the Board
the
In accordance with Section 404(6) of
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.
MICHAEL OSILAMA OTU, ESQ.
Company Secretary/General Counsel
Plot 87, Ajose Adeogun Street
Victoria Island, Lagos
23
Best
Corporate
Governance
‘Financial
Services’
AfricaEthical
BoardroomTo
all
our
esteemed
Customers
and
Shareholders,
your
continuous
support,
patronage
and
loyalty
to
the
Zenith
Brand
made
the
achievement
of
the
awards
possible
in
2022.Bank
of
the
Year,
NigeriaThe
BankerBest
Commercial
Bank,
NigeriaInternational
BankerBest
Innovation
in
Retail
Banking,
NigeriaInternational
BankerBank
CEO
of
the
YearBusinessDay
Newspaper24Zenith Bank Plc Annual Report December 31, 2022Awards Biggest
Bank
in
Nigeriaby
Tier-1
Capital
The
BankerBest
Bank
in
NigeriaGlobal
FinanceBest
Corporate
Governance
Best
Corporate
Governance,
NigeriaWorld
FinanceBest
Commercial
Bank,
NigeriaWorld
FinanceBest
Innovation
in
Retail
Banking,
NigeriaInternational
BankerBest
Company
in
Technology
for
DevelopmentSERAS
AwardsBest
Company
in
Work
Place
PracticeSERAS
AwardsBank
of
the
YearNew
Telegraph
NewspaperRetail
Bank
of
the
YearBusinessDay
Newspaper25 Zenith Bank Plc Annual Report December 31, 2022
s
r
o
t
c
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r
i
D
f
o
d
r
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B
26
JIM OVIA, CFR
Dear Esteemed Shareholders, Guests, and
Ladies and Gentlemen,
I am delighted to welcome you to the 32nd
Annual General Meeting of our Bank and
to present to you the Annual Report and
Financial Statements for the Financial year
ended December 31st, 2022.
Before I proceed, I want to express my
sincere appreciation to all of you for
your continued unwavering loyalty and
commitment to our Bank. Your continued
support has been instrumental to the Bank’s
sterling performance since its inception.
The year 2022 was challenging in many
significant global and
respects, with
domestic economic developments that
impacted our business in several ways.
However, Zenith Bank responded well,
leverage
strategies
adapting our
available opportunities while creating
value for all our stakeholders. Against this
background, I will review the economic and
financial environment within which our
Bank operated during the fiscal year under
review.
to
MACROECONOMIC REVIEW
The Nigerian economy continued
to
maintain a positive growth trend in 2022,
albeit at a slower pace than in 2021, since
exiting recession in 2020. According to the
National Bureau of Statistics (NBS), Gross
Domestic Product (GDP) grew by 3.10 per
cent in 2022, lower than the 3.40 per cent
recorded in 2021. Specifically, GDP grew
by 3.11 per cent in Q1 2022, 3.54 per cent
in Q2 2022, 2.25 per cent in Q3 2022, and
3.52 in Q4 2022. The slower pace of growth
is attributable to the base effects of the
Founder and Chairman
Founder And Chairman’s Statement
recession and the challenging economic conditions that
have impeded productive activities.
Available statistics from the NBS show that the non-
oil sector, comprising Telecommunication, Trade, and
Agriculture, which grew by 4.84 per cent, was the major
driver of the positive growth recorded in 2022. This rate
was higher by 0.4 percentage points compared to the
4.44 growth rate recorded in 2021. In real terms, the non-
oil sector contributed 94.33 per cent to the nation’s GDP
in 2022, higher than the 92.76% reported in 2021. The oil
sector, on the other hand, contracted by 19.22 per cent,
indicating a decrease of 10.92 percentage points relative
to the 8.30 per cent recorded in 2021. The performance of
the sector was affected by the lingering impact of muted
domestic oil production, which stood at an average daily
output of 1.34 million barrels per day (mbpd), lower than
the average daily production of 1.50 mbpd recorded in
2021. The sector contributed 5.67 per cent to the total
real GDP in 2022, down from the 7.24 per cent recorded
in 2021. Aggregate GDP stood at NGN199,336,043.78
million in nominal terms in 2022, higher than the
NGN173,527,662.34 million recorded in 2021.
In 2022, the Consumer Price Index (CPI), which measures
inflation, showed an upward trend. This was caused by
disruptions in the supply of food products, increased
import costs due to persistent currency depreciation,
ongoing conflicts in eastern Europe, and a general increase
in production costs due to high energy prices. According
to the National Bureau of Statistics (NBS), the headline
index steadily rose to 21.47 per cent in November 2022
before easing to 21.34 per cent in December 2022. The
index averaged 18.85 per cent in 2022 compared to 16.95
per cent recorded in 2021. Although headline inflation
showed signs of moderation in December 2022, it
remained significantly above the growth-aiding threshold
of 6-9 per cent set by the Central Bank of Nigeria (CBN)
and reached multi-decade highs in many other countries.
To rein in inflation and maintain price stability globally,
central banks across economies embarked on a rapid
and synchronised tightening of monetary conditions not
seen over the past five decades. On the domestic front,
the Monetary Policy Committee (MPC) of the CBN raised
the benchmark interest rate, Monetary Policy Rate (MPR),
four consecutive times to 16.5 per cent. The committee
also increased the Cash Reserve Requirement (CRR)
by 500 basis points to 32.5 per cent. These hikes were
aimed at reducing the negative real interest rate gap and
inflationary pressure. However, other monetary policy
parameters were held constant, with the asymmetric
corridor around the MPR retained at +100/-700 basis
points and the Liquidity Ratio (LR) maintained at 30 per
cent.
Despite
significant fluctuations, global oil prices
experienced a second straight year of gains in 2022.
U.S. West Texas Intermediate (WTI) and Brent crude oil
averaged $95.73/b and $100.61/b, respectively. The first
half of the year saw a price surge as Russia’s invasion of
Ukraine disrupted global crude flows, with Brent reaching
its highest price since 2008 at $139.13/b. However, central
bank interest rate hikes in the second half of the year
caused prices to cool down and raised concerns about
a recession. Brent gained about 10 per cent for the year,
following a 50 per cent increase in 2021, while U.S. WTI
rose nearly 7 per cent in 2022, after a 55 per cent gain in
the previous year.
The foreign exchange market continued to experience
pressure in 2022. This was largely due to the high demand
for dollars, a rising global inflation rate, and a decline in
forex inflow from foreign capital flows, remittances, and oil
exports. As of December 2022, the exchange rate stood at
NGN461.1/$1 at the Investors’ and Exporters’ (I&E) Window,
while banks continued to sell foreign currencies to retail
customers following the ban of Bureau De Change (BDC)
Operators by the Central Bank of Nigeria (CBN). To manage
demand pressure and maintain exchange rate stability,
the CBN continued to implement its managed-floating
exchange rate regime with regular interventions in the
foreign exchange market.
foreign exchange
Consequently, Nigeria’s
reserves
significantly depleted in 2022, according to data from
the Central Bank of Nigeria (CBN). The country’s foreign
reserves closed at $37.08 billion, having declined by $3.44
billion from $40.52 billion at the beginning of the year.
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Slower forex inflow from foreign capital flows, remittances,
and oil exports contributed to the decline in Nigeria’s
stock of foreign reserves.
the Bank’s total assets grew by 30 per cent from NGN 9.45
trillion to NGN 12.28 trillion, while shareholders’ funds rose
by 7.76 per cent from NGN 1.28 trillion to NGN 1.38 trillion.
During the year under review, the Federation Account
Allocation Committee (FAAC) disbursed NGN11.69 trillion
as allocations to the three tiers of government. This figure
represents a 43.6% increase compared to the NGN8.14
trillion shared in the preceding year, attributable to
improved government oil and non-oil revenue receipts.
Despite dire macroeconomic conditions and global
volatility, the Nigerian Exchange (NGX) closed 2022 with a
positive return. For investors in the Nigerian stock market,
2022 represents an improvement over 2021 in terms of
nominal price appreciation. Specifically, the All-Share Index
(ASI) appreciated by 19.98%, rising from 42,716.44 index
points at the start of the year to 51,251.06 index points by
year-end. Market capitalisation also recorded a 25.20 per
cent appreciation, closing at NGN27.915 trillion, up from
NGN22.297 trillion at the start of the year. During the year,
the market faced challenges such as foreign investors’ exit
due to scarcity of foreign exchange and aggressive hikes
in the Monetary Policy Rate (MPR), among others.
FINANCIAL RESULTS
The year 2022 presented several challenges for operators in
the Nigerian banking industry due to various supervening
factors in the global and domestic environment. However,
despite these challenges, we were able to leverage
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 24 per cent from
NGN 765.56 billion in 2021 to NGN 945.55 billion in 2022.
Profit-Before-Tax (PBT) rose by 2 per cent from NGN 280.37
billion in 2021 to NGN 284.65 billion in 2022, while Profit-
After-Tax (PAT) fell by 8 per cent from NGN 244.56 billion
in 2021 to NGN 223.91 billion in 2022. Total deposits were
NGN 8.97 trillion for the year ended December 31st, 2022,
representing a 38.7 per cent increase over the previous
year’s figure of NGN 6.47 trillion. During the same period,
DIVIDEND
At Zenith Bank, we remain committed to consistently
delivering superior returns to our highly esteemed
shareholders by ensuring that a significant portion of our
profit is set aside for you. Despite the macroeconomic
headwinds, we declared and paid an interim dividend of
30 kobo per share in the course of the 2022 financial year.
We hereby propose a final dividend of NGN 2.90 per share.
If approved, this will bring the total dividend for the year
ended December 31st, 2022, to NGN 3.20 per share.
THE BOARD OF DIRECTORS
In 2022, Zenith Bank appointed Mrs. Adobi Stella Nwapa
and Mr. Anthony Akindele Ogunranti as Executive
Directors, while Mr. Peter Olatunde Bamkole and Mr.
Chuks Emma Okoh were appointed as Independent
Non-Executive Directors and Non-Executive Director,
respectively. These appointments were approved by the
Central Bank of Nigeria (CBN) effective April 12th, 2022.
Meanwhile, two Executive Directors, Mr. Ummar Shuaib
Ahmed and Mr. Dennis Olisa retired from the Board on
December 28th, 2022, following the expiration of their
tenure.
INVESTMENT IN TECHNOLOGY
Zenith Bank remains committed to setting the pace
invested
in financial technology. As such, we have
significantly in new technologies and digital solutions,
in line with our commitment to creating value for our
esteemed customers through innovative products and
solutions that cater to their diverse needs.
CORPORATE SOCIAL RESPONSIBILITY
Zenith Bank is committed to building a more balanced,
fairer, and inclusive economy, which is why we continue
to internalise sustainability principles in our business
operations and investment decisions, in line with global
28
Founder And Chairman’s Statement
best practices. In 2022, we made considerable progress
in this regard, bearing in mind our role in accelerating
the achievement of the United Nations Sustainable
Development Goals (SDGs).
sports development,
Our Corporate Social Responsibility
initiatives are
targeted at health, education, women and youth
empowerment,
and public
infrastructure enhancement. In the course of the year, we
invested NGN1.671 billion in these focus areas across the
country. We believe that institutions’ social investments,
contributions
inclusive economic growth and
development, as well as improvements in the physical
environment, all constitute the balanced scorecard. As
a testament to our achievements in this aspect, Zenith
Bank won the awards for “Best Company in Technology for
Development” and “Best Company in Workplace Practice”
at the 2022 Sustainability, Enterprise, and Responsibility
Awards (SERAs).
to
MACROECONOMIC OUTLOOK
The outlook for the domestic and global economy
remains uncertain amid the heightened global recession
risk. The Nigerian economy is expected to continue to
grow through 2023 but at a subdued pace. The World
Bank expects a 2.9 per cent expansion, while the CBN
forecasts a 3.03 per cent growth rate. Headwinds to
growth remain persistent high inflation, perennial scarcity
of Premium Motor Spirit (PMS), high energy prices, the
rising cost of debt servicing, and deteriorating fiscal
balances, among others. The Federal Government of
Nigeria (FGN) 2023 budget has an aggregate expenditure
estimate of NGN21.83 trillion, representing a 27 per cent
increase compared to the NGN17.13 trillion budget for
the 2022 fiscal year. The budget is predicated on crude
oil production estimate of 1.69 million barrels per day, an
exchange rate of NGN435.57/$1, real GDP growth of 3.75
per cent, and an inflation rate of 17.16 per cent. The budget
deficit is estimated at about NGN11.34 trillion and will be
financed mainly by new borrowings totalling NGN8.80
trillion, NGN206.18 billion from Privatization Proceeds, and
NGN1.77 trillion drawdowns on loans secured for specific
development projects.
On the global front, the outlook of the global economy
in the short to medium-term remains clouded by
uncertainties associated with lingering headwinds from
the Russia-Ukraine conflict and the residual impact of
the COVID-19 pandemic. Also, the growth outlook is
dampened by tightening global financial conditions with
elevated shocks to foreign capital flows, the high level
of corporate and public debt with a heightened risk of a
global financial meltdown, and the high level of inflation
across several economies. Overall, the economic prospect
in 2023 remains that of cautious optimism.
APPRECIATION
The year 2022 was a challenging but successful year for
us as a Bank. Our superior performance recorded in the
year was made possible by the collective efforts of all
our stakeholders. I am grateful to our customers for their
steadfast loyalty, our staff and Management for their
dedication and commitment, and our Board for continually
guiding the Bank along the path of sustained growth and
prosperity. I welcome you to the 2023 financial year with
the firm assurance of continued excellent performance by
our Bank.
Thank you.
JIM OVIA, CFR
Founder and Chairman
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DR. EBENEZER ONYEAGWU
Dear shareholders, I am pleased to welcome you to the
32nd Annual General Meeting of our Bank.
The global economy was beset by a range of
challenges in 2022 that disrupted growth expectations.
These included rising food and energy costs due to the
Russia-Ukraine conflict, the sentiments associated with
election cycles, and monetary policy tightening. As a
result, the International Monetary Fund (IMF) estimated
global economic growth of 3.4 per cent in 2022, down
45.2 per cent from 6.2 per cent in 2021.
On the domestic
front, the Nigerian economy
maintained a positive trajectory in 2022, albeit at a
slower pace, after exiting recession in 2020. The National
Bureau of Statistics (NBS) reported that Gross Domestic
Product (GDP) grew by 3.10 per cent in 2022, a decline
of 8.8 per cent from the 3.4 per cent growth recorded
in 2021. Economic performance was hampered by
weak oil inflationary pressures, production, insecurity,
and flooding that inhibited agricultural productivity in
several states of the federation. Additionally, tightening
global financial conditions and recession fears limited
the flow of investment into key sectors of the economy.
One of the macroeconomic challenges the Central
Bank of Nigeria (CBN) had to respond to in 2022 was
maintaining price stability, with the inflation rate
climbing to 21.34 per cent as at December 2022. The
inflation was caused by a disruption in food production
activities, the Russia-Ukraine conflict, and an uptick in
importation costs. The Monetary Policy Committee
(MPC) of the CBN raised the Monetary Policy Rate
(MPR) four consecutive times to 16.5 per cent while
increasing the Cash Reserve Requirement (CRR) by
500 basis points to 32.5 per cent. In a bid to rein in
spiralling inflation, the CBN increased the interest
rates on its intervention loans to 9 per cent from 5 per
cent. The CBN also redesigned the Naira and updated
cash withdrawal limits to gain control of currency in
circulation and deepen the nation’s cashless policy.
Amidst the headwinds to growth in the past year,
we remained dedicated to creating value for our
customers through our innovative suite of products
and services. We supported clients across various
sectors of the economy to weather the uncertain
Group Managing Director/Chief Executive Officer
business environment while enabling them to achieve
their growth ambitions. Our services played a vital role
in stabilising small businesses, helping them with post
pandemic recoveries and positioning them for growth.
Additionally, our interventions provided a platform for
businesses to network and access emerging opportunities.
The Bank successfully held its 7th Annual Export Seminar,
a flagship platform for canvassing and initiating trade
policies while facilitating engagement between the key
stakeholders in the Non-oil Export Sector. The Zenith
Bank Tech Fair 2022, themed Future Forward 2.0, featured
enriching presentations, panel discussions, the Zecathon,
and exhibitions. The Bank is committed to incubating
and mentoring the laureates that come through its digital
entrepreneurship initiatives to ensure their growth.
All the success we recorded in the past financial year
was only possible with the synergy between our people,
technology infrastructure, and innovative services. Our
highly talented team is committed to sustained innovative
initiatives for continued value creation for our customers.
We are relentless in delivering excellent services, which
is one of the Bank’s hallmarks. Zenith Bank believes that
technology is an enabler of business, both for us and our
clients. Consequently, we are making robust investments in
our technology infrastructure to make it fit for the future. We
are implementing a migration to a new enterprise software
architecture as part of our digital transformation initiative as
we strive to maintain our leadership in the digital financial
services space. Through our investments in technology, we
are confident that we will maintain our ability to innovate
and deepen our overall digital payments suite and offerings,
creating omni channels for digital service delivery.
As a testament to our outstanding accomplishments in 2022,
Zenith Bank received several domestic and international
awards and recognition. These awards include Bank of the
Year, Nigeria (The Banker); Biggest Bank in Nigeria by Tier-1
Capital (The Banker); Best Bank in Nigeria (Global Finance
Magazine); Best Commercial Bank, Nigeria (World Finance);
Best Corporate Governance, Nigeria (World Finance); Best
Commercial Bank, Nigeria (International Banker); Best
Corporate Governance Financial Services Africa (Ethical
Boardroom); Bank of the Year (New Telegraph Newspaper);
Best Company in Technology for Development (SERAs); and
Best Company in Work Place Practice – SERAs.
GMD/CEO’s Review
As a leading financial institution, we remain committed to addressing
the challenges confronting society, as espoused in the Sustainable
Development Goals of the United Nations and the Paris Agreement.
The Bank has integrated sustainability principles and standards into its
business operations and investment decisions because we subscribe
to the principle of the Triple Bottom Line: People, Planet, and Profit. We
strongly believe that businesses should strive to deliver positive social,
environmental, and economic impact. We are poised to deepen our
sustainable banking practices and commitments.
The outlook for the global economy and Nigeria is cautiously optimistic
despite concerns about the trajectory of the Russia-Ukraine conflict
and the risk of a global financial contagion due to financial fragilities in
the United States and Switzerland. In its January 2023 World Economic
Outlook Update report, the International Monetary Fund (IMF) noted
that the global outlook is less gloomy than its October 2022 forecast,
representing a turning point, with growth bottoming out and inflation
declining. The IMF expects that global growth will slow from 3.4 per
cent in 2022 to 2.9 per cent in 2023 due to efforts to rein in inflation
and the Russia-Ukraine conflict, which are expected to weigh on
economic activities. Against this backdrop, the IMF projects that the
Nigerian economy will grow by 3.2 per cent in 2023, up by 0.2 per
cent from its October 2022 forecast. The Nigerian economy is also
expected to benefit from robust commodities trade and dynamic
consumer goods and services markets in 2023, although there are
downside risks, including high inflation, power supply challenges, and
deteriorating fiscal balances.
Overall, we are optimistic about the future, and Zenith Bank is well-
positioned to take advantage of emerging growth opportunities.
We will continue to make the necessary investments and sustain
our sound risk management and corporate governance practices
that have given us an edge as we create enduring value for all our
stakeholders.
Thank you.
DR. EBENEZER ONYEAGWU
Group Managing Director / CEO
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JIM OVIA, CFR
Jim Ovia, CFR is the founder and chairman of Zenith Bank
Plc, one of Africa’s largest banks with over $26.64 billion
in assets and shareholders’ funds of US$2.99 billion as
at December, 2022. 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, CFR 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, CFR 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.
Also,
in 2022, the Federal Government of Nigeria
honoured him with Commander of the Federal Republic,
CFR.
Founder and Chairman
DR. EBENEZER ONYEAGWU
Dr. 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. In
March 2023, the University of Nigeria, Nsukka – Nigeria’s first
indigenous university, honoured him with the Doctor of Business
Administration degree during the 50th convocation ceremony
of the university.
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.
Dr. 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. Dr
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). Dr. 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).
Dr. 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).
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DAME (DR.) ADAORA UMEOJI, OON
With over 20 years of cognate banking and broad executive
management experience, Dame (Dr.) Adaora Umeoji, OON 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, a
Bachelor’s degree in Accounting and a first-class honours in
Law from Baze University Abuja. She also holds a Master of Laws
from the University of Salford, United Kingdom, and a Master in
Business Administration (MBA) from the University of Calabar.
She is a graduate of the Advanced Management Program (AMP)
from Harvard Business School, a graduate of the Global Banking
Program from Columbia Business School and holds a doctorate
in Business Administration from Apollos University, USA. Her
dissertation was on inspirational leadership and her findings
have been recognized as a major contribution to leadership and
people management.
the strategic
She attended
thinking and management
programme at Wharton Business School, USA, and holds a
Certificate in Economics for Business from the prestigious
MIT Management Sloan School and a Certificate in Leading
from Harvard Business School, USA.
Global Businesses
She is a fellow of notable professional bodies including the
Chartered Bankers Institute of London, the Chartered Institute
of Bankers of Nigeria, the Institute of Credit Administration, the
Institute of Certified Public Accountants of Nigeria, the 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. 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.
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Dame (Dr.) Adaora Umeoji, OON 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, OON 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 for promoting professionalism in
the banking industry and improving the well-being of the
less privileged, Dr. Adaora Umeoji, OON founded the Catholic
Bankers Association of Nigeria (CBAN), a platform she uses to
promote ethical banking and service to humanity.
Dame (Dr.) Adaora Umeoji, OON is a Peace Advocate of the
United Nations (UN-POLAC), 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.
In 2022, the Federal Government of Nigeria honoured her with
Officer of the Order of the Niger, OON, as a recognition of her
contributions to nation-building.
Deputy Managing Director
GABRIEL UKPEH
Mr. 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.
Engr. 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.
ENGR. MUSTAFA BELLO
He has attended several conferences, missions and meetings
and represented the Federal Government of Nigeria.
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DR. AL-MUJTABA ABUBAKAR, MFR
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.
In 2022, the Federal Government of Nigeria honoured him with
Member of the Federal Republic.
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. OMOBOLA IBIDAPO-OBE
OGUNFOWORA
Dr. Ogunfowora is a Corporate Governance Practitioner.
38
Non-Executive DirectorNon-Executive Director
DR. PETER OLATUNDE BAMKOLE
Dr. Peter Olatunde Bamkole graduated with B.Sc (Hons)
Mechanical Engineering from the University of Greenwich,
London, United Kingdom in 1984, holds an Executive MBA
from IESE Spain/Lagos Business, Lagos (1999) and a PhD in
Entrepreneurship and Innovation from International School of
Management, Paris in 2022.
Dr. Bamkole joins the Board of Zenith Bank Plc with robust
experience spanning several sectors including oil and gas, public
utilities, and executive education.
He worked as in African Petroleum Plc between 1985 and 1986
as a Technical Sales and Services Engineer, north and with Elf Oil
Nigeria now Total Nigeria Plc between October 1986 and April
1996.
He also served as an Assistant General Manager with Lagos State
Water Corporation between 1996 and 2002. Dr. Bamkole has
been with the Pan-Atlantic University since January 2003 where
he served as the pioneer Director of the Enterprise Development
Centre of the University. He was appointed the Chief Operating
Officer of Pan-Atlantic University in January, 2023.
He is currently serving in the following capacities:
• Advisory Board Chair of International Breweries Foundation.
• Board Chair of Nigeria Climate Innovation Center.
• BOT Chair, Global Entrepreneurship Network, Nigeria.
• Board member of AIFA Reading Society.
• Member, Lagos State Science, Research and
Innovation
Council (LASRIC).
• Board Member, Novare Real Estate Companies in Nigeria
Mr. Okoh graduated from the University of Nigeria, Nsukka, (BSc)
in 1987 with several academic laurels to his credit including the
overall best graduating student in Accounting.
He is a Fellow of the Institute of Chartered Accountants of
Nigeria (FCA) with over thirty (30) years cognate experience in
the Banking industry & Telecommunications sector.
Mr. Okoh has varied experience spanning the areas of Finance,
Internal Audit, Risk Management, Compliance, Operations &
Strategic Management.
He comes with deep insight and has distinguished himself
in various leadership roles and is a recipient of several Service
Excellence & Exceptional Performance awards from the financial
services sector and the telecommunication sector.
Mr. Okoh has attended various management development
programmes at renowned educational Institutions including
Cranfield University School of Management, UK and INSEAD,
France.
He is an Alumnus of the prestigious Wharton Business School,
University of Pennsylvania, USA and Lagos Business School.
CHUKS EMMA OKOH
39
Non-Executive DirectorIndependent Non-Executive Director Zenith Bank Plc Annual Report December 31, 2022
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
DR. TEMITOPE FASORANTI
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 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.
He currently oversees Retail Marketing, Trade Services, Credit Risk and
Management Group, Research, Card Services, Contact Centre, Digital
Marketing, Diaspora Banking, ESettlement and a host of core marketing
groups. He is responsible for driving the Bank’s Retail and Fintech strategy.
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).
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. And was recently
appointed a member of the MasterCard Africa Leadership Council.
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.
HENRY OROH
He brings to the Board of Zenith Bank Plc strong competencies in Credit &
Marketing, Operations, Information Technology, Treasury and impressive
Leadership skills.
40
Executive DirectorExecutive Director
Mrs. Adobi Stella Nwapa holds a Bachelor’s Degree (BA) in History
from Imo State University, a Master’s in Public Administration (MPA)
from Strayer University, Houston-Texas, a Master’s in Business
Administration (MBA) from Jack Welch Management Institute and
an honorary doctorate in Business Administration (DBA) from Abia
State University. She has attended several local and international
including Leading Change and
courses and programmes,
Organisational Renewal (Harvard Business School), Key Executive
Programme (Harvard Business School), World Finance/Winning
Negotiation Strategies (HSM Americas), Developing Strategies
for Value Creation (London Business School) and the Senior
Management Programme (Lagos Business School).
She is a Fellow of several institutes, including the Institute
of Management Consultants (IMC), the
Institute of Credit
Administration (ICA), the Institute of Chartered Management
Accountants (ICMA) and the Institute of Management Specialists
(IMS), United Kingdom. She is also a member of the Nigeria
Institute of Management (NIM) and an honorary member of the
Chartered Institute of Bankers (HCIB).
Mrs. Nwapa comes to the board of Zenith Bank Plc with over thirty
years’ cognate experience in banking, being a pioneer staff of
the Bank since 1990. She has held several senior management
positions in the Bank, including business development and branch
and zonal management, and treasury. Until her appointment as
Executive Director, she was General Manager and Group Zonal
Head of Ikoyi Zone as well as Group Head of Diaspora Banking.
Mr. Ogunranti Akindele is a consummate professional banker
with expertise across Banking Operations, Corporate, Commercial,
Retail and Branch Banking, Multilaterals, Power & Infrastructure, Oil
& Gas, Public Sector, Structured Trade & Project Finance, as well as
General Management.
He holds a B.Sc. (Hons) in International Relations from the Obafemi
Awolowo University, Ile-Ife, an MBA in Marketing, and M.Sc. in
Banking and Finance, University of Ibadan. He has attended
the Moody’s Credit Academy, UK, the Executive Development
Program (EDP), Wharton Business School, USA and the Leading
Change and Organizational Renewal Program (LCOR) at Harvard
Business School, USA.
Mr. Ogunranti joined Zenith Bank Plc in 2004 as a Senior Manager
and has held various leadership positions in the bank. He was
General Manager Corporate Banking; Power and Infrastructure
Sector; Apapa and Ikeja Zones. Prior to his appointment as
Executive Director, he served as the MD/CEO, Zenith Bank Ghana
Limited, where he led the Bank to achieve outstanding results.
Under his leadership, the bank received several laurels and awards,
notable among which was the Bank of the Year 2020 and the Best
Bank in Ghana 2021. He was also a two-time winner of the CEO of
The Year Award (Banking Category) in Ghana.
He is currently a member of the Board of Africa Finance Corporation
(AFC), and was until his appointment a Member of the Executive
Committee of the Ghana Association of Bankers (GAB) and a
Member of the Governing Council, of the National Banking
College, Ghana. He was also conferred with the Distinguished
Alumnus Award 2021, by the Obafemi Awolowo University, Ile-Ife.
He is an Honorary Senior Member of Chartered Institute of Bankers
of Nigeria (HCIB), Honorary Fellow Chartered Institute of Credit
Management, Ghana (FCICM) and a Member Nigeria Institute of
Management (MNIM).
41
ADOBI NWAPA
ANTHONY AKINDELE OGUNRANTI
Executive DirectorExecutive Director Zenith Bank Plc Annual Report December 31, 2022
Directors’ Report for the Year Ended 31 December, 2022
The directors present their report on the affairs of ZENITH BANK PLC (“the Bank”), together with the financial statements and the
independent auditor’s report for the year ended 31 December 2022.
1.
Legal form
The 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 review
The 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
opened three new branches and no branch was closed.
As at 31 December 2022 the Group had 446 branches, 166 cash centers; 2,108 ATM terminals; 233,024 POS terminals and 21,832,175
cards issued to its customers. (31 December 2021: 443 branches, 188 cash centers, 2,086 ATM terminals, 163,398 POS terminals and
14,743,191 cards issued).
3. Operating results
Gross earnings of the Group increased by 23.5% and profit before tax increased by 1.5% . Highlights of the Group’s operating results for
the period under review are as follows:
Gross earnings
Profit before tax
Income tax expense
Profit after tax
Non- controlling interest
Profit attributable to the equity holders of the parent
Appropriations
Transfer to statutory reserve
Transfer to credit risk reserve
Transfer to retained earnings and other reserves
Basic and diluted earnings per share (Naira)
42
31-Dec-22
N' Million
945,554
284,650
(60,739)
223,911
(139)
224,050
35,419
73,458
115,173
224,050
7.14
31-Dec-21
N' Million
765,558
280,374
(35,816)
244,558
156
244,402
44,686
19,580
180,136
244,402
7.78
4. Dividends
The 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 N2.90 per share which in addition to the N0.30 per share as interim dividend
amounts to N3.20 per share (2021: Interim dividend of N0.30 per share), final dividend of N2.80 and a total dividend per share of N3.10
from the retained earnings account as at 31 December 2022. This will be presented for ratification by the shareholders at the next
Annual General Meeting.
Payment of dividends is subject to witholding tax rate of 10% in the hands of qualified recipients.
5. Directors’ shareholding
The 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 the Companies and Allied Matters Act
(CAMA 2020) and the listing requirements of the Nigerian Stock Exchange is as follows:
Interests in shares
Number of Shareholding
31 December, 2022
31 December, 2021
Director
Designation
Direct
Indirect
Direct
Indirect
Dr Al-Mujtaba Abubakar, MFR
Non Executive Director / Independent
Dr Omobola Ibidapo-Obe Ogunfowora
Non Executive Director / Independent
Dr Peter Olatunde Bamkole
Non Executive Director / Independent
Jim Ovia, CFR.
Prof. Chukuka Enwemeka
Mr Jeffrey Efeyini
Mr. Chuks Emma Okoh
Mr Gabriel Ukpeh
Engr. Mustafa Bello
Dr Ebenezer Onyeagwu
Dr Adaora Umeoji, OON.
Mr Umar Shuaib Ahmed
Dr Temitope Fasoranti
Mr Dennis Olisa
Mr Henry Oroh
Mrs Adobi Nwapa
Mr Akindele Ogunranti
Chairman / Non-Executive Director
3,546,199,395
1,528,304,916
3,546,199,395
1,525,904,916
Non-Executive Director**
Non Executive Director**
Non-Executive Director*
Non Executive Director
Non Executive Director / Independent
127,137
541,690
102,697
32,660
-
-
-
-
127,137
541,690
-
32,660
-
-
-
-
65,062,844
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Group Managing Director
82,176,078
Deputy Managing Director****
68,873,169
1,710,123
68,873,169
1,710,123
Executive Director***
Executive Director
Executive Director***
Executive Director
Executive Director*
Executive Director*
19,082,031
13,075,000
16,770,000
9,964,127
11,008,206
2,764,005
14,077,343
11,075,000
14,125,000
9,964,127
8,449,206
764,005
* Appointed to the Board effective 12 April 2022
**Retired from the Board effective 1 July 2022
***Retired from the Board effective 28 December 2022
****Retired from the Board effective 24 February 2023
43
Zenith Bank Plc Annual Report December 31, 2022
Directors’ Report for the Year Ended 31 December, 2022
The indirect holdings relate to the holdings of the director in the underlisted companies:
•
•
Jim Ovia, CFR: (Institutional investors Ltd, Lurot Burca Ltd, Jovis Nigeria Ltd, Veritas Registars Ltd, Quantum Zenith Securities Ltd)
Adaora Umeoji, OON: (Palais Vendome Limited)
6.
Directors’ Remuneration
The 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 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
- 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.
Timing
Paid monthly during
the financial year.
- 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.
-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.
- Paid annually on the day of the Annual General Meeting (‘AGM’) to Non-Executive
Directors only.
Paid annually on the day
of the AGM.
- Allowances paid to Non-Executive Directors only, for attending Board and Board
Committee Meetings.
Paid after each Meeting.
Basic Salary
Other allowances
Productivity bonus
Director fees
Sitting allowances
7.
Changes on the Board
The following changes to the board occured during the year.
(i) Mr. Chuks Emma Okoh, FCA was appointed as non-executive director, effective 12 April 2022
(ii) Mr. Peter Olatunde Bamkole was appointed Independent non-executive director, effective 12 April 2022
(iii) Mrs. Adobi Nwapa and Mr Akindele Ogunranti were appointed as executive directors, effective 12 April 2022
(iv)
(v) Mr. Umar Shuaib Ahmed and Mr Dennis Olisa retired from the Board with effect from 28 December,2022
(vi)
Engr. Mustapha Bello was reclassified from INED to NED with effect from 19 December 2022.
Prof. Chukuka Enwemeka and Mr Jeffrey Efeyini retired from the Board effective 1 July 2022
8.
Directors’ interests in contracts
For the purpose of section 303(1) and (3) of Companies and Allied Matters Act of Nigeria, (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 shares
The 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 equipment
Information 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.
44
11. Shareholding analysis
The shareholding pattern of the Bank as at 31 December 2022 is as stated below:
Share range
No. of Shareholders
Percentage of Shareholders
Number of holdings
Percentage Holdings (%)
1-10,000
10,001 - 50,000
5,001 - 1,000,000
1,000,001 - 5,000,000
5,000,001 - 10,000,000
10,000,001 - 50,000,000
50,000,001 - 1,000,000,000
Above 1,000,000,000
540,735
79,892
23,183
1,341
174
170
65
2
645,562
83.7619 %
12.3756 %
3.5911 %
0.2077 %
0.0270 %
0.0263 %
0.0101 %
0.0003 %
100 %
1,594,624,498
1,652,248,795
3,968,693,955
2,745,286,982
1,227,788,415
3,688,327,472
11,691,005,260
4,828,518,410
31,396,493,787
5.08 %
5.26 %
12.64 %
8.74 %
3.91 %
11.75 %
37.24 %
15.38 %
100 %
The shareholding pattern of the Bank as at December 31, 2021 is as stated below:
Share range
No. of Shareholders
Percentage of Shareholders
Number of holdings
Percentage Holdings (%)
1-10,000
10.001 - 50.000
50.001 - 1.000.000
1,000,001 - 5,000,000
5,000,001 - 10,000,000
10,000,001 - 50,000,000
50.000.001 - 1.000.000.000
Above 1,000,000,000
539,921
79,676
22,690
1,252
184
168
72
2
643,965
83.8432 %
12.3727%
3.5235 %
0.1944 %
0.0286 %
0.0261 %
0.0112 %
0.0003 %
100 %
1,595,654,831
1,644,838,601
3,846,174,546
2,625,604,697
1,276,980,061
3,610,190,362
11,968,532,279
4,828,518,410
31,396,493,787
5.08 %
5.24 %
12.25 %
8.36 %
4.07 %
11.50 %
38.12 %
15.38 %
100 %
12. Substantial interest in shares
According to the register of members as at 31 December, 2022, the following shareholders held more than 5% of the issued share
capital of the Bank.
Jim Ovia, CFR
Number of
Shares Held
Number of
Shares Held
3, 546,199,395
11.29 %
According to the register of members at 31 December 2021, the following shareholders held more than 5% of the issued share capital
of the Bank.
Jim Ovia, CFR
3, 546,199,395
11.29 %
45
Zenith Bank Plc Annual Report December 31, 2022
Directors’ Report for the Year Ended 31 December, 2022
13. Donations and charitable gifts
The Bank made contributions to charitable and non-political organisations amounting to N1,671 million during the year ended 31
December 2022 (31 December 2021: N4,372 million).
The beneficiaries are as follows:
Various charity organizations
Various state government infrastructure/security trust funds
Various educational institutions
Various sport organizations
Various conferences and seminars
Various health/medical initiatives
2022 Microsoft office secured productive enterprise
CFA society of Nigeria
Ikorodu peace initiative
Shared agency network expansion facility(SANEF)
FINTECH association of Nigeria
University of Lagos alumni association
Nigerian content development management board
Nigerian bar association
Other donations individually below N5million
14. Events after the reporting period
31 December 2022
N’ Million
522
331
171
159
63
54
22
20
20
11
10
8
8
5
267
1,671
On 14 February 2023, the Group exchanged N123.6bln (GHS 2,675,754,659 ) of its existing Government of Ghana bonds for a series
of new bonds with maturity dates commencing from 2027 to 2038 under the Ghana Domestic Debt Exchange Programme. The new
bonds were successfully settled on the 21st of February 2023 and have been allotted on the Central Securities Depository. The effect of
the exchange on impairment of the existing bonds at 31 December 2022 was duly recognised in the consolidated financial statements.
See disclosure in note 4.1
15.
Group’s strategy against the impact of Covid-19
The 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 via-a-vis the threat of posed 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.
46
Protection of the Group’s Cash flow
In 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:
Continuous engagement and monitoring of the bank’s customers in key sectors in order to understand their business progression
and recovery in the post pandemic era.
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.
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 bank’s liquidity,capital adequacy and earning capacity in a period of
post pandemic economic recovery.
Update to 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 Resources
The 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 communicating this effectively to all staff and other stakeholders in accordance with our Business
Continuity Plan (BCP). The Group continues to encourage electronic self-services for our traditional banking services,while most
meetings are held virtually except in exceptional situations.
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, the group increased investment in IT and
Cyber Security infrastructure to enable it meet the increasing digital needs of our customers while protecting its organization and
customers from all cyber security threats.
Enhancement of the Digital & Electronic Platforms of the Group
The Group continues to enhance the capabilities of its digital and electronic banking channels. This is to ensure seamless processing of
the huge volumes of digital transactions being processed on the bank’s channels.
47
Zenith Bank Plc Annual Report December 31, 2022
Directors’ Report for the Year Ended 31 December, 2022
16. Disclosure of customer complaints in financial statements for the year ended 31 December 2022
Description
In millions of Naira
Number
Amount claimed
Amount refunded
31-Dec-22
31-Dec-21
31-Dec-22
N’m
31-Dec-21
N’m
31-Dec-22
N’m
31-Dec-21
N’m
Pending complaints brought forward
Received Complaints
Resolved Complaints
166,314
475,499
472,016
83,899
307,537
225,122
Unresolved Complaints
169,797
166,314
57,515
17,577
43,253
31,839
62,988
35,227
40,700
57,515
13
1,982
22,373
-
13
-
7,012
-
17. Human resources
(i)
Employment of disabled persons
The 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 work
The 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 has retained Hospitals use by 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 development
The 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 acordance 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.
