ZENITH BANK PLC
Annual Report - 31 December 2024
ZENITH BANK PLC
DIRECTORS, OFFICERS AND PROFESSIONAL ADVISERS
DIRECTORS
Jim Ovia, CFR
Chairman
Mr. Chuks Emma Okoh
Non-Executive Director
Engr. Mustafa Bello
Non-Executive Director
Dr. Juliet Ehimuan
Non-Executive Director
Mr. Gabriel Ukpeh****
Non-Executive Director/Independent
Dr. Omobola Ibidapo-Obe Ogunfowora
Non-Executive Director/Independent
Dr. Peter Olatunde Bamkole
Non-Executive Director/Independent
Dr. Al-Mujtaba Abubakar, MFR
Non-Executive Director/Independent
Ms. Pamela Yough**
Non-Executive Director
Dr. Ebenezer Onyeagwu*****
Former Group Managing Director/CEO
Dr. Adaora Umeoji, OON*
Group Managing Director/CEO
Mr. Henry Oroh
Executive Director
Mrs. Adobi Nwapa
Executive Director
Mr. Akindele Ogunranti
Executive Director
Mr. Lawani Adamu***
Executive Director
Mr. Louis Odom***
Executive Director
*Dr. Adaora Umeoji, OON was appointed as the Group Managing Director/CEO effective 1 June 2024 following the retirement of Dr. Ebenezer Onyeagwu
from the Board effective 31 May 2024.
**Ms. Pamela Mimi Yough was appointed to the Board effective 30 April, 2024.
***Mr. Lawani Adamu & Mr. Louis Odom were appointed to the Board effective 24 April, 2024.
**** Mr. Gabriel Ukpeh retired from the Board effective 8 March, 2024.
*****Dr. Ebenezer Onyeagwu retired from the Board effective 31 May 2024.
COMPANY SECRETARY
Michael Osilama Otu Esq.
REGISTERED OFFICE
Zenith Bank Plc
Zenith Heights
Plot 84/87, Ajose Adeogun Street
Victoria Island, Lagos.
AUDITOR
PricewaterhouseCoopers (PwC) Chartered Accountants
Landmark Towers, 5B Water Corporation Road
Victoria Island
Lagos.
REGISTRAR AND TRANSFER OFFICE
Veritas Registrars Limited (formerly Zenith Registrars Limited)
Plot 89 A, Ajose Adeogun Street
Victoria Island
Lagos.
1
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Index
Note
Page
Note
Page
Directors, Officers and Professional Advisers
1
6 Interest and similar income
146
Directors' Report
3
7 Interest and similar expense
146
Statement of Corporate Responsibility in Relation to the Financial
Statements
9
8 Impairment charge on financial and non-financial
instruments
146
Corporate Governance Report
10
9 Net income on fee and commission
147
Statement of Directors' Responsibilities in Relation to the Financial
Statements
25
10 Trading gains
147
Report of the Audit Committee
26
11 Other operating income
148
Management's Annual Assessment of, and Report on, Zenith Bank
Plc's Internal Control over Financial Reporting
27
11 Other operating income
148
Chief Finance Officer's Certification of management’s assessment on
internal control over financial reporting
27
11 Other operating income
148
Chief Executive Officer's Certification of management’s assessment
on internal control over financial reporting
27
11 Other operating income
148
Independent Practitioner’s Report
27
11 Other operating income
148
Independent Auditor's Report
27
12 Operating expenses
149
Consolidated and Separate Statements of Profit or Loss and Other
Comprehensive Income for the Year Ended 31 December 2024
34
13 Taxation
150
Consolidated and Separate Statements of Financial Position as at 31
December 2024
35
14 Earnings per share (EPS)
151
Consolidated and Separate Statements of Changes in Equity for the
Year Ended 31 December 2024
36
15 Cash and balances with central banks
152
Consolidated and Separate Statements of Cash Flows for the Year
Ended 31 December 2024
38
16 Treasury bills
152
Notes to the Consolidated and Separate Financial Statements
40
17 Assets pledged as collateral
152
18 Due From Other Banks
153
1 General information
40
19 Derivative assets
153
2.0a Changes in accounting policies
40
20 Loans and advances
154
2.0b Material accounting policies
42
21 Investment Securities
154
2.1 Basis of preparation
42
22a Investment in subsidiaries
155
2.2 Basis of Consolidation
42
22b Condensed results of consolidated entities
156
2.3 Translation of foreign currencies
43
23 Investments in associates
160
2.4 Cash and cash equivalents
44
24 Deferred tax balances
161
2.5 Financial instruments
44
25 Other assets
162
2.6 Derivative instruments
48
26 Property and equipment
164
2.7 Impairment
49
27 Intangible assets
171
2.8 Reclassification of financial instruments
51
28 Customers' deposits
172
2.9 Restructuring of financial instruments
51
29 Other liabilities
172
2.10 Collateral
51
30 On lending facilities
173
2.11 Property and equipment
52
31 Borrowings
176
2.12 Intangible assets
52
Debt Securities issued
178
2.13 Impairment of non-financial assets
53
32 Derivative liabilities
178
2.14 Leases
53
33 Share capital
178
2.15 Provisions
54
34 Share premium, retained earnings and other reserves
179
2.16 Employee benefits
54
35 Pension contribution
180
2.17 Share capital and reserves
55
36 Personnel expenses
181
2.18 Recognition of interest income and expense
56
37 Group subsidiaries and related party transactions
181
2.19 Fees, commission and other income
57
38 Contingent liabilities and commitments
184
2.20 Net trading gains
57
39 Dividend paid
185
2.21 Operating expenses
57
40 Cash and cash equivalents
185
2.22 Current and deferred income tax
57
41 Compliance with Banking Regulations
185
2.23 Earnings per share
58
42 Prudential Adjustments
186
2.24 Segment reporting
59
43 Statement of cash flow workings
187
2.25 Fiduciary activities
59
44 Comparatives
191
2.26 Deposit for investment in AGSMEIS
59
45 Events after the reporting period
191
2.27 Hyperinflationary accounting
59
45 Events after the reporting period
191
3 Risk management
60
Other National Disclosures
192
4 Critical accounting estimate and judgements
139
Value Added Statement
193
5 Segment Analysis
141
Five Year Financial Summary
195
2
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Directors' Report
for the Year Ended 31 December 2024
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 2024.