48
{iv)
Gender analysis of staff
The average number of employees of the Bank during the year by gender and level is as follows:
a. Analysis of total employees
Gender Number
Gender Percentage
Employees
Male
3,378
3,378
Female
3,322
3,322
Total
6,700
6,700
Male
50%
50%
Female
50%
50%
b. Analysis of Board and top management staff
Gender Number
Gender Percentage
Male
Female
Total
Male
Female
Board members
(Executive and Non-executive directors)
Top management staff (AGM-GM)
10
65
75
3
30
33
13
95
108
77%
68%
69%
23%
32%
31%
c. Further analysis of board and top management staff
Gender Number
Gender Percentage
Male
Female
Total
Male
Female
Assistant general managers
Deputy general managers
General managers
Board members (Non-executive directors)
Executive directors (excluding MD and DMDs)
Deputy managing director
Managing director/CEO
18. Auditors
42
15
8
6
3
-
1
21
8
1
1
1
1
-
63
23
9
7
4
1
1
75
33
108
67%
65%
89%
86%
75%
-%
100%
69 %
33%
35%
11%
14%
25%
100%
-%
31 %
The 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 without any
resolution being passed.
By order of the Board
Michael Osilama Otu (Esq.)
Company Secretary
January 26, 2023
FRC/2013/MULTI/00000001084
49
Statement of Corporate Responsibility for the Financial Statements
for the Year Ended 31 December 2022
In line with the provision of S. 405 of CAMA 2020, we have reviewed the audited financial statements of the bank for the
year ended 31 December 2022 and based on our knowledge confirm as follows:
(i)
(ii)
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.
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 31 December 2022.
(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
2022.
That we have disclosed to the bank’s Auditors and the Audit Committee the following information:
(v)
(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.
26 January 2023
Mukhtar Adam, PhD
Chief Financial Officer
FRC/2013/MUL Tl/00000003196
Dr. Ebenezer Onyeagwu
Group Managing Director / CEO
FRC/2013/ICAN/00000003788
50
Governance & Sustainability
02 Zenith Bank Plc Annual Report December 31, 2022
Corporate Governance Report for the Year Ended 31 December 2022
3.
Shareholers
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 also 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
discipline 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 abreast of their responsibilities and
knowledgeable in the business and are therefore able to
exercise good judgment on issues relating to the Bank’s
business. They have on the basis of this acted in good
faith with due diligence and skill and in the overall best
interest of the company and relevant stakeholders during
the period of review.
The Board has a Charter which regulates its operations.
The Charter, recently reviewed, has been forwarded to
the Central Bank of Nigeria in line with the CBN Code of
Corporate Governance.
5.
Board structure
1.
Introduction
Zenith Bank conducts its business in line with the highest
level of Corporate Governance and best practice. The
Group’s governance practices which is replicated across
its subsidiary companies are constantly reviewed to
ensure that we keep pace with global standards as well
as changes occasioned by the dynamics in the business
environment.
2
The Directors and other key personnel
During the period 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 Central Bank of Nigeria (CBN) issued Code of
Corporate Governance for Banks and Discount Houses in
Nigeria 2014.
-
(b)
The Securities and Exchange Commission (SEC) issued
Code of Corporate Governance for public companies.
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
in
compliance with the Central Bank of Nigeria (CBN) circular
on Appointment of Independent Directors by Banks.
Independent Directors, appointed
The Group Managing Director/Chief Executive
is
responsible for the day to day running of the Bank and
oversees the group, 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.
(c)
The National Code of Corporate Governance for Public
Companies which became effective in January, 2019.
6.
Responsibilities of the Board
In addition to the above Codes, the Bank complies with
relevant disclosure requirements in other jurisdictions
where it operates.
a)
The Board is responsible for amongst others:
reviewing and approving the Bank’s strategic plans for
implementation by management;
52
b)
c)
review and approving the Bank’s financial Statements;
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)
f )
implementing the Bank’s succession planning;
approving acquisitions and divestitures of business operations, strategic investments and alliances and major business
development initiatives;
approving delegation of authority for any unbudgeted expenditure;
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 and strategic plans of the Bank and the Group;
Assessing its own effectiveness in fulfilling its responsibilities, including monitoring the effectiveness of individual directors.
g)
h)
i)
The membership of the Board during the year is as follows:
Board of Directors
Name
Jim Ovia, CFR
Prof. Chukuka Enwemeka
Mr Jeffrey Efeyini
Mr Chuks Emma Okoh
Mr Gabriel Ukpeh
Engr. Mustafa Bello
Position
Chairman
Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non Executive Director
Non-Executive Director
Dr Al-Mujtaba Abubakar, MFR
Independent Non Executive Director
Dr Omobola Ibidapo-Obe Ogunfowora
Independent Non Executive Director
Dr Peter Olatunde Bamkole
Independent Non Executive Director
Dr Ebenezer Onyeagwu
Dr Adaora Umeoji, O0N
Mr Umar Shuaib Ahmed
Dr Temitope Fasoranti
Mr Dennis Olisa
Mr Henry Oroh
Mrs Adobi Nwapa
Mr Akindele Ogunranti
Group Managing Director/ Chief Executive Officer
Deputy Managing Director
Executive Director
Executive Director
Executive Director
Executive Director
Executive Director
Executive Director
* Appointed to the Board effective 12 April 2022
**Retired from the Board effective 1 July 2022
***Retired from the Board effective 28 December 2022
****Retired from the Board effective 24 February 2023
Date of Appointment
April 2, 2014
June 23, 2010**
June 23, 2010 **
April 12, 2022*
February 24, 2016
December 29, 2017
August 1, 2019
June 30, 2021
April 12, 2022*
April 24, 2013
October 9, 2012****
October 19, 2016***
December 29, 2017
December 29, 2017***
August 1, 2019
April 12, 2022*
April 12, 2022*
The Board meets at least every quarter but may hold extra-ordinary sessions to address urgent matters requiring the attention of the
Board.
7.
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
Governance & Sustainability
53
Zenith Bank Plc Annual Report December 31, 2022
Corporate Governance Report for the Year Ended 31 December 2022
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.
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 period is as
follows:
Mr. Gabriel Ukpeh - Chairman
Engr. Mustafa Bello
Mr. Chuks Emma Okoh
Dr. Al- Mujtaba Abubakar, MFR
Dr. Ebenezer Onyeagwu
Dame (Dr) Adaora Umeoji, OON
Dr. Temitope Fasoranti
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. The 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
and
Board Governance Nomination
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 to 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,
in acquiring a detailed
to assist Directors
54
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;
recommendations to the Board of
To make
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 Eight (8) members: four (4)
non Executive Directors and four (4) Executive Directors.
It is chaired by a nonexecutive Director. The Committee
considers
large scale procurement by the Bank, as
well as matters relating to staff welfare, discipline, staff
remuneration and promotion.
The membership of the Committee during the period is as
follows:
Mr. Chuks Emma Okoh – Chairman
Mr. Gabriel Ukpeh
Dr.. Omobola Ibidapo-obe Ogunfowora
Dr.Peter Olatunde Bamkole
Dr. Ebenezer Onyeagwu
Dr. Adaora Umeoji
Mr. Henry Oroh
Mrs.Adobi Stella Nwapa
Terms of reference
request
tax planning activities and
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
for
establishment of offshore subsidiaries and other
offshore business offices;
Oversight responsibility with respect to the Bank
and its subsidiary companies relating to material and
strategic financial matters, including those related
to investment policies and strategies, merger and
acquisition transactions, financings, and structure
including debts and equity securities, and credit
agreements;
Consider the Group’s financial risk management and
major insurance program
Overall
developments;
Consider the ratings from Credit rating agencies.
Consideration of the dividend policy of the Bank
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,
for senior
promotion, and disciplinary actions
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
the Board,
recommendation
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;
related
to
Governance & Sustainability
55
Zenith Bank Plc Annual Report December 31, 2022
Corporate Governance Report for the Year Ended 31 December 2022
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 , the chief information security 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 (a
Non-Executive Director), the Committee’s membership
comprises the following:
Engr. Mustapha Bello – Chairman
Dr. Peter Olatunde Bamkole
Dr.Omobola Ibidapo-Obe Ogunfowora
Dr. Al-Mujtaba Abubakar, MFR
Mr. Umar Shuaib Ahmed*
Dr. Ebenezer Onyeagwu
Mr. Dennis Olisa*
Mr.Anthony Akindele Ogunranti
*Retired from the board effective 28 December 2022
Terms 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
identifying, assessing and
its responsibility for
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
progress and periodically review and report to the
Board of Directors:
(a)
the magnitude of all material business risks;
(b)
(c)
the processes, procedures and controls in place to
manage material risks; and
the overall effectiveness of the risk management
56
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 comprises Non-Executive Directors only
and is chaired by - Dr. Al-Mujtaba Abubakar, 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.
The Committee’s membership comprises the following:
Dr. Al-Mujtaba Abubakar – Chairman
Mr. Gabriel Ukpeh
Engr. Mustafa Bello
Dr.Peter Olatunde Bamkole
Dr. Omobola Ibidapo-Obe Ogunfowora
Committee’s terms of reference
The Board Audit and Compliance Committee have the
following responsibilities as delegated by the Board of
Directors:
the scope and planning of audit
Ascertain whether the accounting and reporting
policies of the Bank are in accordance with legal
requirements and acceptable ethical practices;
Review
requirements;
Review the findings on management matters
(Management Letter)
in conjunction with the
external auditors and Management’s responses
thereon;
for
the
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
to carry out
internal auditor
investigations into any activities of the Bank which
may be of interest or concern to the Committee;
Assist in the 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;
the
Oversee management’s processes
fraud risks across
identification of significant
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
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
and
management responses to them;
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;
encountered
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 period and review outstanding Agreed
Actions and follow up
internal control
To develop a comprehensive
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;
The Chief Inspector and the Chief Compliance
Officer makes quarterly presentation
the
Committee, in addition to reporting to the Group
Managing Director. The Chief Inspector and the
Chief Compliance Officer also have unrestricted
access to the Chairman of the Committee;.
To perform such other duties and responsibilities
as the Board of Directors may assign from time to
time.
to
10.5. Board
remuneration Committee
governance,
nomination
and
The Committee is made up of six (6) Non-Executive
Directors and one of the Non-Executive Directors chairs
the Committee.
The membership of the Committee is as follows:
Dr.Omobola Ibidapo-Obe Ogunfowora – (Chairman)
Engr. Mustafa Bello
Mr. Gabriel Ukpeh
Dr. Al-Mujtaba Abubakar MFR
Dr. Peter Olatunde Bamkole
Mr. Chuks Emma Okoh
Governance & Sustainability
57
Zenith Bank Plc Annual Report December 31, 2022
Corporate Governance Report for the Year Ended 31 December 2022
Committe’s terms of reference
and
Directors
To determine a fair reasonable and competitive
compensation practices
for Executive officers
and other key employees of the Bank which are
consistent with the Bank’s objectives;
Determining
the quantum and structure of
compensation and benefits for Non-Executive
Directors;Executive
senior
management of the Group;
Ensuring
the existence of an appropriate
remuneration policy and philosophy for Executive
Directors, Non-Executive Directors and staff of the
Group;
Review and recommendation for Board ratification,
all
for
terminal compensation arrangements
Directors and senior management;
Recommendation of appropriate compensation
for Non-Executive Directors for Board and Annual
General Meeting consideration;
recommended
Review and approval of any
compensation actions for the Company’s Executive
Committee members, including base salary, annual
incentive bonus,
incentive awards,
long-term
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
the appointment and
recommendations on
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 monitoring 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
58
to ensure
code of ethics and business conduct for Directors
and staff;
Review the Group’s organization structure and to
make recommendations to the Board for approval;
Review and agree at the beginning of the year, of
the key performance indicators for the Group MD
and Executive Directors;
Ensure that the Group has a succession policy
and plan in place for the Chairman of the Board,
the MD/CEO and all other EDs, NEDs, and Senior
Management positions
leadership
continuity in the Group;
Review and makerecommendations on
the
recruitment, promotions and disciplinary actions
for Executive Management level personnel;
Ensure that board evaluation reports of subsidiaries
are formally discussed and documented as a way
of radiating sound governance practices across the
Group;
the
Ensure annual
is conducted. This
performance of the Board
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
etc;.
review or appraisal of
10.6. Audit Committee of the Bank
The 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 Committe is as follows:
Shareholders’ representative
Mrs. Adebimpe Balogun – (Chairman)
Prof (Prince) L.F.O Obika
Mr. Michael Olusoji Ajayi
Non-Executive Directors / Director’s Representatives
Dr. Al-Mujtaba Abubakar
Engr. Mustafa Bello
Committe’s terms of reference
report,
including any
specific disclosures
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
related notes, the
statements,
Bank’s
and discussion
under “Managements Control Report” and the
independent auditors’
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,
information
systems and security; any recommendations by
the
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.
independent auditor and
including computerized
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
the
responsibility
implementation of strategies approved by the Board,
provide leadership to the Management team and ensure
efficient deployment and management of the Bank’s
to ensure
is
resources. Its Chairman is responsible for the day-to-day
running and performance of the Bank.
10.8. Other Committee
In addition to the afore-mentioned committees, the Bank
has in place, other standing management committees.
They include:
a)
b)
c)
d)
e)
f )
g)
Management Committee (MANCO)
Assets and Liabilities Committee (ALCO)
Management Global Credit Committee(MGCC)
Risk Management Committee (RMC)
Information technology (IT) steering committee
Sustainability Steering Committee (SSC)
Information Security Steering Committee
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 Committe meets weekly and as frequently as the
need arises.
c) Management Global Credit Committee(MGCC)
The Management Global Credit Committee
is
Governance & Sustainability
59
Zenith Bank Plc Annual Report December 31, 2022
Corporate Governance Report for the Year Ended 31 December 2022
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 entire 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 such other times
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. Head of Treasury
4. Head of Trade Services
5. Marketing Groups Representatives
6. Chief Inspector;
60
7. Chief Risk Officer;
8. Chief Compliance Officer
9. Chief Information Security Officer (CISO)
10. Head of IT;
11. Head of Infotech - Software;
12. Head of Infotech - Enginering;
13. Head of Card Services;
14. Group Head of Operations
15. Group Head of IT Audit;
16. Head of e-Business
17. Head of Investigation
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.
g)
Information Security Steering Committee
The information security steering committee is responsible
for the governance of the cybersecurity programme. The
Committee is also responsible for providing oversight and
ensure alignment between information security strategy
and company objectives. Assessing the adequacy of
resources and funding to sustain and advance successful
security programs and practices for identifying, assessing,
and mitigating cybersecurity risks across all business
functions. The Committee review company policies
information security and cyberthreats,
pertaining to
taking into account the potential for external threats,
internal threats, and threats arising from transactions with
trusted third parties and vendors. Review of privacy and
information security policies and standards and review
the ramifications of updates to policies and standards as
well as establish standards and procedures for escalating
significant security incidents to the ISSC, Board, other
steering committees, government agencies, and law
enforcement agencies, as appropriate.
MEMBERSHIP OF THE COMMITTEE
The Information Security Steering Committee shall be
comprised of:
1. Group Managing Director / CEO
2. Executive Directors
3. Chief Information Officer
4. Chief Inspector
5. Chief Risk Officer(CRO)
6. Chief Financial Officer(CFO)
7. Head of InfoTech - Software
8. Head of InfoTech – Engineering
9. Group Head Retail
10. Chief Information Security Officer(CISO)
11. Head of IT Audit
12. Information Security Officer
13. Head of Risk Management
14. Head of Card Services
15. Representatives of Marketing 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
Zenith 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
line with the disclosure
performance
is made
in
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.
13. 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.
During the year under review, in addition to other
programmes ,all Directors attended the CFT/AML
training programme to keep them abreast of recent
trends in CFT and money laundering.
Executive Directors
The 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.
the
remuneration
Variable annual
Zenith Bank financial results. The amount of this
is subject to achieving specific
remuneration
quantifiable
directly with
targets,
shareholders’ interest.
aligned
linked
to
Governance & Sustainability
61
Zenith Bank Plc Annual Report December 31, 2022
Corporate Governance Report for the Year Ended 31 December 2022
MONITORING COMPLIANCE WITH CORPORATE
GOVERNANCE
Liaison and Oversight Function
Chief Compliance Officer
laundering
The Chief Compliance Officer monitors compliance
with money
and
the implementation of the Code of Corporate
Governance of the Bank. He reports to the Board
through the the Executive compliance officer(ECO).
requirements
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 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 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.
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.
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
breache.
Codes of Coduct
The Bank has a Code of Professional Conduct for
Employees and third parties, which all members of
staff as well as vendors and contractors subscribe to
upon assumption of duties signing onto transactions
with the Bank. The Bank also has a Code of Conduct
for Directors.
14.
Foreign Subsidiaries Governance Structure
The Bank as at 31 December 2022 has four (4) foreign
subsidiaries, two (2) local subsidiaries and one (1)
representative office. Their activities are governed
by the foreign subsidiaries governance structure 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:
62
Local Board and Board Committee
To ensure that the activities of the subsidiaries reflects the
same values, ethics, controls and processes, Zenith Bank Plc is
represented by at least one (1) non-executive director 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 as 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
renumeration 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.
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 covers 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 are
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
in
The Internal Control & Audit Department of Zenith Bank
Plc carries out an annual audit of each of the offshore
subsidiaries
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
Group Compliance Function
is committed to complying with
Zenith Bank Plc
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.
Governance & Sustainability
63
Zenith Bank Plc Annual Report December 31, 2022
Corporate Governance Report for the Year Ended 31 December 2022
16.
Schedule of board and board committees meeting held during the period
The 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.
Directors
Board
Board credit
committee
Finance & general
purpose committee
Board governance,
Nomination and
remuneration committee
Board risk
management
committee
Board audit and
Compliance
committee
Attendance / Number of Meetings
Jim Ovia, CFR
Mr. Jeffrey Efeyini**
Prof. Chukuka S.Enwemeka**
Mr.Gabriel Ukpeh
Engr.Mustafa Bello
Dr. Al-Mujtaba Abubakar, MFR
Dr. Omobola Ibidapo-Obe Ogunfowora
Mr Peter Bamkole*
Mr Chuks Emma Okoh*
Dr. Ebenezer Onyeagwu
Dr.Adaora Umeoji, OON
Mr. Umar Shuaib Ahmed ***:
Dr. Temitope Fasoranti
Mr. Dennis Olisa****
Mr. Henry Oroh
Mrs Adobi Nwapa*
Mr. Akindele Ogunranti*
Note:
7
7
4
4
7
7
7
7
4
4
7
7
7
7
7
7
4
4
4
N/A
2
2
4
2***
4
N/A
N/A
2
4
4
N/A
4
N/A
N/A
N/A
N/A
4
N/A
N/A
2
4
N/A
N/A
4
2
2
4
4
N/A
N/A
N/A
4
0
N/A
4
N/A
2
N/A
4
4
4
2 **
2
2
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4
N/A
2
2
N/A
4
4
2 **
2
N/A
4
N/A
4
N/A
4
N/A
N/A
2
4
N/A
2
N/A
4
4
4
4
2
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
* - Appointed to the Board effective 12 April,2022
** - Retired from the Board with effect from July 1,2022
*** - Reconstitution of Board Committees, effective July 2022
**** - Retired from the Board with effect from 28 December, 2022
N/A - Not Applicable (Not a Committee member)
Dates for Board and Board Committee meetings held within the year to 31 December 2022
Board
meetings
Board credit
committee
meeting
Finance and
general purpose
committee
Board risk and
audit committee
meeting
Board audit and
compliances
committee meeting
Board governance,
nominations and
remuneration committee
Audit committee
meeting of the
bank
27-Jan-22
26-Jan-22
25-Jan-22
25-Jan-22
25-Jan-22
25-Jan-22
25-Jan-22
09-Mar-22
06-Apr-22
28-Apr-22
27-Apr-22
28-Jul-22
27-Jul-22
21-Oct-22
19-Oct-22
28-Dec-22
17.
Audit Committee
27-Apr-22
26-Jul-22
19-Oct-22
26-Apr-22
26-Jul-22
19-Oct-22
26-Apr-22
26-Jul-22
19-Oct-22
26-Apr-22
26-Jul-22
19-Oct-22
26-Apr-22
27-Jul-22
19-Oct-22
The table below shows the frequency of meetings of the audit committee and members’ attendance at these meetings during the year
under review.
64
Number of meetings held during the year:
Members
Mrs. Adebimpe Balogun (SR)
Prof. (Prince) L.F.O Obika (SR)
Mr. Michael Olusoji Ajayi (SR)
Engr. Mustafa Bello (INED)*
Dr. Al-mujtaba Abubakar (NED)*
Mr. Gabriel Ukpeh (INED)*
SR - Shareholders representative
INED- Independent Non-Executive Director
NED- Non-Executive Director
* Changes arising from AGM Resolution
Number of Meetings attended
4
4
4
4
3
1
Governance & Sustainability
65
(cid:21)(cid:28) (cid:26)0(cid:22)(cid:25)(cid:26)
(cid:1)
e
T h
(cid:59) (cid:70) (cid:79) (cid:74) (cid:85) (cid:73)
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(cid:70) (cid:14) (cid:53) (cid:80) (cid:76) (cid:70) (cid:79)
(cid:34) (cid:81) (cid:81)
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(cid:37)(cid:48)(cid:56)(cid:47)(cid:45)(cid:48)(cid:34)(cid:37)
(cid:31)
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(cid:53)(cid:80)(cid:1)(cid:44)(cid:79)(cid:80)(cid:88)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:17)(cid:4)
(cid:36)(cid:83)(cid:70)(cid:66)(cid:85)(cid:70)(cid:1)(cid:46)(cid:80)(cid:67)(cid:74)(cid:77)(cid:70)(cid:1)(cid:56)(cid:66)(cid:77)(cid:77)(cid:70)(cid:85)
(cid:48)(cid:81)(cid:70)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:84)(cid:70)(cid:77)(cid:71)
(cid:48)(cid:81)(cid:70)(cid:79)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:20)(cid:83)(cid:69)(cid:1)(cid:49)(cid:66)(cid:83)(cid:85)(cid:90)
(cid:51)(cid:70)(cid:85)(cid:83)(cid:74)(cid:70)(cid:87)(cid:70)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:47)(cid:86)(cid:78)(cid:67)(cid:70)(cid:83)
(cid:51)(cid:70)(cid:66)(cid:68)(cid:85)(cid:74)(cid:87)(cid:66)(cid:85)(cid:70)(cid:1)(cid:37)(cid:80)(cid:83)(cid:78)(cid:66)(cid:79)(cid:85)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:24)(cid:24)(cid:4)
(cid:51)(cid:70)(cid:72)(cid:74)(cid:84)(cid:85)(cid:70)(cid:83)(cid:1)(cid:56)(cid:66)(cid:77)(cid:77)(cid:70)(cid:85)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:17)(cid:17)(cid:4)
(cid:36)(cid:73)(cid:70)(cid:68)(cid:76)(cid:1)(cid:90)(cid:80)(cid:86)(cid:83)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:26)(cid:18)(cid:18)(cid:4)
(cid:52)(cid:85)(cid:80)(cid:81)(cid:1)(cid:37)(cid:70)(cid:67)(cid:74)(cid:85)(cid:1)(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:66)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)
(cid:74)(cid:79)(cid:85)(cid:80)(cid:1)(cid:90)(cid:80)(cid:86)(cid:83)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:17)(cid:17)(cid:17)(cid:4)
(cid:49)(cid:70)(cid:83)(cid:71)(cid:80)(cid:83)(cid:78)(cid:1)(cid:54)(cid:52)(cid:52)(cid:37)(cid:1)(cid:80)(cid:79)(cid:1)(cid:49)(cid:48)(cid:52)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:23)(cid:23)(cid:4)
(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:66)(cid:85)(cid:70)(cid:1)(cid:34)(cid:72)(cid:70)(cid:79)(cid:85)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:34)(cid:68)(cid:85)(cid:74)(cid:87)(cid:74)(cid:85)(cid:74)(cid:70)(cid:84)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:23)(cid:17)(cid:4)
(cid:51)(cid:70)(cid:84)(cid:70)(cid:85)(cid:1)(cid:46)(cid:80)(cid:67)(cid:74)(cid:77)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:49)(cid:66)(cid:84)(cid:84)(cid:88)(cid:80)(cid:83)(cid:69)
(cid:51)(cid:70)(cid:84)(cid:70)(cid:85)(cid:1)(cid:46)(cid:80)(cid:67)(cid:74)(cid:77)(cid:70)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:1)(cid:49)(cid:42)(cid:47)
(cid:51)(cid:70)(cid:84)(cid:70)(cid:85)(cid:1)(cid:54)(cid:52)(cid:52)(cid:37)(cid:1)(cid:9)(cid:11)(cid:26)(cid:23)(cid:23)(cid:4)(cid:1)(cid:38)(cid:66)(cid:91)(cid:90)(cid:35)(cid:66)(cid:79)(cid:76)(cid:74)(cid:79)(cid:72)(cid:10)(cid:1)(cid:49)(cid:42)(cid:47)
(cid:47)(cid:70)(cid:88)(cid:1)(cid:36)(cid:66)(cid:83)(cid:69)(cid:1)(cid:49)(cid:42)(cid:47)(cid:1)(cid:51)(cid:70)(cid:85)(cid:83)(cid:74)(cid:70)(cid:87)(cid:66)(cid:77)
(cid:35)(cid:77)(cid:80)(cid:68)(cid:76)(cid:1)(cid:36)(cid:66)(cid:83)(cid:69)
(cid:52)(cid:70)(cid:77)(cid:70)(cid:68)(cid:85)(cid:1)(cid:49)(cid:83)(cid:70)(cid:71)(cid:70)(cid:83)(cid:83)(cid:70)(cid:69)(cid:1)(cid:54)(cid:52)(cid:52)(cid:37)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:85)(cid:80)(cid:1)(cid:37)(cid:70)(cid:67)(cid:74)(cid:85)
(cid:42)(cid:79)(cid:69)(cid:70)(cid:78)(cid:79)(cid:74)(cid:85)(cid:90)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:66)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:34)(cid:67)(cid:80)(cid:87)(cid:70)(cid:1)
(cid:47)(cid:18)(cid:17)(cid:17)(cid:13)(cid:17)(cid:17)(cid:17)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:34)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:4)
(cid:35)(cid:86)(cid:90)(cid:1)(cid:66)(cid:74)(cid:83)(cid:85)(cid:74)(cid:78)(cid:70)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:84)(cid:70)(cid:77)(cid:71)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:35)(cid:55)(cid:47)(cid:4)
(cid:54)(cid:81)(cid:69)(cid:66)(cid:85)(cid:70)(cid:1)(cid:35)(cid:55)(cid:47)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:34)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:11)(cid:1)(cid:46)(cid:80)(cid:67)(cid:74)(cid:77)(cid:70)(cid:1)(cid:47)(cid:80)(cid:15)(cid:4)
(cid:35)(cid:86)(cid:90)(cid:1)(cid:66)(cid:74)(cid:83)(cid:85)(cid:74)(cid:78)(cid:70)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:84)
(cid:11)(cid:26)(cid:23)(cid:23)(cid:11)(cid:34)(cid:78)(cid:80)(cid:86)(cid:79)(cid:85)(cid:11)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:47)(cid:80)(cid:15)(cid:4)
(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:71)(cid:86)(cid:79)(cid:69)(cid:84)
Report of the Independent Consultant to the Board of Directors of Zenith Bank PLC. On
their Appraisal for the Year Ended 31 December 2022.
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”) 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
2022. 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 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. A specific recommendation has been proffered to assist in enhancing the Bank’s
governance disclosure. This has been articulated and included in our detailed report to the
Board.
Olumide Olayinka
Partner and Head Advisory
FRC/2013/ICAN/00000000427
17 February 202 3
67
Zenith Bank Plc Annual Report December 31, 2022
Corporate Governance Report for the Year Ended 31 December 2022
Corporate
Responsibility
& SUSTAINABLE
BANKING PRACTICES
W ithin thirty-two years, Zenith Bank has consistently demonstrated resilience irrespective of the business/
economic cycle and has witnessed growth in all areas. This growth has been driven primarily by a strategic
business focus and a conservative business model. The group boasts of a stable and experienced management
team that is well-positioned for strong execution, leading to significant market share opportunities.
For this year’s report, we have adopted a dynamic approach that seeks to incorporate as many existing and emerging ESG frameworks
and reporting guidelines that apply to a business of our kind, locally and globally. While maintaining fundamental alignment with the
GRI Standards, we have included many other frameworks in the report. These include Sustainable Development Goals (SDGs), the
Nigerian Sustainable Banking Principles, the Nigerian Exchange - Sustainability Disclosure Guidelines, UN Women’s Empowerment
Principles, and partly the Sustainability Standards Board (ISSB) Sustainability Reporting Guidelines. The report highlights our progress,
challenges, and aspirations as we continue to advance our journey as sustainable finance leaders.
Sustainability Strategy and Management
Our sustainability journey began over a decade and a half ago and has remained a vital aspect of our corporate identity, significantly
defining our business model and strategy. We have been leading in shaping and adopting sustainability regulations and frameworks
within our industry and the broader corporate space. We are committed to upholding the highest possible sustainability standards
and practices.
68
At Zenith Bank, we understand that the sustainability of our
operations is directly related to the sustained value we create
for our people, investors, and society. We strive to be a trusted
partner that is better, simpler, and faster in meeting the needs
of our stakeholders, thereby creating long-term value for
our employees,
investors, customers, suppliers, regulators,
the community, and the environment. As a member of the
United Nations Global Compact (UNGC), we are committed to
driving progress towards the achievement of 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.
In line with the SDGs, Zenith Bank is committed to improving
the socioeconomic conditions of the communities where
we do business. Our social initiatives are geared towards
eradicating extreme poverty, encouraging skills development
and capacity building, creating employment, and supporting
the government’s efforts to achieve inclusive growth and
development, in line with the development priorities of the
Federal Government of Nigeria as communicated in economic
development plans and policies.
Ethical Leadership
At Zenith Bank, we set high standards for accountability,
transparency, integrity, compliance, service delivery, and ethical
behaviour in line with our mission: to build the Zenith brand
into a reputable international financial institution recognised
for innovation, superior performance, and creation of premium
value for all stakeholders. Our governance structures, corporate
standards, and business principles ensure that sustainability is
integrated into everything we do.
We are committed to strong ethical business conduct and
leadership to strengthen our culture of accountability and
honest dealings with all our stakeholders. The Bank’s Ethical
Code, Code of Business Conduct, Employee Handbook, and other
relevant internal policies and procedures underpin our stance
on promoting a culture of accountability, honesty, and ethical
conduct. Zenith Bank promotes a workplace where employees
feel empowered to speak up and report any concerns regarding
unethical behaviour.
Our commitment to ethical governance and an inclusive
workplace starts at the top. Our directors and top executives
come from diverse cultural, professional, and educational
backgrounds. The collective experience and knowledge of our
top management and board members add a wide range of
skills and qualifications towards the stewardship of the Bank’s
business, culture, and strategy.
Local Communities and Social Investments
Investing in local communities is a significant aspect of Zenith
Bank’s commitment to society. We support a wide range of
activities within our areas of operation across the 36 states of
Nigeria, focusing on initiatives that will improve the quality of life,
including that of the vulnerable and disadvantaged. We identify
community needs through engagement, physical assessments,
and national emergencies to define our contributions and make
lasting impacts on people’s lives, empowering communities and
settling immediate needs.
Governance & Sustainability
69
Zenith Bank Plc Annual Report December 31, 2022
Corporate Responsibility & Sustainabl Banking Practices
Zenith Bank invested NGN1.671 billion in Corporate Social
Responsibility (CSR) in 2022, representing about 0.75% of our
Profit After Tax (PAT). We remain one of the largest spenders
on social investment in the Nigerian corporate space. Our CSR
endeavours focus on the Sustainable Development Goals (SDGs)
of the United Nations and include security, healthcare, education
and skills development, sports development, youth & women
empowerment, and public infrastructure development.
Security: Security is a fundamental need of our communities,
and in 2022, we invested NGN331 million in our various
partnerships with local communities, federal, state and local
governments, and other relevant agencies to preserve public
peace and ensure a crime-free environment. Zenith Bank won
awards for achievements in this area of sustainability.
Sports: In 2022, Zenith Bank invested approximately NGN159
million in sports development, supporting initiatives such
as title sponsorship of the Zenith Bank Delta State Principal’s
Cup, Zenith Bank Headmasters’ Cup, and various Zenith Tennis
Championships held at Ikoyi Club and Lagos Country Club.
Health: We continue to champion SDG3 (Good Health
and Well-being), and in 2022, Zenith Bank invested about
NGN54 million towards various medical interventions for low-
income individuals faced with various life-threatening medical
conditions.
Education:
In reaffirmation of our commitment to the
development of the nation’s education sector, Zenith Bank
expended approximately NGN171 million towards educational
initiatives in 2022. Our investments in the education sector
include donations to the educational endowment fund of St.
Saviour’s School, Ikoyi, and the 2022 Microsoft Office Specialist
World Championship sponsorship. Zenith Bank continues to pay
great attention to championing SDG4 (Quality Education).
Risk Management Framework
importance of a robust risk
Zenith Bank recognises the
management framework to ensure resilience and business
continuity and preemptively
identify, assess, and mitigate
risks inherent in its business processes. The risk management
function of the Bank aligns with best practices standards and
includes policies, procedures, processes,
internal controls,
tools, capabilities, and decision-making methods that ensure
the mitigation of risks and compliance with extant regulations.
Zenith Bank has made significant progress in its Environmental,
Social, and Governance (ESG) policies and practices, which have
had a tremendous impact on its customers’ businesses, including
suggestions for corrective action plans and Environmental
Impact Assessment (EIA) certification. The Bank has enhanced its
credit process by ensuring all credit undergoes ESG assessment,
and it conducts enhanced due diligence on its credit customers
in their offer
to ensure compliance with E&S conditions
letters. Zenith Bank is committed to continually improving
its risk management function by training and educating its
employees on ESG investing on an ongoing basis to develop
their competency in ESG risk practices and promote sustainable
investment.
70
Environmental Sustainability and
Carbon Footprint Management
Zenith Bank is dedicated to managing its
environmental impact and supporting
transition to a low-carbon economy. The
Bank’s operational strategy aligns with
global sustainability goals,
including
the 2015 Paris Climate Agreement, Task
Force on Climate-Related Financial
Disclosures
(TCFD), and Sustainable
Development Goal 13 (Climate Action).
Zenith Bank continuously monitors,
reviews, and sets environmental targets
to manage
its carbon footprint and
overall environmental impact. The Bank
has implemented eco-friendly practices,
such as seeking alternative energy
sources and adopting a resource efficiency approach, to achieve
its targets while tracking its Greenhouse Gas (GHG) emissions.
The Bank’s environmental and social risk management system
includes assessing prospective and ongoing projects for E&S
risks before approval, prioritising reducing GHG emissions
through improved energy efficiency, sourcing carbon-efficient
assets, optimising digital solutions, reducing business trips, and
minimising emissions by third parties. Zenith Bank is committed
to achieving net-zero greenhouse emissions by 2050 and will
continue to explore opportunities to reduce its environmental
carbon-friendly
impact and adopt
technologies in its operations.
inclusive workplace
Our Workforce
Zenith Bank is proud to have a diverse
and
fostering
collaboration, innovation, and growth.
Our workforce is made up of a mix of
young aspiring professionals, established
leaders, and experts in their respective
fields. We value this mix of talents and
are committed to attracting the best
brains within the Nigerian labour market.
As of December 31, 2022, our total
active workforce (both permanent and
temporary staff ) stood at 9,040 of which
53.96% were female, and 46.04% were
male. We believe that having a diverse
inclusive workforce promotes
and
representation of a wide range of voices and perspectives,
leading to better decision-making, innovation, and overall
business success. In recognition of our efforts, the Bank was
awarded the Best Company in Workplace Practice at the 2022
SERAS Awards.
Human Rights
Zenith Bank is committed to respecting human rights and
upholding the best practices on labour standards, as outlined by
the UN Global Compact, United Nations Principles on Business
Governance & Sustainability
71
Zenith Bank Plc Annual Report December 31, 2022
Corporate Responsibility & Sustainabl Banking Practices
and Human Rights, and the United Nations Environment
Programme Finance Initiative (UNEP-FI). We strongly condemn
discrimination against employees or third parties based on age,
gender, religion, ethnic group, disability, or political views. We do
not condone any form of child labour or forced labour in our
business operations. Our employees receive training on human
rights, and we have a platform for reporting and investigating
cases of human rights violations. We also consider human
rights aspects in our supply chain and financing activities by
conducting E&S impact assessments on our financed projects,
ensuring that they have no human rights violations. The
community members in financed project areas can report
any violation of human rights through the designated public
liaison office and other available channels. In 2022, 75% of our
employees received training on human rights.
Women Empowerment
At Zenith Bank, we are dedicated to creating a business
environment that is free of gender bias and promotes the
participation of women in economic and business activities. To
this end, we offer the Z-Woman Business Package, designed to
address the unique needs of women-owned businesses. The
package provides loans of up to NGN10 million at low-interest
rates, free digital skills training, and free exhibition stands at
Zenith Bank events, among other benefits, to help women
grow their businesses and increase sales. We provide equal
opportunities for all employees to participate and compete
at all levels of our organisation. In 2022, 53.96% of our active
employees and 31% of our staff in top management positions
were women. Our employees also receive training on women’s
rights courses through our e-learning module, including Women
in Leadership: Mastering Key Leadership Competencies and
Women in Leadership: Moving Beyond Gender Roles as a Leader.
Financial Inclusion
As a leading financial institution, Zenith Bank is committed to
supporting the financial inclusion of underserved and unbanked
communities. Lack of support or access to financial services is a
significant barrier for these communities, and we recognise our
duty to support the development of more sustainable financial
futures for our clients, employees, and communities.
We have played a crucial role in promoting financial inclusion
through SME funding and developing financial
inclusion
products. Our retail banking services have been instrumental
in empowering the unbanked. We aim to promote financial
inclusion by developing products and services that meet the
needs of our customers and improve access and use of financial
72
services in rural communities. We also conduct educational
workshops and awareness campaigns to increase financial
literacy in these communities.
Zenith Bank Financial Literacy & World Savings Day
Celebration
We have partnered with the apex bank, the Central Bank of
Nigeria, to mark Financial Literacy Day and World Saving Days
with students from schools across states in Nigeria. This employee
volunteering initiative provided an avenue for the Bank and 167
employees 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 sets, drawing sets,
notebooks, pen, and pencil sets, kiddies lunch bags, etc. In 2022,
a total of 2,311 male students and 3,262 female students were
impacted by the Financial Literacy Day Celebration. Similarly,
a total of 3,400 male students and 3,946 female students were
impacted by the World Savings Day Celebration.
Talent Development
At Zenith Bank, professional and personal development for
our employees is a core factor, as we believe employees can
deliver efficient service to our clients and customers when
they are adequately equipped with the right skills. Our training
curriculum comprises control, interpersonal, leadership, and
technical training for all our employees, delivered through
physical and online sessions. This training helps employees to
adopt new work methodologies and approaches, enhance
capabilities, and improve collaborative skills and leadership
techniques. In 2022, employees had training on anti-corruption,
health and safety, ESG investing, human rights, leadership
development, banking processes, basic emergency response
and first aid, and fire safety. A total of 283,014.88 hours were
expended on training 6,514 employees. We invested a total of
NGN727,630,626.46 in specialised employee training in 2022,
representing a 25.25% increase compared to the 2021 spending.
risk management
Sustainability, environment, and social
sessions are integrated into our anti-money laundering and
operational risk management training. 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.
Reporting
Zenith Bank is committed to sustainability reporting as a
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’s
Finance Initiative (UNEP-FI). A standalone Sustainability Report
is published annually to demonstrate the Bank’s economic,
environmental, and social progress
in the financial year,
incorporating the Nigerian Stock Exchange (NSE) and Global
Reporting Initiative (GRI) Sustainability reporting guidelines.
Additionally, Zenith Bank sends biannual progress reports to the
CBN and annual reports to the International Finance Corporation
(IFC), United Nations Global Compact (UNGC), PROPARCO, and
the African Development Bank (AfDB), among others.
Conclusion
At Zenith Bank, we understand that creating value for our people,
investors, and society is directly related to the sustenance of
our operations. Therefore, we are committed to being a trusted
partner that is better, simpler, and faster in meeting the needs
of our stakeholders, creating long-term value for our employees,
investors, customers, suppliers, regulators, the community, and
the environment. We will continue to drive sustainability at the
highest level of our business, factoring environmental, social,
and governance dimensions of our operations. This includes
our products, services, investment decisions, and stakeholder
relationships.
Governance & Sustainability
73
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 2022
To the Directors of Zenith Bank Plc.
We have undertaken a limited assurance engagement in respect of the selected sustainability information,
Independent Auditor’s Limited Sustainability Assurance Report on the Selected
as described below, and presented in the 2022 Sustainability Report of Zenith Bank Plc. for the year ended
Sustainability Information in Zenith Bank Plc’s Sustainability Report for the year ended 31
31 December 2022. This engagement was conducted by a multidisciplinary team including economic,
December 2022
social and environmental assurance specialists with relevant experience in sustainability reporting.
To the Directors of Zenith Bank Plc.
Subject Matter
We have undertaken a limited assurance engagement in respect of the selected sustainability information,
You have engaged us to provide a limited assurance conclusion in our report on the following selected
as described below, and presented in the 2022 Sustainability Report of Zenith Bank Plc. for the year ended
31 December 2022. This engagement was conducted by a multidisciplinary team including economic,
on the relevant pages in the sustainability report for the year
sustainability information, marked with
social and environmental assurance specialists with relevant experience in sustainability reporting.
ended 31 December 2022. The selected sustainability information in the table contained in this opinion
have been prepared in accordance with the reporting criteria that accompanies the sustainability
Subject Matter
information on the relevant pages of the Report (the accompanying reporting criteria).
You have engaged us to provide a limited assurance conclusion in our report on the following selected
Zenith Bank Plc. Management’s responsibility
sustainability information, marked with
on the relevant pages in the sustainability report for the year
The Management of Zenith Bank Plc. is responsible for the selection, preparation and presentation of the
ended 31 December 2022. The selected sustainability information in the table contained in this opinion
selected sustainability information in accordance with the accompanying reporting criteria as set out in the
have been prepared in accordance with the reporting criteria that accompanies the sustainability
Sustainability Report (the “Reporting Criteria”).
information on the relevant pages of the Report (the accompanying reporting criteria).
This responsibility includes:
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”).
Identification of the stakeholder requirements, material issues, commitments with respect to
sustainability performance, and
• 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.
This responsibility includes:
• 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
Identification of the stakeholder requirements, material issues, commitments with respect to
available to the report users.
sustainability performance, and
•
• 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.
• 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, www.pwc.com/ng TIN: 01556757-0001 BN: 958268
Partners:
S Abu, O Adekoya, T Adeleke, W Adetokunbo-Ajayi, S Adu, E Agbeyi, A Akingbade, UN Akpata, O Alakhume, A Atitebi, C Azobu, A Banjo,
E Erhie, K Erikume, M Iwelumo, H Jaiyeola,T Labeodan, U Muogilim, C Obaro, C Ojechi, U Ojinmah, O Oladipo, W Olowofoyeku, P Omontuemhen,
O Osinubi, T Oyedele, O Ubah, C Uwaegbute, Y Yusuf
PricewaterhouseCoopers Chartered Accountants
Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria
T: +234 1 271 1700, www.pwc.com/ng TIN: 01556757-0001 BN: 958268
74
Partners:
S Abu, O Adekoya, T Adeleke, W Adetokunbo-Ajayi, S Adu, E Agbeyi, A Akingbade, UN Akpata, O Alakhume, A Atitebi, C Azobu, A Banjo,
E Erhie, K Erikume, M Iwelumo, H Jaiyeola,T Labeodan, U Muogilim, C Obaro, C Ojechi, U Ojinmah, O Oladipo, W Olowofoyeku, P Omontuemhen,
O Osinubi, T Oyedele, O Ubah, C Uwaegbute, Y Yusuf
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78
(cid:24)
Zenith Bank Plc Annual Report December 31, 2022
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:
PricewaterhouseCoopers Chartered Accountants
Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria
T: +234 1 271 1700, www.pwc.com/ng TIN: 01556757-0001 BN: 958268
Partners:
S Abu, O Adekoya, T Adeleke, W Adetokunbo-Ajayi, S Adu, E Agbeyi, A Akingbade, UN Akpata, O Alakhume, A Atitebi, C Azobu, A Banjo,
E Erhie, K Erikume, M Iwelumo, H Jaiyeola,T Labeodan, U Muogilim, C Obaro, C Ojechi, U Ojinmah, O Oladipo, W Olowofoyeku, P Omontuemhen,
O Osinubi, T Oyedele, O Ubah, C Uwaegbute, Y Yusuf
79
•
Interviewed management to obtain an understanding of the internal control environment, risk
assessment process and information systems relevant to the sustainability reporting process;
Inspected documentation to corroborate the statements of management in our interviews;
•
• Tested the processes and systems to generate, collate, aggregate, monitor and report the selected
sustainability information;
• Performed a controls walkthrough of identified key controls;
•
Inspected supporting documentation on a sample basis and performed analytical procedures to
evaluate the data generation and reporting processes against the reporting criteria;
• Evaluated the reasonableness and appropriateness of significant estimates and judgements made
by Management in the preparation of the selected sustainability information; and
• 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 2022 are not prepared, in all material respects, in accordance with the reporting criteria.
80
(cid:26)
Zenith Bank Plc Annual Report December 31, 2022
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
13 April 2023
Chartered Accountants
Lagos, Nigeria
Engagement Partner: Edafe Erhie
FRC/2013/ICAN/00000001143
81
(cid:27)
(cid:46)(cid:70)(cid:70)(cid:85)
(cid:53)(cid:73)(cid:70)(cid:1)(cid:59)(cid:70)(cid:79)(cid:74)(cid:85)(cid:73)(cid:1)(cid:35)(cid:66)(cid:79)(cid:76)(cid:1)(cid:1)
(cid:42)(cid:79)(cid:85)(cid:70)(cid:77)(cid:77)(cid:74)(cid:72)(cid:70)(cid:79)(cid:85)(cid:1)(cid:55)(cid:74)(cid:83)(cid:85)(cid:86)(cid:66)(cid:77)(cid:1)
(cid:34)(cid:84)(cid:84)(cid:74)(cid:84)(cid:85)(cid:66)(cid:79)(cid:85)(cid:1)
ZIVA
(cid:15)(cid:15)(cid:15)(cid:1)(cid:80)(cid:79)(cid:1)(cid:56)(cid:73)(cid:66)(cid:85)(cid:84)(cid:34)(cid:81)(cid:81)(cid:1)
“07040004422"(cid:1)
(cid:48)(cid:81)(cid:70)(cid:79)(cid:1)(cid:66)(cid:79)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)
(cid:51)(cid:70)(cid:66)(cid:68)(cid:85)(cid:74)(cid:87)(cid:66)(cid:85)(cid:70)(cid:1)(cid:66)(cid:79)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)
(cid:51)(cid:70)(cid:84)(cid:85)(cid:83)(cid:74)(cid:68)(cid:85)(cid:1)(cid:66)(cid:79)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)
(cid:36)(cid:73)(cid:70)(cid:68)(cid:76)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:35)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)
(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:46)(cid:80)(cid:79)(cid:70)(cid:90)
(cid:35)(cid:86)(cid:90)(cid:1)(cid:34)(cid:74)(cid:83)(cid:85)(cid:74)(cid:78)(cid:70)
(cid:49)(cid:86)(cid:83)(cid:68)(cid:73)(cid:66)(cid:84)(cid:70)(cid:1)(cid:37)(cid:66)(cid:85)(cid:66)
(cid:49)(cid:66)(cid:90)(cid:1)(cid:35)(cid:74)(cid:77)(cid:77)(cid:84)
(cid:35)(cid:77)(cid:80)(cid:68)(cid:76)(cid:1)(cid:36)(cid:66)(cid:83)(cid:69)
(cid:51)(cid:70)(cid:85)(cid:83)(cid:74)(cid:70)(cid:87)(cid:70)(cid:1)(cid:36)(cid:66)(cid:83)(cid:69)
(cid:54)(cid:81)(cid:69)(cid:66)(cid:85)(cid:70)(cid:1)(cid:35)(cid:55)(cid:47)
(cid:36)(cid:73)(cid:70)(cid:68)(cid:76)(cid:1)(cid:34)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:52)(cid:85)(cid:66)(cid:85)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)
(cid:45)(cid:80)(cid:72)(cid:1)(cid:36)(cid:80)(cid:78)(cid:81)(cid:77)(cid:66)(cid:74)(cid:79)(cid:85)(cid:84)
(cid:51)(cid:70)(cid:82)(cid:86)(cid:70)(cid:84)(cid:85)(cid:1)(cid:45)(cid:80)(cid:66)(cid:79)
(cid:45)(cid:80)(cid:68)(cid:66)(cid:85)(cid:70)(cid:1)(cid:66)(cid:1)(cid:59)(cid:70)(cid:79)(cid:74)(cid:85)(cid:73)(cid:1)(cid:34)(cid:53)(cid:46)(cid:16)(cid:35)(cid:83)(cid:66)(cid:79)(cid:68)(cid:73)
(cid:45)(cid:80)(cid:68)(cid:66)(cid:85)(cid:70)(cid:1)(cid:66)(cid:1)(cid:59)(cid:46)(cid:80)(cid:79)(cid:70)(cid:90)(cid:1)(cid:34)(cid:72)(cid:70)(cid:79)(cid:85)
(cid:36)(cid:73)(cid:66)(cid:85)(cid:1)(cid:88)(cid:74)(cid:85)(cid:73)(cid:1)(cid:66)(cid:79)(cid:1)(cid:34)(cid:72)(cid:70)(cid:79)(cid:85)
(cid:51)(cid:70)(cid:84)(cid:70)(cid:85)(cid:1)(cid:49)(cid:42)(cid:47)
(cid:43)(cid:86)(cid:84)(cid:85)(cid:1)(cid:84)(cid:66)(cid:87)(cid:70)(cid:1)(cid:80)(cid:86)(cid:83)(cid:1)(cid:69)(cid:70)(cid:69)(cid:74)(cid:68)(cid:66)(cid:85)(cid:70)(cid:69)(cid:1)(cid:56)(cid:73)(cid:66)(cid:85)(cid:84)(cid:34)(cid:81)(cid:81)(cid:1)
(cid:79)(cid:86)(cid:78)(cid:67)(cid:70)(cid:83)(cid:1)
(cid:12)(cid:19)(cid:20)(cid:21)(cid:1) (cid:24)(cid:17)(cid:21)(cid:1) (cid:17)(cid:17)(cid:17)(cid:1) (cid:21)(cid:21)(cid:19)(cid:19)
(cid:1) (cid:80)(cid:79)(cid:1)
(cid:90)(cid:80)(cid:86)(cid:83)(cid:1)(cid:34)(cid:77)(cid:70)(cid:83)(cid:85)(cid:59)(cid:1)(cid:77)(cid:74)(cid:79)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:84)(cid:66)(cid:90)(cid:1)(cid:105)
(cid:41)i
(cid:119)(cid:1)(cid:85)(cid:80)(cid:1)(cid:86)(cid:84)(cid:1)
(cid:80)(cid:79)(cid:1)(cid:56)(cid:73)(cid:66)(cid:85)(cid:84)(cid:34)(cid:81)(cid:81)(cid:15)
Governance
(cid:7)
Sustainability
Financials
0203 Statement of Directors’ Responsibilities in Relation to the Financial
Statements for the Year Ended 31 December 2022
The 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 period ahead.
_________________________
Dr. Ebenezer Onyeagwu
Group Managing Director / CEO
FRC/2013/ICAN/00000003788
January 26, 2023
SIGNED ON BEHALF OF THE
BOARD OF DIRECTORS BY:
_________________________
Mr. Jim Ovia, CFR
Chairman
FRC/2013/CIBN/00000002405
January 26, 2023
84
Report of The Audit Committee for the Year Ended 31 December,
2022
In compliance with Section 359(6) of the Companies and Allied Matters Act of Nigeria (2020), Cap C20 LFN 2004, we have
reviewed the consolidated and separate financial statements of Zenith Bank Pie for the year ended 31 December, 2022
and hereby state as follows:
1.
2.
3.
4.
5.
The scope and planning of the audit were adequate in our opinion;
The accounting and reporting policies of the Group and Bank conformed with the statutory requirements and
agreed ethical practices;
The Internal Control and Internal Audit functions were operating effectively; and
The External Auditor’s findings as stated in the management letter are being dealt with satisfactorily by the
management.
Related party transactions and balances have been disclosed in note 38 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 25, 2023.
Mrs. Adebimpe Balogun
Chairman, Audit Committee
FRC/2017/CITN/00000017467
MEMBERS OF THE COMMITTEE
Shareholders’ Representative
1. Mrs Adebimpe Balogun
2.
3. Mr. Michael Olusoji Ajayi
Professor Leonard F.O. Obika
Directiors’ Representative
Directors’ Representatives
Engr. Mustafa Bello
1.
Dr. AI-Mujtaba Abubakar MFR
2.
- Chairman
Financials
85
86
Zenith Bank Plc Annual Report December 31, 2022
Financials
87
88
Zenith Bank Plc Annual Report December 31, 2022
Financials
89
90
Zenith Bank Plc Annual Report December 31, 2022
Financials
91
Notes
USSD
Merchant
(cid:52)ome(cid:1)(cid:47)ew(cid:1)(cid:34)(cid:81)(cid:81)(cid:1)(cid:39)eat(cid:86)(cid:83)e(cid:84)(cid:27)(cid:63)(cid:3)(cid:49)e(cid:90)(cid:3)(cid:15)(cid:15)(cid:15)(cid:1)(cid:88)(cid:73)(cid:70)(cid:83)(cid:70)(cid:1)(cid:68)(cid:77)(cid:66)(cid:84)(cid:84)(cid:1)(cid:78)(cid:70)(cid:70)(cid:85)(cid:84)(cid:1)(cid:68)(cid:80)(cid:79)(cid:87)(cid:70)(cid:79)(cid:74)(cid:70)(cid:79)(cid:68)(cid:70)(cid:52)(cid:36)(cid:34)(cid:47)(cid:1)(cid:53)(cid:48)(cid:1)(cid:37)(cid:48)(cid:56)(cid:47)(cid:45)(cid:48)(cid:34)(cid:37)(cid:18)(cid:15)(cid:1)(cid:1)(cid:49)(cid:70)(cid:83)(cid:84)(cid:80)(cid:79)(cid:66)(cid:77)(cid:1)(cid:39)(cid:74)(cid:79)(cid:66)(cid:79)(cid:68)(cid:70)(cid:1)(cid:46)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:15)(cid:19)(cid:15)(cid:1)(cid:1)(cid:39)(cid:80)(cid:83)(cid:70)(cid:89)(cid:1)(cid:36)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:68)(cid:90)(cid:1)(cid:38)(cid:89)(cid:68)(cid:73)(cid:66)(cid:79)(cid:72)(cid:70)(cid:1)(cid:51)(cid:66)(cid:85)(cid:70)(cid:1)(cid:7)(cid:1)(cid:36)(cid:80)(cid:79)(cid:87)(cid:70)(cid:83)(cid:84)(cid:74)(cid:80)(cid:79)(cid:1)(cid:36)(cid:66)(cid:77)(cid:68)(cid:86)(cid:77)(cid:66)(cid:85)(cid:80)(cid:83)(cid:15)(cid:20)(cid:15)(cid:1)(cid:1)(cid:49)(cid:83)(cid:80)(cid:246)(cid:77)(cid:70)(cid:1)(cid:37)(cid:66)(cid:85)(cid:66)(cid:1)(cid:49)(cid:66)(cid:72)(cid:70)(cid:1)(cid:46)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:15)4(cid:15)(cid:1)(cid:1)(cid:52)(cid:86)(cid:78)(cid:1)(cid:80)(cid:71)(cid:1)(cid:66)(cid:77)(cid:77)(cid:1)(cid:90)(cid:80)(cid:86)(cid:83)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:67)(cid:66)(cid:77)(cid:66)(cid:79)(cid:68)(cid:70)(cid:84)(cid:1)(cid:9)(cid:47)(cid:66)(cid:74)(cid:83)(cid:66)(cid:1)(cid:7)(cid:1)(cid:80)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:68)(cid:86)(cid:83)(cid:83)(cid:70)(cid:79)(cid:68)(cid:74)(cid:70)(cid:84)(cid:10)(cid:15)...
and
lots
more.(cid:22)(cid:15)(cid:1)(cid:1)(cid:35)(cid:80)(cid:80)(cid:76)(cid:16)(cid:49)(cid:66)(cid:90)(cid:1)(cid:71)(cid:80)(cid:83)(cid:1)(cid:39)(cid:77)(cid:74)(cid:72)(cid:73)(cid:85)(cid:84)(cid:13)(cid:1)(cid:41)(cid:80)(cid:85)(cid:70)(cid:77)(cid:84)(cid:13)(cid:1)(cid:38)(cid:79)(cid:85)(cid:70)(cid:83)(cid:85)(cid:66)(cid:74)(cid:79)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:51)(cid:80)(cid:66)(cid:69)(cid:1)(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:81)(cid:80)(cid:83)(cid:85)(cid:15)(cid:23)(cid:15)(cid:1)(cid:1)(cid:45)(cid:80)(cid:66)(cid:79)(cid:1)(cid:51)(cid:70)(cid:82)(cid:86)(cid:70)(cid:84)(cid:85)(cid:13)(cid:1)(cid:53)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:45)(cid:74)(cid:78)(cid:74)(cid:85)(cid:1)(cid:46)(cid:72)(cid:85)(cid:13)(cid:1)(cid:36)(cid:73)(cid:70)(cid:82)(cid:86)(cid:70)(cid:16)(cid:37)(cid:83)(cid:66)(cid:71)(cid:85)(cid:1)(cid:46)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:13)(cid:1)(cid:37)(cid:86)(cid:67)(cid:66)(cid:74)(cid:1)(cid:55)(cid:74)(cid:84)(cid:66)(cid:1)(cid:7)(cid:1)(cid:48)(cid:85)(cid:73)(cid:70)(cid:83)(cid:1)(cid:52)(cid:70)(cid:83)(cid:87)(cid:74)(cid:68)(cid:70)(cid:84)(cid:15)(cid:24)(cid:15)(cid:1)(cid:1)(cid:46)(cid:70)(cid:83)(cid:68)(cid:73)(cid:66)(cid:79)(cid:85)(cid:1)(cid:50)(cid:51)(cid:1)(cid:81)(cid:66)(cid:90)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)Pay
with
Transfer Notes
Zenith Bank Plc Annual Report December 31, 2022
Consolidated and Separate Statement of Profit or Loss and Other
Comprehensive Income for the Year Ended 31 December 2022
In millions of Naira
Note(s)
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
Interest and similar income
Interest and similar expense
Net interest income
Impairment charge on financial and non-financial instruments
Net interest income after impairment loss on financial and non-
financial instruments
Net income on fees and commission
Trading gains
Other operating income
Depreciation of property and equipment
Amortisation of intangible assets
Personnel expenses
Operating expenses
Profit before tax
Income tax expense
Profit for the year after tax
Other comprehensive income:
6
7
8
9
11
10
26
27
37
12
540,166
427,597
448,174
(173,539)
(106,793)
(153,019)
340,388
(82,718)
366,627
320,804
295,155
257,670
(123,252)
(59,932)
(61,896)
(56,175)
243,375
260,872
233,259
201,495
132,795
212,678
35,494
(26,630)
(3,678)
103,958
167,483
37,594
(25,305)
(3,779)
110,098
201,645
49,790
(24,519)
(3,045)
84,185
171,469
53,266
(23,204)
(3,064)
(86,412)
(79,885)
(68,475)
(61,123)
(222,972)
(180,564)
(204,703)
(165,857)
284,650
280,374
294,050
257,167
13a
(60,739)
(35,816)
(59,457)
(24,034)
223,911
244,558
234,593
233,133
Items that will never be reclassified to profit or loss:
Fair value movements on equity instruments at FVOCI
8,109
5,599
8,109
5,599
Items that are or may be reclassified to profit or loss:
Foreign currency translation differences for foreign operations
Fair value movements on debt securities at FVOCI
(28,768)
(6,602)
8,485
(2,227)
-
-
-
-
Other comprehensive(loss)/ income for the year net of taxation
(27,261)
11,857
8,109
5,599
Total comprehensive income for the year
196,650
256,415
242,702
238,732
Profit (loss) attributable to:
Equity holders of the parent
Non controlling interest
Total comprehensive income attributable to:
Equity holders of the parent
Non controlling interest
Earnings per share
Basic and diluted (Naira)
224,050
244,402
234,593
233,133
(139)
156
-
-
196,981
256,245
242,702
238,732
(331)
170
-
-
14
7.14
7.78
7.47
7.43
The accompanying notes are an integral part of these consolidated and separate financial statements.
94
Consolidated and Separate Statement of Financial Position as at 31
December 2022
In millions of Naira
Assets
Cash and balances with central banks
Treasury bills
Assets pledged as collateral
Due from other banks
Derivative assets
Loans and advances
Investment securities
Investment in subsidiaries
Deferred tax asset
Other assets
Property and equipment
Intangible assets
Total assets
Liabilities
Customers' deposits
Derivative liabilities
Current income tax payable
Deferred tax liabilities
Other liabilities
On-lending facilities
Borrowings
Debt securities issued
Total liabilitles
Capital and reserves
Share capital
Share premium
Retained earnings
Other reserves
Attributable to equity holders of the parent
Non-controlling interest
Total shareholders' equity
Total liabilities and equity
Note(s)
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
15
16
17
18
19
20
21
22
24
25
26
27
28
33
13
24
29
30
31
32
34
35
35
35
35
2,201,744
2,246,538
254,663
1,302,811
49,874
4,013,705
1,728,334
-
18,343
213,523
230,843
25,251
1,488,363
1,764,946
392,594
691,244
56,187
3,355,728
1,303,725
-
1,837
168,210
200,008
25,001
2,102,394
2,206,668
254,565
1,132,796
48,851
3,735,676
622,781
34,625
-
193,792
214,572
23,958
1,397,666
1,577,647
357,000
518,053
57,476
3,099,452
477,004
34,625
-
152,326
177,501
23,542
12,285,629
9,447,843
10,570,678
7,872,292
8,975,653
6,472,054
7,434,806
5,169,199
6,325
64,856
16,654
568,559
311,192
963,450
-
14,674
16,909
11,603
487,432
369,241
750,469
45,799
6,040
61,655
15,911
546,347
311,192
999,580
-
15,170
14,241
11,596
427,876
369,241
769,395
45,799
10,906,689
8,168,181
9,375,531
6,822,517
15,698
255,047
625,005
482,377
1,378,127
813
1,378,940
12,285,629
15,698
255,047
607,203
400,570
1,278,518
1,144
1,279,662
9,447,843
15,698
255,047
494,429
429,973
15,698
255,047
466,249
312,781
1,195,147
1,049,775
-
1,195,147
10,570,678
-
1,049,775
7,872,292
The 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 26th January 2023 and
signed on its behalf by:
Jim Ovia, CFR.
(Chairman)
FRC/2013/CIBN/00000002406
Dr. Ebenezer Onyeagwu
(Group Managing Director & Chief Executive Officer)
FRC/2013/ICAN/00000003788
Mukhtar Adam, PhD
(Chief Financial Officer)
FRC/2013/MUL Tl/00000003196
Financials
95
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Notes
97
Zenith Bank Plc Annual Report December 31, 2022
Consolidated and Separate Statement of Cash Flows for the
Year Ended 31 December 2022
For the year ended 31 December
In millions of Naira
Cash flows from operating activities
Profit before tax for the year
Adjustments for:
Group
Bank
Note(s)
2022
2021
2022
2021
284,650
280,374
294,050
257,167
Net impairment loss on financial and non-financial instruments
8
123,252
59,932
61,896
56,175
Unrealised fair value change in trading bond, bills and derivatives
44(xii)
Depreciation of property and equipment
Amortisation of intangible assets
Dividend income
Foreign exchange revaluation gain
Write-off of Intangible
Interest income
Interest expense
Gain on sale of property and equipment
Gain on sale of financial instruments
Modification Loss
Gain on lease derecognition
Changes in operating assets and liabilities:
Net increase in loans and advances
Net (increase) decrease in other assets
26
27
10
10
27
6
7
10
10
44 (xvi)
90,046
26,630
3,679
(2,223)
(94,564)
(88,394)
(97,873)
25,305
3,779
24,520
3,045
23,204
3,064
(2,754)
(17,148)
(19,186)
(25,201)
(25,537)
(25,320)
(26,012)
-
2,454
-
2,454
(540,166)
(427,597)
(448,174)
(340,388)
173,539
106,793
153,019
82,718
(2,563)
-
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(251)
(353)
(2,451)
(69)
-
-
-
-
-
44 (xvili)
(2,028)
-
(2,025)
(50,477)
(71,791)
(46,983)
(58,746)
44(iii)
(543,005)
(536,014)
(502,442)
(409,303)
44 (viii)
(59,586)
1,362
(55,735)
6,896
Net increase in treasury bills (FVTPL) including bills pledged
44(iib)
(76,101)
(97,724)
(78,553)
(95,938)
Net (increase)/decrease in investment securities including bonds pledged (FVTPL and FVOCI)
Net (increase)/decrease in restricted balances (cash reserves)
44(i)
44(x)
(254,630)
(160,011)
138
(418,711)
80,525
(419,705)
Net decrease/ (increase) in due from banks with maturity greater than three months
44(vii)
(15,661)
139,061
(21,065)
33,389
95,418
75,556
Net increase in customer deposits
Net increase/(decrease) in Other liabilities
44(iv)
44(V)
2,362,290
1,091,293
2,153,832
823,850
48,387
(225,060)
84,480
(180,330)
992,506
221,641
1,113,967
290,792
Interest received from operating activities
44 (xiiia)
354,722
286,640
302,324
253,341
Interest paid
Tax paid
Net cash flows generated from operations
Cash flows from investing activities
Purchase of property and equipment
Proceeds from Sale of property and equipment
Purchase of intangible assets
Additions to treasury bills
Disposal of treasury bills
Interest received from treasury bills and investment securities
Acquisition of Right of Use Asset
Additions to other Investment securities
Disposal of other Investment securities
Proceeds from sale of financial instruments
Dividends received
Net cash from investing activities
98
44(xi)
(143,859)
(107,051)
(128,805)
(83,695)
13
(24,247)
(15,045)
(7,728)
(2,581)
1,179,122
386,185
1,279,758
457,857
44(xivb)
(67,245)
(34,109)
(64,357)
(31,584)
44(vi)
3,207
448
2,671
437
27
(4,130)
(14,884)
(3,461)
(14,361)
44(iia)
(3,060,163)
(2,652,094)
(2,968,565)
(2,346,839)
44(iiа)
2,833,003
2,449,816
2,679,567
2,056,995
44 (xiiib)
44(xiva)
88,416
(2,281)
78,970
(240)
71,700
(2,031)
41,492
(150)
44(XV)
(559,328)
(300,852)
(206,285)
(159,577)
44(i)
403,066
230,056
65,448
75,928
10
10
-
2,223
251
2,754
-
-
17,148
19,186
(363,232)
(239,884)
(408,165)
(358,474)
In millions of Naira
Group
Bank
Note(s)
2022
2021
2022
2021
Cash flows from financing activities
Repayment of debt securities Issued
Cash inflow from long term borrowings
Repayment of long term borrowings
Cash inflow from onlending facility
Repayment of onlending facility
Repayment of principal for lease liability
Unclaimed dividend received
Dividends paid to shareholders
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Analysis of changes in cash and cash equivalents :
(46,071)
-
(46,071)
-
31
31
30(b)
30(b)
44(v)
44(xvii)
1,243,614
712,420
1,279,743
693,944
(1,135,414)
(860,123)
(1,154,340)
(826,805)
-
(59,470)
(4,011)
1,117
14,482
(33,011)
(2,802)
612
-
14,482
(59,470)
(33,011)
(2,927)
1,117
(2,007)
612
40
(97,371)
(94,226)
(97,330)
(94,189)
(97,606)
(262,648)
(79,278)
(246,974)
718,284
(116,347)
792,315
(147,591)
Cash and cash equivalent at the beginning of the year
1,134,519
1,208,520
776,574
882,683
(decrease)/increase in cash and cash equivalents
Effect of exchange rate movement on cash balances
718,286
(116,347)
792,315
(147,591)
87,955
42,346
88,297
41,482
Cash and cash equivalents at the end of the year
41
1,940,758
1,134,519
1,657,186
776,574
The accompanying notes are an integral part of these consolidated and separate financial statements.
Financials
99
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(cid:1)
(cid:1)
(cid:52) (cid:48) (cid:45) (cid:54) (cid:53) (cid:42) (cid:48) (cid:47) (cid:52)
(cid:39) (cid:44)(cid:42) (cid:44)(cid:55)C(cid:47)(cid:3)(cid:37)(cid:56)(cid:54)(cid:44)(cid:49) (cid:40)(cid:54)(cid:54)(cid:3)
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(cid:1)(cid:93)
(cid:1)(cid:1)(cid:46)(cid:86)(cid:77)(cid:85)(cid:74)(cid:67)(cid:66)(cid:79)(cid:76)(cid:1)(cid:49)(cid:66)(cid:90)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:49)(cid:83)(cid:80)(cid:68)(cid:70)(cid:84)(cid:84)(cid:74)(cid:79)(cid:72)
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(cid:93)
(cid:93)
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us
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Statement
of
Directors(cid:8)
Responsibilities
Notes
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
1. General information
(i) Property and Equipment: Proceeds before intended use –
Amendments to IAS 16
Zenith 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 84/87
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 2022 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 2022 were approved and authorised for issue by
the Board of Directors on 26 January 2023. The directors have
the power to amend and re-issue the financial statements
The Group does not have any unconsolidated structured
entity.
2.0(a) Changes in accounting policies
Except 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 new standards and
amendments including any consequential amendments to
other standards with initial date of application of January 1,
2022.
102
The amendment to IAS 16 Property, Plant and Equipment (PP&E)
prohibits an entity from deducting from the cost of an item of PP&E
any proceeds received from selling items produced while the entity
is preparing the asset for its intended use. It also clarifies that an
entity is ‘testing whether the asset is functioning properly’ when
it assesses technical and physical performance of the asset. The
financial performance of the asset is not relevant to this assessment.
Entities must disclose separately the amounts of proceeds and costs
relating to items produced that are not an output of the entity’s
ordinary activities. This amendment does not have an impact on the
Group Financial statements.
(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 to 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.
There has been no change in the Group structure within the period
as such this amendment does not have an impact on the Group
financial statements.
(iii) Onerous Contracts – Cost of Fulfilling a Contract
Amendments to IAS 37
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.
This amendment does not have an impact on the Group Financial
statements.
(iv) Annual Improvements to IFRS Standards 2018–2020
The following improvements were finalised in May 2020:
•
•
IFRS 9 Financial Instruments – clarifies which fees should
be included in the 10% test for derecognition of financial
liabilities.
IFRS 16 Leases – amendment of illustrative example 13 to
remove the illustration of payments from the lessor relating
to leasehold improvements, to remove any confusion about
the treatment of lease incentives.
•
IFRS 1 First-time Adoption of International Financial
Reporting Standards – allows entities that have
measured their assets and liabilities at carrying amounts
recorded in their parent’s books to also measure any
cumulative translation differences using the amounts
reported by the parent. This amendment will also apply
to associates and joint ventures that have taken the
same IFRS 1 exemption.
2.0(b) Changes in accounting policy following IFRS
IC agenda discussions
No Agenda decisions issued by the IFRS IC had an impact on
the group financial statements for the year ended 31 December
2022
2.0(c) IBOR reform disclosure
Overview
A 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 entity’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 referenced
IBOR from 1 January 2022
However, the Bank is still in the process of negotiating the
replacement rate for IBOR legacy contracts with rates that
ceased as at 31 December 2022. The IBOR transition working
group is working closely with the business teams to amend the
contractual terms to replace the IBOR rate. The sections below
contain details of all of the financial instruments that the Group
holds at 31 December 2022 which reference IBOR and have not
yet transitioned to alternative interest rate benchmark.
.
There are no derivatives benchmarked to IBOR as at period end.
(i)
Non-derivative financial assets
Zenith 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 2022. The amounts
of these assets are shown at their gross carrying amounts.
Notes
103
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Dollars
USD
LIBOR
USD
LIBOR
31 Dec 2022
Carrying Value at
31 Dec 2022
Of which have yet to be
transitioned as at 31 Dec 2022
Carrying Value at
31 Dec 2021
Of which have yet to be
transitioned as at 31 Dec 2021
Loans and advances to customers
Multilateral loans
1,228
1,228
873
873
2,883
2,883
2,883
2,883
(ii)
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 are in
discussions with the counterparties of the Banks financial liabilities to amend the contractual terms in response to IBOR reform.
The following tables show the total amounts of unreformed non-derivative financial liabilities as at 31 December 2022. The amounts
shown in the table are the carrying amounts.
In millions of Dollars
USD
LIBOR
USD
LIBOR
31 Dec 2022
Borrowings
Multilateral Borrowings
Carrying Value at
31 Dec 2022
Of which have yet to be
transitioned as at 31 Dec 2022
Carrying Value at
31 Dec 2021
Of which have yet to be
transitioned as at 31 Dec 2021
397
397
67
67
805
805
805
805
(d)
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.
(e)
Standards issued but not yet effective
The following standards and interpretations had been issued but were not mandatory for annual reporting year ended on 31 December
2022. The Group has not early 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.
This amendment is not expected to have a significant impact on the group financial statement.
104
(ii)
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.
This amendment is not expected to have a significant
impact on the accounting policies disclosed in the
financial statement.
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:
•
•
•
restoration and
right-of-use assets and lease liabilities, and
decommissioning,
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.
The effective date is 1 January 2023.
The impact of this amendment on the Group’s
financial statements is currently under assessment.
iii)
Definition
Amendments to IAS 8
of Accounting
Estimates
–
2.1 Basis of preparation
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.
This amendment does not have an impact on the
Group financial statements.
(a)
Statement of compliance
The financial statements are prepared in accordance
with International Financial Reporting Standard (IFRS)
ººand 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:
iv)
iv) 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
•
Financial assets and
amortised cost;
• Derivative financial
liabilities measured at
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 IAS 34 requires the use of certain critical accounting
estimates. It also requires management to exercise its
Notes
105
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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.
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).
Interests
When the proportion of the equity held by Non
(NCIs) changes, the carrying
Controlling
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
initially recognised at cost. The Group’s
and are
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.
2.2 Basis of Consolidation
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
interests are measured at
Non-controlling
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.
106
2.3
Translation of foreign currencies
Foreign 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;
(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 periodend 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
Notes
107
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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
instruments are recognised
Financial
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).
(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:
108
• 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
is held within a business
test: The asset
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
investments are measured at fair value.
including equity
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
commitments
guarantees
contracts
and
loan
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. Subsequently, 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 assessment
The 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.
Notes
109
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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 interest
For 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).
The 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.
Reclassifications
Financial assets are not reclassified subsequent to their
initial recognition, except in the period after the Group
changes its business model for managing financial assets.
110
(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
original 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.
Notes
111
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
(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
profit 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.
112
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
assumptions.
fair valuation methods and
(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
in a hedging relationship are recognized immediately in
profit or loss and are included in Trading gains/(losses).
Derivatives are initially recognized at fair value on the
date on which the derivative contract is entered into and
are subsequently remeasured at fair value. All derivatives
are carried as assets when fair value is positive and as
liabilities when fair value is negative.
The method of recognizing the resulting fair value
gain or loss depends on whether the derivative is
designated and qualifies as a hedging instrument, and
if so, the nature of the item being hedged. The Group
designates certain derivatives as Hedges of the fair value
of recognized assets or liabilities or firm commitments
(fair value hedges).
The Group documents, at the inception of the hedge,
the relationship between hedged items and hedging
instruments, as well as its risk management objective
and strategy for undertaking various hedge transactions.
The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether
the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or
cash flows of hedged items.
(a)
Fair Value Hedge
Changes
in the fair value of derivatives that are
designated and qualify as fair value hedges are recorded
in the statement of profit or loss, together with changes
in the fair value of the hedged asset or liability that are
attributable to the hedged risk.
The Bank discontinues hedge accounting in any of the
following circumstances:
•
•
•
•
•
The hedging instrument is not, or has ceased to be,
highly effective as a hedge
The hedging
terminated, or exercised
instrument has expired,
is sold,
The hedged item matures, is sold, or repaid
The forecast transaction is no longer deemed
highly probable
The Bank elects to discontinue hedge accounting
voluntarily
Derivatives that do not qualify for Hedge Accounting
Certain derivatives do not qualify for hedge accounting.
Changes in the fair value of any derivative not designated
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.
No 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’.
instruments
Financial
is
recognised which are credit impaired are referred to as
‘Stage 3 financial instruments”.
lifetime ECL
for which
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’ .
Notes
113
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
2.7.1 Measurement of ECL
ECL 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.’
2.7.2 Credit-impaired financial assets
At 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.
114
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 position
Loss 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 policy
The 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 loan subsequently recovered is
treated as other income.
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 not 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 2022 was N74.1billion (31 December
2021: N42.5 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 instruments
Financial 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.
reclassification
is applied prospectively
The
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.
from
2.9 Restructuring of financial instruments
Financial 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 Collateral
The 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.
Notes
115
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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 cirumstances, property may be repossessed following the foreclosure on loans that are in default. These repossessd 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 equipment
Property 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:
Item
Land
(Not depreciated)
Motor vehicles
Office equipment
Furniture and fittings
4 years
5 years
5 years
Computer equipment
3 years
Buildings
50 years
Leasehold improvement
Over the remaining lease period
Aircraft
25 years
Right of use assets
Lower of lease term or the useful life for the specified class of item
Depreciation 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.
Property 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.
116
Borrowing Costs
Borrowing 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 software
Software 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:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
it is technically feasible to complete the software
product so that it will be available for use;
management
product and use or sell it;
intends to complete the software
there is an ability to use or sell the software product;
it can be demonstrated how the software product will
generate probable future economic benefits
adequate technical, financial and other resources
to complete the development and to use/sell the
software product are available
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 assets
The 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 to 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.
Notes
117
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
2.14 Leases
A.
Group / Bank as a lessee
Leases, 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.
The major lease transaction wherein the Group/Bank is
lessee relates to the lease of Bank’s branches
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 id entified 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.
118
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 Provisions
Provisions 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.
A 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 benefits
The 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 benefits
Short-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 benefits
The 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 costs
Incremental 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 shares
Dividends 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 premium
Premiums from the issue of shares are reported in share premium.
(d)
Statutory reserve
Nigerian 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
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.
(e)
SMIEIS reserve
The 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 risk
The 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 earnings
Retained earnings comprise the undistributed profits from
previous periods which have not been reclassified to any
specified reserves.
(h)
Fair value reserve
Comprises fair value movements on equity instruments and
debt securities carried at FVOCI.
Notes
119
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
(i)
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.
Recognition of interest income and
2.18
expense
Effective interest rate
Interest 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:
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.
the gross carrying amount of the financial asset; or
the amortised cost of the financial liability.
For information on when financial assets are credit-impaired, see
Note 2.7.2.
interest rate for financial
When calculating the effective
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 amount
The ‘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 expense
The 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
Presentation
Interest 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
liabilities measured at
amortised cost.
interest on financial
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 income
Fee 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
120
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 gains
Net 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 expense
Expenses 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.
2.22 Current and deferred income tax
Income 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.
to
income
The Bank had determined that interest and penalties
tax
relating
treatments, do not meet the definition of income taxes,
and therefore are accounted for under IAS 37 Provisions,
Contingent Liabilities and Contingent Assets.
including uncertain
taxes,
(a)
Current tax
Current 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
Notes
121
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
profit (i.e. profit after deducting all expenses and taxes
from revenue earned by the company during the year).
National Agency for Science and Engineering
Infrastructure is computed on profit before tax.
assets and they relate to taxes levied by the same tax authority
on the same taxable entity or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realized simultaneouslyt.
(b)
Deferred tax
Deferred 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.
2.22 Earnings per share
The 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.
2.23 Segment reporting
An 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.