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 Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited, Zenith Bank (The
Gambia) Limited, Zenith Pensions Custodian Limited and Zenith Nominees Limited. During the year, the Bank opened 7 new branches.
As at 31 December 2024 the Group had 454 branches, 167 cash centers; 2,134 ATM terminals; 475,524 POS terminals and 27,941,582 cards issued to its
customers. (31 December 2023: 447 branches, 166 cash centers, 2,102 ATM terminals, 414,192 POS terminals and 25,653,330 cards issued).
3.
Operating results
Gross earnings of the Group increased by 86% and profit before tax increased by 67% . Highlights of the Group’s operating results for the year under review
are as follows:
31 December 2024
N' Million
31 December 2023
N' Million
Gross earnings
3,970,959
2,131,750
Profit before tax
1,326,851
795,962
Income tax expense
(293,956)
(119,053)
Profit after tax
1,032,895
676,909
Non- controlling interest
(184)
(340)
Profit attributable to the equity holders of the parent
1,032,711
676,569
Appropriations
Transfer to statutory reserve
140,424
97,693
Transfer to credit risk reserve
10,200
(1,322)
Transfer to retained earnings
882,087
580,198
1,032,711
676,569
Basic and diluted earnings per share (Naira)
32.87
21.55
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 N4.00 per share which in addition to the N1.00 per share as interim dividend amounts to N5.00 per share (2023: Interim
dividend of N0.50 per share, final dividend of N3.50 and a total dividend per share of N4.00) from the retained earnings accounts as at 31 December 2024.
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.
3
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Directors' Report
for the Year Ended 31 December 2024
5.
Capital raise exercise
In compliance with the Central Bank of Nigeria’s (CBN) directive on minimum capital requirements, Zenith Bank Plc conducted a capital raise exercise through
a combination of rights and public offers, generating N343 billion.
The total number of additional shares raised by the bank through the capital raise exercise is 9,673,336,214. This brings the total number of issued shares of
the bank from a previous 31,396,493,787 units to a current 41,069,830,001 units.
As of December 31, 2024, the CBN has verified these shares, and the Securities and Exchange Commission (SEC) has approved their inclusion in the financial
statements, pending approval for final allotment. This successful capital raise enhances the bank’s financial stability and supports our strategic growth
objectives.
6.
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 2024
31 December 2023
Director
Designation
Direct
Indirect
Direct
Indirect
Jim Ovia, CFR.
Chairman / Non-Executive Director
3,552,949,395
1,529,851,344
3,552,949,395
1,529,851,344
Mr. Chuks Emma Okoh
Non-Executive Director
371,124
-
203,412
-
Mr.Gabriel Ukpeh****
Non Executive Director
32,660
-
32,660
-
Dr Juliet Ehimuan
Non-Executive Director
128,906
-
128,906
-
Engr. Mustafa Bello
Non Executive Director/Independent
-
-
-
-
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
-
-
-
-
Ms. Pamela Mimi Yough**
Non-Executive Director
22,878
-
-
-
Dr. Ebenezer Onyeagwu*****
Former Group Managing Director
90,176,078
-
90,176,078
-
Dr. Adaora Umeoji,OON.*
Group Managing Director
90,192,856
1,710,123
90,000,000
1,710,123
Mr. Henry Oroh
Executive Director
14,813,703
-
14,813,703
-
Mrs. Adobi Nwapa
Executive Director
15,008,206
-
15,008,206
-
Mr. Akindele Ogunranti
Executive Director
6,885,601
-
6,885,601
-
Mr. Lawani Adamu***
Executive Director
3,133,245
-
3,133,245
-
Mr. Louis Odom***
Executive Director
2,424,557
-
2,424,557
-
-
-
-
-
-
-
-
-
-
*Dr. Adaora Umeoji,OON was appointed as the Group Managing Director/CEO on 1 June 2024 following the retirement of Dr. Ebenezer Onyeagwu from the
Board.
** Ms. Pamela Mimi Yough was appointed to the Board on 30 April, 2024.
***Mr. Adamu Lawani and Mr. Louis Odom were appointed to the Board on 24 April, 2024.
****Mr. Gabriel Ukpeh retired from the Board effective 8 March, 2024.
*****Dr. Ebenezer Onyeagwu retired from the Board effective 31 May 2024.
The indirect holdings relate to the holdings of the director in the underlisted companies:
Jim Ovia: (Institutional investors Ltd, Lurot Burca Ltd, Jovis Nigeria Ltd, Veritas Registars Ltd, and Quantum Zenith Securities Ltd).
Adaora Umeoji: (Palais Vendome Limited).
4 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Directors' Report
for the Year Ended 31 December 2024
7.
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
Timing
Basic Salary
- Part of gross salary package for Executive Directors only.
Reflects the banking industry's competitive salary package
and the extent to which the Bank’s objectives have been met
for the financial year.
Paid monthly during the financial year.
Other allowances
- Part of gross salary package for Executive Directors only.
Reflects the banking industry's competitive salary package
and the extent to which the Bank’s objectives have been met
for the financial year.
Paid at periodic intervals during the
financial year.
Productivity bonus
-Paid to Executive directors only and tied to performance of the
line report. It is also a function of the extent to which the Bank's
objectives have been met for the financial year.
Paid annually in arears.
Director fees
- Paid annually on the day of the Annual General Meeting
(‘AGM’) to Non-Executive Directors only.
Paid annually on the day of the AGM.
Sitting
allowances
- Allowances paid to Non-Executive Directors only, for
attending Board and Board Committee Meetings.
Paid after each Meeting.
8.