2.24 Fiduciary activities
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.
The 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.
2.25 Deposit for outstanding investment in
AGSMEIS
The 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.
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
deferred tax liabilities are offset if there is a legally enforceable
right to offset the current tax liabilities against the current tax
122
3.
Risk management
3.1
Enterprise Risk Management
The 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/Strategy
The 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.
c.
d.
e.
Risk management is a shared responsibility. Therefore,
the Group aims to build a shared perspective on risks
that is grounded in consensus.
There is clear segregation of duties between market-
facing business units and risk management functions.
Risk 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.
3.1.2 Risk Appetite
The 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 Approach
The 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
aligned 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.
b.
c.
The Board of Directors provides overall risk management
direction and oversight;
The Group’s risk appetite is approved by the Board of
Directors;
Risk management is embedded in the Group as an
intrinsic process and is a core competence of all its
employees;
Notes
123
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
d.
e.
f.
The Group manages its credit, market, operational
and liquidity risks in a coordinated manner within the
organisation;
The Group’s risk management function is independent
of the business divisions; and
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.
b.
c.
d.
Comprehensive compliance manual detailing the roles
and responsibilities of all stakeholders in the compliance
process:
Review and analysis of all relevant laws and regulations,
which are adopted into policy statements to ensure
business is conducted professionally;
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; and
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 Rating
The risk management strategy is to develop an integrated
approach to risk assessments, measurement, monitoring and
124
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.
b.
c.
d.
e.
f.
g.
h.
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;
lines of authority and responsibility
Establish
for
managing individual risk elements in line with the
Board’s overall direction;
identification, measurement, monitoring and
Risk
control procedures;
Establish effective internal controls that cover each risk
management process;
Ensure that the Group’s risk management processes are
properly documented;
Create adequate awareness to make risk management a
part of the corporate culture of the Group;
that
Ensure
established by the Board; and
risk
remains within
the boundaries
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.
b.
c.
d.
The strategic importance of the activity and sector;
The contribution of the activity/sector to the total assets
of the Bank;
The net income of the sector; and
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 conditions
The Nigeria Gross Domestic Product (GDP) grew by 3.52 per
cent in the fourth quarter of 2022 on a year-on-year basis. The
performance of the GDP in the fourth quarter of 2022 was
driven mainly by the services sector, which recorded a growth
of 5.69 per cent and contributed 56.27 per cent to the aggregate
GDP. The acceleration chiefly reflected the agricultural sector
gaining steam and growing 2.0%. The aggregate GDP stood at
N56.76 trillion in nominal terms in Q4, 2022. This improvement
is reflected in the banking sector’s earnings and profitability
which appreciated in 2022, driven by broader adoption of digital
channels post-lockdowns, a mild upswing in industry OPEX, and
a slightly improved cost-to-income ratio.
Zenith Bank’s principal strategy is aimed at promoting growth
and profitability of banking activities. The Bank adopted an
integrated approach to risk management by bringing all risks
together under a controlled oversight functions. Risk culture
permeates the entire organization and the tone at the top
is impeccable. Risk challenges are addressed through the
Enterprise Risk Management (ERM) Framework supported by a
governance structure consisting of board level and executive
management committees.
The Bank’s risk appetite is the core instrument used in aligning
the overall corporate strategy, capital allocation and risk. The
Bank has a comprehensive risk appetite framework linked to
its corporate strategy and risk culture. As part of the Bank’s risk
appetite framework, Risk Control Self-Assessment is conducted
frequently. This assessment provides details on risk tolerance per
risk category for each business/department across the entire
bank. It also includes a nature of the threat, controls/mitigants,
residual impact and early warning mechanisms for each risk.
The Bank has both qualitative and quantitative indicators
which are drawn from its existing risk management framework.
There are several risk related frameworks and policies for both
financial and non-financial risks. Macro-economic and market-
based indicators are also used to proactively show and monitor
negative trends, which may harm the Bank. The thresholds for the
indicators were determined based on regulatory requirements
(CBN), the Bank’s risk appetite and global good practice. The Bank
is conservative as far as risk taking is concerned. As a result, the
risk appetite is set at a level that minimizes erosion of earnings
or capital due to avoidable losses or from frauds and operational
inefficiencies.
3.2 Credit Risk
Credit 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:
a.
b.
c.
d.
e.
f.
g.
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;
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;
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;
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
considerations
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;
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;
All insiders’ related credits are limited to regulatory and
strict internal limits and are disclosed as required; and
Notes
125
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
h.
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 Tools
Zenith 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:
Zenith Group
Rating
Description of the grade
AAA
AA
A
BBB
BB
B
CCC
CC
C
D
Investment Risk (Extremely Low Risk)
Investment Risk (Very Low Risk)
Investment Risk (Low Risk)
Upper Standard Grade (Acceptable Risk)
Lower Standard Grade (Moderately High Risk)
Non-Investment Grade (High Risk)
Non-Investment Grade (Very High Risk)
Non-Investment Grade (Extremely High Risk)
Non-Investment Grade (High Likelihood of
Default)
Non-Investment Grade (Lost)
Adherence to the strict credit selection criteria, which
includes defined target market, credit history, the capacity
and character of customers;
Unrated
Individually insignificant (unrated)
(b)
Other debt instruments
a.
b.
c.
d.
e.
Credit rating of obligor;
The likelihood of failure to pay over the period stipulated in
the contract;
The size of the facility in case default occurs; and
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 Tools
The 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 banks
Each 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.
126
With respect to other debt instruments, the Group
takes the following
in the
into consideration
management of the associated credit risk:
(i)
(ii)
Internal and external research and market
intelligence reports; and
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 system
Zenith’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 Processes
Zenith 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.
b.
c.
d.
e.
f.
g.
Credit assessment of the borrower’s
macro-economic factors;
industry, and
The purpose of credit and source of repayment;
The track record / repayment history of borrower;
Assess/evaluate the repayment capacity of the borrower;
The proposed terms and conditions and covenants;
Adequacy and enforceability of collaterals; and
Approval from appropriate authority.
3.2.4 Group Credit Risk Management
Zenith’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:
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;
Well-defined target market and risk asset acceptance
criteria;
e.
f.
g.
h.
i.
j.
Continuous
mitigation strategies;
assessment of
concentrations
and
Continuous validation and modification of early
warning system to ensure proper functioning for risk
identification;
Systematic and objective credit risk rating methodologies
that are based on quantitative, qualitative and expert
judgment;
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;
Solid documentation and collateral management
process with proper coverage and top-up triggers and
follow-ups; and
Annual and interim individual credit reviews to ensure
detection of weakness signs or warning signals and
considering proper remedies.
The 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 Limits
The 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.
Rigorous financial, credit and overall risk analysis for each
customer/transaction;
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.
Regular portfolio examination
performance indicators and periodic stress testing;
line with key
in
Notes
127
a.
b.
c.
d.
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
The Group’s internal credit approval limits for the various authorities levels are as indicated below.
Zenith Group Rating
Board Credit Committee
Approval limit (% of Shareholders’ Fund)
N3.5 billion and above (Not exceeding 20% of total shareholders’ fund)
Management Global Credit Committee
Below N3.5 billion
These 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 Monitoring
The 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.
3.2.7 (a) Credit Risk Mitigation, Collateral and other Credit Enhancements
The 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 Security
A 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 the 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:
Real estate, plant and equipment collateral (usually all asset or mortgage debenture or charge), which have to be registered
and enforceable under Nigerian law;
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;
Stocks and shares of publicly quoted companies;
a.
b.
c.
128
d.
e.
f.
g.
Domiciliation of contracts proceeds;
Documents of title to goods such as shipping documents consigned to the order of Zenith Bank or any of its subsidiaries;
Letter of lien; and
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.
As part of its Credit risk management strategy, the bank emphasizes on the robustness of its credit analysis and diagonsis prior to
disbursment of loans and advances to its customers.
The bank closely monitors the performance of its loans and advances. Once a loan shows sign of credit deterioration, the bank works
closely with the customer to salvage the situation and ensure recoverability of its loans.
Fore closure of collateral is usually the last measure adopted by the bank in the realization of its funds.
Details of collateral pledged by customers against the carrying amount of loans and advances as at 31 December 2022 are as follows:
In millions of Naira
Secured against real estate
Secured by shares of quoted companies
Cash Collateral, lien over fixed and floating assets
Unsecured
Total Gross amount
ECL Allowance
Net carrying amount
Group
Bank
Total exposure
Fair Value of collateral
Total exposure
Fair value of collateral
319,203
54,851
2,318,640
1,431,271
4,123,966
(110,261)
4,013,705
312,265
26,620
1,856,751
-
270,935
54,851
2,162,646
1,350,373
208,068
26,620
1,678,280
-
2,195,636
3,838,805
1,912,968
-
(103,129)
-
2,195,636
3,735,676
1,912,968
Notes
129
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Group
31 December 2022
Disclosure by Collateral
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Grand total: Fair value of collateral
Grand total: Gross loans
Grand total: ECL Allowance
Grand total: Net amount
Term loan
Overdrafts
Onlending
Total
243,975
18,656
1,266,931
1,529,562
2,982,808
47,653
7,964
152,207
207,824
450,649
20,637
-
437,613
458,250
690,509
312,264
26,620
1,856,751
2,195,635
4,123,966
(62,315)
(39,864)
(8,082)
(110,261)
2,920,493
410,785
682,427
(224,177)
4,013,705
(1,818,070)
Grand total: Amount of overcollaterization/(undercollaterization)
(1,390,931)
(202,961)
31 December 2022
Term loan
Overdrafts
Onlending
Total
Against 12 months ECL loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
129,049
18,233
732,826
880,108
2,078,669
(15,224)
33,870
3,484
137,584
174,938
373,017
(6,238)
2,063,445
366,778
18,912
-
436,790
455,702
687,421
(8,039)
679,382
181,831
21,717
1,307,200
1,510,747
3,139,107
(29,501)
3,109,606
Grand total: Amount of overcollaterization/(undercollaterization)
(1,183,337)
(191,840)
(223,681)
(1,598,859)
31 December 2022
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL not credit-impaired loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
107,255
423
529,067
636,745
876,633
(34,523)
842,110
Grand total: Amount of overcollaterization/(undercollaterization)
(205,365)
6,127
2,270
8,713
17,110
26,786
(830)
25,955
(8,845)
1,652
-
-
1,652
1,975
(17)
1,958
(306)
115,034
2,693
537,779
655,506
905,394
(35,370)
870,023
(214,516)
31 December 2022
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL credit-impaired loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
Grand total: Amount of (undercollaterization)/overcollaterization
130
7,671
-
5,038
12,709
27,507
7,656
2,210
5,911
15,777
50,845
(12,569)
(32,796)
14,938
(2,229)
18,049
(2,273)
73
-
823
896
1,113
(25)
1,088
(192)
15,400
2,210
11,772
29,382
79,465
(45,390)
34,075
(4,693)
Bank
31 December 2022
Disclosure by Collateral
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Grand total: Fair value of collateral
Grand total: Gross loans
Grand total: ECL Allowance
Grand total: Net amount
Term loan
Overdrafts
On lending
Total
154,805
18,656
1,097,502
1,270,963
2,720,843
(57,904)
2,662,939
32,625
7,964
143,165
183,754
427,453
(37,143)
390,310
20,637
-
437,613
458,250
690,509
(8,082)
682,427
208,067
26,620
1,678,280
1,912,967
3,838,805
(103,129)
3,735,676
Grand total: Amount of overcollaterization/(undercollaterization)
(1,391,976)
(206,556)
(224,177)
(1,822,709)
31 December 2022
Against 12 months ECL loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
Term loan
Overdrafts
Onlending
Total
39,976
18,233
563,397
621,606
1,822,213
(11,812)
1,810,401
22,321
3,484
128,600
154,405
352,845
(5,418)
347,427
18,912
-
436,790
455,702
687,421
(8,039)
679,382
81,209
21,717
1,128,787
1,231,713
2,862,479
(25,269)
2,837,210
Grand total: Amount of overcollaterization/(undercollaterization)
(1,188,795)
(193,022)
(223,680)
(1,605,497)
31 December 2022
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL not credit-impaired loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
107,158
423
529,067
636,648
871,125
(33,524)
837,601
Grand total: Amount of overcollaterization/(undercollaterization)
(200,953)
6,104
2,270
8,713
17,087
26,645
(800)
25,845
(8,758)
1,652
-
-
1,652
1,975
(17)
1,958
(306)
114,914
2,693
537,780
655,387
899,745
(34,341)
865,404
(210,017)
31 December 2022
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL credit-impaired loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
Grand total: Amount of overcollaterization/(undercollaterization)
7,671
-
5,038
12,709
27,505
4,199
2,210
5,852
12,261
47,962
(12,568)
(30,926)
14,937
(2,228)
17,036
(4,775)
73
-
823
896
1,113
(25)
1,088
(192)
11,943
2,210
11,713
25,866
76,580
(43,519)
33,061
(7,195)
Notes
131
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Details of collateral pledged by customers against carrying amount of loans and advances as at 31 December 2021 are as follows:
In millions of Naira
31 December 2020
Group
Bank
Total exposure Fair Value of collateral
Total exposure
Value of collateral
Secured against real estate
Secured by shares of quoted companies
Cash collateral, lien over fixed and floating assets
Unsecured
Total Gross amount
ECL Allowance
Net carrying amount
Group
31 December 2021
Disclosure by Collateral
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Grand total: Fair value of collateral
Grand total: Gross loans
Grand total: ECL Allowance
Grand total: Net amount
463,049
7,249
1,283,489
1,748,091
3,501,878
(146,150)
3,355,728
350,232
3,785
1,016,994
-
1,371,011
-
1,371,011
418,264
7,249
1,239,790
1,572,670
3,237,973
(138,521)
3,099,452
286,414
3,785
952,128
-
1,242,327
-
1,242,327
Term loan
Overdrafts
On lending
Total
298,867
1,653
639,798
940,318
2,522,278
(77,487)
2,444,791
36,437
2,132
74,542
113,111
439,459
(63,176)
376,283
14,928
-
302,654
317,582
540,141
(5,487)
534,654
350,232
3,785
1,016,994
1,371,011
3,501,878
(146,150)
3,355,728
Grand total: Amount of overcollaterization/(undercollaterization)
(1,504,473)
(263,172)
(217,072)
(1,984,717)
31 December 2021
Against 12 months ECL loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
Term loan
Overdrafts
On lending
Total
85,481
1,652
397,277
484,410
1,771,887
(12,942)
1,758,945
18,540
7
62,551
81,098
326,517
(3,642)
322,875
14,918
-
299,605
314,523
501,946
(5,222)
496,724
118,939
1,659
759,433
880,031
2,600,350
(21,806)
2,578,544
Grand total: Amount of overcollaterization/(undercollaterization)
(1,274,535)
(241,777)
(182,201)
(1,698,513)
31 December 2021
Term loan
Overdrafts
On lending
Total
Against lifetime ECL not credit-impaired loans and advances
Property/Real estate
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
204,345
222,147
426,492
686,225
(26,239)
659,986
4,448
6,826
11,274
30,808
(542)
30,266
-
2,589
2,589
37,674
(257)
37,417
208,793
231,562
440,355
754,707
(27,038)
727,669
Grand total: Amount of overcollaterization/(undercollaterization)
(233,494)
(18,992)
(34,828)
(287,314)
132
31 December 2021
Term loan
Overdrafts
On lending
Total
Against lifetime ECL credit-impaired loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
Grand total: Amount of overcollaterization/(undercollaterization)
Bank
31 December 2021
Disclosure by Collateral
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Grand total: Fair value of collateral
Grand total: Gross loans
Grand total: ECL Allowance
Grand total: Net amount
9,041
13,447
-
20,375
29,416
64,166
2,126
5,166
20,739
82,134
(38,306)
(58,992)
25,860
3,556
23,142
(2,403)
10
-
460
470
521
(8)
513
(43)
22,498
2,126
26,001
50,625
146,821
(97,306)
49,515
1,110
Term loan
Overdrafts
On lending
Total
245,732
1,653
586,499
833,884
2,278,613
(73,557)
2,205,056
25,754
2,132
62,975
90,861
419,219
(59,478)
359,741
14,928
-
302,654
317,582
540,141
(5,486)
286,414
3,785
952,128
1,242,327
3,237,973
(138,521)
534,655
3,099,452
Grand total: Amount of overcollaterization/(undercollaterization)
(1,371,172)
(268,880)
(217,073)
(1,857,125)
31 December 2021
Against 12 months ECL loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
Term loan
Overdrafts
On lending
Total
32,962
1,653
343,977
378,592
1,530,854
(9,312)
1,521,542
11,844
7
50,999
62,850
312,155
(3,000)
309,155
14,920
-
299,605
314,525
501,947
(5,222)
59,726
1,660
694,581
755,967
2,344,956
(17,534)
496,725
2,327,422
Grand total: Amount of overcollaterization/(undercollaterization)
(1,142,950)
(246,305)
(182,200)
(1,571,455)
31 December 2021
Term loan
Overdrafts
On lending
Total
Against lifetime ECL not credit-impaired loans and advances
Property/Real estate
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
203,728
222,147
425,875
684,547
(25,942)
658,605
4,432
6,810
11,242
30,773
(472)
30,301
-
2,589
2,589
37,674
(257)
37,417
208,160
231,546
439,706
752,994
(26,671)
726,323
Grand total: Amount of overcollaterization/(undercollaterization)
(232,730)
(19,059)
(34,828)
(286,617)
Notes
133
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
31 December 2021
Term loan
Overdrafts
On lending
Total
Against lifetime ECL credit-impaired loans and advances
Property/Real estate
Equities
Cash Collateral, lien over fixed and floating assets
Fair value of collateral
Gross loans
ECL Allowance
Net amount
Grand total: Amount of overcollaterization/(undercollaterization)
(ii)
Balance Sheet Netting Arrangements
9,040
-
20,375
29,415
63,211
9,477
2,126
5,167
16,770
76,290
(38,304)
(56,004)
24,907
4,508
20,286
(3,516)
10
-
460
470
522
(8)
514
(44)
18,527
2,126
26,002
46,655
140,023
(94,316)
45,707
948
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 2022 and 31 December 2021 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 2022.
In millions of Naira
Maximum exposure to credit risk
Maximum exposure to credit risk
Group
Bank
Trading assets
- Treasury bills
- Investment in securities
- Derivatives Asset -Hedging Instrument
- Derivatives Asset-Non Hedging Instrument
- Assets pledged as collateral
1,243,038
12,442
20,052
29,822
26,287
1,243,038
10,560
20,052
28,799
26,189
134
The following table contains an analysis of the maximum credit risk exposure from financial assets not subject to impairment as at
31 December 2021
Group
Bank
In millions of Naira
Maximum exposure to credit risk
Maximum exposure to credit risk
Trading assets
- Treasury bills
- Investment in securities
- Derivatives Assets
- Assets pledged as collateral
824,222
22,338
56,187
234,687
823,891
11,897
57,476
199,093
Maximum exposure to credit risk - Financial instruments subject to impairment
The following table contains an analysis of the maximum credit risk exposure from financial assets subject to impairment as at 31
December 2022.
In millions of Naira
Maximum exposure to credit risk
Maximum exposure to credit risk
Group
Bank
Financial assets measured at amortised cost
- Balances with central bank
- Treasury bills
- Investment in securities
- Assets pledged as collateral
- Loans and advances to customers
- Due from banks
- Other financial assets
Financial assets measured through other comprehensive income
- Investment in securities
Off balance sheet exposures
2,116,307
1,003,500
788,133
228,375
4,013,705
1,302,811
193,465
833,849
1,024,218
2,036,327
963,630
518,338
228,375
3,735,676
1,132,796
176,289
-
906,014
The following table contains an analysis of the maximum credit risk exposure from financial assets subject to impairment as at 31
December 2021
In millions of Naira
Maximum exposure to credit risk
Maximum exposure to credit risk
Group
Bank
Financial assets measured at amortised cost
- Balances with central bank
- Treasury bills
- Investment in securities
- Assets pledged as collateral
- Loans and advances to customers
- Due from banks
- Other financial assets
Financial assets measured through other comprehensive income
- Investment in securities
Off balance sheet exposures
1,404,286
940,723
654,185
157,907
3,355,728
691,244
148,821
541,629
1,108,856
1,341,767
753,756
379,533
157,907
3,099,452
518,053
134,794
-
924,176
Notes
135
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
3.2.8 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 2022 and 31 December 2021 respectively is set out below:
(a)
Geographical sectors
The following table breaks down the Group’s main credit exposure at their carrying amounts, as categorised by geographical
region at 31 December 2022 and 31 December 2021 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 Naira
31 December 2022
Balances with central bank
Treasury bills
Assets pledged as collateral
Due from other banks
Investment securities
Derivative Asset - Hedging Instrument
Derivative Asset-Non Hedging Instrument
Other financial assets
Total
Financial Guarantees
Usance
Letters of credit
Performance bond and guarantees
Total
Group
Bank
Nigeria
Rest of Africa Outside Africa
Nigeria
Rest of Africa Outside Africa
2,036,327
2,227,845
254,564
6,435
584,599
20,052
28,786
105,249
79,980
18,695
98
20,393
229,474
-
13
17,884
-
-
-
1,275,983
820,373
-
1,023
70,331
2,036,327
2,206,669
254,564
14,565
514,092
20,052
28,785
104,867
5,263,857
366,537
2,167,710
5,179,921
276,481
341,290
329,167
946,938
-
22,065
55,215
77,280
-
-
-
-
276,481
279,791
323,824
880,096
-
-
-
3,057
14.804
-
13
1,262
19,136
-
-
1,042
1,042
-
-
-
1,115,174
-
-
1
70,159
1,185,334
-
-
24,876
24,876
In millions of Naira
31 December 2021
Balances with central bank
Treasury bills
Assets pledged as collateral
Due from other banks
Investment securities
Derivative instruments
Other financial assets
Total
Financial Guarantees
Usance
Letters of credit
Performance bond and guarantees
Total
Group
Bank
Nigeria
Rest of Africa Outside Africa
Nigeria
Rest of Africa Outside Africa
1,341,768
1,671,640
357,000
-
460,456
55,223
115,095
62,518
93,305
35,594
49,158
239,155
698
15,049
-
-
-
642,086
518,541
266
18,677
1,341,767
1,577,647
357,000
-
390,917
55,223
115,333
-
-
-
7,663
513
1,437
1,178
4.001,182
495,477
1,179,570
3,837,887
10,791
195,354
493,180
343,238
1,031,772
-
59,574
17,239
76,813
-
1,732
4,155
5,887
195,354
398,605
335,833
929,792
-
-
-
-
-
-
-
510,390
-
816
18,283
529,489
-
-
-
-
Gross loans and advances to customers and the impairment allowance per geographical region as at 31 December 2022
Carrying amounts presented in the table below is determined as gross loans less impairment allowances.
136
In millions of Naira
31 December 2022
Group
Bank
Loans and advances to customers
Loans and advances to customers
Gross loans
Impairment Allowance
Carrying amount
Gross loans
Impairment Allowance
Carrying amount
South South Nigeria
South West Nigeria
South East Nigeria
North Central Nigeria
North West Nigeria
North East Nigeria
Rest of Africa
Outside Africa
31 December 2021
South South Nigeria
South West Nigeria
South East Nigeria
North Central Nigeria
North West Nigeria
North East Nigeria
Rest of Africa
Outside Africa
277,548
3,136,204
158,058
148,610
53,605
110,809
133,599
105,534
(5,380)
(92,036)
(1,822)
(3,738)
(671)
(394)
(5,122)
(1,098)
272,168
277,548
3,044,168
3,090,175
156,236
144,872
52,934
110,415
128,476
104,435
158,058
148,610
53,605
110,809
-
-
(5,380)
(91,124)
(1,822)
(3,738)
(671)
(394)
-
-
272,168
2,999,051
156,236
144,872
52,934
110,415
-
-
4,123,966
(110,261)
4,013,705
3,838,805
(103,129)
3,735,676
366,246
2,445,088
128,638
111,570
75,430
151,683
121,152
102,071
6,774
126,734
1,279
2,740
453
763
6,016
1,391
359,515
366,246
2,357,697
2,444,975
127,478
109,177
74,977
110,571
115,622
100,691
128,638
111,570
75,430
111,114
-
-
6,774
126,733
1,279
2,740
453
542
-
-
359,472
2,318,242
127,359
108,830
74,977
110,572
-
-
3,501,878
146,150
3,355,728
3,237,973
138,521
3,099,452
(b)
Industry sectors
Gross loans and advances to customers per industry sector as at 31 December 2022
Carrying amounts presented in the table below are determined as gross loans less impairment allowances.
In millions of Naira
31 December 2022
Agriculture
Oil and gas
Consumer Credit
Manufacturing
Real estate and construction
Finance and insurance
Government
Power
Transportation
Communication
Education
General Commerce
Group
Bank
Loans and advances to customers
Loans and advances to customers
Gross loans
Impairment Allowance
Carrying amount
Gross loans
Impairment Allowance
Carrying amount
265,213
931,045
120,345
1,254,050
136,403
72,959
529,942
67,143
116,856
26,218
15,146
588,646
4,123,966
(5,853)
(59,309)
(14,382)
(10,774)
(2,784)
(667)
(1,679)
(566)
(3,286)
(317)
(257)
(10,386)
(110,261)
259,359
871,737
105,963
251,306
912,505
94,448
1,243,276
1,190,640
133,619
72,292
528,263
66,577
113,570
25,900
14,889
134,017
37,181
488,286
67,016
98,529
21,790
14,501
578,268
528,586
(5,722)
(58,641)
(13,183)
(8,039)
(2,700)
(280)
(539)
(565)
(3,158)
(142)
(229)
(9,931)
4,013,705
3,838,805
(103,129)
245,584
853,864
81,265
1,182,601
131,317
36,901
487,747
66,451
95,371
21,648
14,272
518,655
3,735,676
Notes
137
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
31 December 2021
Agriculture
Oil and gas
Consumer Credit
Manufacturing
Real estate and construction
Finance and insurance
Government
Power
Transportation
Communication
Education
General Commerce
Group
Bank
Loans and advances to customers
Loans and advances to customers
Grossloans
Impairment Allowance
Carrying amount Gross loans
Impairment Allowance
Carrying amount
227,237
782,412
199,129
848,478
109,143
5,996
509,021
67,132
176,747
59,111
11,542
505,930
8,931
55,273
15,124
5,408
1,668
158
2,375
4,830
1,236
22,410
136
28,601
218,306
727,139
184,005
843,070
107,475
5,838
506,646
62,302
175,511
36,701
11,406
212,587
756,936
170,239
826,275
105,760
8,562
472,151
66,649
162,688
52,126
10,579
477,329
393,421
8,571
54,418
13,064
5,035
1,580
83
1,597
4,825
990
22,316
133
25,909
138,521
204,016
702,518
157,175
821,240
104,180
8,479
470,554
61,824
161,698
29,810
10,446
367,512
3,099,452
3,501,878
146,150
3,355,728
3,237,973
Group
Financial assets excluding loans and advances per industry sector as at 31 December 2022
In millions of naira
Balances with
central bank
Treasury
bills
Assets
pledged as
collateral
Due from
other banks
Investment
securities
Derivative
Hedging
instruments
Derivatives
Non
Hedging
instruments
Other
financial
assets
31 December 2022
Government
Manufacturing
Finance and
Insurance
Communication
Gross amount
Impairment
allowance
2,116,307
2,246,947
254,583
-
-
-
-
-
-
-
98
-
1,623,788
20,052
-
-
1,302,886
8,279
42,454
-
22,163
27,579
1,206
1,037
-
-
222,439
-
-
-
-
-
2,116,307
2,246,947
254,681
1,302,886
1,696,684
20,052
29,822
222,439
-
(408)
(19)
(75)
(62,233)
(28,973)
Carrying amount
2,116,307
2,246,539
254,662
1,302,811
1,634,451
20,052
29,822
193,466
Financial assets excluding loans and advances per industry sector as at 31 December 2021
31 December 2021
In millions of naira
Balances
with central
bank
Treasury bills
Assets
pledged as
collateral
Due from
other banks
Investment
securities
Derivative
instruments
Government
Manufacturing
Finance and Insurance
Communication
Gross amount
1,404,285
1,765,760
392,792
-
-
-
-
-
-
-
-
-
-
-
691,968
-
1,148,302
56,187
16,771
17,208
39,637
-
-
-
1,404,285
1,765,760
392,792
691,968
1,221,918
56,187
Impairment allowance
-
(815)
(198)
(724)
(3,766)
-
Carrying amount
1,404,285
1,764,945
392,594
691,244
1,218,152
56,187
Other
financial
assets
10,274
-
148,472
-
158,746
(9,925)
148,821
138
Bank
Financial assets excluding loans and advances per industry sector as at 31 December 2022
In millions of naira
Balances with
central bank
Treasury
bills
Assets
pledged as
collateral
Due from
other banks
Investment
securities
Derivative
Hedging
instruments
Derivatives
Non
Hedging
instruments
Other
financial
assets
31 December 2022
Government
Manufacturing
Finance and
Insurance
Communication
Gross amount
Impairment
allowance
2,036,327
2,206,707
254,583
-
-
-
-
-
-
-
-
-
-
-
1,132,871
463,676
6,238
39,601
-
21,966
20,052
-
-
-
27,563
1,222
14
-
-
-
205.157
-
2,036,327
2,206,707
254,583
1,132,871
531,481
20,052
28,799
205,157
-
(39)
(18)
(75)
(2,583)
-
-
(28,868)
Carrying amount
2,036,327
2,206,668
254,565
1,132,796
528,898
20,052
28,799
178,289
Financial assets excluding loans and advances per industry sector as at 31 December, 2021
31 December 2021
In millions of naira
Balances
with central
bank
Treasury
bills
Assets
pledged as
collateral
Due from
other banks
Investment
securities
Derivative
Hedging
instruments
Derivatives
Non
Hedging
instruments
Other
financial
assets
Government
Manufacturing
Finance and Insurance
Communication
Gross amount
1,341,767
1,578,042
357,198
-
-
-
-
-
-
-
-
-
-
-
518,111
-
321,262
15,512
15,685
39,637
1,341,767
1,578,042
357,198
518,111
392,096
Impairment allowance
-
(395)
(198)
(58)
(666)
Carrying amount
1,341,767
1,577,647
357,000
518,053
391,430
-
-
-
-
-
-
-
50,772
10,274
4,190
2,514
-
-
134,355
-
57,476
144,629
-
(9,835)
57,476
134,794
3.2.9 Credit quality analysis
Group
31 December 2022
Credit rating - 12 month ECL: All financial assets excluding loans and advances
In millions of naira Balances with
central bank
Treasury
bills
Assets
pledged as
collateral
Due from
other
banks
Investment
securities
Derivative
Asset -
Hedging
Instrument
Derivative
Asset -Non
Hedging
Instrument
Other
financial
assets
AAA to A
BBB to BB
CCC to C
Unrated
2,036,327
2,206,975
254,583
1,128,219
1,283,859
2,994
37,723
-
76,986
-
2,249
-
-
98
89,328
3,057
82,283
197,408
10,354
205,060
-
20,052
-
-
312
133,177
27,266
-
2,245
25,152
45,498
18,612
Gross amount
2,116,307
2,246,947
254,681
1,302,887
1,696,681
20,052
29,823
222,439
ECL - impairment
-
(408)
(19)
(75)
(62,233)
-
-
(28,973)
Carrying amount
2,116,307
2,246,539
254,662
1,302,812
1,634,448
20,052
29,823
193,466
Notes
139
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Loans and Advances
Term loan
Overdrafts
On lending
12 months ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
Gross loans and advances
Less allowance for impairment
12 - months ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
Total allowances for impairment
Net loans and advances
2,078,669
876,633
27,507
2,892,808
(15,224)
(34,523)
(12,569)
(62,316)
2,920,493
373,017
26,786
50,845
450,648
(6,238)
(830)
(32,796)
(39,864)
410,783
Credit rating for loans and advances with 12 month ECL
687,421
1,975
1,113
(8,039)
(17)
(25)
(8,081)
682,428
A
AA
B
BB
BBB
CC
CCC
Below C
Unrated
Gross amount
ECL-Impairment
Carrying amount
Bank
31 December 2021
Loans and Advances
Term loan
Overdrafts
On lending
692,565
357,588
69,895
735,922
10,658
46
-
-
211,996
2,078,669
(15,239)
2,063,430
99,827
147,369
1,299
104,682
-
-
-
-
19,840
373,017
(6,251)
366,766
263,526
20,559
-
403,336
-
-
-
-
-
687,421
(8,039)
679,382
690,509
4,123,965
Total
3,139,107
905,393
79,465
(29,501)
(35,370)
(45,390)
(110,275)
4,013,690
Total
1,055,918
525,516
71,194
1,243,940
10,658
46
-
-
231,836
3,139,107
(29,530)
3,109,578
Credit rating - 12 month ECL: All financial assets excluding loans and advances
In millions of
naira
Balances with
central bank
Treasury
bills
Assets
pledged as
collateral
Due from
other banks
Investment
securities
Derivative
Asset -
Hedging
Instrument
Derivative
Asset -Non
Hedging
Instrument
Other
financial
assets
AAA to A
BBB to BB
CCC to C
Unrated
2,036,327
2,206,707
254,583
-
-
-
-
-
-
-
-
-
957,055
170,984
3,057
1,775
480,352
51,129
-
-
-
312
133,162
20,052
27,265
-
-
-
1,222
26,478
45,493
24
Gross amount
2,036,327
2,206,707
254,583
1,132,871
531,481
20,052
28,799
205,157
ECL - impairment
-
(39)
(18)
(75)
(2,583)
-
-
(28,868)
Carrying amount
2,036,327
2,206,668
254,565
1,132,796
528,898
20,052
28,799
176,289
140
12 months ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
Gross loans and advances
Less allowance for impairment
12 - months ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
Total allowances for impairment
Net loans and advances
A
AA
B
BB
BBB
C
CC
CCC
Below C
Gross amount
ECL-Impairment
Carrying amount
Group
31 December 2021
Loans and Advances
Overdrafts
On lending
690,509
3,838,804
Term loan
1,822,213
871,125
27,505
2,720,843
(11,812)
(33,524)
(12,568)
(57,904)
2,662,939
352,845
26,645
47,962
427,452
(5,418)
(800)
(30,926)
(37,144)
390,308
692,565
357,588
9
772,051
-
-
-
-
-
1,822,213
(11,812)
1,810,401
99,827
147,369
968
104,682
-
-
-
-
-
352,846
(5,418)
347,428
687,421
1,975
1,113
(8,039)
(17)
(25)
(8,081)
682,428
263,526
20,559
-
403,336
-
-
-
-
-
Total
2,862,479
899,745
76,580
(25,269)
(34,341)
(43,519)
(103,129)
3,735,675
Total
1,055,918
525,516
977
1,280,069
-
-
-
-
-
687,421
(8,039)
679,382
2,862,480
(25,269)
2,837,211
Loans and Advances
Term loan
Overdrafts
On lending
Credit rating: All financial assets with credit exposure excluding loans and advances
In millions of
naira
Balances with
central bank
Treasury
bills
Assets
pledged as
collateral
Due from
other banks
Investment
securities
Derivative
Asset -
Hedging
Instrument
Derivative
Asset -Non
Hedging
Instrument
Other
financial
assets
AAA to A
BBB to BB
Below B
Unrated
1,404,285
1,765,760
392,792
263,051
-
-
-
-
-
-
-
-
-
84,147
1,055
856,410
175,600
5,487
343,715
184,421
Gross amount
1,404,285
1,765,760
392,792
691,968
1,221,918
ECL - impairment
-
(815)
(198)
(724)
(3,766)
Carrying amount
1,404,285
1,764,945
392,594
691,244
1,218,152
Loans and Advances
-
-
-
-
-
-
-
56,187
-
-
-
90,351
38,530
-
29,865
56,187
158,746
-
(9,925)
56,187
148,821
Notes
141
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of naira
12 months ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
Gross loans and advances
Less allowance for impairment
12 - months ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
Total allowances for impairment
Net loans and advances
Credit rating for loans and advances with 12 month ECL
A
AA
B
BB
BBB
C
CC
CCC
Below C
Unrated
Gross amount
ECL-Impairment
Carrying amount
Bank
31 December 2021
Term loan
1,771,887
686,225
64,166
2,522,278
12,942
26,239
38,306
77,487
2,444,791
Overdrafts
On lending
326,517
30,808
82,134
439,459
3,642
542
58,992
63,176
376,283
501,946
37,674
521
540,141
5,222
257
8
5,487
534,654
Loans and Advances
Term loan
Overdrafts
On lending
658,120
218,817
-
634,892
850,174
12,084
1,546
35,575
18,013
93,057
2,522,278
(77,487)
2,444,791
56,707
150,950
-
7,654
126,942
25,526
1,971
21,168
28,598
19,943
439,459
(63,176)
376,283
170,443
77,029
-
4,841
287,309
485
-
-
34
-
540,141
(5,487)
534,654
Total
2,600,350
754,707
146,821
3,501,878
21,806
27,038
97,306
146,150
3,355,728
Total
885,270
446,796
-
647,387
1,264,425
38,095
3,517
56,743
46,645
113,000
3,501,878
(146,150)
3,355,728
Credit rating - 12 month ECL: All financial assets excluding loans and advances
In millions of
naira
Balances with
central bank
Treasury
bills
Assets pledged
as collateral
Due from
other banks
Investment
securities
Derivative
instruments
Other financial
assets
AA to A
AA to A
BBB to BB
CCC to C
Unrated
1,341,767
1,578,042
357,198
228,273
367,261
-
-
-
-
-
-
-
-
-
-
-
-
-
-
286,175
24,835
1,056
2,607
-
-
4,003
-
50,772
-
2,701
Gross amount
1,341,767
1,578,042
357,198
518,111
392,096
57,476
ECL - impairment
-
(395)
(198)
(58)
(666)
-
Carrying amount
1,341,767
1,577,647
357,000
518,053
391,430
57,476
90,349
-
38,529
-
15,751
144,629
(9,835)
134,794
142
In millions of Naira
12 months ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
Gross loans and advances
Less allowance for impairment
12 - months ECL
Lifetime ECL not credit impaired
Lifetime ECL credit impaired
Total allowances for impairment
Net loans and advances
A
AA
BB
BBB
C
CC
CCC
Below C
Unrated
Gross amount
ECL-Impairment
Carrying amount
Term loan
1,529,907
684,547
64,159
2,278,613
9,312
25,942
38,303
73,557
2,205,056
Loans and Advances
Overdrafts
On lending
311,567
30,419
77,233
419,219
3,000
474
56,004
59,478
359,741
501,946
37,674
521
540,141
5,221
257
8
5,486
534,655
Loans and Advances
Term loan
Overdrafts
On lending
687,816
218,817
634,892
672,929
12,084
1,546
32,523
18,006
-
2,278,613
(73,557)
2,205,056
56,707
150,950
7,654
126,676
25,526
1,971
21,168
28,567
-
419,219
(59,478)
359,741
170,443
77,029
4,841
287,309
485
-
-
34
-
540,141
(5,486)
534,655
Total
2,343,420
752,640
141,913
3,237,973
17,533
26,673
94,315
138,521
3,099,452
Total
914,966
446,796
647,387
1,086,914
38,095
3,517
53,691
46,607
-
3,237,973
(138,521)
3,099,452
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 ECL
Corporate exposures
Retail exposures
All 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
– Payment record – this
includes overdue status as well
as a range of variables about
payment ratios
Affordability metrics
External data from
credit reference
agencies, including
industry-standard
credit scores
Utilisation of the
granted limit
Requests for and
granting of forbearance
Existing and forecast
changes in business,
financial and economic
conditions
Notes
143
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
The 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 segmentation
Credit 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.
144
Generally, 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 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.
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 assets
The 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
3.2.15 Definition of default
The 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
information
The 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 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. This process involves developing
Notes
145
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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. The
macroeconomic variables considered include GDP growth rate, Inflation rate, Exchange rate, Crude oil production, Crude oil price,
Monetary policy rate, Prime lending rate, and Government revenue.