Changes on the Board
Dr. Adaora Umeoji, OON was appointed as the Group Managing Director effective 1 June 2024.
Ebenezer Onyeagwu retired from the Board effective 31 May 2024.
Mr. Gabriel Ukpeh retired from the Board effective 8 March 2024.
Ms. Pamela Yough was appointed to the Board effective 30 April 2024.
Mr. Adamu Lawani and Mr. Louis Odom were appointed to the Board effective 24 April 2024.
9.
Directors' interests in contracts
For the purpose of section 303(1) and (3) of Companies and Allied Matters Act of Nigeria, (CAMA 2020), information relating to related parties transactions
are contained in Note 37 to the financial statements.
10.
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.
11.
Property and equipment
Information relating to changes in property and equipment is given in Note 26 to the financial statments. 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.
12.
Shareholding analysis
The shareholding pattern of the Bank as at 31 December 2024 is as stated below:
Share range
No. of
Shareholders
Percentage of
Shareholders
Number of
holdings
Percentage
Holdings (%)
1-10,000
549,184
%
84.0955
1,596,169,135
%
5.08
10,001 - 50,000
79,586
%
12.1869
1,644,208,132
%
5.24
50,001 - 1,000,000
22,675
%
3.4722
3,850,300,830
%
12.26
1,000,001 - 5,000,000
1,233
%
0.1888
2,509,553,999
%
7.99
5,000,001 - 10,000,000
152
%
0.0233
1,064,997,545
%
3.39
10,000,001 - 50,000,000
157
%
0.0240
3,224,352,248
%
10.27
50,000,001 - 1,000,000,000
58
%
0.0089
11,535,196,576
%
36.74
Above 1,000,000,000
3
%
0.0005
5,971,715,322
%
19.02
653,048
%
100
31,396,493,787
%
100
5
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Directors' Report
for the Year Ended 31 December 2024
The bank issued additional 9,673,336,214 shares through a combination of right issue and public offer. This has moved the total number of shares to
41,069,830,001. Approval for the allotment of the newly issued share was outstanding as at 31st December 2024. The allotment of the newly issued shares
were approved by the securities & exchange commission on 23 January, 2025.
The shareholding pattern of the Bank as at 31 December 2023 is as stated below
Share range
No. of
Shareholders
Percentage of
Shareholders
Number of
holdings
Percentage
Holdings (%)
1-10,000
542,071
%
83.9600
1,591,364,537
%
5.07
10,001 - 50,000
79,281
%
12.2800
1,637,601,326
%
5.22
50,001 - 1,000,000
22,650
%
3.5100
3,854,576,850
%
12.28
1,000,001 - 5,000,000
1,265
%
0.2000
2,612,484,842
%
8.32
5,000,001 - 10,000,000
151
%
0.0200
1,087,361,826
%
3.46
10,000,001 - 50,000,000
151
%
0.0200
3,085,943,442
%
9.83
50,000,001 - 1,000,000,000
65
%
0.0100
11,633,370,085
%
37.05
Above 1,000,000,000
3
%
-
5,893,790,879
%
18.77
645,637
%
100
31,396,493,787
%
100
13.
Substantial interest in shares
According to the register of members as at 31 December 2024, the following shareholders held more than 5% of the share capital of the Bank.
Number of Shares
Held
Number of Shares
Held
Jim Ovia, CFR
3,552,949,395
%
11.32
According to the register of members as at 31 December 2023, the following shareholders held more that 5% of the issued share capital of the Bank.
Number of Shares
Held
Number of Shares
Held
Jim Ovia, CFR
3,552,949,395
%
11.32
14.
Donation and charitable gifts
The Bank made contributions to charitable and non-political organisations amounting to N4,750 million during the year ended 31 December 2024 (31
December 2023: N5,673 million).
The beneficiaries are as follows:
31 December 2024
N' Million
State government infrastructure/security trust funds
2,548
Conferences and seminars
951
Sport organisations
276
Educational institutions
259
Charitable organisations
164
Various Professional Associations
83
Religious organisation
58
Health/medical initiatives
53
Other donations individually below N5million
358
4,750
6
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Directors' Report
for the Year Ended 31 December 2024
15.
Events after the reporting period
On January 23, 2025, the bank received approval for the allotment of its newly issued shares. The total number of additional shares raised by the bank
through the capital raise exercise is 9,673,336,214. This brings the total number of issued shares of the bank from a previous 31,396,493,787 units to a
current 41,069,830,001 units.
See below analysis of the newly allotted shares:
Share range
No. of
Shareholders
(Right)
No of shares
(Right)
No. of
Applicants
No. of Shares
(Public offer)
Total no of
Shareholders
Total no of
issued shares
1 - 50,000
38,169
410,937,059
116,643
815,302,250
154,812
1,226,239,309
50,001 - 100,000
637
85,569,449
5,700
465,710,250
6,337
551,279,699
100,001 - 500,000
660
410,622,233
3,834
877,405,500
4,494
1,288,027,733
500,001 - 1,000,000
121
97,269,348
756
649,132,500
877
746,401,848
1,000,001 - 5,000,000
115
353,919,902
411
915,262,500
526
1,269,182,402
5,000,001 - 10,000,000
19
177,806,321
30
214,104,000
49
391,910,321
10,000,001 - 50,000,000
23
633,280,993
21
391,340,750
44
1,024,621,743
50,000,001 and above
14
3,063,343,659
2
112,329,500
16
3,175,673,159
39,758
5,232,748,964
127,397
4,440,587,250
167,155
9,673,336,214
16.
Disclosure of customer complaints in financial statements for the year ended 31 December 2024
Description
Number
Amount claimed
Amount refunded
In millions of Naira
31 December 2024
31 December 2023
31 December 2024
31 December 2023
31 December 2024 31 December 2023
N.'m
N.'m
N.'m
N.'m
Pending complaints brought
forward
101,647
169,797
16,246
31,839
1,048
13
Received Complaints
102,140
355,210
181,921
16,915
63,873
3,694
Resolved Complaints
202,384
423,360
125,889
32,508
64,921
15,486
Unresolved Complaints
1,403
101,647
72,278
16,246
-
-
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 used
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.
7
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Directors' Report
for the Year Ended 31 December 2024
(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.
(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
Gender
Number
Percentage
Male
Female
Total
Male
Female
Employees
3,614
4,090
7,704
%
47
%
53
3,614
4,090
7,704
%
47
%
53
9
(b)
Analysis of Board and top management staff
Gender
Gender
Number
Percentage
Male
Female
Total
Male
Female
Board members
(Executive and Non-executive directors)
9
5
14
%
64
%
36
Top management staff (AGM-GM)
63
29
92
%
68
%
32
72
34
106
%
68
%
32
(c)
Further analysis of board and top management staff
Gender
Gender
Number
Percentage
Male
Female
Total
Male
Female
Assistant general managers
31
16
47
%
66
%
34
Deputy general managers
22
9
31
%
71
%
29
General managers
10
4
14
%
71
%
29
Board members (Non-executive directors)
5
3
8
%
63
%
38
Executive Directors (excluding MD)
4
1
5
%
80
%
20
Managing Director/CEO
-
1
1
%
-
%
100
72
34
106
%
68
%
32
18.
Auditors
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 30, 2025
FRC/2013/MULTI/00000001084
8
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Statement of Corporate Responsibility in Relation to the Financial Statements
for the Year Ended 31 December 2024
In line with the provision S. 405 of CAMA 2020 we have reviewed the audited financial statements of the Bank for the year ended 31 December 2024 and
based on our knowledge confirm as follows:
(i) The audited financial statements do not contain any untrue statement of material fact or omit to state a material fact which could make the statements
misleading.
(ii)The audited financial statements and all other financial information included in the financial statmements 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 2024.
(iii) The Bank's internal controls have 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 2024.
(v) That we have disclosed to the Bank's Auditors and the Audit Committee the following information:
(a) there are no material weaknesses in the design or operation of the Bank's internal controls which could adversely affect the Bank's ability to record
process and summarise and report financial data, and have discussed with the auditors any weakness 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.
30 January 2025
Durosinmi Abiodun Akanbi
Chief Financial Officer
FRC/2013/ICAN/00000001308
Dame (Dr.) Adaora Umeoji, OON
Group Managing Director / CEO
FRC/2024/PRO/DIR/003/967545
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1.
Introduction
Corporate Governance is central to our business. The Bank conducts its business in line with the highest level of Corporate Governance and best practice.
These governance practices are replicated across our subsidiary companies and 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 year under review, the Directors and other key personnel of the Bank complied with the following Codes of Corporate Governance, which the
Bank subscribes to:
a)
The Central Bank of Nigeria (CBN) issued Corporate Governance Guidelines for Commercial, Merchant, Non-interest, and Payment Services Banks in
Nigeria.
b)
The Securities and Exchange Commission (SEC) issued Code of Corporate Governance for public companies.
c)
The National Code of Corporate Governance for Public Companies which became effective in January 2019.
In addition to the above Codes, the Bank complies with relevant disclosure requirements in other jurisdictions where it operates.
3.
Shareholders
The Bank has a diverse shareholding structure with no single ultimate individual shareholder holding more than 12% of the Bank’s total shares.
4
Board of Directors
The Board has the overall responsibility for setting the strategic direction of the Bank and for oversight of Senior Management. It also ensures that good
Corporate Governance processes and best practices are implemented across the Bank and the the Subsidiary companies at all times.
The Board of the Bank consists of persons of diverse disciplines and skills, chosen on the basis of professional background and expertise, business experience
and integrity as well as knowledge of the Bank’s business.
Directors are fully 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 year under review.
The Board has a Charter which regulates its operations. The Charter is reviewed from time to time in line with the CBN Code of Corporate Governance.
5.
Board structure
The Board is made up of a Non-Executive Chairman, seven (7) Non-Executive Directors and six (6) Executive Directors including the GMD/CEO. Three (3) of
the Non-Executive Directors are Independent Directors, appointed in compliance with the Central Bank of Nigeria (CBN) circular on Appointment of
Independent Directors by Banks.
The Group Managing Director/Chief Executive is responsible for the day to day running of the Bank, assisted by the Executive Committee (EXCO). EXCO
comprises the Executive Directors, and the Group Managing Director/Chief Executive as its Chairman.
6.
Responsibilities of the Board
The Board is responsible for the following amongst others:
a)
reviewing and approving the Bank’s strategic plans for implementation by management;
b)
reviewing and approving the Bank’s financial statements;
c)
reviewing and approving the Bank’s financial objectives, business plans and budgets, including capital allocations and expenditures;
d)
monitoring corporate performance against the strategic plans and business, operating and capital budgets;
e)
implementing the Bank’s succession planning;
f)
approving acquisitions and divestitures of business operations, strategic investments and alliances and major business development initiatives;
g)
approving delegation of authority for any unbudgeted expenditure;
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h)
setting the tone for and supervising the Corporate Governance Structure of the Bank, including corporate structure of the Bank and the Board and any
changes to the strategic plans of the Bank and the Group;
i)
assessing its own effectiveness in fulfilling its responsibilities, including monitoring the effectiveness of individual directors.
The membership of the Board during the year is as follows:
Board of Directors
Name
Date of Appointment
Jim Ovia, CFR. - (Chairman)
April 2, 2014
Mr.Gabriel Ukpeh - (Ind.NED)*****
February 24, 2016
Engr. Mustafa Bello - (NED)
December 29, 2017
Dr. Al-Mujtaba Abubakar, MFR - (Ind.NED)
August 1, 2019
Dr. Omobola Ibidapo-Obe Ogunfowora - (Ind.NED)
June 30, 2021
Mr Chuks Emma Okoh - (NED)
April 12, 2022
Dr. Peter Olatunde Bamkole - (Ind. NED)
April 12, 2022
Dr. Ebenezer Onyeagwu- GMD/CEO****
April 24, 2013
Dr. Adaora Umeoji,OON - (GMD)*
August 2, 2023
Mr. Henry Oroh - (ED)
August 1, 2019
Mrs Adobi Nwapa - (ED)
April 12, 2022
Mr. Akindele Ogunranti - (ED)
April 12, 2022
Dr. Juliet Ehimuan
August 29, 2023
Mr. Lawani Adamu***
April 24, 2024
Mr Louis Odom***
April 24, 2024
Ms. Pamela Yough**
April 30, 2024
*Dr. Adaora Umeoji, OON was appointed as the Group Managing Director effective 1 June 2024.