However, from the statistical analysis of the various macroeconomic variables, the results infer that the key drivers vary across the
different sectors and this necessitated the sectors to be grouped into three (3) segments.
The macroeconomic variables used across the different segments are as follows:
Segment 1 Oil and Gas portfolio
Macroeconomic Variables Adopted - GDP rate and Crude Oil production
Segment 2 Consumer Credit, Finance & Insurance, General Commerce, Public Sector, Information, Manufacturing
Macroeconomic Variables Adopted- Exchange rate and Prime lending rate.
Segment 3 Agriculture, Art and ntertainment, Education, Transportation, Utility, Industry Retail Others, Industry Retail Staff.
Macroeconomic Variables Adopted- Inflation and Exchange rate.
The economic scenarios used as at 31 December 2022 included the following key indicators for Nigeria for the years ending 31
December 2023 to 2027 sourced majorly from Nigerian bureau of statistics and Central Bank of Nigeria
GDP growth rate %
Inflation rate forecast %
Prime lending rate (%)
2023
Base 2.9
2024
Base 3.0
2025
Base 2.0
2026
Base 2.0
Base 17.10
Base 13.0
Base 9.50
Base 9.50
2027
Base 2.50
Base 9.50
Base 21
Rasp 18.3
Rasp 18.3
Rasp 18.3
Rasp 18.3
Exchange rate (NGN / USD)
Base 432.50
Base 475
Crude oil production (Million Barrels per day- mbpd)
Base 1.89
Base 1.92
Crude Oil Price ($ Per Barrels)
Base 100
Base 88
Base 575
Base 1.92
Base 85
Base 575
Base 1.92
Base 85
Base 625
Base 1.92
Base 85
Government Revenue (NGN trillions
Base 3.726
Base 3.671
Base 3.671
Base 3.671
Base 3.671
Monetary policy rate
Base 12.5%
Base 13.5%
Base 13.5%
Base 13.5%
Base 13.5%
Please note that the Macroeconomic variables for 2025 and beyond are the forecast at the end of 2024.
The Bank held the forecast constant from the end of 2024 because they believe that they cannot reliably estimate above 2024, given
the expected change in government in 2023.
Predicted 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
146
3.2.17 Measurement of ECL
The 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)
ECL 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 borrower
The groupings are subject to regular review to ensure that
exposures within a particular group remain appropriately
homogeneous.
Notes
147
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
3.2.18 Loss allowance
The following tables show reconciliations from the opening to the closing balance of the loss allowance by class of financial
instrument. Comparative amounts for 2021 represent allowance account for credit losses and reflect measurement basis under
IFRS 9.
Group
In millions of Naira
Treasury bills at amortised cost
Balance at 1 January
Impairment Charge/(writeback) (see note 8)
Foreign exchange and other movements
Foreign exchange and other movements
Closing balance
Gross amount
31 December 2022
31 December 2021
12-month ECL
12-month ECL
815
(400)
-
(8)
407
1,003,908
1,575
(781)
21
-
815
941,538
In millions of Naira
Off balance sheet exposure
Balance at 1 January
Transfer to lifetime ECL not credit-impaired
Transfer to lifetime ECL credit-impaired
Impairment/(write back) (see note 8)
Closing balance
Gross amount
31 December 2022
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
31 December 2021
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
2,375
20
3,221
5,616
1,591
20
3,221
4,832
3,436
5,811
45
65
(2,483)
738
998
6,614
784
2,375
-
20
1,010,968
1,056
12,194
1,024,218
908,566
14,591
-
3,221
6,635
784
5,616
929,792
In millions of Naira
12-month ECL
12-month ECL
31 December 2022
31 December 2021
Assets pledged as collateral at ammortised cost
Balance at 1 January
Impairment Charge/(writeback) (see note 8)
Foreign exchange and other movements
Closing balance
Gross amount
198
(181)
-
17
228,492
355
(158)
1
198
158,105
148
In millions of Naira
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime ECL
credit
impaired
In millions of Naira
Loans and advances to customers at
amortised cost
Balance at 1 January
- Transfer to 12-month ECL
- Transfer to lifetime ECL not credit-
impaired
- Transfer to lifetime ECL credit-impaired
Net remesurement of loss allowance (see
note 8)
New financial assets originated or
purchased
Derognized assets other than write off
Write-off
Foreign exchange and
other movements
Closing balance
Gross amount
Investment securities at amortised
cost and fair value through OCI
Balance at 1 January
Impairment Charge/(writeback) (see
note 8)
Foreign exchange and other
movements
Closing balance
Gross amount
In millions of Naira
Other financial assets
Balance at 1 January
Transfer to 12-month ECL
Impairment Charge/(writeback) (see note 8)
Foreign exchange and other movements
Closing balance
Gross amount
31 December 2022
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
31 December 2021
Lifetime ECL
not credit-
impaired
Lifetime
ECL credit-
impaired
Total
26,032
94,445
146,149
23,400
108,211
140,314
25,672
1,650
(314)
(613)
4,154
-
-
-
(689)
1,675
327
7,671
-
-
-
(961)
(1,361)
286
-
-
-
26,518
38,343
-
-
-
-
(74,077)
(74,077)
(1,049)
354
540
(155)
2,911
(475)
(301)
-
137
-
-
-
8,703
(1,309)
28,546
(1,602)
(28,071)
(27,762)
28,063
-
-
-
-
-
-
17.854
30,882
48,873
-
-
-
-
-
(42,508)
(42,508)
(530)
(530)
29,501
35,370
45,390
110,260
25,672
26,032
94,445
146,149
3,139,107
905,393
79,465
4,123,966
2,600,350
754,707
146,821
3,501,878
31 December 2022
31 December 2021
-
-
-
-
10,649
52,464
(742)
(3,456)
(4,270)
Total
-
3,766
62,742
12-month
ECL
-
773
2,993
-
Total
-
773
2,993
-
-
3,766
(371)
(72)
3,323
1,400,136
9,907
90,253
49,008
62,238
195,605
1,685,994
3,766
657,957
3,766
657,957
31 December 2022
31 December 2021
12-month ECL
12-month ECL
9,925
-
19,037
11
28,973
168,692
2,141
-
7,781
3
9,925
117,858
Notes
149
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
Due from other banks
Balance at 1 January
Impairment/(write back) (see note 8)
Foreign exchange and other movements
Closing balance
Gross amount
Bank
In millions of Naira
Treasury bills at ammortised cost
Balance at 1 January
Impairment Charge/(writeback) (see note 8)
Closing balance
Gross amount
31 December 2022
31 December 2021
12-month ECL
12-month ECL
724
(649)
-
75
58
666
-
724
1,302,886
691,968
31 December 2022
31 December 2021
12-month ECL
12-month ECL1
395
(356)
39
676
(281)
395
963,669
754,151
In millions of Naira
Off balance sheet exposure
Balance at 1 January
Impairment/(write back) (see note 8)
Closing balance
Gross amount
31 December 2022
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
31 December 2021
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
2,375
2,112
4,487
20
45
65
3,221
(2,482)
5,616
(325)
739
5,291
1,591
784
2,375
20
-
20
3,221
-
3,221
Total
4,832
784
5,616
893,456
367
12,191
906,014
908,566
14,591
6,635
929,792
In millions of Naira
Assets pledged as collateral at amortised cost
Balance at 1 January
Impairment Charge/(writeback) (see note 8)
Closing balance
Gross amount
31 December 2022
31 December 2021
12-month ECL
12-month ECL
198
(179)
19
355
(158)
197
228,394
158,105
150
In millions of Naira
31 December 2022
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
31 December 2021
Lifetime
ECL not
credit-
impaired
Lifetime
ECL credit-
impaired
Total
Loans and advances to customers at amortised cost
Balance at 1 January
- Transfer to 12-month ECL
- Transfer to lifetime ECL not credit-impaired
- Transfer to lifetime ECL credit-impaired
Net remeasurement of loss allowances (see
note 8)
Impairment Charge (see note 8)
Write-offs
Foreign exchange and other movements
17,578
26,628
1,399
(310)
(613)
7,215
-
-
-
(438)
1,671
(107)
6,587
-
-
-
94,315
(961)
(1,361)
720
138,521
-
-
-
24,627
38,429
-
-
(73,821)
(73,821)
-
-
16,931
810
(464)
(301)
602
-
-
-
8,702
(509)
107,233
132,866
(301)
-
28,226
(27,762)
(27,762)
17,971
28,063
29,784
-
-
48,357
-
-
-
-
-
(42,702)
(42,702)
-
-
Closing balance
Gross amount
25,269
34,341
43,519
103,129
17,578
26,628
94,315
138,521
2,862,479
899,746
76,580
3,838,805
2,343,420
752,640
141,913
3,237,973
In millions of Naira
Other financial assets
Balance at 1 January
Impairment Charge (see note 8)
Closing balance
Gross amount
31 December 2022
31 December 2021
Lifetime ECL not credit-impaired
Lifetime ECL not credit-impaired
9,835
19,033
28,868
150,690
2,046
7,789
9,835
144,629
The above loss allowance is not recognised in the statement of financial position because the carrying amount of debt
investment securities at FVOCI is their fair value.
31 December 2022
12-month ECL
31 December 2021
12-month ECL
In millions of Naira
Due from other Banks
Balance at 1 January
Impairment/(write back) (see note 8)
Closing balance
Gross amount
58
17
75
1,132,871
In millions of Naira
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
Lifetime ECL
not credit-
impaired
Lifetime
ECL credit-
impaired
31 December 2022
31 December 2021
Investment securities at mortised cost and fair value through OCI
Balance at 1 January
Impairment Charge (see note 8)
Closing balance
Gross amount
666
611
1,277
518,217
-
-
-
-
-
1,306
1,306
2,703
666
1,917
2,583
755
(90)
666
520,920
380,199
-
-
-
-
-
-
-
-
58
-
58
518,111
Total
755
(90)
666
38,019,900
Notes
151
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Significant changes in the gross carrying amount of financial assets that contributed to changes in the loss allowance were
as follows:
Group
31 December 2022
31 December 2021
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
In millions of Naira
12-month
ECL
Lifetime ECL not
credit impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
Lifetime ECL not
credit- impaired
Lifetime
ECL credit-
impaired
Total
Treasury bills at mortised cost
Gross carrying amount at 1 January
941,538
Financial assets derecognised during
the period other than write-offs
(2,741,441)
Changes in mortised cost value
New financial assets originated or
purchased
(190,521)
2,994,157
-
-
-
177
-
941,538
880,957
-
(2,741,441)
(2,054,917)
-
-
(190,521)
111
2,994,334
2,115,387
-
-
-
-
-
880,957
-
(2,054,917)
-
-
111
2,115,387
Closing gross carrying amount
1,003,732
177
-
1,003,910
941,538
-
-
941,538
In millions of Naira
Off balance sheet exposure
31 December 2022
31 December 2021
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
12-month
ECL
Lifetime ECL not
credit impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
Lifetime ECL not
credit- impaired
Lifetime
ECL credit-
impaired
Total
Gross carrying amount at 1 January
1,093,246
14,591
6,635
1,114,472
599,927
-
-
599,927
Transfers:
Transfer from stage 1 to stage 2
Transfer from stage 1 to stage 3
Financial assets derecognised during
the period other than write-offs
New financial assets originated or
purchased
(1,315)
(1,960)
(388,847)
1,315
-
(15,528)
-
1,960
(1,834)
-
-
(14,591)
(6,635)
(406,208)
(194,947)
14,591
-
-
-
6,635
-
-
-
(194,947)
309,843
679
5,433
315,954
709,492
-
-
709,492
Closing gross carrying amount
1,010,968
1,056
12,194
1,024,218
1,093,246
14,591
6,635
1,114,472
In millions of Naira
In millions of Naira
Assets pledged as collateral at amortised cost
Gross carrying amount at 1 January Transfers:
Financial assets derecognised during the period other than write-offs
Changes in amortised cost value
New financial assets originated or purchased
Closing gross carrying amount
31 December 2022
31 December 2021
Stage 1
12-month ECL
Stage 2
12-month ECL
158,105
(127,558)
907
196,941
228,395
227,283
(122,884)
(535)
54,241
158,105
152
31 December 2022
31 December 2021
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
In millions of Naira
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
Lifetime ECL
not credit-
impaired
Lifetime
ECL credit-
impaired
Total
Loans and advances to customers at amortised cost
Gross carrying amount at 1 January Transfers:
2,600,349
Transfer from stage 1 to stage 2
Transfer from stage 1 to stage 3
Transfer from stage 2 to stage 3
Transfer from stage 3 to stage 2
Transfer from stage 2 to stage 1
Transfer from stage 3 to stage 1
(89,454)
(14,268)
-
-
43,018
1,644
754,708
89,454
-
(2,682)
2,550
(43,018)
-
14,268
2,682
(2,550)
-
-
(1,644)
146,821
3,501,878
2,160,991
570,746
187,605
2,919,342
-
-
-
-
-
-
(66,388)
(17,593)
-
-
23,742
7,218
66,388
-
(39,210)
-
17,593
39,210
37,703
(37,703)
(23,742)
-
-
(7,218)
-
-
-
-
-
-
Financial assets derecognised during the period
other than write- offs
(1,078,237)
(20,231)
(19,307)
(1,117,775)
(937,772)
(19,235)
(15,076)
(972,083)
New financial assets originated or purchased
1,676,055
124,612
13,016
1,813,683
1,430,151
162,058
-
1,592,209
Write-offs
Foreign exchange and other movements
-
-
-
-
(73,820)
(73,820)
-
-
-
-
-
-
(37,590)
(37,590)
-
-
Closing gross carrying amount
3,139,107
905,393
79,466
4,123,966
2,600,349
754,708
146,821
3,501,878
31 December 2022
31 December 2021
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
In millions of Naira
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
Lifetime ECL
not credit-
impaired
Lifetime
ECL credit-
impaired
Total
Investment Securities at amortised cost and fair value through OCI
Gross carrying amount at 1 January Transfers:
Transfer from stage 1 to stage 2
Transfer from stage 1 to stage 3
Transfer from stage 2 to stage 3
Financial assets derecognised during the period
other than write- offs
Changes in amortised cost value
New financial assets originated or purchased
Foreign exchange and other movements
1,199,579
(53,680)
(148,204)
-
(69,857)
(10,942)
483,240
-
-
53,680
-
-
-
148,204
(4,024)
(4,402)
-
4,024
-
-
1,199,579
868,437
-
-
-
-
-
-
(74,259)
(154,128)
(10,942)
34,940
45,000
43,377
571,617
450,331
-
-
-
-
Closing gross carrying amount
1,400,136
90,523
195,605
1,685,995
1,199,580
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
868,437
-
-
-
(154,128)
34,940
450,331
-
1,199,580
In millions of Naira
Other financial assets
Gross carrying amount at 1 January Transfers:
New financial assets originated or purchased
Financial asset derecognised during the year
Foreign exchange and other movements
Closing gross carrying amount of assets
subject to simplified approach
31 December 2022
31 December 2021
Stage 1
12-month ECL
Lifetime ECL not
credit-impaired
Stage 2
12-month ECL
Lifetime ECL not
credit-impaired
-
-
-
-
-
117,857
50,835
-
-
168,692
-
-
-
-
-
151,709
-
(33,852)
-
117,857
Notes
153
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
Due from other banks
Gross carrying amount at 1 January Transfers:
Financial assets derecognised during the year other than write-offs
New financial assets originated or purchased
Foreign exchange and other movements
Closing gross carrying amount
Bank
In millions of Naira
Treasury bills at amortised cost
31 December 2022
31 December 2021
Stage 1
12-month ECL
Stage 1
12-month ECL
691,968
(91,034)
701,952
-
810,552
(118,584)
-
-
1,302,886
691,968
31 December 2022
31 December 2021
Stage 1
12-month ECL
Total
Stage 1
12-month ECL
Total
Gross carrying amount at 1 January Transfers:
754,151
754,151
695,898
695,898
Financial assets derecognised during the year other than write-offs
(2,554,055)
(2,554,055)
(1,990,231)
(1,990,231)
Changes in amortised cost value
(190,521)
(190,521)
63
63
New financial assets originated or purchased
2,954,094
2,954,094
2,048,421
2,048,421
Closing gross carrying amount
963,669
963,669
754,151
754,151
In millions of Naira
31 December 2022
31 December 2021
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
12-month
ECL
Lifetime
ECL not
credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
Lifetime
ECL not
credit-
impaired
Lifetime
ECL
credit-
impaired
Off balance sheet exposure
Gross carrying amount at 1 January Transfers:
908,566
Transfer from stage 1 to stage 2
Transfer from stage 1 to stage 3
Transfer from stage 3 to stage 2
Financial assets derecognised during the
period other than write-offs
New financial assets originated or purchased
Closing gross carrying amount
(1,304)
(1,957)
-
14,591
1,304
-
-
6,635
929,792
-
1,957
-
-
-
-
(310,594)
(15,528)
(1,834)
(327,956)
459,001
(14,591)
(6,635)
-
-
298,745
893,456
-
367
5,433
304,178
470,791
-
14,591
-
-
-
-
-
-
6,635
-
-
-
Total
459,001
-
-
-
-
470,791
12,191
906,014
908,566
14,591
6,635
929,792
31 December 2022
31 December 2021
Stage 1
12-month ECL
Stage 2
12-month ECL
158,105
(127,558)
907
196,943
228,397
227,283
(122,884)
(535)
54,241
158,105
In millions of Naira
Assets pledged as collateral at amortised cost
Gross carrying amount at 1 January Transfers:
Financial assets derecognised during the year other than write-offs
Changes in amortised cost value
New financial assets originated or purchased
Closing gross carrying amount
154
31 December, 2022
31 December, 2021
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
In millions of Naira
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
Lifetime ECL
not credit-
impaired
Lifetime
ECL credit-
impaired
Total
Loans and advances to customers at amortised cost
Gross carrying amount at 1 January Transfers:
2,343,421
Transfer from stage 1 to stage 2
Transfer from stage 1 to stage 3
Transfer from stage 2 to stage 3
Transfer from stage 3 to stage 2
Transfer from stage 2 to stage 1
Transfer from stage 3 to stage 1
New financial assets originated or purchased
Financial assets derecognised during the year other
than write-offs
Write-offs
Foreign exchange and other movements
(85,122)
(14,266)
-
-
42,999
1,644
1,652,040
(1,078,237)
141,912
3,237,973
2,012,000
578,481
182,182
2,772,663
752,640
85,122
-
(2,670)
2,537
(42,999)
-
14,266
2,670
(2,537)
-
-
(1,644)
-
-
-
-
-
-
(53,296)
(8,904)
-
-
6,866
3,179
53,296
-
(29,193)
-
8,904
29,193
37,703
(37,703)
(6,866)
-
-
(3,179)
-
-
-
-
-
-
125,347
(20,231)
13,025
1,790,412
1,168,387
(17,293)
(1,115,761)
(784,811)
138,454
(19,235)
-
-
1,306,841
(804,046)
-
-
-
-
(73,820)
(73,820)
-
-
-
-
-
-
(37,485)
(37,485)
-
-
Closing gross carrying amount
2,862,479
899,746
76,579
3,838,804
2,343,421
752,640
141,912
3,237,973
31 December, 2022
31 December, 2021
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
In millions of Naira
12-month
ECL
Lifetime ECL
not credit
impaired
Lifetime
ECL credit
impaired
Total
12-month
ECL
Lifetime ECL
not credit-
impaired
Lifetime
ECL credit-
impaired
Investment securities at mortised cost
Gross carrying amount at 1 January Transfers:
Transfer from stage 1 to stage 3
Financial assets derecognised during the year other
than write-offs
Changes in mortised cost value
New financial assets originated or purchased
Foreign exchange and other movements
Closing gross carrying amount
380,199
(2,703)
(9,263)
(16,683)
166,667
-
518,217
-
-
-
-
-
-
-
-
380,199
208,973
2,703
-
-
-
-
-
(9,263)
(16,683)
166,667
-
-
-
-
171,226
-
2,703
520,920
380,199
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
208,973
-
-
-
171,226
-
380,199
In millions of Naira
Other financial assets
Gross carrying amount at 1 January Transfers:
Financial assets derecognised during the
period other than write-offs
New financial assets originated or purchased
Closing gross carrying amount of assts
subject to simplified approach
31 December 2022
31 December 2021
Stage 1
12-month ECL
Stage 2
Lifetime ECL not
credit-impaired
Stage 1
12-month ECL
Stage 2
Lifetime ECL not
credit-impaired
-
-
-
-
92,747
57,943
-
150,690
-
-
-
-
145,347
(52,600)
-
92,747
Notes
155
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
Due from other banks
Gross carrying amount at 1 January Transfers:
Financial assets derecognised during the period other than write-offs
New financial assets originated or purchased
Closing gross carrying amount
31 December 2022
31 December 2021
Stage 1
12-month ECL
Stage 2
12-month ECL
518,111
(16,651)
631,410
1,132,870
532,435
(14,324)
-
518,111
Summary of loss allowance by class of financial instruments also showing ECL coverage ratio as at 31 December 2022 .
Group
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial Statement Items
In millions of Naira
Stage 1
Stage 2
Lifetime
ECL
Stage 3
Total
Stage 1
Stage 3
Total
Stage 2
Lifetime
ECL
Stage 1 Stage 2
Lifetime
ECL
Stage 3
Total
%
%
%
%
On-balance sheet items
Assets pledged as collateral
Treasury bills
Loans and advances to
customers at amortised cost
Debt investment securities at
mortised cost and FVOCI
228,492
1,003,908
-
-
-
-
228,492
1,003,908
17
407
-
-
-
-
17
407
3,139,107
905,393
79,465
4,123,965
29,501
35,370
45,390
110,261
1,400,136
90,253
195,605
1,685,994
3,323
9,907
49,008
62,238
Other financial assets measured
at amortised cost
-
168,692
Due from other Banks
1,302,886
-
-
-
168,692
1,302,886
-
75
28,973
-
-
-
28,973
75
Subtotal
7,074,529
1,164,338
275,070
8,513,937
33,323
74,427
94,398
202,148
Off-balance sheet items
Loans and other credit related commitments
Letters of credit
Usance Financial guarantee and
similar contracts
Performance bonds and
guarantees
Undrawn overdraft balance
Subtotal
Total
363,328
275,723
-
4
27
754
363,355
276,481
2,743
1,794
372,609
363
11,410
384,382
1,015
78,901
1,090,561
7,896
8,263
2,952
89,749
15,143
1,113,967
260
5,812
-
-
-
65
65
27
133
2,770
1,927
40
1,055
538
738
863
6,615
8,165,090
1,172,601
290,213
9,627,904
39,135
74,492
95,136
208,763
0.01
0.04
0.94
0.24
-
0.01
0.47
0.75
0.65
0.27
0.33
0.53
0.48
-
-
-
-
3.91
57.12
-
-
-
-
-
-
6.41
34.32
0.01
0.04
2.67
3.69
-
0.01
2.37
-
-
-
100.00
17.64
0.76
0.70
0.35
0.27
0.82
0.79
6.35
18.22
4.87
32.78
0.96
0.59
2.17
* The Group adopted the simplified approach in estimating the ECL for other financial asset. Under this approach, all ECL
allowance are lifetime ECL.
156
Bank
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial Statement Items
In millions of Naira
Stage 1
Stage 2
Lifetime
ECL
Stage 3
Total
Stage 1
Stage 3
Total
Stage 2
Lifetime
ECL
Stage 1 Stage 2
Lifetime
ECL
Stage 3
Total
%
%
%
%
On-balance sheet items
Assets pledged as collateral
Treasury bills
Loans and advances to
customers at amortised cost
Debt investment securities at
amortised cost
Other financial assets
measured at amortised cost
228,394
963,669
-
-
-
-
228,394
963,669
19
39
-
-
-
-
19
39
2,862,479
899,746
76,580
3,838,805
25,269
34,341
43,519
103,129
0.01
-
0.88
-
-
-
-
3.82
56.83
518,217
-
2,703
520,920
1,277
Due from other Banks
1,132,871
-
-
150,690
-
-
150,590
1,132,871
-
75
-
-
-
1,306
2,583
0.25
-
28,868
28,868
-
19.16
-
75
-
0.01
0.47
Subtotal
5,705,630
1,050,436
79,283
6,835,349
26,679
34,341
73,693
134,713
3.27
92.95
0.01
-
2.69
0.50
19.16
0.01
1.97
-
-
-
Off-balance sheet items
Loans and other credit
related commitments
Letters of credit
Usance Financial guarantee
and similar contracts
Performance bonds and
guarantees
Undrawn overdraft balance
Subtotal
Total
279,764
275,723
-
4
27
754
279,791
279,791
2,415
1,794
337,969
363
11,410
349,742
19
78,901
972,357
7,896
8,263
2,952
89,749
15,143
995,764
260
4,488
-
-
-
65
65
27
133
40
538
738
2,442
1,927
0.86
0.65
59
0.01
-
-
-
100.00
17.64
0.87
0.70
0.35
0.02
863
5,291
0.33
0.46
0.47
0.82
0.79
3.25
18.22
4,87
78.82
0.96
0.53
1.79
6,677,987 1,058,699
94,426 9,831,113
31,167
34,406
74,431 140,004
*The Group adopted the simplified approach in estimating the ECL for other financial asset. Under this approach, all ECL allowance are lifetime ECL.
Summary of loss allowance by class of financial instruments also showing ECL coverage ratio as at 31 December 2021
Notes
157
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Group
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial Statement Items
In millions of Naira
Stage 1
Stage 2
Lifetime
ECL
Stage 3
Total
Stage 1
Stage 3
Total
Stage 2
Lifetime
ECL
Stage 1 Stage 2
Lifetime
ECL
Stage 3
Total
%
%
%
%
Financial Statement Items In millions of Naira
On-balance sheet items
Assets pledged as collateral
Treasury bills
158,105
941,538
-
-
-
-
158,105
941,538
198
815
-
-
-
-
198
815
2,600,350
754,707
146,821
3,501,878
25,672
26,032
94,445
146,149
0.13
0.09
0.99
-
-
-
-
3.45
64.33
Loans and advances to
customers at amortised cost
Debt investment securities at
amortised cost
Other financial assets
measured at amortised cost
657,957
-
-
158,746
Due from other Banks
691,968
-
-
-
-
657,957
3,766
-
158,746
-
9,925
691,968
724
-
-
-
-
3,766
0.57
-
9,925
-
6.25
724
-
0.10
0.62
Subtotal
5,049,918
913,453
146,821
6,110,192
31,175
36,134
94,445
161,754
3.96
64.33
Off-balance sheet items
Loans and other credit related commitments
Letters of credit
Usance Financial guarantee
and similar contracts
Performance bonds and
guarantees
Undrawn overdraft balance
Subtotal
Total
546,957
188,345
7,503
5,378
25
1,632
554,485
195,355
1,470
1,253
357,944
1,710
4,978
364,632
24
3
-
-
-
1,632
1,473
2,885
0.27
0.67
19
43
0.01
-
-
-
-
100.00
0.27
1.48
0.38
0.01
125,944
1,219,190
10,045
24,636
1,941
8,576
137,930
1,252,402
807
3,554
116
119
292
1,943
1,215
5,616
6,269,108
938,089
155,397
7,362,594
34,729
36,253 96,388
167,370
0.64
0.29
0.55
1.15
0.48
15.04
22.66
3.86
62.03
0.88
0.45
2.27
*The Group adopted the simplified approach in estimating the ECL for other financial asset. Under this approach, all ECL allowance are lifetime ECL.
Bank
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial Statement Items
In millions of Naira
Stage 1
Stage 2
Lifetime
ECL
Stage 3
Total
Stage 1
Stage 3
Total
Stage 2
Lifetime
ECL
Stage 1 Stage 2
Lifetime
ECL
Stage 3
Total
%
%
%
%
On-balance sheet items
Assets pledged as collateral
Treasury bills
Loans and advances to
customers at amortised cost
Debt investment securities at
amortised cost
Other financial assets measured
at amortised cost
158,105
754,151
-
-
-
-
158,105
754,151
197
395
-
-
-
-
197
395
2,343,420
752,640
141,913
3,237,973
17,534
26,673
94,315
138,522
-
-
-
-
3.54
66.46
380,199
-
-
144,629
-
-
-
380,199
666
-
144,629
518,111
-
58
9,835
-
-
-
-
666
9,835
58
-
6.80
-
-
4.07
66.46
0.12
0.05
0.75
0.18
0.01
0.45
Due from other Banks
518,111
-
Subtotal
4,153,986
897,269
141,913
5,193,168
18,850
36,508
94,315
149,673
158
0.13
0.09
4.17
0.57
6.25
0.10
2.65
0.12
0.05
4.28
0.18
6.80
0.01
2.88
-
-
-
-
-
-
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial Statement Items
In millions of Naira
Stage 1
Stage 2
Lifetime
ECL
Stage 3
Total
Stage 1
Stage 3
Total
Stage 2
Lifetime
ECL
Stage 1 Stage 2
Lifetime
ECL
Stage 3
Total
%
%
%
%
Off-balance sheet items
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2 Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loans and other credit related commitments
Letters of credit
Usance Financial guarantee and
similar contracts
Performance bonds and
guarantees
Undrawn overdraft balance
Subtotal
Total
391,076
188,345
7,503
5,378
25
1,631
398,604
195,354
1,470
1,253
329,145
1,710
4,978
335,833
24
3
-
-
-
1,632
1,473
2,885
19
43
125,944
1,034,510
10,045
24,636
1,941
8,575
137,930
1,067,721
807
3,554
116
119
292
1,943
1,215
5,616
5,188,496
921,905
150,488
6,260,889
22,404
36,627
96,258
155,289
0.38
0.67
0.01
0.64
0.34
0.43
0.04
-
100.06
0.37
1.48
-
-
1.15
0.48
3.97
0.38
0.01
15.04
22.66
63.96
0.88
0.53
2.48
* 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 Policy
Loans 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 are 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; and
(g).
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 risk
Market 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.
Notes
159
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
3.3.1 Management of market risk
The 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:
(a).
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; and
(e).
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:
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).
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.
(i)
(ii)
Group
In millions of Naira
Note Carrying Amount
Trading
Non-trading
Carrying
Amount
Trading
Non-
trading
At 31 December 2022
At 31 December 2021
Assets
Cash and balances with central bank
Treasury bills
Assets pledged as collateral
Due from other banks
Derivative Asset • Hedging Instrument
Derivative Asset -Non Hedging Instrument
Loans and advances
Investment securities
Other financial assets
Liabilities
Customer deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
160
15
16
17
18
19
19
20
21
25
28
33
29
30
31
32
2,201,743
-
2,246,540
1,243,038
254,662
26,287
1,302,811
20,052
29,822
4,013,705
-
20,052
29,822
-
1,728,331
12,442
193,465
193,465
8,975,653
-
-
6,325
6,325
545,938
311,192
963,450
-
-
-
-
-
2,201,743
1,003,500
228,375
1,302,811
-
-
4,013,705
1,715,889
193,465
1,488,363
1,764,945
392,594
691,244
-
3,355,728
1,303,726
148,821
56,187
56,187
-
1,488,363
824,222
234,687
-
-
940,723
157,907
691,244
-
-
-
3,355,728
22,338
1,281,388
-
-
14,674
-
-
-
-
148,821
6,472,054
-
455,776
369,241
750,469
45,799
8,975,653
6,472,054
-
545,938
311,192
963,450
-
14,674
455,776
369,241
750,469
45,799
Bank
In millions of Naira
Note
Carrying
Amount
Trading
Non-trading
Carrying
Amount
Trading
Non-
trading
At 31 December 2022
At 31 December 2021
Assets
Cash and balances with central bank
Treasury bills
Assets pledged as collateral
Due from other banks
Derivative Asset • Hedging Instrument
Derivative Asset -Non Hedging Instrument
Loans and advances
Investment securities
Other financial assets
Liabilities
Customer deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
15
16
17
18
19
19
20
21
25
28
33
29
30
31
32
3.3.2 Measurement of Market Risk
2,102,394
-
2,102,394
2,206,669
1,243,038
254,564
26,189
963,630
228,375
1,132,796
-
1,132,796
20,052
28,799
-
-
-
3,735,676
612,220
176,289
1,397,666
1,577,647
357,000
518,053
-
3,099,452
477,004
134,794
57,476
57,476
20,052
28,799
3,735,676
622,780
176,289
7,434,806
6,040
526,945
311,192
999,580
-
10,560
-
-
6,040
-
-
-
-
7,434,806
5,169,199
-
526,945
311,192
999,580
-
15,170
409,103
369,241
769,395
45,799
-
1,397,666
823,891
199,093
-
-
753,756
157,907
518,053
-
-
-
3,099,452
11,897
-
-
15,170
-
-
-
-
465,107
134,794
5,169,199
-
409,103
369,241
769,395
45,799
The 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.
3.3.3 Foreign exchange risk
Fluctuations 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 designating part of its derivatives for hedge accounting
purposes and trading other basic derivative products. 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
Notes
161
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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.
The Bank’s risk appetite is the level of risk that the Bank would assume in achieving its business objectives at any point in time. This
appetite is reviewed annually by the Board of Directors at a level that minimizes depletion of earnings and capital due to avoidable
foreign exchange fluctuations. The Bank’s strategy is to manage all material foreign exchange risks associated with highly probable
forecast transactions, firm commitments and monetary items denominated in foreign currencies using derivative products such as
forwards, futures and foreign currency swaps.
Group
The table below summarizes the Group’s exposure to foreign currency exchange rate risk at 31 December 2022 and 31
December 2021. Included in the table are the Group’s financial instruments at carrying amounts, categorised by currency.
In millions of Naira
At 31 December 2022
Assets
Naira
Dollar
GBP
Euro
Others
Total
Cash and balances with central bank
2,089,869
18,937
4,181
4,957
83,799
2,201,744
Treasury bills
Assets pledged as collaterals
Due from other banks
Derivative assets-hedging instruments
Derivative assets-non hedging instruments
Loans and advances to customers
Investment securities
Other financial assets
Liabilities
Customer’s deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
2,227,845
254,565
-
-
-
-
-
-
18,695
2,246,540
98
254,663
110
1,133,525
62,355
75,185
31,637
1,302,811
-
326
20,052
29,351
2,212,928
1,615,146
628,850
861,522
77,095
100,899
-
-
14,087
96,955
227
-
-
-
145
20,052
29,822
77,477
35,155
94,066
4,013,704
105,852
1,728,333
33
15,210
193,464
6,185,521
2,084,960
202,842
135,821
366,511
8,975,655
374
430,582
311,192
-
-
5,806
86,339
-
963,450
-
-
-
145
1,176
10,996
16,845
-
-
-
-
-
-
-
-
-
6,325
545,938
311,192
963,450
-
As at 31 December 2022, the Group had outstanding SWAP transactions with various counterparties. The SWAP transactions creates
for the Group both a right to receive US dollar of the notional SWAP amount at different maturities and an obligation to deliver NGN of
the notional SWAP amount at different maturity. The total USD receivables at various maturity dates is USD 1.66 billion while the Naira
payable at various maturities is N714 Billion:
162
In millions of Naira
At 31 December 2021
Assets
Cash and balances with central bank
Treasury bills
Assets pledged as collaterals
Due from other banks
Derivative assets-non hedging instruments
Loans and advances to customers
Investment securities
Other financial assets
Liabilities
Customer’s deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
Naira
Dollar
GBP
Euro
Others
Total
4,689
1,877
9,436
89,302
1,488,363
1,383,059
1,671,658
357,000
-
-
414
4,003
507,060
51,557
1,845,837
1,301,543
501,224
545,517
11,035
123,896
-
-
49,479
184
23,439
43,550
-
-
-
82,801
1
59,872
22,632
93,287
1,764,945
35,594
51,220
442
392,594
691,244
56,187
125,037
3,355,728
190,803
1,303,726
18
13,872
148,821
4,062,040
1,626,142
163,580
116,701
503,591
6,472,054
3,820
9,475
256,532
135,804
369,241
-
-
-
750,469
45,799
-
578
-
-
-
470
9,252
909
53,610
-
-
-
-
-
-
14,674
455,776
369,241
750,469
45,799
The Group’s exposure to foreign currency risk is largely concentrated in the 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 table below shows the impact on the Group’s profit or loss and statements of financial position size if the exchange
rate between the US Dollars, and Nigerian Naira had increased or decreased by 9% (31 December 2021: 6%, with all other
variables held constant.
31 December 2022
31 December 2021
US Dollar effect of 9% (31 December 2021:6%) up or (down) movement on profit
before tax and statement of financial position size (in millions of Naira)
US Dollar effect of 9% (31 December 2021: 6%) up or (down) movement on profit
before tax and statement of financial position size (in millions of Naira)
US Dollar effect of 9% (31 December 2021: 6%) up or (down) movement on OCI and
statement of financial position size (in millions of Naira)
US Dollar effect of 9% (31 December 2021: 6%) up or (down) movement on OCI and
statement of financial position size (in millions of Naira)
68,926
68,926
8,042
8,042
32,351
32,351
4,895
4,895
Notes
163
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Bank
The table below summarizes the Bank’s exposure to foreign currency exchange rate risk at 31 December 2022 and 31 December 2021.
Included in the table are the Bank’s financial instruments at carrying amounts, categorised by currency.
In millions of Naira
At 31 December 2022
Assets
Naira
Dollar
GBP
Euro
Others
Total
Cash and balances with central bank
2,086,532
10,420
3,208
2,235
Treasury bills
Assets pledged as collaterals
Due from other banks
Derivative assets-hedging instruments
Derivative assets-non hedging instruments
Loans and advances to customers
Investment securities
Other financial assets
Liabilities
Customer’s deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
-
-
-
2,102,395
2,206,669
254,565
2,206,669
254,565
-
-
-
-
-
-
10,020
1,032,923
23,240
56,122
10,490
1,132,795
-
326
20,052
28,328
2,212,764
1,481,680
593,312
15,364
75,387
100,813
-
-
657
-
55
-
-
38,569
14,103
33
-
145
20,052
28,799
2,005
3,735,675
-
-
622,779
176,288
7.434.807
6,172,467
1,175,734
15,222
65,964
5,420
7,434,807
299
429,971
311,192
5,596
77,361
-
-
999,580
-
-
1,176
10,996
-
-
-
-
145
7,440
-
-
6,040
526,944
311,192
999,580
As at 31 December 2022, the Group had outstanding SWAP transactions with various counterparties. The SWAP transactions
creates for the Bank both a right to receive US dollar of the notional SWAP amount at different maturities and an obligation
to deliver NGN of the notional SWAP amount at different maturity. The total USD receivables at various maturity dates Is USD
1.66 billion while the naira payable at various maturities Is 714 billion.
In millions of Naira
At 31 December 2021
Assets
Cash and balances with central bank
Treasury bills
Assets pledged as collaterals
Due from other banks
Derivative Asset -Non Hedging Instrument
Loans and advances to customers
Investment securities
Other financial assets
Liabilities
Customer’s deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
164
Naira
Dollar
GBP
Euro
Others
Total
1,382,751
1,577,647
357,000
3,703
1,846
9,367
-
-
-
-
-
-
-
458,061
8,542
51,111
-
-
-
339
441
1,397,667
1,577,647
357,000
518,053
57,476
4,003
52,847
1,845,837
1,222,657
462,071
14,933
11,275
123,501
184
60
-
-
1
22,756
8,142
3,099,452
-
18
-
-
477,004
134,794
4,062,040
1,019,434
17,072
67,828
2,825
5,169,199
3,820
10,438
256,490
135,804
369,241
-
-
-
769,395
45,799
-
578
-
-
-
470
9,252
442
6,979
-
-
-
-
-
-
15,170
409,103
369,241
769,395
45,799
The Banks exposure to foreign currency risk Is largely concentrated in US Dollar. Movement In exchange rate between the US
Dollar, and the Nigeriar 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 and average Dollar rate as at 31 December 2022 was N461.1 USD and N428 96/USD respectively..
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 2021: 9%), with all other variables held
constant.