**Ms. Pamela Mimi Yough was appointed to the Board on 30 April, 2024
***Mr. Lawani Adamu and Mr. Louis Odom was appointed to the Board on 24 April, 2024.
****Dr.Ebenezer Onyeagwu retired from the Board effective 31 May 2024
*****Mr. Gabriel Ukpeh retired from the Board effective 8 March, 2024
The Board meets at least once every quarter but may hold extra-ordinary sessions to address urgent matters that require 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 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 Board Governance Nomination and Remuneration Committee is charged with the responsibility of leading the process for Board appointments and for
identifying and nominating suitable candidates for the approval of the Board.
With respect to new appointments, the committee identifies, reviews and recommends candidates for potential appointment as Directors. In identifying
suitable candidates, the Committee considers candidates on merit against objective criteria and with due regard to diversity on the Board, including gender
as well as the balance and mix of appropriate skills and experience.
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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.
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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 facilitated by the Company Secretary, may include meetings with senior management staff and key external advisors, to assist
Directors in acquiring a detailed understanding of the Bank’s operations, its strategic plan, its business environment, the key issues the Bank faces, and to
introduce Directors to their fiduciary duties and responsibilities.
The Bank attaches great importance to training its Directors and for this purpose, continuously offers training and education from onshore and offshore
institutions to its Directors, in order to enhance their performance on the Board and the various committees to which they belong.
10
Board Committees
The Board carries out its oversight functions using its various Board Committees. This makes for efficiency and allows for a deeper attention to specific
matters for the Board.
Membership of the Committees of the Board is intended to make the best use of the skills and experience of non-executive directors in particular.
The Board has established the various Committees with well defined terms of reference and Charters defining their scope of responsibilities in such a way as
to avoid overlap or duplication of functions.
The Committees of the Board meet quarterly but may hold extraordinary sessions as the business of the Bank demands.
The following are the current standing Committees of the Board:
10.1. Board Credit Committee
The Committee is currently made up of seven (7) members comprising four (4) Non-Executive Directors and three (3) Executive Directors of the Bank. The
Board Credit Committee is chaired by a Non-Executive Director who is well versed in credit matters. The Committee considers loan applications above the
level of Management Credit Committee. It also determines the credit policy of the Bank or changes therein.
The membership of the Committee during the year is as follows:
Mr. Chuks Emma Okoh
- Chairman
Dr. Al- Mujtaba Abubakar
Dr.Peter Bamikole
Ms. Pamela Mimi Yough
Mr. Adamu Lawani
Mr. Henry Oroh
Dr. Adaora Umeoji
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 for various customers;
To review the credit portfolio of the Bank;
To approve all credit facilities above Management approval limit;
To establish and periodically review the Bank’s credit portfolio in order to align organizational strategies, goals and performance;
To evaluate on an annual basis the components of total credit facilities as well as market competitive data and other factors as deemed appropriate,
and to determine the credit level based upon this evaluation;
To make recommendations to the Board of Directors with respect to credit facilities based upon performance, market competitive data, and other
factors as deemed appropriate
To recommend to the Board of Directors, as appropriate, new credit proposals, restructure plans, and amendments to existing plans;
To recommend non-performing credits for write-off by the Board;
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To perform such other duties and responsibilities as the Board of Directors may assign from time to time.
10.2. Finance and General Purpose Committee
This Committee is made up of six (6) members: three (3) Non-Executive Directors and three (3) Executive Directors. It is chaired by a non-executive Director.
The Committee considers large scale procurement by the Bank, as well as matters relating to staff welfare, discipline, staff remuneration and promotion.
The membership of the Committee during the year is as follows:
Dr. Peter Olatunde Bamkole – Chairman
Dr. Omobola Ibidapo-Obe Ogunfowora
Dr. Juliet Ehimuan
Mr. Adamu Lawani
Mrs. Adobi Stella Nwapa
Dr. Adaora Umeoji
Terms of reference
Approval of large scale procurements by the Bank and other items of major expenditure by the Bank;
Recommendation of the Bank’s Capital Expenditure (CAPEX) and major Operating Expenditure (OPEX) limits for consideration by the Board;
Consideration of management requests for branch set up and other business locations;
Consideration of management request for establishment of offshore subsidiaries and other offshore business offices;
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 tax planning activities and related 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, promotion, and disciplinary actions for senior management staff;
To discharge the Board’s responsibility relating to oversight of the management of the health and welfare plans that cover the company’s employees;
Review and recommendation to the Board, salary revisions and service conditions for senior management staff, based on the recommendation of the
Executives;
Oversight of broad-based employee compensation policies and programs;
10.3. Board Risk Management Committee
The Board risk management committee has oversight responsibility for the overall risk assessment of various areas of the Bank’s operations and compliance.
The Chief Risk Officer , 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:
14 Zenith Bank Plc Annual Report - 31 December 2024
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Engr. Mustapha Bello
– Chairman
Dr. Peter Olatunde Bamkole
Dr.Omobola Ibidapo-Obe Ogunfowora
Dr. Juliet Ehimuan
Mr. Louis Odom
Mr. Akindele Ogunranti
Mr. Henry Oroh
Dr. Adaora Umeoji
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 its responsibility for identifying, assessing and managing risk
Ensure and monitor risk management practices, specifically determine which enterprise risks are most significant and approve resource allocation for
risk monitoring and improvement activities, assign risk owners and approve action plans;
Periodically review and monitor risk mitigation progress and periodically review and report to the Board of Directors:
(a) the magnitude of all material business risks;
(b) the processes, procedures and controls in place to manage material risks; and
(c) the overall effectiveness of the risk management process;
Ensure the implementation of the approved cyber security policies, standards and delineation of cybersecurity responsibilities.