In millions of Naira
31 December 2022
31 December 2021
US Dollar effect of 9% (31 December 2021: 6%) up or (down) movement on profit
before tax and balance sheet size
US Dollar effect of 9% (31 December 2021: 6%) up or (down) movement on profit
before tax and statement of financial position size (in millions of Naira)
US Dollar effect of 9% (31 December 2021: 6%) up or (down) movement on OCI and
statement of financial position size (in millions of Naira)
US Dollar effect of 9% (31 December 2021: 6%) up or (down) movement on OCI and
statement of financial position size (in millions of Naira)
3.3.3.1 Foreign exchange risk
68,927
68,927
8,042
8,042
28,047
28,047
4,895
4,895
A fair value hedge is used to hedge a change in the fair value of an asset or liability or an unrecognized firm commitment that is
attributable to a particular risk and could affect the profit or loss or other comprehensive income.
The Bank manages the foreign currency risk on a group basis and items that are subject to the same risk are managed together. The
Bank has designated its foreign currency borrowings and term deposits as hedged items in a formal hedge relationship for accounting
purposes.
a) Hedged item: The Bank has hedged the NGN/USD spot exchange rate risk arising from the translation of recognized foreign currency
borrowings (see note 31) and term deposits (see note 28) denominated in United States Dollars (USD) to NGN. This risk is due to the
sustained depreciation of the Naira against the Dollar, leading to revaluation losses.
b) Hedging instrument The Bank has designated the spot component of its currency swaps with the Central Bank of Nigeria (CBN) as
the hedging instrument in the hedge relationship for accounting purposes.
c) Hedge ratio :The Bank has defined the hedge ratio as the actual ratio between the hedged item and hedging instruments. This is the
ratio that the Bank uses for risk management purposes, which is appropriate for purposes of hedge accounting. The proportion of the
hedging instrument designated in the hedge relationship is in line with the defined hedge ratio of 1:1.
d) Hedge effectiveness: An economic relationship between a hedged item and hedging instrument exists where the values of the
hedged item and hedging instrument will typically move in opposite directions in response to movements in the hedged risk. The
Bank’s assessment is that gains and losses on the derivatives attributable to the spot component will continue to move in the opposite
direction to the hedged items. The currency swap derivatives transaction was to “sell USD, buy NGN” at inception and “buy USD, sell
NGN” at the forward date. A foreign currency gain is recognised if the Naira depreciates, and a loss recognised if it appreciates. For
the hedged items - foreign currency liabilities, a foreign currency gain is recognised if the Naira appreciates, and a loss recognised if it
depreciates. Therefore, management has assessed that there is an economic relationship between the hedging instrument and the
hedged item as they will generally move in the opposite direction.
The designated amounts and currency denomination for the hedge instruments and hedge items are also closely aligned. The Bank
determines hedge effectiveness at the inception of the hedge relationship, and through quarterly prospective effectiveness assessments.
Sources of ineffectiveness include; timing differences between the settlement dates of the hedged item and hedging instruments,
credit risk of the Bank and its counterparty to the forward contract, and the use of existing currency swaps at the designation dates.
Notes
165
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
Total exposure to foreign exchange risk- fair value hedge
- Interest bearing borrowings
- Term deposits
Bank
271,705
100,453
The Bank’s accounting policy for its fair value hedges is set out in note 2.6 Further information about the hedging derivatives
used by the Bank is provided below as at 31 st of December 2022:
In millions of Naira
At 31 December 2022
Risk Category
Hedge Type: Fair Value hedge
CBN Currency Swap
Foreign
Exchange risk
Average
Strike Price
Nominal
Amount of
Hedging
Instrument
Carrying
Amount of
Hedging
Instrument
Changes in fair
value used for
calculatingHedging
ineffectiveness
Line Item in the statement
of financial position where
the hedging instrument is
located
Number
Assets
Assets
430
346,918
20,052
40,632
Derivative assets
In millions of Naira
At 31 December 2022
Hedge Type: Fair Value hedge
Foreign exchange risk on
foreign currency interest
bearing borrowing
Foreign exchange risk on term
deposits
In millions of Naira
At 31 December 2022
Fair Value hedge
Foreign exchange risk
Risk Category Carrying amount of
hedged item
Change in fair value
for calculating hedge
ineffectiveness
Line Item In the statement of
financial position where the
hedging instrument is located
Foreign Exchange risk
Liabilities
271,705
(24,830)
Borrowings
Foreign Exchange risk
100,453
(14,760)
Customer’s deposits
Hedge
ratio
Effectiveness
recognized in
profit or loss
Hedge ineffectiveness
recognized in profit
or loss
Line item inprofit or loss
that includeshedge
ineffectiveness
-
93%
39,590
1,042
Trading gains
The notional contract amounts of the hedging instruments indicate the balance of designated hedging instruments at the reporting
date. This balance fluctuates over the hedging period in line with the amortizing nature of the hedged items.
The following table shows the profile of the timing of the nominal amount of the hedging instrument
In millions of Naira
At 31 December 2022
Up to 1 month
1-3 months
3-6 months
6-12 months
Derivative assets - Hedging
Gross settled
Receivable
Payable
614
(614)
-
-
95,466
(95,466)
250,838
(250,838)
166
3.3.4 Interest Rate Risk
The 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.
Group
The table below summarizes the Group’s interest rate gap position:
At 31 December 2022
In millions of Naira
Assets
Cash and balances with central banks
Treasury and other eligible bills (Amortized cost)
Assets pledged as collateral (Amortised cost)
Due from other banks
Derivative Asset - Hedging Instrument
Derivative Asset -Non Hedging Instrument
Loans and advances to customers
Investment securities (Amortized cost and Fair value through OCI)
Other financial assets
Liabilities
Customer deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
15
16
17
18
19
19
20
21
25
28
33
29
30
31
32
Note
Carrying Amount
Rate sensitive
Non rate sensitive
2,201,743
1,003,501
228,474
1,302,811
20,052
29,822
4,013,705
1,715,889
193,465
-
0
-
-
-
-
870,276
-
-
10,709,462
870,276
2,201,743
1,003,501
228,474
1,302,811
20,052
29,822
3,143,429
1,715,889
193,465
9,839,186
8,975,654
3,145,312
5,830,342
6,324
545,938
311,192
963,450
-
284
-
-
292,215
-
10,802,559
3,437,811
6,040
545,938
311,192
671,234
-
7,364,746
2,474,440
Total interest rate gap
The table shows the maturity profile of financial instruments that are rate sensitive.
(93,097)
(2,567,535)
At 31 December 2022
In millions of Naira
Assets
Loans and advances to customers
Liabilities
Customer deposits
Borrowings
Up to 1
month
1 - 3
months
3 - 6
months
6 - 12
months
Over 1
year
Total rate
sensitive
40,139
40,139
607,695
607,695
2,854,186
-
104,666
240,529
43,640
43,640
37,739
51,685
30,958
30,958
147,844
147,844
870,276
870,276
62,615
86,106
3,145,312
-
-
292,214
2,854,186
345,195
89,424
62,615
86,106
3,437,525
Total interest repricing gap
(2,814,047)
262,500
(45,784)
(31,657)
61,738
(2,567,250)
Notes
167
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Impact of interest rate sensitivity on cash flows - Liabilities:
For its liabilities, the group is primarily exposed to changes in interest rate on variable borrowings. Impact on cash flow due to +/- 1
bps movement in Libor (holding all other variables constant) has been estimated to be N73 million.
At 31 December 2021
In millions of Naira
Assets
Cash and balances with central banks
Treasury and other eligible bills (Amortized cost)
Assets pledged as collateral (Amortised cost)
Due from other banks
Derivative assets
Loans and advances to customers
Investment securities (Amortized cost and Fair value through OCI)
Other financial assets
Liabilities
Customer deposits
Derivative liabilties
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
Total interest repricing gap
Note
Carrying Amount
Rate sensitive
Non rate sensitive
15
16
17
18
42
20
21
25
28
32
29
30
31
32
1,488,363
940,723
157,907
691,244
-
3,355,728
1,195,814
148,821
-
-
-
-
-
1,539,700
-
-
7,978,600
1,539,700
1,488,363
940,723
157,907
691,244
-
1,816,028
1,195,814
148,821
6,438,900
6,472,054
1,194,221
5,277,833
-
455,776
369,241
750,469
45,799
8,093,339
(114,739)
-
-
-
352,332
-
1,546,553
(6,853)
-
455,776
369,241
398,137
45,799
6,546,786
-
The table shows the maturity profile of financial instruments that are rate sensitive.
In millions of Naira
At 31 December 2021
Assets
Up to 1
month
1 - 3
months
3 - 6
months
6 - 12
months
Over 1
year
Total rate
sensitive
Loans and advances to customers
524,255
39,430
155,212
36,113
784,690
1,539,700
Liabilities
Customer deposits
Borrowings
524,255
39,430
155,212
36,113
784,690
1,539,700
1,194,221
-
42,739
278,768
1,236,960
278,768
-
9,606
9,606
-
21,219
21,219
1,194,221
1,194,221
352,332
1,546,553
-
-
-
Total interest repricing gap
(712,705)
(239,338)
145,606
14,894
784,690
(6,853)
168
Group
Interest rate sensitivity showing fair value interest rate risk
In millions of Naira
Financial assets at FVPL
Treasury bills
Government bonds
Assets pledged as collateral
Total
Impact on income statement:
Favourable change at 5% reduction in interest rate (2021:2%)
Unfavourable change at 5% increase in interest rate (2021:2%)
FVOCI investment securities
Government bonds
Impact on other comprehensive income statement:
Favourable change at 1% reduction in interest rate (2021: 2%)
Unfavourable change at 1% increase in interest rate (2021: 2%)
31 December 2022
31 December 2021
1,243,038
12,442
26,189
1,281,669
64,083
(64,083)
824,222
22,338
234,687
1,081,247
21,625
(21,625)
833,849
541,629
8,338
(8,338)
10,833
(10,833)
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.
Bank
The table below summarizes the Bank’s interest rate gap position:
At 31 December 2022
In millions of Naira
Assets
Cash and balances with central banks
Treasury and other eligible bills (Amortized cost)
Assets pledged as collateral
Due from other banks
Derivative Asset - Hedging Instrument
Derivative Asset -Non Hedging Instrument
Loans and advances to customers
Investment securities (Amortized cost and Fair value through OCI)
Other financial assets
Liabilities
Customer deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
Total interest rate gap
Note
Carrying Amount
Rate sensitive Non rate sensitive
15
16
17
18
19
19
20
21
25
28
32
29
30
31
32
2,102,394
963,630
228,376
1,132,796
20,052
28,799
3,735,676
612,220
176,289
-
-
-
-
-
-
558,051
-
-
9,000,232
558,051
2,102,394
963,330
228,376
1,132,796
20,052
28,799
3,177,625
612,220
176,289
8,444,881
7,434,806
2,673,518
4,761,287
6,040
526,945
311,192
999,580
-
-
-
-
292,215
-
9,278,563
2,965,733
(278,331)
(2,407,682)
6,040
526,945
311,192
707,365
-
6,312,829
2,132,052
Notes
169
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
The table below shows the maturity profile of financial instruments that are rate sensitive.
At 31 December 2022
In millions of Naira
Assets
Loans and advances to customers
Liabilities
Customer deposits
Borrowings
Up to 1
month
1 - 3
months
3 - 6
months
6 - 12
months
Over 1
year
Total rate
sensitive
922
922
557,129
557,129
2,673,518
-
-
-
-
-
240,529
51,685
2,673,518
240,529
51,685
-
-
-
-
-
-
-
-
-
-
-
-
558,051
558,051
2,673,518
292,214
2,965,732
(2,407,681)
Total interest rate gap
(2,672,596)
316,600
(51,685)
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 +/-
9 bps movement in Libor (holding all other variables constant) has been estimated to be N157 million.
Note
Carrying Amount
Rate sensitive
Non rate sensitive
15
16
17
18
42
20
21
25
28
29
13
30
31
32
1,397,666
753,756
157,907
518,053
54,476
-
-
-
-
-
3,099,452
1,253,615
477,004
134,794
-
-
6,593,108
1,253,615
1,397,666
753,756
157,907
518,053
54,476
1,845,837
477,004
134,794
5,339,493
5,169,199
1,194,221
3,974,978
15,170
409,103
369,241
769,395
45,799
-
-
-
341,463
-
15,170
409,103
369,241
427,932
45,799
6,777,907
1,535,684
5,242,223
(184,799)
(282,069)
97,270
At 31 December 2021
In millions of Naira
Assets
Cash and balances with central banks
Treasury and other eligible bills (Amortized cost)
Assets pledged as collateral
Due from other banks
Derivative assets
Loans and advances to customers
Investment securities (Amortized cost and Fair value through OCI)
Other financial assets
Liabilities
Customer deposits
Derivative liabilities
Other financial liabilities
On-lending facilities
Borrowings
Debt securities issued
Total interest rate gap
170
The table below shows the maturity profile of financial instruments that are rate sensitive.
At 31 December 2021
In millions of Naira
Assets
Loans and advances to customers
Liabilities
Customer deposits
Borrowings
Up to 1
month
1 - 3
months
3 - 6
months
6 - 12
months
Over 1
year
Total rate
sensitive
469,345
469,345
1,194,221
-
-
-
42,739
267,899
1,236,960
267,899
120,847
17,064
646,359
1,253,615
120,847
17,064
646,359
1,253,615
-
9,606
9,606
-
21,219
21,219
-
-
-
1,194,221
341,463
1,535,684
Total interest repricing gap
(767,615)
(267,899)
111,241
(4,155)
646,359
(282,069)
Bank
Interest rate sensitivity showing fair value interest rate risk
In millions of Naira
Financial assets at FVPL
Treasury bills
Government bonds
Assets pledged as collateral
Total
Impact on income statement:
Favourable change at 5% reduction in interest rate(2021: 2%)
Unfavourable change at 5% increase in interest rate(2021: 2%)
31 December 2022
31 December2021
1,243,038
10,560
26,189
1,279,787
63,989
(63,989)
823,891
11,897
199,093
1,034,881
20,698
(20,698)
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 500 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 risk
The 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)
7.795% equity holding in African Finance Corporation (AFC) valued at N86.6 billion and cost N40 billion.
(ii)
3.6% equity holding in Nigerian Interbank Settlement Scheme (NIBBS) valued at N1.75 billion and cost N50 million
(iii)
2.31% equity holding in FMDQ holdings pic valued at N2.90 billion.
(iv)
0.79% equity holding in Unified Payment Services (UPS) valued at N105.9 million
(v)
0.02% equity holdings in AFREXIM valued N266.4 million.
Notes
171
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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 risk
Liquidity 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 process
The 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.
b.
c.
d.
e.
f.
Projecting cash flows and considering the level of liquid assets necessary in relation thereto;
Monitoring balance sheet liquidity ratios against internal and regulatory requirements;
Maintaining a diverse range of funding sources with adequate back-up facilities;
Managing the concentration and profile of debt maturities;
Monitoring deposit concentration in order to avoid undue reliance on large individual depositors and ensure a satisfactory
overall funding mix;
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 testing
The 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:
172
(a).
Conducts on a regular basis appropriate stress tests so as to;
(i)
(ii)
Identify sources of potential liquidity strain; and
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.
b.
c.
Changes in market condition;
Changes in the nature, scale or complexity of the Bank’s business model and activities; and
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 Plan
The Group maintains a contingency funding plan which sets out strategies for addressing liquidity. The Plan:
a.
b.
c.
d.
e.
f.
g.
h.
outlines strategies, policies and plans to manage a range of stresses;
establishes a clear allocation of roles and clear lines of management responsibility;
is formally documented;
includes clear invocation and escalation procedures;
is regularly tested and the result shared with the ALCO and Board;
outlines that Group’s operational arrangements for managing a huge funding run;
is sufficiently robust to withstand simultaneous disruptions in a range of payment and settlement;
outlines how the Group will manage both internal communications and those with its external stakeholders; and
As 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.
3.4.3 Funding approach
Our 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.
Notes
173
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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 risk
The 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.
Group
Bank
31 December 2022
31 December 2021
31 December 2022
31 December 2021
At year end
Average for the year
Maximum for the year
Minimum for the year
(b)
Liquidity reserve
75.00%
63.00%
75.00%
56.00%
71.19%
70.43%
72.18%
68.72%
67.00%
64.00%
67.00%
62.00%
59.73%
57.96%
61.14%
52.37%
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.
31 December 2022
31 December 2021
Gross value
Gross value
452,135
2,246,946
1,302,886
660,485
-
4,662,452
407,487
2,206,707
1,132,871
383,973
-
4,131,038
157,466
1,765,760
668,425
1,123,565
-
3,715,216
127,465
1,578,042
432,139
293,733
-
2,431,379
In millions of naira
Group
Cash and balances with central banks
Treasury bills
Balances with other banks
Investment securities
Assets pledged as collaterals
Total
Bank
Cash and balances with central banks
Treasury bills
Balances with other banks
Investment securities
Assets pledged as collaterals
Total
174
(c)
Financial assets available to support funding
The table below sets out the availability of the Group’s financial assets to support future funding
Group
At 31 December 2022
At 31 December 2021
In millions of Naira
Note Encumbered
Unencumbered
Total
Encumbered Unencumbered
Total
Cash and balances with central banks
Treasury bills
Assets pledged as collateral
Due from other banks
Loans and advances
Investment securities
Other financial assets
15
16
17
18
20
21
25
1,749,608
452,136
2,201,744
1,330,897
157,466
1,488,363
-
2,246,540
2,246,540
-
1,764,945
1,764,945
254,662
115,315
1,770
-
-
-
254,662
1,187,496
1,302,811
4,011,935
4,013,705
1,728,331
1,728,331
193,464
193,464
392,594
23,543
-
-
-
-
667,701
392,594
691,244
3,355,728
3,355,728
1,303,726
1,303,726
148,821
148,821
Group
At 31 December 2022
At 31 December 2021
In millions of Naira
Note Encumbered
Unencumbered
Total
Encumbered Unencumbered
Total
Bank
Cash and balances with central banks
Treasury bills
Assets pledged as collateral
Due from other banks
Loans and advances
Investment securities
Other financial assets
15
16
17
18
20
21
25
1,694,907
407,488
2,102,395
1,275,201
122,465
1,397,666
-
2,206,669
2,206,669
-
1,577,647
1,577,647
254,564
115,315
-
-
-
-
254,564
1,017,481
1,132,796
3,735,676
3,735,676
622,780
622,780
176,829
176,829
357,000
85,972
-
-
-
-
357,000
432,081
518,053
3,099,452
3,099,452
477,004
477,004
134,794
134,794
(d)
Financial assets pledged as collateral
The total financial assets recognized in the statement of financial position that have been pledged as collateral for liabilities as at 31
December 2022 and 31 December 2021 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 analysis
The 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.
Notes
175
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
The liquidity analysis of lease liability is disclosed in note 29c.
Note
Up to 1
month
1 - 3
months
3 - 6
months
6 - 12
months
Over 1 year
Gross nominal
inflow/ (outflow)
Carrying
amount
15
16
17
18
20
21
25
463,163
323,828
4,595
1,263,202
981,044
70,368
168,268
938
-
-
1,697,512
460,101
613,895
1,028,194
-
85,164
28,666
557,865
234,430
713
35,375
11,375
511,134
211,719
30
21,161
302,153
-
592,972
141,728
-
1,776,619
1,524,161
76
54,575
2,161,613
2,426,016
448,448
1,303,243
4,419,634
2,182,407
223,662
2,201,743
2,246,540
254,663
1,302,811
4,013,710
1,728,449
194,791
3,274,467
1,367,876
1,383,529
1,784,130
5,355,020
13,165,022
11,942,707
Note
Up to 1
month
1 - 3
months
3 - 6
months
6 - 12
months
Over 1 year
Gross nominal
inflow/ (outflow)
Carrying
amount
8,183,517
396,598
2,771
35,146
402,334
124,131
23,000
225,342
202,080
113,935
385
18,092
370,726
9,569
29,871
229,298
84,476
16,503
276,278
130,980
8,986,342
8,975,654
547,186
350,012
991,491
545,938
311,192
963,449
7,187,769
495,526
381,958
320,194
504,624
10,875,031
9,377,460
28
29
30
31
19
614
(614)
-
-
95,466
250,838
(95,466)
(250,838)
135,645
66,063
(105,614)
(27,258)
13
13
104,297
(63,881)
48
134,410
(134,400)
252
22,659
43,405
-
27,243
58,114
11
731
39,781
46
-
-
242
-
-
-
-
-
-
-
-
346,918
(346,918)
20,052
20,052
440,421
(331,169)
326
50,633
141,300
299
29,822
29,822
326
6,325
6,325
299
Group
At 31 December 2022
In millions of Naira
Assets
Non-derivative assets
Cash and balances with central banks
Treasury bills
Assets pledged as collateral
Due from other banks
Loans and advances to customers
Investment securities
Other financial assets
At 31 December 2022
Liabilities
Non-derivative liabilities
Customer’s deposits
Other financial liabilities
On-lending facilities
Borrowings
Derivative Asset - Hedging Instrument
Gross settled:
Receivable
Payable
Derivative Asset -Non Hedging Instrument
Gross settled:
Receivable
Payable
Net settled
Derivative liabilities
33
Gross settled:
Receivable
Payable
Net settled
176
At 31 December 2021
Note Up to 1month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Gross nominal
inflow/(outflow)
Carrying amount
In millions of Naira
Assets
Non-derivative assets
Cash and balances with central banks
Treasury bills
Assets pledged as collateral
Due from other banks
Loans and advances to customers
Investment securities
Other financial assets
15
16
17
18
20
21
25
157,466
331,777
6,724
645,651
1,254,367
30,197
117,750
-
386,797
7,255
22,336
300,139
157,472
105
-
458,851
108,864
1,853
281,086
121,644
-
-
1,330,897
621,404
152,604
3,902
237,561
168,247
-
309,561
17,583
1,360,162
1,302,303
-
40,888
1,488,363
1,798,829
585,008
691,325
3,433,315
1,779,863
158,743
1,488,363
1,764,945
392,594
691,244
3,355,728
1,303,726
148,821
2,543,932
874,104
972,298
1,183,718
4,361,394
9,935,446
9,145,421
At 31 December 2021
Note Up to 1month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Gross nominal
inflow/(outflow)
Carrying amount
5,911,598
334,843
2,408
62,078
-
268,589
97,795
2,036
211,953
-
118,299
544
3,128
189,444
47,231
113,528
10,576
61,261
20,027
6,418
442,932
264,864
28,814
-
-
6,473,275
6,472,054
463,785
456,922
757,153
47,231
455,776
369,241
750,469
45,799
6,310,977
580,373
358,646
395,386
553,034
8,198,366
8,093,339
28
29
30
31
32
19
Liabilities
Non-derivative liabilities
Customer's deposits
Other financial Liabilities
On-lending facilities
Borrowings
Debt securities issued
Derivative assets
Gross settled:
Receivable
Payable
Net settled
202,006
169,887
304,628
350,156
(190,367)
(153,433)
(297,946)
(339,275)
870
1,296
777
370
Derivative liabilities
33
Gross settled:
Receivable
Payable
Net settled
99,580
81,216
(460,439)
(412,973)
81,011
(27,726)
13,359
(13,611)
158,159
121,745
(69,492)
(205,906)
-
-
-
-
-
-
1,026,677
(981,021)
3,313
275,166
(914,749)
4,506
52,874
52,874
3,313
10,167
10,167
4,506
Notes
177
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Bank
At 31 December 2022
Note Up to 1month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Gross nominal
inflow/(outflow)
Carrying amount
In millions of naira
Assets
Non-derivative assets
Cash and balances with central banks
Treasury bills
Assets pledged as collateral
Due from other banks
Loans and advances to customers
Investment securities
Other financial assets
Liabilities
Non-derivative liabilities
Customer's deposits
Other financial Liabilities
On-lending facilities
Borrowings
Debt securities issued
15
16
17
18
20
21
25
28
29
30
31
32
407,488
317,767
4,595
1,131,783
956,681
8,653
150,690
-
444,309
85,066
1,380
498,681
10,367
-
-
603,408
35,375
-
475,411
57,518
-
-
1,694,907
1,020,587
-
21,161
302,153
-
569,863
28,407
-
1,671,708
962,816
2,102,395
2,386,071
448,350
1,133,163
4,172,344
1,067,761
2,102,394
2,206,669
254,565
1,132,796
3,735,676
622,780
-
54,467
205,157
176,289
2,977,657
1,039,803
1,171,712
1,640,018
4,686,051
11,515,241
10,231,169
6,921,203
385,106
2,771
35,146
-
314,782
124,060
23,000
166,668
282
18,092
42,783
9,439
29,871
225,342
384,559
251,594
-
-
-
-
7,445,436
7,434,806
16,034
276,278
130,980
-
534,921
350,012
1,027,621
-
526,945
311,192
999,580
-
7,344,226
687,184
569,601
333,597
423,292
9,257,990
9,272,523
At 31 December 2021
Note Up to 1month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Gross nominal
inflow/(outflow)
Carrying amount
Derivative Asset - Hedging
Instrument
19
Gross settled:
Receivable
Payable
Derivative Asset - Non Hedging
Instrument
19
Gross settled:
Receivable
Payable
Net settled
Derivative liabilities
33
Gross settled:
Receivable
Payable
Net settled
178
614
(614)
-
-
95,466
250,838
(95,466)
(250,838)
135,651
(105,620)
13
66,063
(27,258)
13
104,297
(63,881)
48
134,410
(134,410)
252
22,659
43,405
-
27,243
58,114
11
731
39,781
46
-
-
242
-
-
-
-
-
-
-
-
346,918
(346,918)
20,052
(20,052)
440,421
(331,169)
326
50,633
141,300
299
28,799
28,799
326
5,741
5,741
299
At 31 December 2021
Note Up to 1month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Gross nominal
inflow/(outflow)
Carrying amount
In millions of naira
Assets
Non-derivative assets
Cash and balances with central banks
Treasury bills
Assets pledged as collateral
Due from other banks
Loans and advances to customers
Investment securities
Other financial assets
Liabilities
Non-derivative liabilities
Customer's deposits
Other financial Liabilities
On-lending facilities
Borrowings
Debt securities issued
15
16
17
18
20
21
25
28
29
30
31
32
122,465
287,459
6,724
509,885
-
274,343
7,255
4,283
1,199,643
260,927
20,676
103,636
5,681
105
-
454,208
108,864
-
246,931
8,504
-
-
1,275,201
591,367
152,536
3,902
218,826
23,683
-
275,790
-
1,222,092
739,387
1,397,666
1,607,377
551,169
518,070
3,148,419
797,931
1,397,666
1,577,647
357,000
518,053
3,099,452
477,004
-
40,888
144,629
134,794
2,250,488
552,594
818,507
990,314
3,553,358
8,165,261
7,561,616
5,083,367
287,950
2,408
62,078
-
75,982
97,634
2,036
200,950
-
8,111
544
3,128
219,239
47,231
2,786
10,576
6,418
264,864
-
86
5,170,332
5,169,199
12,884
442,932
28,814
-
409,588
456,922
775,945
47,231
409,103
369,241
769,395
45,799
5,435,803
376,602
278,253
284,644
484,716
6,860,018
6,762,737
At 31 December 2021
Note Up to 1month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Gross nominal
inflow/(outflow)
Carrying amount
Derivative Assets
19
Gross settled:
Receivable
Payable
Net settled
Derivative liabilities
33
Gross settled:
Receivable
Payable
Net settled
183,399
105,119
267,385
402,905
(172,082)
(101,564)
(260,841)
(393,450)
870
1,986
777
370
72,203
112,517
(432,890)
(443,252)
832
1,978
60,007
(6,040)
736
-
-
323
-
-
-
-
-
-
958,808
(927,937)
4,003
244,727
(882,182)
3,819
53,473
53,473
4,003
11,350
11,350
3,819
Notes
179
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
The amounts in the tables above and below have been compiled as follows.
Type of financial instrument
Basis on which amounts compiled
Non-derivative financial liabilities and financial assets
Undiscounted cash flows, which include estimated interest payments.
Issued financial guarantee contracts
Derivative financial liabilities and financial assets
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.
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, 2022
Carrying
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
Letters of Credit
Performance bonds and Guarantees
276,481
363,355
384,381
20,056
58,461
71,184
239,026
273,698
99,505
Total
1,024,217
149,701
612,229
17,399
23,577
144,771
185,747
-
7,619
51,272
58,891
-
-
17,650
17,650
At 31 December, 2021
Carrying
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
Letters of Credit
Performance bonds and Guarantees
195,354
554,486
364,632
8,211
55,399
44,099
119,994
451,019
57,286
67,149
47,782
68,951
Total
1,114.,477
107,709
628,299
183,882
-
455
109,700
110,155
-
-
84,427
84,477
180
Bank
At 31 December, 2022
Carrying
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
Letters of Credit
Performance bonds and Guarantees
276,481
279,791
349,741
20,056
33,202
73,320
239,026
235,279
74,684
Total
906,013
126,578
548,989
17,399
11,310
134,513
163,222
-
-
49,574
49,574
-
-
17,650
17,650
At 31 December, 2021
Carrying
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
Letters of Credit
Performance bonds and Guarantees
Total
195,354
398,605
335,833
929,792
8,211
462
41,604
50,277
119,994
359,581
50,746
67,149
38,562
68,916
530,321
174,627
-
169
89,971
90,140
-
-
84,427
84,427
3.5
Fair value of financial assets and liabilities
IFRS 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)
(ii)
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
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.
Notes
181
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
3.5.a Classification of financial assets and liabilities and fair value hierarchy
Group
The table below sets out the Group’s classification of each class of its financial assets and liabilities and fair value heirachy.
At 31 December, 2022
In millions of Naira
Note
Carrying Value
Total Fair value
Level 1
Level 2
Level 3
Assets
Carried at FVTPL:
Treasury bills
Investment securities (Fixed income)
Derivative Asset - Hedging Instrument
Derivative Asset -Non Hedging Instrument
Asset pledged as collateral
Carried at FVOCI:
Equity securities (unquoted)
Debt securities
Carried at amortized cost:
Treasury bills
Assets pledged as collateral
Investment securities
Liabilities
Carried at FVTPL
Derivative liabilities
1,243,039
1,243,039
129,703
1,113,336
16
21
19
19
17
21
32
16
17
21
12,441
20,052
29,822
26,287
93,883
833,549
1,003,501
228,376
794,422
12,441
20,052
29,822
26,287
11,455
-
-
9,997
825
20,052
29,822
16,290
93,883
-
833,549
833,549
-
-
1,002,865
835,073
167,792
-
-
-
-
-
93,883
-
-
-
228,394
762,668
222,646
5,749
465,654
194,226
102,788
33
6,325
6,325
-
6,325
-
The carrying values of the following assets and liabilities are assumed to be their fair values:
•
•
•
•
•
•
•
•
•
•
The carrying values of the following assets and liabilities (which are measured at amortized cost) are assumed to be their
approximate fair values:
Cash and balances with central banks
Due from other banks
Other financial assets
Loans and advances to customers
Customers deposits
Other financial liabilities
On-lending
Borrowings
See additional disclosures on valuation methods in Note 3.5d
182
At 31 December, 2021
In millions of Naira
Note
Carrying Value
Total Fair value
Level 1
Level 2
Level 3
Assets
Carried at FVTPL:
Treasury bills
Investment securities (Fixed income)
Derivative Asset -Non Hedging Instrument
Asset pledged as collateral
Carried at FVOCI:
Equity securities (unquoted)
Debt securities
Carried at amortized cost:
Treasury bills
Assets pledged as collateral
Investment securities
Liabilities
Carried at FVTPL
Derivative liabilities
Carried at Amortised cost
Debt securities issued
Bank
16
21
19
17
21
32
16
17
21
33
32
824,222
22,338
56,187
234,687
85,574
541,629
940,723
157,907
654,185
824,222
270,914
553,308
22,338
56,187
16,548
-
5,790
56,187
234,687
33,340
201,347
85,574
-
541,629
541,629
-
-
935,838
163,406
655,481
599,325
336,513
161,228
2,178
437,731
217,750
14,647
14,647
-
14,647
45,799
46,656
46,656
-
-
-
-
-
85,574
-
-
-
-
-
-
The table below sets out the Bank’s classification of each class of its financial assets and liabilities.
At 31 December, 2022
In millions of Naira
Note
Carrying Value
Total Fair value
Level 1
Level 2
Level 3
Assets
Carried at FVTPL:
Treasury bills
Investment securities (Fixed income)
Derivative Asset - Hedging Instrument
Derivative Asset -Non Hedging Instrument
Asset pledged as collateral
Carried at FVOCI:
Equity securities (unquoted)
Carried at amortized cost:
Treasury bills
Assets pledged as collateral
Investment securities
Liabilities
Carried at FVTPL
Derivative liabilities
16
21
19
19
17
21
16
17
21
1,243,038
1,243,038
129,703
1,113,336
10,560
20,052
28,799
26,189
10,560
20,052
28,799
26,189
10,433
-
-
9,899
127
20,052
28,799
16,290
-
-
-
-
-
93,883
93,883
-
-
93,883
963,630
228,376
518,337
963,669
228,394
501,399
795,877
167,792
222,646
442,388
5,749
59,011
33
6,040
6,040
-
6,040
-
-
-
-
Notes
183
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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 liabilities
On lending
Borrowings
See additional disclosures on valuation methods in Note 3.5
31 December 2021
In millions of Naira
Note
Carrying Value
Total Fair value
Level 1
Level 2
Level 3
823,891
823,891
270,914
552,977
11,897
57,476
11,897
57,476
11,799
98
-
57,476
199,093
199,093
33,340
165,753
-
-
-
-
85,574
753,756
157,908
379,533
85,574
748,633
-
-
85,574
589,834
158,799
163,406
161,228
7,178
377,323
340,274
37,049
15,170
11,076
-
15,170
45,799
46,656
46,656
-
-
-
-
-
-
Assets
Carried at FVTPL:
Treasury bills
Investment securities (Fixed income)
Derivative Asset -Non Hedging Instrument
Asset pledged as collateral
Carried at FVOCI :
Equity securities (Unquoted)
Treasury bills
Assets pledged as collateral
Investment securities
Liabilities
Carried at FVTPL :
Derivative liabilities
Carried at amortized cost:
Debt securities issued
16
21
19
17
21
16
17
21
33
32
184
3.5.b Financial instruments measured at fair value- Reconciliation of level 3.
Group and Bank
In millions of Naira
At 1 January 2021
Transfer due to non-availability of observable data
Gain recognised through other comprehensive income of equity investments
At 31 December, 2021
Reconciliation of Level 3 items
At 1 January 2022
Addition
At 31 December 2022
21
21
3,912
76,063
5,599
85,574
85,574
200
8,109
93,883
In current year, there was no transfer between fair value hierachy( 2021:there was a transfer between fair value heirarchy from level 2
to level 3,due to the absence of observable market data).
3.5.c Level 3 fair value measurements
(i)
Unobservable inputs used in measuring fair value
The table below sets out information about significant unobservable inputs used at 31 December 2022 and 31 December 2021 in
measuring financial instruments categorized as level 3 in the fair value hierarchy.
Type of financial instrument
Fair values at 31 December, 2021 Valuation technique Significant unobservable input
Unquoted equity investment
N93.85 billion
Equity 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 measurements
Although 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.
In millions of Naira
At 31 December 2022
The lowest and highest values if the cost of equity and terminal growth rate decrease or increase by 1%
and 0.25%respectively
Lowest value
Highest value
Actual value
AFC
FMDQ
NIBSS
UPSL
AFREXIM
85,303
2,217
1,521
281
111
93,554
2,622
1,825
306
118
89,359
2,402
1,660
293
114
Notes
185
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
The table below shows the effect of changes in cost of equity and terminal growth rate on other comprehensive income.
In millions of Naira
Effect of 1% decrease in cost of equity and 0.25% increase in terminal growth rate
Effect of 1% increase in cost of equity and 0.25% decrease in terminal growth rate
31 Dec 2022
31 Dec 2021
4,897
(4,394)
1,126
(1,099)
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.
(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
186
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 management
The 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 jurisdictions 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.
b.
c.
Profit from Operations: The Group has consistently reported good profit, which can easily be retained to support the
capital base.
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.
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 period ended 31 December 2022 as well
as the 31 December 2021 comparatives. During those two periods, the individual entities within the Group complied with all
Notes
187
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
of the externally imposed capital requirements to which they are subject.
The Group and Bank’s capital adequacy ratio are above the minimum statutory requirement.
In millions of Naira
Tier 1 capital
Share capital
Share premium
Statutory reserves
SMEIES reserve
Retained earnings
Non-controlling interest
Total qualifying Tier 1 capital
Deferred tax assets
Intangible assets
Investment in capital of financial subsidiaries
Unsecured lending to subsidiaries within the
same group
Group
Bank
31-Dec-22
Basel II
31-Dec-21
Basel II
31-Dec-22
Basel II
31-Dec-21
Basel II
15,698
255,047
311,411
3,729
625,005
813
15,698
255,047
275,993
3,729
607,203
-
15,698
255,047
278,602
3,729
494,429
-
1,211,704
1,157,670
1,047,505
(18,343)
(25,251)
-
-
(1,837)
(25,001)
-
-
-
(23,958)
(17,313)
-
15,698
255,047
243,414
3,729
466,249
-
984,137
-
(23,542)
(17,313)
14,343
Adjusted Total qualifying Tier 1 capital
1,168,110
1,130,832
1,006,234
957,625
Tier 2 capital
Other comprehensive income (OCI)
Total qualifying Tier 2 capital
Investment in capital and financial subsidiaries
Net Tier 2 Capital
Total regulatory capital
Risk-weighted assets
Credit risk
Market risk
Operational risk
Total risk-weighted assets
Risk-weighted Capital Adequacy Ratio (CAR)
3.7 Operational risk
72,923
72,923
-
72,923
99,002
99,002
-
99,002
1,241,033
1,229,834
4,961,579
142,290
1,163,701
6,267,570
20%
4,756,267
154,846
1,042,189
5,953,302
21 %
53,731
53,731
(17,313)
36,418
1,042,652
4,335,844
94,041
1,058,784
5,488,669
19 %
45,622
45,622
(17,313)
28,309
985,934
4,053,986
63,908
914,227
5,032,121
20 %
Operational 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.
The 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.
188
Operational risk objectives include the following:
major operational risk exposures and reinforces more qualitative
efforts to manage operational risk within each of the business lines.
a.
b.
c.
To provide clear and consistent direction in all
operations of the group;
framework and
To provide a standardised
appropriate guidelines for creating and managing
all operational risk exposures; and
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
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 Reporting
Periodic 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 risk
Strategic 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.
3.9
Legal risk
Legal 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.
Notes
189
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
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 risk
Reputational 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:
Board and senior management oversee the proper
set-up and effective functioning of the reputational
risk management framework;
Enterprise Risk Management Policy/Strategy (ERSP)
is responsible for supporting the Board and senior
management in overseeing the implementation of
reputational risk management framework; and
Communications
responsible
Corporate
for managing both the
internal and external
communications that may impact the reputation of
the Bank.
is
The process of reputation risk management within
the Bank encompasses the following steps:
Identification: Recognizing potential reputational risk
as a primary and consequential risk;
Assessment: Conducting qualitative assessment of
reputational risk based on the potential events that
have been identified as reputational risk;
Monitoring: Undertaking frequent monitoring of the
reputational risk drivers;
Mitigation and Control: Establishing preventive
measures and controls
for management of
reputational risk and tracking mitigation actions;
Independent review: Subjecting the reputational
risk measures and mitigation techniques to regular
independent review by internal auditors and/or
external auditors; and
Reporting: Generating
reports for management review.
regular, action-oriented
a.
b.
c.
i.
ii.
iii.
iv.
v.
vi.
190
3.11 Taxation risk
Taxation 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 risk
The 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
judgements
The 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.
4.1
Impairment losses on loans and advances
and impairment of debt securities issued
by the Government of Ghana (GOG)
Measurement 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
ii
Input assumptions applied in estimating probability
of default, loss given default and exposure at default;
Incorporation of forward-looking information;
Detailed information about the judgements and estimatesmade 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 on lans and advances of changes in macroeconomic risk drivers
and how credit losses respond to 10% decrease and increase in macro-variables. This macro economic variables are crude
production, GDP growth rate ,exchange rate, prime lending rate and inflation rate.