Ensure that cybersecurity processes are conducted in line with the business requirements, applicable laws and regulation.
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;
Provide oversight for the Bank's IT governance and Cybersecurity programme, including value delivery, strategic alignment, framework for performance
management, resource management and policies;
Review, approve and provide oversight for the bank's sustainability policy and banking principles and practices to ensure compliance with globally
accepted standards.
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, MFR – Chairman
Engr. Mustafa Bello
Dr. Omobola Ibidapo-Obe Ogunfowora
Mr. Chuks Okoh
Committee's terms of reference
The Board Audit and Compliance Committee have the following responsibilities as delegated by the Board of Directors:
Ascertain whether the accounting and reporting policies of the Bank are in accordance with legal requirements and acceptable ethical practices;
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Review the scope and planning of audit requirements including the review of the external audit plan;
Review the findings on management matters (Management Letter) in conjunction with the external auditors and Management’s responses thereon;
Review the effectiveness of the Bank’s system of accounting and internal control;
Make recommendations to the Board regarding the appointment, removal and remuneration of the external auditors of the Bank
Authorize the internal audit function to carry out 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;
Oversee management’s processes for the identification of significant fraud risks across the Bank and ensure that adequate prevention, detection and
reporting mechanisms are in place
On a quarterly basis, obtain and review reports by the internal auditor on the strength and quality of internal controls, including any issues or
recommendations for improvement, raised during the most recent control review of the Bank;
Discuss and review the Bank’s unaudited quarterly and annual financial statements with management and external auditors to include disclosures,
management control reports, independent reports and external auditors’ reports before submission to the Board, in advance of publication
Meet separately and periodically with management, the internal auditor and the external auditors, respectively;
Review and ensure that adequate whistle - blowing procedures are in place and that a summary of issues reported is highlighted to the Board, where
necessary;
Review with external auditors, any audit scope limitations or problems encountered and management responses to them;
Review the independence of the external auditors and ensure that they do not provide restricted services to the Bank;
Appraise and recommend the appointment of internal auditor of the Bank to the Board and review his/her performance annually;
Review the response of management to the observations and recommendation of the Auditors and Bank regulatory authorities;
Agree Internal Audit Plan for the year with the Internal auditor and ensure that the internal audit function is adequately resourced and has appropriate
standing within the Bank
Undertake quarterly review of Internal Audit progress against Plan for the year as well as outstanding agreed actions including following up
Develop a comprehensive internal control framework for the Bank and obtain assurances on the operating effectiveness of the Bank’s internal control
framework;
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;
Liaise 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;
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 to 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;.
Review and discuss external suspicious activity/transaction reports (SARs) submitted by the Chief Compliance officer with a view to making
recommendations to the Board.
Review and discuss recommendations from the Compliance Group on ways to enhance the company's compliance with statutes, rules and directives of
the relevant regulatory agencies, most especially the Nigerian Financial Intelligence Unit (NFIU).
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Ensure the generation and submission, in due time, of external suspicion activity/transaction reports (SARs) and submit same to the Nigerian Financial
Intelligence Unit (NFIU) and other relevant Regulatory Authorities in accordance with the AML/CFT/CPF rules or any other relevant legislation in force at
the time.
Perform such other duties and responsibilities as the Board of Directors may assign from time to time.
10.5. Board Governance, Nomination and Remuneration Committee
The Committee is made up of five (5) Non-Executive Directors and is chaired by an Independent Non-Executive Director.
The membership of the Committee is as follows:
Dr.Omobola Ibidapo-Obe Ogunfowora
– (Chairman)
Engr. Mustafa Bello
Dr. Al-Mujtaba Abubakar, MFR
Mr. Chuks Okoh
Dr. Juliet Ehimuan
Ms. Pamela Mimi Yough
Committee's terms of reference
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;
Determine the quantum and structure of compensation and benefits for Non-Executive Directors, Executive Directors and senior management of the
Group;
Ensure the existence of an appropriate remuneration policy and philosophy for Executive Directors, Non-Executive Directors and staff of the Group;
Review and recommend for the Board's ratification, all terminal compensation arrangements for Directors and senior management;
Recommend appropriate compensation for Non-Executive Directors for Consideration by the Board and at the Annual General Meeting;
Review and approve any recommended compensation actions for the Company's Executive Committee members, including base salary, annual
incentive bonus, long-term incentive awards, severance benefits, and perquisites;
Review and continuously assess the size and composition of the Board and Board Committees, and recommend the appropriate Board structure, size,
age, skills, competencies, composition, knowledge, experience and background in line with needs of the Group and diversity required to fully discharge
the Board’s duties;
Recommendation of membership criteria for the Group Board, Board Committees and subsidiary companies Boards.
Identification at the request of the Board of specific individuals for nomination to the Group and subsidiary companies Boards and to make
recommendations on the appointment and election of New Directors (including the Group MD) to the Board, in line with the Group’s approved Director
Selection criteria
Review of the effectiveness of the process for the selection and removal of Directors and to make recommendations where appropriate;
Ensuring that there is an approved training policy for Directors, and 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;
Monitor compliance by Directors and staff of the Group's code of ethics and business conduct;
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 to ensure leadership continuity in the Group.
Review and make recommendations on the recruitment, promotions and disciplinary actions for Executive Management level personnel.
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Ensure that board evaluation reports of subsidiaries are formally discussed and documented as a way of radiating sound governance practices across
the Group.
Ensure annual review or appraisal of the performance of the Board is conducted. This review/appraisal covers all aspects of the Board’s structure,
composition, responsibilities, individual competencies, Board operations, Board’s role in strategy setting, oversight over corporate culture, monitoring
role and evaluation of management performance and stewardship towards shareholders etc.
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
Committee's terms of reference
To meet with the independent auditors, chief financial officer, internal auditor and any other Bank executive both individually and/or together, as the
Committee deems appropriate at such times as the Committee shall determine to discuss and review:
The Bank's quarterly and audited financial statements, including any related notes, the Bank's specific disclosures and discussion under "Managements
Control Report” and the independent auditors' report, in advance of publication;
The performance and results of the external and internal audits, including the independent auditor's management letter, and management's responses
thereto;
The effectiveness of the Bank's system of internal controls, including computerized information systems and security; any recommendations by the
independent auditor and internal auditor regarding internal control issues and any actions taken in response thereto; and, the internal control
certification and attestation required to be made in connection with the Bank's quarterly and annual financial reports;
Such other matters in connection with overseeing the financial reporting process and the maintenance of internal controls as the committee shall deem
appropriate.
To prepare the Committee's report for inclusion in the Bank's annual report;
To report to the entire Board at such times as the Committee shall determine.
10.7. Executive committee (EXCO)
The EXCO comprises the Group Managing Director, Deputy Managing Director as well as all the Executive Directors. EXCO has the GMD/CEO as its Chairman.
The Committee meets weekly (or such other times as business exigency may require) to deliberate and take policy decisions on the effective and efficient
management of the Bank. It also serves as a first review platform for issues to be discussed at the Board level. EXCO’s primary responsibility is to ensure the
implementation of strategies approved by the Board, provide leadership to the Management team and ensure efficient deployment and management of the
Bank’s resources. Its Chairman is responsible for the day-to-day running and performance of the Bank.
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10.8. Other Committees
In addition to the afore-mentioned committees, the Bank has in place, other standing management committees. They include:
a)
Management Committee (MANCO)
b)
Assets and Liabilities Committee (ALCO)
c)
Management Global Credit Committee(MGCC)
d)
Sustainability Steering Committee (SSC)
e)
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 Committee meets weekly and as frequently as the need arises.
c)
Management Global Credit Committee(MGCC)
The Management Global Credit Committee is responsible for ensuring that the Bank complies with the credit policy guide as established by the Board. The
Committee also makes contributions to the Board Credit Committee. The Committee can approve credit facilities to individual obligors not exceeding in
aggregate a sum as pre-determined by the Board from time to time. The Committee is responsible for reviewing and approving extensions of credit, including
one-obligor commitments that exceed an amount as may be determined by the Board. The Committee reviews the 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 at 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)
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.
e) 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 pertaining to information security and cyberthreats, 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.
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Membership of the Committee
The membership of the Information Security Steering Committee comprises 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 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, operating
performance and trends. Apart from the Bank's annual report and accounts, proxy statements and formal shareholders' meetings, the Bank maintains a rich
website (with suggestion boxes) that provide information on a wide range of issues for all stakeholders.
Also, a quarterly publication of the Bank and Group performance is produced in line with the disclosure requirements of the Nigerian 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.
20
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Corporate Governance Report
for the Year Ended 31 December 2024
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.
Variable annual remuneration linked to the Zenith Bank financial results. The amount of this remuneration is subject to achieving specific
quantifiable targets, aligned directly with shareholders’ interest.
MONITORING COMPLIANCE WITH CORPORATE GOVERNANCE
Chief Compliance Officer
The Chief Compliance Officer monitors compliance with money laundering requirements and the implementation of the Code of Corporate Governance
of the Bank. He reports to the Board through the the Executive compliance officer(ECO).
The Chief Compliance Officer and the Company Secretary forward regular returns to the Central Bank of Nigeria and other regulatory bodies on all
whistle-blowing reports and also on corporate governance compliance.
Whistle Blowing Procedures
The Bank has a whistle-blowing procedure that ensures anonymity for whistle-blowers. The Bank has a direct link on the Bank’s website, provided for the
purpose of whistle-blowing.
Internally, the Bank has a direct link on its intranet for dissemination of information, to enable members of staff report all identified breaches of the
Bank’s Code of Corporate Governance. All reports are investigated and necessary sanctions applied for breache.
Codes of Coduct
The Bank has a Code of Professional Conduct for Employees, which all members of staff subscribe to upon assumption of duties with the Bank. The Bank
also has a Code of Conduct for Directors.
14. Foreign Subsidiaries Governance Structure
The Bank as at 31 December 2024 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 through the Group Governance Framework 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 respective jurisdiction.
The activities of the subsidiaries are closely monitored by Zenith Bank Plc using the following strategies:
Liaison and Oversight Function
The Foreign Subsidiaries Department is charged with the responsibility of overseeing the growth and implementation of the Bank’s global expansion
strategy into new territories/regions. The Department serves as an interface between the Bank and its offshore subsidiaries. It also provides guidance on
how to optimize synergy within the Group. Reports from the Group is presented to the Board at its quarterly meetings.
Representation on the Subsidiary Board
Zenith Bank Plc exercises control over the subsidiaries by maintaining adequate representation on the Board of each subsidiary. The representatives are
chosen on the basis of professional competencies, business experience and integrity as well as knowledge of the Bank’s business.
The Board of Directors of the subsidiaries are responsible for reviewing and approving the strategic plans and financial objectives as well as monitoring
the corporate performance against these objectives.
Local Board and Board 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.
21
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Corporate Governance Report
for the Year Ended 31 December 2024
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
The Internal Control & Audit Department of Zenith Bank Plc carries out an annual audit of each of the offshore subsidiaries in line with the Group’s
Annual Audit Programme. This audit exercise covers all operational areas of the subsidiaries and the outcome is discussed with Executive Management
at the home office for timely intervention on identified lapses. It is important to note that this exercise is distinct from the daily operations audit carried
out by the respective internal audit unit within the subsidiaries
Annual Loan Review/Audit
This audit is carried out by the Loan Review & Monitoring Unit of Zenith Bank Plc. The core areas of concentration during this audit exercise include asset
quality assessment, loan performance, review of security pledged, loan conformity with credit policy, documentation check and review of central liability
report among others
Group Compliance Function
Zenith Bank Plc is committed to complying with regulatory requirements in all locations where it operate. To this end, The Bank’s Compliance Group
monitors ongoing developments in the regulatory environment of each location where it operates and ensuring compliance with same. This include
conducting periodic compliance checks on each subsidiary annually to ascertain compliance with local banking laws and regulations.