31 December 2022
In millions of Naira
Gross exposure
Loss allowance
10% increase
No change
10% decrease
3,838,805
102,921
3,838,805
103,129
3,838,805
117,335
The table below shows the impact on expected credit losses on investment securities of changes in discount rate.
31 December 2022
In millions of Naira
No change
0.5% Increase
1% increase
Gross balance of Investment securities issued by the Government Ghana
Loss allowance
202,448
(58,761)
202,448
(60,939)
202,448
(63,035)
4.2 Determining fair values
The 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)
ii)
iii)
Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
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.
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 Liabilities
The 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.
Notes
191
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
5.
Segment analysis
The 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.
(c)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker.
The board of Directors assess the financial performance and position of the group and makes strategic decisions. The
board of Directors is the chief operating decision maker.
192
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Notes
193
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
31 December 2022
Nigeria Corporate
retail and pensions
sustanian services
Outside Nigeria
Africa
Europe
Total (Outside
Nigeria)
Total
reportable
segments
Eliminations
Consolidation
Expenditure on non•current
assers
71,501
3,259
398
3,657
75,158
-
75,158
Total assets
10,600,730
510,386
1,445,532
1,955,918
12,556,648
(271,019)
12,285,629
Other measures of assets:
Loans and advances to customers
Treasury bills
Investment securities
Total liabilities
Other measures of liabilities
Customer deposits
Borrowings
3,735,839
2,206,935
90,043
39,603
223,953
313,996
4,049,835
(36,130)
-
39,603
2,246,538
648,654
155,125
924,555
1,079,680
1,728,334
4,013,705
2,246,538
1,778,334
-
-
9,378,927
451,703
1,313,009
1,764,712
11,143,639
(236,950)
10,906,689
7,434,806
436,541
1,303,257
1,739,798
9,174,604
(198,951)
8,975,653
999,580
-
-
999,580
999,580
(36,130)
963,450
In millions of Naira
31 December 2021
Nigeria
Corporate retail
and pensions
sustanian services
Outside Nigeria
Africa
Europe
Total reportable
segments
Eliminations
Consolidation
Interest and similar income
Total income on fee and
commission
Other operating income
Trading gains
Total revenue
Revenue:
342,517
120,648
53,528
171,469
688,162
68,955
8,590
1,599
(4,447)
74,697
16,309
3,646
(1,101)
461
19,315
427,781
132,884
54,026
167,483
782,174
(184)
-
(16,432)
-
(16,616)
427,597
132,884
37,594
167,483
765,558
Derived from external
671,541
74,702
19,315
765,558
-
765,558
customers
Derived from other business
16,621
(5)
-
16,616
16,616
-
segments
Total revenue
In millions of Naira
31 December 2021
Interest expense
Impairment loss on financial assets
Depreciation charge
Amortisation charge
Fees and commission expense
688,162
74,697
19,315
782,174
(16,616)
765,558
Nigeria Corporate
retail and pensions
sustanian services
Outside Nigeria
Africa
Europe
Total
reportable
segments
Eliminations
Consolidation
(106,977)
184
(106,793)
(82,723)
(56,167)
(23,316)
(3,195)
(27,975)
(22,152)
(2,033)
(1,701)
(312)
(951)
(2,102)
(1,732)
(288)
(272)
-
(59,932)
(25,305)
(3,779)
(28,926)
Admin and operating expenses
(228,877)
(20,302)
(9,996)
(259,175)
Profit before tax
Tax expense
Profit / (loss)after tax
194
265,909
(26,033
239,876
27,246
18,937)
18,309
4,925
846
4,079
298,080
(35,816)
262,264
-
-
-
-
(1,274)
17,706
-
59,932
(25,305)
(3,779)
(28,926)
(260,449)
280,374
(35,816)
17,706
244,558
In millions of Naira
31 December 2021
Nigeria Corporate
retail and pensions
sustanian services
Outside Nigeria
Africa
Europe
Total
reportable
segments
Eliminations
Consolidation
Expenditure on non-current assets
47,805
3,484
205
51,494
-
51,494
Total assets
Other measures of assets:
Loans and advances to customers
Treasury bills
Investment securities
Total liabilities
Other measures of liabilities
Customer deposits
Borrowings
7,901,589
688,040
1,218,814
9,808,443
(360,600)
9,447,843
3,099,567
1,583,254
498,234
109,003
181,692
180,567
176,954
3,385,524
(29,796)
-
1,764,946
624,924
1,303,725
-
-
3,355,728
1,764,946
1,303,725
6,825,424
564,897
1,103,832
8,494,153
(325,972)
8,168,181
5,169,199
497,665
1,097,451
6,764,315
(292,261)
6,472,054
769,395
10,869
-
780,264
(29,795)
750,469
In millions of Naira
31 December
2022
31 December
2021
31 December
2022
31 December 2021
Group
Bank
6. Interest and similar income
Loans and advances to customers
Placement with banks and discount houses
Treasury bills
Promissory note
Commercial papers
Government and other bonds
370,446
12,270
43,609
1,332
2,766
109,743
292,224
346,320
6,766
40,426
1,344
168
86,669
3,968
32,972
1,330
2,726
60,858
272,942
1,898
19,520
1,341
168
44,519
540,166
427,597
448,174
340,388
Interest and similar income represents interest income on financial assets measured at amortised cost.
Interest income accrued on impaired financial assets amount to N5,228 million and N4,667 million (31 December 2021: N6,505 million
and N6,505million) for Group and Bank respectively.
7. Interest and similar expense
Current Account
Savings accounts
Time deposits
Borrowed funds
Leases
37,926
32,150
52,634
48,747
2,082
14,292
16,653
29,377
43,044
3,427
34,405
31,885
38,269
46,391
2,069
173,539
106,793
153,019
7,148
16,348
14,061
42,276
2,885
82,718
Total 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.
Notes
195
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
8. Impairment charge on financial and non-financial instruments
ECL on financial instruments:
Loans and advances( see note 3.2.18)
Investment securities (see note 3.2.18)
Treasury Bills (see note 3.2.18)
Other financial assets (see note 3.2.18)
Due from other Banks (see note 3.2.18)
Assets pledged as collateral (see note 3.2.18)
Total ECL on financial instruments
Impairment (credit)/charge on non-financial
instruments:
Off balance sheet (see note 3.2.18)
Other non financial assets (see note 25)
38,343
62,742
(400)
19,037
(649)
(180)
-
118,893
998
3,361
123,252
48,873
2,993
(781)
7,781
666
(158)
-
59,374
784
(226)
59,932
38,429
1,918
(356)
19,033
17
(180)
-
58,861
(326)
3,361
61,896
48,357
(90)
(281)
7,789
-
(158)
-
55,617
784
(226)
56,175
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
9. Net income on Fees and commission
Credit related fees
Commission on turnover
Account maintenance fee
Income from financial guarantee contracts issued
Fees on electronic products
Foreign currency transaction fees and commission
Asset based management fees
Auction fees income
Corporate finance fees
Foreign withdrawal charges
Commission on letters of credit
Commissions on agency and collection services
Total fee and Commission income
Fees and commission expense
6,609
1,165
41,557
10,536
45,739
3,389
9,595
622
1,691
15,551
8,541
12,221
157,216
(24,421)
132,795
9,451
1,613
31,390
8,894
37,470
3,298
8,276
517
186
9,129
8,603
14,057
132,884
(28,926)
103,958
1,406
-
40,860
6,829
43,275
3,258
-
622
1,691
15,535
8,303
11,699
133,478
(23,380)
110,098
5,294
-
30,867
6,629
35,443
2,590
-
517
118
9,129
8,322
13,251
112,160
(27,975)
84,185
The 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 N107,982 million and N84,636 million for Group and
Bank (31 December 2021: N91,291 million and N71,092 million) respectively while an amount of N49,235million and N48,840
million (31 December 2021: N41,593 million and N41,068 million) was recognised over the service period.
196
10. Other operating income
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
Dividend income from equity investments (see note a
below)
Gain on disposal of property and equipment (see note
44(vii))
Income on cash handling
Loan recovery (see note c below)
Gain on disposal of equity investment
Foreign currency revaluation gain (See note b below)
2,223
2,563
476
5,030
-
25,202
35,494
2,754
17,148
19,186
78
999
7,975
251
25,537
37,594
2,451
445
4,426
-
25,320
49,790
69
383
7,616
-
26,012
53,266
(a)
(b)
Dividend income from equity investments represent dividend received from subsidiaries of N14,925 million and N2,223
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.
Foreign currency revaluation gain represents net gain on the revaluation of foreign currency-denominated assets and
liabilities. This also includes the effective portion of the gains on the derivatives designated in the fair value hedge of the
foreign currency risk (note 3.3.3.1 and 11).
(c)
This represents amount recovered for previously written-off facilities. The amount is recognised on a cash basis only.
11. Trading gains
(Loss)/gain on other trading books
Gain on treasury bills FVTPL
Loss on bonds FVTPL
Interest income on trading bonds
(1,325)
214,508
(910)
405
212,678
42,438
127,613
(3,232)
664
167,483
(9,238)
210,932
(454)
405
46,368
127,556
(3,119)
664
201,645
171,469
Included in gain/(loss) on other trading books is a mark to market gain on derivatives instruments of N47.9 billion and N42.8 billion for Group
and Bank respectively (31 December 2021: Group 42.6 billion and Bank N42.31 billion).
Hedge ineffectiveness recognized in Trading gain comprises: Fair
value hedging
FV gains on the derivatives designated as hedging instruments
40,632
- (spot component only)
- Losses on the hedged items attributable to the hedged risk
-Fair value hedge ineffectiveness
(39,590)
1,042
-
-
-
40,632
(39,590)
1,042
-
-
-
Notes
197
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
The effective portion of the fair value gains on the derivatives designated in the fair value hedge of the foreign
currency risk has been transferred to other income to net off the recognised losses on the hedged item attributable
to the hedged risk (see note 10(b))
In millions of Naira
12. Operating expenses
Directors' emoluments (see note 37 (b))
Auditors' remuneration
Deposit insurance premium
Professional fees
Training and development
Information Technology
Lease expense
Advertisement
Outsourcing services
Bank charges
Fuel and maintenance
Insurance
Licenses, registrations and subscriptions
Travel and hotel expenses
Printing and stationery
Security and cash handling
Fines & Penalties (see note 42)
Donations
AMCON levy
Telephone,postages and communication
charges
Corporate promotions
Others
Group
Bank
31 December
2022
31 December
2021
31 December
2022
31 December
2021
5,444
1,065
21,747
6,413
2,934
30,971
593
8,787
14,758
11,936
29,648
2,258
4,712
2,987
4,137
4,784
-
1,697
44,010
9,709
8,230
6,152
222,972
1,663
1,060
17,273
5,347
1,588
28,716
985
7,100
14,773
7,725
20,656
2,347
4,142
2,628
2,742
4,766
4
4,450
37,920
7,189
4,698
2,792
5,154
600
21,747
5,738
2,858
27,662
583
8,622
14,571
11,124
25,905
1,991
3,246
2,637
3,133
4,467
-
1,670
44,010
9,323
7,999
1,663
1,362
500
17,273
4,458
1,419
27,540
46
6,919
14,754
6,729
16,804
1,990
3,379
1,417
1,960
4,265
4
4,372
37,920
6,625
4,551
1,570
180,564
204,703
165,857
Lease expense represent the amount of straight line amortisation on short term lease in which the Group/Bank has
applied the recognition exception. For the year ended 31 December 2022 an amount of N593 million and N583
million for Group and Bank (31 December 2021: N985 million and N46 million) respectively
The Bank paid the external auditors’ professional fees for the provision of Non audit services.
The total amount of non-audit services provided by the external auditors during the year was N118 million. These
non-audit services were for the following: assessment of risk management practices (N40 million), assessment of
compliance with whistle blowing guidelines (N10 million) and review of the Bank’s corporate governance (N42
million), ACL training (N6 million), assurance on the bank’s sustainability (N4 million) and professional service relating
to the creation of a customer analytic portal for the bank (N16 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.
198
Included in training and development is a total 596 million which the bank paid as contribution to the industrial
training fund.
In millions of Naira
13. Taxation
(a) Major components of the tax expense
Income tax expense
Corporate tax
Information technology tax
Tertiary Education tax
Police trust fund levy
National agency for science and engineering infrastructure levy
National Fiscal Stabilization Levy & Financial Sector Recovery
Reversal of prior period over provision
Current income tax
Deferred tax expense:
Origination of temporary differences
Income tax expense
Total tax expense
(b) Reconciliation of effective tax rate
In millions of Naira
Profit before income tax
Tax calculated at the weighted average Group rate of 30% (2021: 30%)
Tax effect of adjustments on taxable income
Effect of tax rates in other jurisdictions
Non-deductible expenses
Tax exempt income
Balancing charge
Tax loss utilised
Origination of Temporary differences
Information technology levy
Capital allowance utilised
Tertiary education tax
Reversal of prior period excess provision
National Fiscal Stabilization Levy & Financial Sector Recovery Levy
Police trust fund levy
NASENI
Total tax expense
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
68,156
3,026
6,775
15
735
-
(6,513)
72,194
(11,455)
60,739
60,739
12,223
2,626
2,716
13
643
2,043
-
20,264
15,552
35,816
35,816
51,370
2,940
6,595
15
735
-
(6,513)
55,142
4,315
59,457
59,457
1,905
2,546
2,598
13
643
-
-
7,705
16,329
24,034
24,034
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
284,650
85,395
(889)
35,802
(27,207)
5,610
(146)
(11,455)
3,026
(30,408)
6,775
(6,513)
-
15
735
280,374
84,112
(1,786)
40,208
(80,934)
46
(8,114)
15,552
2,626
(21,298)
2,705
-
2,043
13
643
294,050
88,215
-
17,658
(26,734)
2,640
-
4,315
2,940
(30,408)
6,595
(6,513)
-
15
735
257,167
77,150
-
34,303
(80,274)
46
(8,533)
16,329
2,546
(20,787)
2,598
-
-
13
643
60,739
35,816
59,457
24,034
Notes
199
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
(c) The movement in the current income tax payable balance
is as follows:
At start of the year
Tax paid
Current income tax charge (see note 13a)
At end of the year
14. Earnings per share
16,909
(24,247)
72,194
-
64,856
11,690
(15,045)
20,264
-
14,241
(7,728)
55,142
-
9,117
(2,581)
7,705
-
16,909
61,655
14,241
Basic earnings per share
Basic 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 period.
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
Profit attributable to shareholders of the Bank (N'million)
Number of shares in issue at end of the year (millions)
Weighted average number of ordinary shares in issue (millions)
Basic and diluted earnings per share (Naira)
224,050
31,396
31,396
7.14
244,402
31,396
31,396
7.78
234,593
31,396
31,396
7.47
233,133
31,396
31,396
7.43
Basic and diluted earnings per share are the same, as the Bank has no potentially dilutive ordinary shares.
15. Cash and balances with central banks
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
85,437
366,699
1,668,919
80,689
2,201,744
452,136
1,749,608
2,201,744
84,077
73,389
1,250,208
80,689
66,067
341,420
1,614,217
80,689
55,899
66,566
1,194,512
80,689
1,488,363
2,102,394
1,397,666
157,466
1,330,897
1,488,363
407,488
1,694,906
2,102,394
122,465
1,275,201
1,397,666
Cash
Operating accounts and deposits with Central Banks
Mandatory reserve deposits with central bank (cash reserve)
Special Cash Reserve Requirement
Current
Non current
200
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
16
Treasury bills
Treasury bills (FVTPL)
Treasury bills (Amortized cost)
ECL Allowance on treasury bills (Amortized cost) (see note 3.2.18)
Classified as:
Current
1,243,038
1,003,908
(408)
824,222
941,539
(815)
1,243,038
963,669
(39)
823,891
754,151
(395)
2,246,538
1,764,946
2,206,668
1,577,647
2,246,538
2,246,538
1,764,946
1,764,946
2,206,668
2,206,668
1,577,647
1,577,647
Treasury bills measured at fair value through profit and loss are held for trading.
The 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).
17. Assets pledged as collateral
Bonds pledged as collateral
Treasury bills under repurchase agreement
ECL Allowance on assets pledged and under repo
232,218
315,795
232,218
230,213
232,218
315,795
232,218
230,213
119,145
135,536
(18)
139,458
253,334
(198)
119,047
135,536
(18)
103,864
253,334
(198)
254,663
392,594
254,565
357,000
Included in assets pledged as collateral for group/bank are treasury bills at amortised cost of N109,346 million and bonds at
amortised cost of N119,047 million(31 December 2021:treasury bills N54,241 million and bonds 103,864 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) N3.74billion (31 December 2021: N3.63 billion), Federal Inland Revenue Services
N8.43billion (31 December 2021: N8.18 billion), V-Pay N47 million (31 December 2021: N45.46million), Interswitch Limited
N2,247 billion (31 December 2021: N2.18 billion), the Bank of Industry (Nigeria) N31.88 billion (31 December 2021: N32.89
billion), E- Tranzact N47 million (31 December 2021: N45.22 million), CBN Real Sector Support Fund (RSSF) N21.67 billion (31
December 2021: N22.22 billion),CBN settlement clearing (31 December 2021: N14.78 billion), System Specs/REMITA N2.3
billion (31 December 2021: N2.27 billion) and Financial Market dealers Quotation (FMDQ) N1.81 billion (31 December 2021:
N17.62 billion), pension funds management companies, institutional investors and high net worth customers related to
Zenith Bank Ghana totals N3.86 billion.
Notes
201
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Assets exchanged under repurchase agreement as at 31 December 2022 are with the following counterparties (note 31):
Counterparties
In millions of Naira
ABSA (see note 31)
Standard Bank London (see note 31)
Carrying value
of asset
Carrying value
of liability
Carrying value
of asset
Carrying value
of liability
Group
Bank
31 December
2022
31 December
2021
31 December
2022
31 December
2021
51,492
130,770
182,262
46,340
63,456
109,796
51,492
130,770
182,262
46,340
63,456
109,796
Assets exchanged under repurchase agreement as at 31 December 2021 are with the following counterparties (note 31):
Counterparties
In millions of Naira
ABSA (see note 31)
JP Morgan Chase (see note 31)
First Abu Dhabi Bank (see note 31)
Mashreq Bank (see note 31)
Classified as:
Current
Non-current
Carrying value
of asset
Carrying value
of liability
Carrying value
of asset
Carrying value
of liability
Group
Bank
31 December
2022
31 December
2021
31 December
2022
31 December
2021
113,809
50,477
61,388
27,660
84,922
31,808
42,448
63,739
113,809
50,477
61,388
27,660
84,922
31,808
42,448
63,739
253,334
222,917
253,334
222,917
142,905
111,758
254,663
253,306
139,288
392,594
142,807
111,758
254,565
253,306
103,695
357,001
In millions of Naira
31 December
2022
31 December
2021
31 December
2022
31 December
2021
Group
Bank
18. Due from other banks
Current balances with banks within Nigeria
Current balances with banks outside Nigeria
Placement with banks
ECL allowance
Classified as:
Current
202
-
907,358
395,528
(75)
1,302,811
-
377,238
314,730
(724)
691,244
-
957,902
174,969
(75)
1,132,796
1,302,811
691,244
1,132,796
-
501,450
16,661
(58)
518,053
518,053
Included in balances with banks outside Nigeria is the amount of N45.02billion and N113.9billion for the Group and Bank respectively
(31 December 2021: N23.54 billion and N85.97 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).
In millions of Naira
Due from banks with maturity greater than 3 months and
restricted balances::
Group
Bank
31 December
2022
31 December
2021
31 December
2022
31 December
2021
46,407
29,986
115,315
94,157
19. Derivative assets
Instrument types (fair value):
Forward and Swap Contracts
Futures contracts
Instrument types (Notional amount) :
Forward and Swap Contracts
Futures contract
Total
a) Hedging derivative assets
49,548
326
49,874
960,894
24,624
985,518
52,874
3,313
56,187
867,926
109,503
977,429
48,525
326
48,851
924,485
37,659
962,144
53,473
4,003
57,476
909,300
180,571
1,089,871
he Group estimates the fair value of the hedge derivative instrument transacted with the counterparties (CBN) using the discounted
mark-to-market technique. The Group has designated part of its swap contracts with the CBN as hedging instruments in order to
manage the foreign exchange volatility in its Profit or Loss. See note 3.3.4 for the mark to market value of these hedge asset .
b) Non-hedging derivative assets and liabilities
The 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. See note
3.3.4 for the mark-to-market value of these non-hedged assets.
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.
All derivative assets are current.
Notes
203
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
20. Loans and advances
Overdraft
Term Loans
On Lending Facilities
Gross loans and advances to customers
Less: ECL Allowance (see note 3.2.18)
Net Loans classified as:
Current
Non-current
450,649
2,982,808
690,509
4,123,966
(110,261)
439,459
2,522,278
540,141
3,501,878
(146,150)
427,453
2,720,843
690,509
3,838,805
(103,129)
419,219
2,278,613
540,141
3,237,973
(138,521)
4,013,705
3,355,728
3,735,676
3,099,452
2,133,065
1,880,640
4,013,705
1,456,094
1,899,634
1,958,733
1,776,943
1,376,248
1,723,204
3,355,728
3,735,676
3,099,452
Movement in ECL Allowance as at 31 December 2022 is presented in Note 3.2.18.
In millions of Naira
21. Investment securities
Debt securities
At amortised cost (see note iii)
At FVTOCI
ECL allowance (see note 3.2.18)
Net debt securities measured at amortised cost and FVTOCI
Debt securities (measured at fair value through profit or loss) (see note ii)
Net debt securities
Equity securities
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
852,145
833,849
(63,986)
1,622,008
12,443
657,950
541,629
(3,766)
1,195,813
22,338
1,634,451
1,218,151
520,921
380,199
-
(2,583)
518,338
10,560
528,898
-
(666)
379,533
11,897
391,430
At fair value through other comprehensive income (see note (i) below)
93,883
85,574
93,883
85,574
1,728,334
1,303,725
622,781
477,004
Movement in impairment allowance on investment securities is presented in Note 3.2.18
Classified as:
Current
Non-current
101,339
1,626,995
1,728,334
53,960
77,887
21,476
1,249,765
1,303,725
544,894
455,528
622,781
477,004
(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.
204
ii. The Group and Bank debt securities measured at FVTPL comprise FGN bonds (31 December 2022: N12.44 billion and N10.5
million respectively; 31 December 2021; N22.33 and N11.9 billion respectively).
(iii) The Group’s debt securities measured at amortised cost can be analysed as follows:
In millions of Naira
Sovereign (Federal)
Sub-sovereign (State)
Corporate bonds
Promissory note
Commercial papers
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
660,485
32,996
120,438
18,464
19,762
559,584
383,973
281,833
19,163
52,230
17,096
9,877
31,636
67,798
18,425
19,089
19,163
52,230
17,096
9,877
852,145
657,950
520,921
380,199
22. Investment in subsidiaries
The following table lists the entities which are controlled by the Group, either directly or indirectly through subsidiaries.
Bank
Name of company
Zenith Bank (Ghana) Limited
Zenith Bank (UK) Limited
Zenith Bank (Sierra Leone) Limited
Zenith Bank (Gambia) Limited
Zenith Pensions Custodian Limited
Zenith Nominees
31 December
2022
31 December 2021
31 December
2022
31 December
2021
Ownership interest %
Ownership interest %
Carrying amount
99.42%
100.00%
99.99%
99.96%
99.00%
99.00%
99.42%
100.00%
99.99%
99.96%
99.00%
99.00%
7,066
21,482
2,059
1,038
1,980
1,000
7,066
21,482
2,059
1,038
1,980
1,000
34,625
34,625
Notes
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Notes
209
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Apart 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 associates
The 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 2022 (31 December 2021: Nil).
210
24. Deferred tax balances
(i) Deferred tax asset
In millions of Naira
Unutilised capital allowances
ECL allowance on not-credit impaired financial instruments
Tax loss carry forward
Other assets
Lease liability
Foreign exchange differences
Total deferred tax asset
Set-off of deferred tax asset against deferred tax liabilities
pursuant to set-off provisions (see (ii) below)
Group
Bank
31 December
2022
31 December
2021
31 December
2022
31 December
2021
32
21,149
6
587
2,898
2,701
27,373
(9,030)
15,057
11,017
(8)
1,071
2,325
-
29,462
(27,625)
-
6,132
-
-
2,898
-
9,030
(9,030)
15,100
8,914
-
-
2,325
-
26,339
(26,339)
Net deferred tax asset
18,343
1,837
-
-
(ii) Deferred tax liability
In millions of Naira
Property and equipment
Right of use asset
Foreign exchange differences
Fair value reserves
Total deferred tax liability
Set-off of deferred tax asset against deferred tax liabilities
pursuant to set-off provisions (see (i) above)
Group
Bank
31 December
2022
31 December
2021
31 December
2022
31 December
2021
17,296
3,161
5,227
-
25,684
(9,030)
16,861
4,151
17,795
421
39,228
(27,625)
16,553
3,161
5,227
-
24,941
(9,030)
15,989
4,151
17,795
-
37,935
(26,339)
Net deferred tax liability
16,654
11,603
15,911
11,596
Group
31 December 2022
Movements in temporary differences during the year
1 January 2022
Recognised in profit or loss
31December 2022
Asset
Other assets
Unutilized capital allowances
ECL Allowance on not-credit impaired financial instruments
Tax loss carry forward
Fair value reserve
Lease liability
1,071
15,057
11,017
(8)
-
2,325
29,462
(484)
(15,025)
10,132
14
2,701
573
(2,089)
587
32
21,149
6
2,701
2,898
27,373
Notes
211
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
31 December 2021
Movements in temporary differences during the year
1 January 2022
Recognised in profit or loss
31December 2022
Liabilities
Property and equipment
Right of use asset
Fair value reserve
Foreign exchange differences
Bank
31 December 2022
16,861
4,151
421
17,795
39,228
435
(990)
(421)
(12,568)
(13,544)
17,296
3,161
-
5,227
25,684
Movements in temporary differences during the year
1 January 2022
Recognised in profit or loss
31December 2022
Asset
ECL Allowance on not-credit impaired financial instruments
Unutilized capital allowances
Lease liability
Bank
31 December 2022
8,914
15,100
2,325
26,339
(2,782)
(15,100)
573
(17,309)
6,132
-
2,898
9,030
Movements in temporary differences during the year
1 January 2022
Recognised in profit or loss
31December 2022
Liabilities
Property and equipment
Right of use asset
Foreign exchange differences
15,989
4,151
17,795
37,935
564
(990)
(12,568)
(12,994)
16,553
3,161
5,227
24,941
The group’s deferred tax asset is largely attributable to Zenith bank Ghana, which suffered a loss in the current year. The
deferred tax asset principally arose from ECL allowance on financial instruments. The group has recognized all of its deferred
tax asset as at 31 Dec 2022. The group, therefore, has no unrecognized deferred tax asset. The group will continue to assess
the recoverability of its deferred tax asset and ensure that only amounts considered recoverable are recognized in the books
and presented in the statement of financial position.
25. Other assets
In millions of Naira
Non-financial assets
Prepayments
Other non-financial assets
Gross other non-financial assets
less impairment (see note (i) below)
Net other non-financial assets
Other financial assets
E-card and settlement receivables
Intercompany receivables
Deposit for investment in AGSMEIS
Other receivables*
Deposits for shares
Gross other financial assets
Less: ECL allowance(see note 25(ii))
Net other financial assets
Total other assets (Net)
212
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
9,803
13,615
23,418
(3,361)
20,057
9,626
9,763
19,389
-
19,389
7,363
13,501
20,864
(3,361)
17,503
127,583
101,520
125,569
-
53,747
41,109
-
222,439
(28,973)
193,466
213,523
-
40,888
16,338
-
158,746
(9,925)
148,821
542
53,747
24,579
720
205,157
(28,868)
176,289
7,717
9,815
17,532
-
17,532
88,601
458
40,888
13,962
720
144,629
(9,835)
134,794
168,210
193,792
152,326
Deposit 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: Witholding tax, revenue collection, sundry receivables. These assets are short tenured and are promptly
settled.
*Other receivables comprises of mobile electronic funds receivable from customer.
Classified as:
Current
Non-current
157,545
55,978
213,523
127,322
40,888
168,210
139,324
54,468
193,792
111,438
40,888
152,326
See note 3.2.18 for movement in impairment allowance for other financial assets as at 31 December .
(i) Movement in impairment allowance for non-financial assets
In millions of Naira
At start of the year
Charge for the year (see note 8)
Non financial asset
At end of the year
(ii) Provision matrix
Group
Bank
31 December
2022
31 December
2021
31 December
2022
31 December
2021
-
3,361
-
-
3,361
226
-
(226)
-
-
-
3,361
-
-
3,361
226
-
(226)
-
-
The table below summarises the provision matrix of the Bank as at 31 December 2022. The loss allowance recorded by the
other subsidiaries on their other financial assets is considered insignificant to the Group.
31 December, 2022
0-30 days
31-60 days
61-90 days
91-180 days
Above 180 days
Total
Receivables
Expected loss rate
ECL
124,077
2.35 %
2,918
555
4.71 %
26
145
1,813
24,101
150,691
7.07 %
100.00 %
100.00 %
-
10
1,813
24,101
28,868
31 December, 2021
0-30 days
31-60 days
61-90 days
181-365 days
Above 180 days
Receivables
Expected loss rate
ECL
84,602
3.20 %
2,707
278
6.40 %
18
840
9.60 %
81
1,806
100.00 %
1,806
5,223
100.00 %
5,223
Total
92,749
-
9,835
The receivables exclude the deposit for shares and deposit for AGSMEIS which are not subject to impairment by the simplified
approach.
Notes
213
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B
The total cash outflow of leases as at 31 December 2022 was N3,826 million and 3,255 million respectively (31 December 2021: 4,805million
andN3,957 million respectively)
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
27. Intangible assets
Computer software
Cost
At start of the year
Exchange difference
Reclassification from PPE
Additions
Write off
Disposal
At end of the year
Accumulated amortization
In millions of Naira
At start of the year
Exchange difference
Disposal
Charge for the year
At end of the year
Carrying amount at end of the year
48,353
(324)
-
4,130
-
(2,884)
49,275
35,609
246
68
14,884
(2,454)
-
48,353
41,654
29,747
-
-
3,461
-
-
45,115
-
-
14,361
(2,454)
-
41,654
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
23,352
(123)
(2,884)
3,679
24,024
25,251
19,366
18,112
15,048
207
-
3,779
23,352
25,001
-
-
3,045
21,157
23,958
-
-
3,064
18,112
23,542
All 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
Savingss
Term
Classified as:
Current
4,880,784
2,717,049
1,377,820
3,530,521
2,489,340
452,193
3,844,612
2,673,518
916,676
2,561,736
2,301,379
306,084
8,975,653
6,472,054
7,434,806
5,169,199
8,975,653
6,472,054
7,434,806
5,169,199
Notes
219
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
29. Other liabilities
Other financial liabilities
Customer deposits for letters of credit
Managers’ cheques
Collections accounts
Unclaimed dividend
Lease liability (see note (c) below)
AMCON payable
Electronic card and settlement payables
Customers’ foreign transactions payables
Account payables
Total other financial liabilities
In millions of Naira
Non financial liabilities
Tax collections
Deferred income on financial guarantee contracts
Other payables
Off Balance Sheet exposures impairment allowance
Total other non financial liabilities
Total other liabilities
Classified as:
Current
Non-current
113,680
19,614
111,953
29,764
14,990
1,908
107,619
30,979
115,431
545,938
86,872
18,279
154,728
28,647
24,102
3,817
60,829
8,653
69,849
455,776
113,680
19,244
108,689
29,764
8,916
1,908
106,268
30,975
107,501
526,945
86,872
17,707
154,694
28,647
16,708
3,817
58,000
8,653
34,005
409,103
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
5,765
2,507
7,735
6,614
22,621
568,559
556,023
12,536
568,559
5,339
1,206
19,495
5,616
31,656
5,503
1,926
6,683
5,290
5,003
1,186
6,968
5,616
19,402
18,773
487,432
546,347
427,876
474,070
13,362
487,432
539,225
7,122
413,624
14,252
546,347
427,876
(a) ECL allowance for off balance sheet exposure
In millions of Naira
Bonds and guarantee contracts
Undrawn portion of loan commitments
Letters of credit
1,054
863
4,697
6,614
43
1,215
4,358
5,616
59
863
4,369
5,291
43
1,215
4,358
5,616
220
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
(b) Lease liability
This 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 N21.1 billion and N16.1 billion as at 31 December 2022. (31 December 2021: N28.60 billion and N20.12 billion) for both
Group and Bank respectively.
The undiscounted cash flow payments on the lease liabilities extend over a number of years. This is analysed as follows:
Not more than one year
Over one year but less than five years
More than five years
At end of the year
1,252
8,572
13,141
22,965
4,561
19,531
11,681
35,773
857
2,921
13,114
16,892
4,311
19,226
4,843
28,380
The table below shows the movement in lease liability during the year.
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
As at 1 January
Additions
Reclassification
Lease Termination
Principal repayment
Modification
Interest expense
Interest paid
Foreign exchange difference
At end of the year
24,102
1,491
1,255
(4,011)
(3,493)
675
2,082
(333)
(1,631)
14,990
24,456
499
-
-
(2,802)
353
3,427
(2,003)
172
24,102
16,708
1,363
-
(8,640)
(2,927)
674
2,069
(333)
-
8,914
17,521
259
-
-
(2,007)
-
2,885
(1,950)
-
16,708
Notes
221
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
30. On-lending facilities
(a) This comprises:
Central Bank of Nigeria (CBN) Commercial Agriculture
Credit Scheme Loan (i)
Bank of Industry (BOI) Intervention Loan (ii)
Central Bank of Nigeria (CBN) / Bank of Industry(BOI) -
Power & Aviation intervention Funds (iii)
CBN MSMEDF Deposit (iv)
FGN SBS Intervention Fund (v)
Excess Crude Loan Facilty Deposit (vi)
Real Sector Support Facility (vii)
Non-Oil Export Stimulation Facility (viii)
Paddy Aggregation Scheme (Phase 2) Fund
Creative Industry Financing Initiative (ix)
Maize Aggregation Scheme
Accelerated Agricultural Development Scheme (x)
Classified as:
Current
Non-current
(b) Movement
In millions of Naira
At beginning of the year
Principal addition during the year
Principal repayment during the year
Interest expense during the year
Interest paid during the year
At end of the year
32,893
29,772
2,380
1,349
126,917
74,007
32,336
11,538
-
-
-
-
43,631
32,266
3,893
1,233
136,605
83,030
40,398
19,593
-
229
-
8,363
32,893
29,772
2,380
1,349
126,917
74,007
32,336
11,538
-
-
-
-
43,631
32,266
3,893
1,233
136,605
83,030
40,398
19,593
-
229
-
8,363
311,192
369,241
311,192
369,241
71,023
240,169
311,192
8,363
71,023
8,363
360,878
369,241
240,169
311,192
360,878
369,241
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
369,241
-
(59,470)
6,278
(4,857)
311,192
384,573
14,482
(33,011)
4,881
(1,684)
369,241
369,241
-
(59,470)
6,278
(4,857)
311,192
384,573
14,482
(33,011)
4,881
(1,684)
369,241
(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.
(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
222
(SMEs) and Manufacturing Companies. The total facility is secured by Nigerian Government Securities. 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.
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.
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.
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 onlending 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..
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.
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.
(iii)
(iv)
(v)
(vi)
(vii)
(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
Notes
223
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
annum. Each state is allowed a facility of N1.5billion at 9% per annum and repayments are made via ISPO deductions.
The Central Bank of Nigeria (CBN) further extended the 5% per annum interest rate on all intervention facilities for an additional year
until February 28, 2023. The Bank on-lends to customers at 5% p.a.
31. Borrowings
In millions of Naira
31 December 2022
31 December 2021
31 December 2022
31 December 2021
Group
Bank
Long term borrowing comprise:
Due to BUNGESA
Due to KEXIM (i)
Due to AFREXIM (i)
Due to COMMERZ
Due to ABSA bank (ili)
Due to ICBC (Standard Bank London) (vi)
Due to Mashreq (iv)
Due to IFC (v)
Due to First Abu Dhabi Bank
Due to CAIXA
Due to EMIRATESNB
Due to J P Morgan Chase bank
Due to Standard Chartered Bank UK
Due to banks for clean letters of credit
Due to WILBENTRAD
Due to CITILON
Due to SUMITOMOBN
Due to ADMSTF
Due to ZENUK
51,938
3,859
30,943
49,064
105,677
63,459
124,209
116,909
-
151,200
16,493
-
67,869
52,253
33,790
36,207
46,578
12,979
23
-
2,748
65,936
-
84,922
-
63,739
49,863
42,447
-
-
31,808
10,869
398,137
-
-
-
-
-
51,938
3,859
30,943
49,064
105,677
63,459
124,209
116,909
-
151,200
16,493
-
67,869
74,550
33,790
36,207
46,578
12,979
13,856
-
2,748
65,936
-
84,922
-
63,739
49,863
42,447
-
-
31,808
-
427,932
-
-
-
-
-
The 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 2021: nil). The assets exchanged under repurchase agreements with counterparties are
disclosed in note 17.
963,450
750,469
999,580
769,395
Classified as:
In millions of Naira
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Group
Bank
Current
Non-current
Movement in borrowings
At beginning of the year
Addition during the year
Interest expense
Interest paid
Repayments (principal)
Foreign exchange difference
At end of the year
224
846,540
116,910
963,450
750,469
1,243,614
40,609
(20,917)
(1,135,414)
85,089
963,450
724,548
25,921
750,469
870,080
712,420
34,778
(41,325)
(860,123)
34,639
750,469
882,670
116,910
999,580
769,395
1,279,743
38,254
(20,917)
(1,154,340)
87,445
999,580
743,474
25,921
769,395
874,090
693,944
34,011
(40,788)
(826,805)
34,943
769,395
i.
Due to KEXIM(The Export- Import Bank of Korea)
The amount of N3.86billion (US $8.4million) represents the outstanding balance from two (2) short term loan facilities of US
$4.8m and US $12million, granted by KEXIM in May 2022 and June 2022 respectively. Interest is payable quarterly at 3 months
Term Sofr+1.8% for all running obligations. Final repayments on these facilities are due in May 2023 and June 2023 respectively.
ii.
Due to AFREXIM (African Export-Import Bank)
The outstanding balance of N30.94bllion (US $66.66million) due to AFREXIM represents the amount payable by the Bank from
3year term loan, with a oneyear 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.
iii.
Due to ABSA (Amalgamated Banks of South Africa)
The amount of N105.68billion (US 229 million) represents the amount payable by the Bank on dollar repurchase facilities of
US$50 million each granted by ABSA in June 2022and August 2022 respectively. Interest is payable quarterly and is priced at a
fixed rate of 4.85% & 5.64%per annum respectively. The facility will mature in June 2023 and August 2023.
iv.
Due to Mashreq Bank
The amount of N124.21 billion(US $269 million) represents the amount payable by the Bank on syndicated loan granted to the
bank in April 2022 with Mashreq as the Lead Arranger, Bookrunner and Coordinator. Interest is payable at maturity, and it is
priced at 12months Term Sofr+1.5%per annum and will mature in April 2023.
v.
Due to IFC (International Finance Corporation)
The amount of N116.91 billion (US $250million) represents the amount payable by the bank on a 3-year term loan granted by
IFC in two tranches of $150m & $100m in July 2022 and September 2022 respectively. Interest is payable semiannually at 6
months Term SOFR+2.87% and the facility will mature in September 2025.
vi
Due to ICBC Standard Bank Plc
The amount of N63.46 billion (US $135 million) represents the amount payable by the Bank on a 6 month repurchase facility of
US$ 90 million & US$45 million granted by ICBC in August 2022 & November 22 respectively. Interest is payable at maturity and
both deals are priced at 6month Term Sofr+2.75% per annum and will mature in February 2023 and May 2023 respectively
32. Debt securities issued
in Millions of Naira
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
Group
Bank
Due to Euro bond holders
-
45,799
-
45,799
In May 2022, the group paid down outstanding balance of the second tranche of US $500million eurobond. This eurobond was issued
by Zenith Bank in May 2017 with a maturity date of May 2022
The Group has not had any defaults of principal, interest or other breaches with respect to the debt securities during the period (31
December 2021: Nil).
Notes
225
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Movement in debt securities issued
In Millions of Naira
At start of the year
Revaluation loss for the year
Interest expense
Principal repayment
Interest paid
Foreign exchange
At end of the year
Classified as:
Current
Non-current
33. Derivative liabilities
Instrument types (Fair value):
Forward and Swap Contracts
Futures contracts
Instrument types (Notional Amount):
Forward and Swap Contracts
Futures contracts
Classified as:
Current
see additional disclosures in Note 19.
34. Share capital
Issued and fully paid
Group
Bank
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
45,799
-
1,860
(46,071)
(1,699)
111
-
-
-
6,026
299
6,325
229,332
6,262
235,594
43,177
2,491
3,385
-
(3,254)
-
45,799
45,799
-
10,167
4,507
14,674
226,471
243,110
469,581
45,799
-
1,860
(46,071)
(1,669)
(683)
-
-
5,741
299
6,040
191,737
11,589
203,326
43,177
2,491
3,385
-
(3,254)
-
45,799
45,799
-
11,350
3,820
15,170
257,536
133,919
391,455
6,325
14,674
6,040
15,170
31,396,493,787 ordinary shares of 50k each (December 2021: 31,396,493,787)
15,698
15,698
15,698
15,698
Issued
Ordinary
15,698
15,698
15,698
15,698
There 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.
226
35. Share premium, retained earnings and other reserves
(a)
There was no movement in the Share premium account during the current and prior year.
In Millions of Naira
Share premium
Group
31-Dec-22
255,047
31-Dec-21
255,047
Bank
31-Dec-22
255,047
31-Dec-21
255,047
The 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)
(d)
Retained earnings: Retained earnings represent undistributed profits, net of statutory appropriations attributable to the
ordinary shareholders.
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
N35.19billion (2021: N34.97 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 reserve: 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).
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 )
(g)
(h)
Fair value reserve: Comprises fair value movements on equity and debt instruments that are carried at fair value through
Other Comprehensive Income.
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.
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 31 December 2022, the Bank has made a cumulative credit risk reserve of N93.91 billion, while the cumulative
amount made by the Group is N95.30 billion (31 December 2021: Group N21.85 billion and Bank 20.02 billion).
(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.
Notes
227
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
31-Dec-22
31-Dec-21
Movement in Non-controlling interest
At start of the year
Profit for the year
Foreign currency translation differences
At end of year
36. Pension contribution
1,144
(139)
(192)
813
974
156
14
1,144
In 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 period were N3.89 billion and N2.98 billion respectively (31 December
2021: N4.07 billion and N2.80 billion).
In millions of Naira
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
Group
Bank
37. Personnel expenses
Compensation for the staff are as follows:
Salaries and wages
Other staff costs
Pension contribution
74,102
8,423
3,887
86,412
69,910
5,903
4,072
79,885
58,576
6,916
2,983
68,475
53,466
4,860
2,797
61,123
(a) The average number of persons employed during the year by category:
Executive directors
Management
Non-management
Number
Number
Number
Number
6
449
7,622
8,077
6
420
7,091
7,517
6
399
6,295
6,700
6
368
5,924
6,298
The table below shows the number of employees, whose earnings during the year, fell within the ranges shown below:
N300,001 - N2,000,000
N2,000,001 - N2,800,000
N2,800,001 - N4,000,000
N4,000,001 - N6,000,000
N6,000,001 - - N8,000,000
N8,000,001 - N9,000,000
N9,000,001 - and above
228
Number
Number
Number
Number
257
61
2,601
683
717
58
3,700
8,077
80
1,819
145
1,106
1,164
154
3,049
7,517
-
-
2,487
456
518
13
3,226
6,700
-
1,739
19
985
986
14
2,555
6,298
(b) Directors’ emoluments
The remuneration paid to directors are as follows:
Number
Number
Number
Number
Executive compensation
Fees and sitting allowances
Retirement Benefit costs
1,563
602
3,279
5,444
1,086
568
9
1,663
Fees and other emoluments disclosed above include amounts paid to:
The Chairman
The highest paid director
1,563
312
3,279
5,154
39
285
1,086
267
9
1,362
38
246
The number of directors who received fees and other emoluments (excluding pension contributions and reimbursable
expenses) in the following ranges was:
N5,500,001 and above
15
35
15
13
Number
Number
Number
Number
38. Group subsidiaries and related party transactions
Parent:
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 N6,266 billion (31 December 2021: N5,568 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 N114 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, which are eliminated on consolidation are not separately disclosed
in the consolidated financial statements. The Group’s effective interests and investments in subsidiaries as at are shown below.
Entity
Foreign/banking subsidiaries:
Zenith Bank (Ghana) Limited
Zenith Bank (UK) Limited
Zenith Bank (Sierra Leone) Limited
Zenith Bank (Gambia ) Limited
Zenith Pensions Custodian Limited
Zenith Nominee Limited
Effective holding %
Nominal share capital held
99.42 %
100.00 %
99.99 %
99.96 %
99.00 %
99.00 %
7,066
21,482
2,059
1,038
1,980
1,000
Notes
229
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
31 December, 2022
Transactions and balances with subsidiaries
Receivable from Payable to
Income received from
Expense paid to
In millions of Naira
Zenith Bank (UK) Limited
Zenith Bank (Ghana) Limited
Zenith Bank (Sierra leone) Limited
Zenith Bank (Gambia) Limited
Zenith Pensions Custodian Limited
158,211
24
442
796
-
36,212
9,968
-
-
708
4,643
6,897
-
-
6,000
-
-
-
-
697
The income received includes dividend received from subsidiaries during the year.
31 December 2021
Transactions and balances with subsidiaries
Receivable from Payable to
Income received from
Expense paid to
In millions of Naira
Zenith Bank (UK) Limited
Zenith Bank (Ghana) Limited
Zenith Bank (Sierra leone) Limited
Zenith Bank (Gambia) Limited
Zenith Pensions Custodian Limited
Significant restrictions
284,453
1,451
353
803
4
34,924
116
-
-
708
3,445
8,247
-
-
6,000
-
-
-
-
-
The 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 N1,986 billion and N1,767 billion respectively
(31 December 2021: N1,907 billion and N1,669 billion respectively).
Non controlling interest in subsidiaries
The Group does not have any subsidiary that has material non-controlling interest.
Key management personnel
Key management personnel is defined as the Group’s executive and non-executive directors, including their family members
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.
In millions of Naira
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
Group
Bank
Key management compensation
Short term benefits
Post employment benefits
Fees and sitting allowances
230
1,861
3,279
602
5,742
1,716
47
375
2,138
1,861
3,279
312
5,452
787
13
267
1,067
In millions of Naira
31-Dec-22
31-Dec-21
31-Dec-22
31-Dec-21
Group
Bank
Loans and advances to key management personnel
At start of the year
Granted during the year
Repayment during the year
At end of of the year
Interest earned
2,902
445
(102)
3,245
261
1,797
2,167
(1,062)
2,902
123
1,432
310
(50)
1,692
69
1,476
-
(44)
1,432
65
Loans 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.
Insider related transactions:
These have been disclosed in accordance with CBN circular BSD/1/2004
31 December, 2022
Name of company
Relationship/Name
Loans Deposits
Interest
received
Interest
paid
Directors
Quantum Fund Management
Common significant shareholder/Jim Ovia
Zenith General Insurance Company Ltd
Common directorship/Jim Ovia
Cyberspace Network
Zenith Trustees Ltd
Oviation limited
Sirius Lumina Ltd
Common significant shareholder /Jim Ovia
Common significant shareholder /Jim Ovia
Common directorship /Jim Ovia
Director / Prof. Sam Enwemeka
1,588
-
-
-
-
-
-
3,298
10
1,026
763
7
3,497
1
69
-
-
-
-
-
-
1,588
8,602
69
-
-
-
-
-
-
-
-
Insider related transactions:
These have been disclosed in accordance with CBN circular BSD/1/2004
31 December 2021
Directors
Quantum Fund Management
Common significant shareholder/Jim Ovia
Zenith General Insurance Company Ltd
Common directorship/JimOvia
Cyberspace Network
Zenith Trustees Ltd
Oviation Limited
Sirius Lumina Ltd
Common significant shareholder /Jim Ovia
Common significant shareholder /Jim Ovia
Common directorship /Jim Ovia
Director / Prof. Sam Enwemeka
1,692
2,699
60
15
-
-
-
-
-
-
18
1,136
484
12
2,358
1
-
-
-
-
-
-
-
9
-
-
-
-
1,692
6,880
60
24
Loans granted to related parties are secured over real estate and other assets of the respective borrowers. Loans granted
to related parties are performing.
Notes
231
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
No life time impairment has been recognised in respect of loans granted to related parties (31 December 2021: Nil).
During the year, Zenith Bank Plc. paid N795 million as insurance premium to Zenith General Insurance Limited (31
December 2021: N2.23 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 lease agreement has been exited and a total payment of
1.84bn was made during the year.
The Bank paid N3.33billion (31 December 2021:N3.89 billion) to Cyberspace Network for various Information technology
services rendered during the year.
39. Contingent liabilities and commitments
(a)
Legal proceedings
The Group is presently involved in several litigation suits in the ordinary course of business. The total amount claimed in the
cases against the Group is estimated at N967 billion (31 December 2021: N143.5 billion). The actions are being contested and the
Directors are of the opinion that none of the aforementioned cases is likely to have a material adverse effect on the Group and
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 commitments
At the reporting date, the Group had capital commitments amounting to N630 million (31 December 2021: N1,930 billion) in
respect of authorized and contracted capital projects.
Break down of capital commitments
Property and equipment:
Motor vehicles, Furniture and equipments
Property
Intangible assets:
Information technology
Group
31 December 2022
31 December 2021
191
104
334
629
811
748
371
1,930
(c)
Confirmed credits and other obligations on behalf of customers
In 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:
Performance bonds and guarantees
Usance (see note ii below)
Letters of credit (see note ii below)
Group
Bank
31 December 2022
31 December 2021
31 December 2022
31 December 2021
384,382
276,481
363,355
364,632
195,354
554,486
1,024,218
1,114,472
349,742
276,481
279,791
906,014
335,833
195,354
398,605
929,792
Pension Funds (See Note iii below)
6,265,755
5,568,341
6,265,755
5,568,341
(i) 232
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 2022, performance bonds and guarantees worth
N7.5 billion (31 December 2021: N356 billion) are secured by cash while others are otherwise secured.
(ii)
(iii)
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.
The amount of N6,266 billion (31 December 2021: N5,568 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 N114.4 million (31 December 2021: 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 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 share
In millions of Naira
Dividend proposed
Number of shares in issue and ranking for dividend
Proposed dividend per share (Naira)
Interim dividend per share paid (Naira)
Final dividend per share proposed
Final dividend paid during the year
Interim dividend paid during the year
Total dividend paid during the year
Group
Bank
31 December 2022
31 December 2021
31 December 2022
31 December 2021
100,467
31,396
3.20
0.30
2.90
87,952
9,419
97,371
97,328
31,396
3.10
0.30
2.80
84,808
9,418
94,226
100,467
31,396
3.20
0.30
2.90
87,910
9,419
97,330
97,328
31,396
3.10
0.30
2.80
84,771
9,418
94,189
TThe 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 N2.90 per share (31 December 2021: interim; N0.30, final; N2.80)
from the retained earnings account as at 31 December 2022. 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 2022
and 31 December 2021 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 equivalents
For the purposes of the cash flow statement, cash and cash equivalents include cash and non-restricted balances with central
banks, treasury bills and other eligible bills, operating account balances with other banks, amount due from other banks and
short-term governement securities.
Notes
233
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
Cash and cash balances with central bank (less
mandatory reserve deposits)
Treasury bills ((3 month tenor) (see note 16)
Due from other banks
Group
Bank
31 December 2022
31 December 2021
31 December 2022
31 December 2021
452,136
157,466
407,487
122,465
232,218
1,256,404
1,940,758
315,795
661,258
1,134,519
232,218
1,017,481
1,657,186
230,213
423,896
776,574
42. Compliance with banking regulations
The bank did not pay any fine or penalty during the year.
43. Prudential Adjustments
Provisions 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:
(i)
Where Prudential Provisions is greater than IFRS provisions, the resulting difference should be transferred from the general
reserve account to a nondistributable regulatory credit risk reserve.
(ii) 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 N93,911 billion as at 31
December 2022.
Provision for loan losses per prudential guidelines
In millions of Naira
Loans and advances:
-Lost
- Doubtful
- Substandard
- Watchlist
- Performing
234
Bank
31 December 2022
31 December 2021
74,968
1,901
1,069
96,484
62,850
237,272
16,656
7,814
3,790
99,109
47,936
175,305
In millions of Naira
31 December 2022
31 December 2021
Bank
Impairment assessment under IFRS
Loans and advances
12-months ECL credit
Life-time ECL Not impaired
Life- time ECL credit impaired
(b)
Due from Banks- 12 months ECL (c)
Treasury bills- 12 months ECL (d)
Asset pledged as collateral- 12 months ECL (e)
Investment securities- 12 months ECL (f )
Other financial assets- ECL allowance (g)
Other non-financial assets (h)
Off Balance Sheet Exposures- 12 months ECL (i)
(m)=(b)+(c)+(d)+(e)+(f )+(g)+(h)+(i)
(n)=(a)-(m)
Reversal from)/transfer to retained earnings at year end
25,268
34,341
43,518
103,127
75
39
18
2,583
28,868
3,361
5,290
143,361
93,911
(93,911)
17,708
26,671
94,142
138,521
58
395
198
666
9,835
-
5,616
155,289
20,016
(20,016)
In millions of Naira
Group
Bank
44.
Statement of cash flow reconciliation
(i) Investment securities (see note 17 & 21)
31 December 2022
Investment securities
(including pledged
instruments amortised
cost
Investment securities
including pledged
instruments at FVTPL
and FVOCI
Investment securities
(including pledged
instruments) at
amortised cost
Investment securities
including pledged
instruments at FVTPL
and FVOCI
At 1 January 2022
Change in ECL allowance
Additions to Investment securities
Disposal of Investment securities
Unrealised gain from changes in fair value
recognised in profit or loss
Fair value gain/loss OCI
Interest Income
Interest received
Foreign exchange difference
Balance as at 31 December 2022
Recognised in cash flow statement
757,851
(62,562)
559,128
(403,066)
-
-
113,841
(59,116)
1,113
(907,188)
-
685,135
-
200
-
(1,802)
1,507
-
-
603
(940,273)
(254,630)
483,199
(1,738)
206,085
(65,448)
-
-
64,914
(50,758)
1,113
(637,367)
-
97,471
-
200
-
(1,802)
8,109
-
-
603
(104,443)
138
Notes
235
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
31 December 2021
Investment securities
(including pledged
instruments) at
amortised cost
At 1 January 2021
Change in ECL allowance
Additions to Investment securities
Disposal to Investment Securities
Unrealised gain from changes in fair value
recognised in profit or loss
Fair value gain/loss OCI
Interest income
Interest received
Foreign exchange difference
Balance as at 31 December 2022
Recognised in cash flow statement
649,228
(2,835)
300,852
(230,056)
-
-
88,181
(47,834)
314
(757,850)
-
In millions of Naira
(iia) Treasury bills (Amortised cost) (see note 16 & 17)
31 December 2022
Investment securities
(including pledged
instruments) at
amortized cost and
FVOCI
521,402
-
-
-
(173)
3,372
-
-
524
(685,136)
(160,011)
Investment securities
(including pledged
instruments) at
amortised cost
381,932
248
159,577
(75,928)
-
-
46,029
28,973
314
(483,199)
-
Investment securities
(including pledged
instruments) at
amortized cost and
FVOCI
124,910
-
-
-
(173)
5,599
-
-
524
(97,471)
33,389
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
Treasury bills (including pledged instruments) at amortised cost as at 1 January
(798,022)
(535,673)
(648,637)
(351,511)
Change in ECL allowance
Interest income
Additions
Redemptions
Interest received
Balance as at 31 December 2022
(iib) Treasury bills (FVTPL) (see note 16)
31 December 2022
Treasury bills fair value through profit or loss (Including pledged instruments) as at 1 January
Unrealised fair value gain
Balance as at end of period
Recognised in Cashflow
(iii) Loans and advances (see note 20)
31 December 2022
Loans and advances at 1 January
Changes in ECL allowance
Interest income
Interest received
Foreign exchange difference
Balance as at end of year
Recognised in Cash flow
236
(400)
(781)
356
(281)
(43,609)
(40,426)
(32,972)
(19,520)
(3,060,163)
(2,652,094)
(2,968,565)
(2,346,839)
2,833,003
2,449,816
2,679,567
2,056,995
29,300
31,136
20,942
12,519
989,891
748,022
950,021
648,637
954,462
129,402
770,094
86,644
952,131
129,281
(1,159,965)
(954,462)
(1,159,965)
(76,101)
(97,724)
(78,553)
769,800
86,393
(952,131)
(95,938)
3,355,728
2,779,027
3,099,452
2,639,797
(38,343)
(48,873)
(38,429)
370,446
292,224
346,320
(48,357)
272,942
(342,562)
(270,343)
(298,466)
(241,912)
125,432
67,679
124,357
67,679
(4,013,705)
(3,355,728)
(3,735,676)
(3,099,452)
(543,004)
(536,014)
(502,442)
(409,303)
(iv) Customer deposits
In millions of Naira
As at 1 January
Interest expense
Interest paid
Foreign exchange differences
Balance as at end of year
Recognised in Cash flow
(v) Other liabilities (see note 29)
31 December 2022
As at 1 January
Changes in ECL allowance
Lease modification
Lease liability additions
Interest expense on lease liability
Lease interest paid
Principal repayment on lease liability
Foreign exchange difference
Unclaimed dividend received
Lease terminations
Balance as at end of year
Net cash movement in operating activties
(vi) Profit on disposal of property and equipment
31 December 2022
December 2021
Cost (see note 25)
Accumulated depreciation (see note 25)
Net book value
Sales proceed
Profit on Disposal (see note 10)
(vii) Due from Banks (greater than 90 days)
31 December 2022
As at 1 January
Due to banks below 90 days
Changes in ECL allowance
Interest Income
Interest received
Foreign exchange difference
Balance as at end of Period
Recognised in cash flow statement
Group
Bank
31 Dec 2022
(6,472,054)
(122,710)
116,053
(134,652)
8,975,653
2,362,290
31 Dec 2021
(5,339,911)
(60,322)
58,785
(39,313)
6,472,054
1,091,293
31 Dec 2022
(5,169,199)
(104,559)
101,000
(108,216)
7,434,806
2,153,832
31 Dec 2021
(4,298,258)
(37,556)
36,019
(45,554)
5,169,199
823,850
(487,432)
(703,292)
(427,876)
(599,464)
(998)
(675)
(1,491)
(2,082)
333
4,011
(39,361)
(1,117)
8,640
568,559
48,387
(784)
(353)
(499)
(3,427)
2,003
2,802
(8,330)
(612)
-
(487,432)
(225,060)
326
(675)
(1,363)
(2,069)
333
2,927
(40,993)
(1,117)
8,640
546,347
84,480
(784)
-
(259)
(2,885)
1,950
2,007
(8,159)
(612)
-
(427,876)
(180,330)
31-Dec-21
31-Dec-20
31-Dec-21
31-Dec-20
644
-
(644)
3,207
2,563
(6,395)
6,025
(370)
448
78
(220)
-
(220)
2,671
2,451
(6,196)
5,828
(368)
437
69
31-Dec-21
31-Dec-20
31-Dec-21
31-Dec-20
29,986
-
649
12,270
(12,159)
-
(46,407)
(15,661)
179,244
(666)
-
6,766
(16,297)
-
(29,986)
139,061
94,157
-
(17)
3,967
(3,857)
-
(115,315)
(21,065)
179,244
-
-
1,898
(11,429)
-
(94,157)
75,556
Notes
237
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
In millions of Naira
(viii) Other assets
31 December 2022
As at 1 January
Changes in ECL allowance
Foreign exchange difference
Balance as at end of period
Net cash movement in operating activities
(ix) Net movement in Derivatives
Derivative assets
31 December 2022
At 1 January
Balance as at end of year
Derivative liabilities
31 December 2022
At 1 January
Balance as at end of period
Recognised in cash flow
Net movement in derivatives
Group
Bank
31 Dec 2022
31 Dec 2021
31 Dec 2022
31 Dec 2021
168,210
(22,398)
8,125
(213,523)
(59,586)
169,967
(7,555)
7,160
(168.210)
1,362
152,326
(22,394)
8,125
(193,792)
(55,735)
(56,187)
49,874
(6,313)
(14,674)
6,325
(8,349)
2,036
(44,496)
56,187
11,691
(11,076)
14,674
3,598
8,073
(57,476)
48,851
(8,625)
(15,170)
6,040
(9,130)
505
Group
Bank
159,625
(7,563)
7,160
(152,326)
6,896
(41,729)
57,476
15,747
(11,076)
15,170
4,094
11,653
In millions of Naira
31 December 2022
31 December 2021
31 December 2022
31 December 2021
(x) Restricted balances (Cash Reserve)31
December 2022
Opening Balance
Mandatory reserve deposit with central bank
Special Cash Reserve
Recognised in cash flow
(xi)
Interest paid
31 December 2022
1,330,897
(1,668,919)
80,689
(418,711)
1,411,422
(1,250,208)
80,689
80,525
1,275,201
(1,614,217)
80,689
(419,705)
1,370,619
(1,194,512)
80,689
95,418
In millions of Naira
31 December 2022
31 December 2021
31 December 2022
31 December 2021
Group
Bank
Customer deposit (see note 44(iv) )
Onlending facilities (see note 30b)
Lease liabilities (see 44(v))
Borrowings (see note 31)
Debt securities (see note 32)
238
(116,053)
(4,857)
(333)
(20,917)
(1,699)
(143,859)
(58,785)
(1,684)
(3,254)
(2,003)
(41,325)
(107,051)
(101,000)
(4,857)
(333)
(20,917)
(1,698)
128,805
(36,019)
(1,684)
(3,254)
(1,950)
(40,788)
(83,695)
(xii) Unrealised fair value change
31 December 2022
Investment securities (see note 44(i))
Treasury bills (see note 44(ii))
Derivatives (see note 44(ix))
Hedging effectiveness
(xiiia) Interest received from operating activities
31 December 2022
Due from other banks (see note 41(vii))
Loans and advances (see note 41(iii))
1,802
(129,402)
(2,036)
39,590
(90,046)
173
(86,644)
(8,093)
-
(94,564)
1,802
(129,281)
(505)
39,590
(88,394)
173
(86,393)
(11,653)
-
(97,873)
12,160
342,562
354,722
16,297
270,343
286,640
5,858
298,466
302,324
11,429
241,912
253,341
(xiiib) Interest received from treasury bills and investment securities
3
31 December 2022 1 December, 2021
Treasury bills (see note 41(ii))
Investment securities (see note 41(i))
(xiva) Acquisition of Right of use asset
31 December 2022
Addition to right of use (see note 26)
Lease liability addition (see note 44(v))
31-Dec-21
31-Dec-20
31-Dec-21
31-Dec-20
29,300
59,116
88,416
(3,772)
1,491
(2,281)
31,136
47,834
78,970
(739)
499
(240)
20,942
50,758
71,700
(3,394)
1,363
(2,031)
12,519
28,973
41,492
(409)
259
(150)
(xivb) Additions to property, plant and equipment other than right of use
31 December 2022
Addition to property, plant and equipment (see note 26)
Addition to right of use asset (see note 26)
(71,017)
3,772
(67,245)
(34,848)
739
(34,109)
(67,751)
3,394
(64,357)
(31,993)
409
(31,584)
Notes
239
Zenith Bank Plc Annual Report December 31, 2022
Notes to the Consolidated and Separate Financial
Statements for the Year Ended 31 December 2022
(xv) Additions to investment securities
31 December 2022
In millions of Naira
Investment securities at amortized cost
Investment securities at FVOCI
(xvi) Lease Modification
31 December 2022
Right of use
Lease Liability
(xvii) Uncliamed dividend received
31 December 2022
As at 1 January
Balance as at 31 Dec 2022
(xviii) Lease derecognition
31 December 2022
Right of use- cost
Right of use-Accumulated depreciation
lease liability
45. Comparatives
Group
Bank
31 December 2022
31 December 2021
31 December 2022
31 December 2021
(559,128)
(200)
(559,328)
(300,852)
-
(300,852)
(206,085)
(200)
(206,285)
(159,577)
-
(159,577)
(675)
675
-
(28,647)
29,764
1,117
12,773
(6,160)
(8,640)
(2,028)
-
353
(353)
(28,035)
28,647
612
-
-
-
-
(675)
675
-
(28,647)
29,764
1,117
12,600
(5,985)
(8,640)
(2,025)
-
-
-
(28,035)
28,647
612
-
-
-
-
Certain disclosures and some prior year figures have been re-presented to conform with current period presentation.
46. Events after the reporting period
On 14 February 2023, the Group exchanged N123.6bln (GHS 2,675,754,659 ) of its existing Government of Ghana bonds for a series
of new bonds with maturity dates commencing from 2027 to 2038 under the Ghana Domestic Debt Exchange Programme. The
new bonds were successfully settled on the 21st of February 2023 and have been allotted on the Central Securities Depository.
The effect of the exchange on impairment of the existing bonds at 31 December 2022 was duly recognised in the consolidated
financial statements. See disclosures in Note 4.1
240
...
THË
ÏDËÅL
WÅŸ
TØ
SÅVË
FØR
ŸØÜR
Other National Disclosures04 Zenith Bank Plc Annual Report December 31, 2022
Zenith Bank Plc Annual Report December 31, 2022
Value Added Statement
In millions of Naira
31 December 2022
31 December 2022
31 December 2021
31 December 2021
%
%
Group
Gross income
Interest and fee expense
- Local
- Foreign
Impairment loss on financial and non-financial instruments
Bought-in materials and services
- Local
- Foreign
Value added
Distribution
Employees
956,351
(132,589)
(76,169)
747,593
(123,252)
624,341
(206,841)
(16,131)
401,369
100
765,558
(110,698)
(25,021)
629,839
(59,932)
569,907
(167,921)
(12,643)
389,343
100
Salaries and benefits
86,412
22
79,885
21
Government
Income tax
Retained in the Group
Replacement of property and equipment/ intangible assets
Profit for the year (including statutory reserves, small scale
industry, and non-controling interest)
60,739
30,308
233,910
14
8
56
35,816
29,084
244,558
9
7
63
Total Value Added
401,369
100
389,343
100
Value added represents the additional wealth which the group has been able to create by its own and employees efforts.
242
In millions of Naira
31 December 2022
31 December 2022
31 December 2021
31 December 2021
%
%
Bank
Gross income
Interest and fee expense
- Local
- Foreign
Impairment loss on financial and non-financial instruments
Bought-in materials and services
- Local
- Foreign
Value added
Distribution
Employees
833,087
(136,285)
(40,112)
656,690
(61,896)
594,794
(204,704)
-
390,088
100
677,283
(65,532)
(45,161)
566,589
(56,175)
510,415
(165,857)
-
344,558
100
Salaries and benefits
68,475
18
61,123
18
Government
Income tax
Retained in the Group
Replacement of property and equipment/ intangible assets
Profit for the year (including statutory reserves, small scale
industry, and non-controling interest)
59,457
27,564
234,593
15
7
60
24,034
26,268
233,133
7
8
68
Total Value Added
390,089
100
344,558
100
Other National Disclosures
243
Zenith Bank Plc Annual Report December 31, 2022
Zenith Bank Plc Annual Report December 31, 2022
Five Year Financial Summary
In millions of Naira
Group
Statement of Financial Position
Assets
Cash and balances with central
banks
Treasury bills
Assets pledged as collateral
Due from other banks
Derivative assets
Loans and advances
Investment securities
Investments in associates
Deferred tax asset
Other assets
Property and equipment
Intangible assets
Total assets
Liabilities
Customer deposits
Derivative liabilities
Current tax payable
Deferred tax liabilities
Other liabilities
On-lending facilities
Borrowings
Debt Securities issued
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Other Reserves
31 December
2022
31 December
2021
31 December
2020
31 December
2019
31 December
2018
2,201,744
1,488,363
1,591,768
2,246,538
1 764 946
1.577 875
254,663
1,302,811
49,874
4,013,705
1,728,334
-
18,343
213,523
230,843
25,251
392,594
691,244
56,187
3,355,728
1,303,725
-
1,837
168,210
200,008
25,001
298,530
810,494
44,496
2,779,027
996,916
-
5,786
169,967
190,170
16,243
936,278
991.393
431,728
707,103
92,722
2,305,565
591,097
-
11,885
77,395
185,216
16,497
954,416
1,000,560
592,935
674,274
88,826
1,823,111
565,312
-
9,513
80,948
149,137
16,678
12,285,629
9,447,843
8,481,272
6,346,879
5,955,710
8,975,653
6,472,054
5,339,911
4,262,289
3,690,295
6,325
64,856
16,654
568,559
311,192
963,450
-
10,906,689
1,378,940
15,698
255,047
625,005
482,377
14,674
16,909
11,603
487,432
369,241
750,469
45,799
8,168,181
1,279,662
15,698
255,047
607,203
400,570
11,076
11,690
-
703,292
384,573
870,080
43,177
7,363,799
1,117,473
15,698
255,047
521,293
324,461
14,762
9,711
25
363,764
392,871
322,479
39,092
5,404,993
941,886
15,698
255,047
412,948
257,439
941,132
754
941,886
16,995
9,154
67
231,716
393,295
437,260
361,177
5,139,959
815,751
15,698
255,047
322,237
221,231
814,213
1,538
815,751
Attributable to equity holders of the
parent
Non-controlling interest
1,378,127
1,278,518
1,116,499
813
1,144
974
Total shareholders' equity
1,378,940
1,279,662
1,117,473
* See note 43
244
In millions of Naira
31
December
2022
31
December
2021
31
December
2020
31
December
2019
31
December
2018
Statement of profit or loss and other comprehensive income
Gross earnings
Share of profit / (loss) of associates
Interest expense
Operating and direct expenses
Impairment charge for financial and non-financial assets
Profit before taxation
Taxation
Profit after tax
Foreign currency translation differences
Fair value movements on equity instruments
Fair value movements on debt securities at FVOCI
Related tax
Total comprehensive income
Earning per share:
Basic and diluted (kobo)
945,554
765,558
696,450
667,751
630,344
-
(173,539)
(364,113)
(123,252)
284,650
(60,739)
223,911
(28,768)
8,109
(6,602)
-
196,650
214,667
-
(106,794)
(318,458)
(59,932)
280,372
(35,816)
244,556
8,485
5,599
(2,227)
-
-
(121,131)
(279,974)
(39,534)
255,861
(25,296)
230,565
-
16,295
1,981
(355)
-
(148,532)
(246,393)
(24,032)
243,294
(34,451)
208,843
(8,498)
13,870
518
(66)
-
(144,458)
(235,829)
(18,372)
231,685
(38,261)
193,424
4,828
1,459
-
-
256,413
214,667
248,486
199,711
214,667
199,711
714
778
734
665
615
Other National Disclosures
245
Zenith Bank Plc Annual Report December 31, 2022
Zenith Bank Plc Annual Report December 31, 2022
Five Year Financial Summary
In millions of Naira
Bank
Statement of Financial Position
Assets
31
December
2022
31
December
2021
31
December
2020
31
December
2019
31
December
2018
Cash and balances with central banks
2,102,394
1397,666
1,503,245
879,449
902,073
Treasury bills
Assets pledged as collateral
Due From Other Banks
Derivatives
Loans and advances
Investment securities
Investment in subsidiaries
Investment in associates
Deferred tax
Other assets
Property and equipment
Intangible assets
Total assets
Liabilities
Customer deposits
Derivative liabilities
Current tax payable
Deferred income tax liabilities
Other liabilities
On Lending Facilities
Borrowings
Debt Securities issued
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Other reserves
2,206,668
1,577,647
1,393,421
822,449
817,043
254,565
1,132,796
48,851
357,000
518,053
57,476
298,530
532,377
41,729
431,728
482,070
92,722
592,935
393,466
88,826
3,735,676
3,099,452
2,639,797
2,239,472
1,736,066
622,781
34,625
477,004
34,625
-
-
193,792
214,572
23,958
-
-
152,326
177,501
23,542
333,126
34,625
-
4,733
159,625
169,080
14,699
189,358
34,625
-
11,223
71,412
165,456
15,109
156,673
34,003
-
9,197
75,910
133,854
15,399
10,570,678
7,872,292
7,124,987
5,435,073
4,955,445
7,434,806
5,169,199
4,298,258
3,486,887
2,821,066
6,040
61,655
15 911
546,347
311,192
999,580
-
15,170
14,241
11.596
427,876
369,241
769,395
45,799
11,076
9,117
-
599,464
384,573
874,090
43,177
14,762
6,627
-
386,061
392,871
329,778
39,092
16,995
5,954
-
223,463
393,295
458,463
361,177
9,375,531
1,195,147
6,822,517
1,049,775
6,219,755
905,232
4,656,078
778,995
4,280,413
675,032
61,655
15 911
15,698
255,047
494,429
429,973
15,698
255,047
466,250
312,781
15,698
255,047
382,292
252,195
905,232
15,698
255,047
302,028
206,222
778,995
15,698
255,047
238,635
165,652
675,032
Attributable to equity holders of the parent
1,195,147
1,049,776
Total shareholders' equity
1,195,147
1,049,776
905,232
778,995
675,032
246
In millions of Naira
31
December
2022
31
December
2021
31
December
2020
31
December
2019
31
December
2018
Statement of profit or loss and other comprehensive income
Gross earnings
Interest expense
Other operating expenses
Impairment charge for financial assets
Profit before tax
Income tax
Profit after tax
Other comprehensive income
Fair value movements on equity instruments
833,087
(153,019)
(324,122)
(61,896)
294,050
(59,457)
234,593
-
8,109
8,109
677,283
(82,718)
(281,223)
(56,175)
257,167
(24,034)
233,133
-
5,599
5,599
595,921
(102,111)
(246,566)
(37,237)
210,007
(12,155)
197,852
-
16,295
16,295
564,687
(126,237)
(215,037)
(23,393)
200,020
(19,688)
180,332
-
13,870
13,870
538,004
(124,156)
(206,428)
(15,313)
192,107
(26,627)
165,480
-
1,459
1,459
Total comprehensive income
242,702
238,732
214,147
194,202
166,939
Earning per share:
Basic and diluted (kobo)
747
743
630
567
527
Other National Disclosures
247
Zenith Bank Plc Annual Report December 31, 2022
Zenith Bank Plc Annual Report December 31, 2022
Share Capital History
Financial year
Nominal value of shares
Number of shares
Nominal value per share
(N)
(units)
(N)
3 0 - J u n - 9 1
3 0 - J u n - 9 2
3 0 - J u n - 9 3
3 0 - J u n - 9 4
3 0 - J u n - 9 5
3 0 - J u n - 9 6
3 0 - J u n - 9 7
3 0 - J u n - 9 8
3 0 - J u n - 9 9
3 0 - J u n - 0 0
3 0 - J u n - 0 1
3 0 - J u n - 0 2
3 0 - J u n - 0 3
3 0 - J u n - 0 4
3 0 - J u n - 0 5
3 0 - J u n - 0 6
3 0 - J u n - 0 7
3 0 - S e p - 0 8
3 1 - D e c - 0 9
2 4 , 8 3 9 , 0 0 0 . 0 0
5 4 , 4 0 7 , 0 0 0 . 0 0
5 7 , 8 9 7 , 3 5 2 . 0 0
9 0 , 0 6 2 , 0 0 0 . 0 0
24,839,000.00
54,407,000.00
57,897,352.00
90,062,000.00
1 7 8 , 7 4 4 , 0 0 0 . 0 0
178,744,000.00
2 4 2 , 8 3 0 , 0 0 0 . 0 0
242,830,000.00
2 4 4 , 0 5 4 , 0 0 0 . 0 0
244,054,000.00
5 1 2 , 5 1 3 , 0 0 0 . 0 0
512,513,000.00
5 1 2 , 5 1 3 , 0 0 0 . 0 0
512,513,000.00
5 1 3 , 3 2 9 , 0 0 0 . 0 0
513,329,000.00
1 , 0 2 6 , 6 5 8 , 0 0 0 . 0 0
1,026,658,000.00
1 , 0 2 6 , 6 5 8 , 0 0 0 . 0 0
1,026,658,000.00
1 , 5 4 8 , 5 5 5 , 0 0 0 . 0 0
1,548,555,000.00
1 , 5 4 8 , 5 5 5 , 0 0 0 . 0 0
3,097,110,000.00
3 , 0 0 0 , 0 0 0 , 0 0 0 . 0 0
6,000,000,000.00
4 , 5 8 6 , 7 4 4 , 4 5 0 . 0 0
9,173,488,900.00
4 , 6 3 2 , 7 6 2 , 1 5 0 . 0 0
9,265,524,300.00
8 , 3 7 2 , 3 9 8 , 3 4 3 . 0 0
16,744,796,686.00
1 2 , 5 5 8 , 5 9 7 , 5 1 4 . 5 0
25,117,195,029.00
3 1 - D e c - 1 0
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 1
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 2
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 3
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 4
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 5
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 6
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 7
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 8
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
3 1 - D e c - 1 9
3 1 - D e c - 2 0
3 1 - D e c - 2 1
3 1 - D e c - 2 2
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
1 5 , 6 9 8 , 2 4 6 , 8 9 3 . 0 0
31,396,493,786.00
248
1
1
1
1
1
1
1
1
1
1
1
1
1
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
0 . 5
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0 . 5
0 . 5
nd
PROXY
FORM
FOR
THE
32
ANNUAL
GENERAL
MEETING
OF
ZENITH
BANK
PLC
TO
BE
HELD
VIRTUALLY
VIA
WWW.ZENITHBANK.COM/32AGM
ON
TUESDAY,
MAY
2,
2023
AT
9.00
A.
M.
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
via
www.zenithbank.com/32AGM
on
Tuesday,
May
2,
2023
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.
To
present
and
consider
the
Bank's
Audited
Accounts
for
the
financial
year
ended
31
December,
2022,
the
Reports
of
the
Directors,
Auditors
and
Audit
Committee
thereon.
st
2.
To
declare
a
final
dividend.
3.
To
approve
the
appointment
of
the
following
Directors꞉
(a.)
(b.)
(c.)
(d.)
Dr.
Peter
Olatunde
Bamkole
as
Independent
Non‑Executive
Director
Mr.
Chuks
Emma
Okoh
as
Non‑Executive
Director
Mrs.
Adobi
Stella
Nwapa
as
Executive
Director
Mr.
Anthony
Akindele
Ogunranti
as
Executive
Director
4.
To
re‑elect
the
following
Directors
who
retire
by
rotation
at
this
meeting
(I)
(ii)
(iii)
Dr.
Omobola
Ibidapo‑Obe
Ogunfowora
Mr.
Gabriel
Ukpeh
Dr.
Temitope
Fasoranti
5.
To
authorize
the
Directors
to
fix
the
remuneration
of
the
Auditors.
6.
To
disclose
the
remuneration
of
Managers
of
the
bank.
7.
To
elect
members
of
the
Audit
Committee.
8.
9.
That
Dr.
Al‑Mujtaba
Abubakar,
Independent
Non‑Executive
Director
of
the
bank.
MON
,
who
has
attained
the
age
of
70
years
since
the
last
general
meeting
be
re‑elected
as
an
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,
2023
be
and
is
hereby
fixed
at
N30
million
only”
for
each
Director.
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
31st
Day
of
March,
2023
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.
The
meeting
would
also
be
accessible
to
all
members
virtually
on
the
bank's
website
and
our
social
media
platforms.
A
member
who
is
unable
to
attend
the
Annual
General
Meeting
is
allowed
to
vote
by
Proxy.
ENVIRONMENTAL
00
00
0000
SOCIAL
GOVERNANCE