Report of External Auditors
In line with global best practices and regulatory guidelines, the Bank undertakes the 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.
22
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Corporate Governance Report
for the Year Ended 31 December 2024
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.
16. Report of Fraud and Forgeries
This report details the fraud and forgery incidents that took place during the specified year, summarizing both attempted and successful cases.
31 December 2024
31 December 2023
Number of fraud cases
497
523
Amount involved (N'millions)
7,746
894.4
Amount involved ($'millions)
62
0.61
Actual loss (N'millions)
5,261
383.38
Actual loss ($'millions)
0.049
0.6
17.
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 and
general purpose
committee
Board governance,
nomination and
remuneration committee
Board risk
management
committee
Board audit and
compliance
committee
Attendance/no of meetings
8
5
4
4
4
4
Jim Ovia, CFR
8
N/A
N/A
N/A
N/A
N/A
Mr.Gabriel Ukpeh*
2
1
1
1
N/A
1
Engr.Mustafa Bello
8
N/A
N/A
4
4
4
Dr. Al-Mujtaba Abubakar, MFR
8
5
N/A
4
1
4
Dr. O. Ibidapo-Obe Ogunfowora
8
N/A
4
4
4
4
Mr Peter Bamkole
8
4
4
2
4
2
Mr Chuks Emma Okoh
8
5
2
4
N/A
2
Dr. Juliet Ehimuan
8
N/A
N/A
4
4
4
Ms. Pamela Yough***
4
2
N/A
2
N/A
N/A
Dr.Ebenezer Onyeagwu****
5
2
2
N/A
2
N/A
Dr.Adaora Umeoji, OON*****
8
5
4
N/A
2
N/A
Mr. Henry Oroh
8
4
2
N/A
4
N/A
Mrs. Adobi Nwapa
8
N/A
4
N/A
N/A
N/A
Mr. Akindele Ogunranti
8
N/A
N/A
N/A
4
N/A
Mr. Adamu Lawani**
4
2
N/A
N/A
N/A
N/A
Mr. Louis Odom**
4
N/A
N/A
N/A
2
N/A
Note:
* Mr. Gabriel Ukpeh retired from the Board effcetive 8 March, 2024.
** Mr. Adamu Lawani and Mr. Louis Odom was appointed to the Board effective 24 April, 2024.
*** Ms. Pamela Yough was appointed to the Board effective 30 April, 2024.
**** Dr. Ebenezer Onyeagwu retired from the Board effective 31 May, 2024.
***** Dr. Adaora Umeoji was appointed as Group Managing Director/CEO effective 1 June, 2024
N/A - Not Applicable (Not a Committee member)
Dates for Board and Board Committee meetings held within the year to 31 December 2024
23
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Corporate Governance Report
for the Year Ended 31 December 2024
Board
meetings
Board credit
committee
meeting
Finance and general
purpose committee
Board Risk
Management
committee Meeting
Board Audit and
Compliance Committee
Meeting
Board Governance,
Nomination and
Remuneration
Committee
Audit committee
meeting of the
bank
25-Jan-24
31-Jan-24
30-Jan-24
29-Jan-24
29-Jan-24
30-Jan-24
29-Jan-24
30-Jan-24
19-Mar-24
25-Apr-24
24-Apr-24
23-Apr-24
23-Apr-24
22-Apr-24
23-Apr-24
22-Apr-24
08-May-24
27-Jun-24
23-Jul-24
19-Jul-24
18-Jul-24
18-Jul-24
22-Jul-24
18-Jul-24
22-Jul-24
11-Sep-24
30-Oct-24
29-Oct-24
28-Oct-24
28-Oct-24
21-Oct-24
25-Oct-24
21-Oct-24
18. Audit Committee
The table below shows the frequency of meetings of the audit committee and members’ attendance at these meetings during the year under review.
Number of meetings held during the year:
Members
Number of Meetings attended
Mrs. Adebimpe Balogun (SR)
4
Prof. (Prince) L.F.O Obika (SR)
4
Mr. Michael Olusoji Ajayi (SR)
4
Engr. Mustafa Bello (INED)
4
Dr.Al-mujtaba Abubakar (INED)
4
SR - Shareholders representative
INED- Independent Non-Executive Director
24
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Statement of Directors' Responsibilities in Relation to the Financial Statements
for the Year Ended 31 December 2024
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 assessed the Bank's 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 for at least a year from the date of approval of the financial statements.
SIGNED ON BEHALF OF THE
BOARD OF DIRECTORS BY:
Jim Ovia, CFR.
Chairman
FRC/2013/CIBN/00000002406
30 January, 2025
Dame (Dr.) Adaora Umeoji, OON
Group Managing Director / CEO
FRC/2024/PRO/DIR/003/967545
30 January, 2025
25
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Report of the Audit Committee
for the Year Ended 31 December 2024
In compliance with Section 407(1) Companies and Allied Matters Act of Nigeria 2020, we have reviewed the consolidated and separate financial statements
of Zenith Bank Plc for the year ended 31 December 2024 and hereby state as follows:
1. The scope and planning of the audit were adequate in our opinion;
2. The accounting and reporting policies of the Group and Bank conformed with the statutory requirements and agreed ethical practices;
3. The internal control and internal audit functions were operating effectively; and
4. The external auditor's findings as stated in the management letter are being dealt with satisfactorily by the management.
5. Related party balances and transactions have been disclosed in Note 37 to the financial statements in accordance with requirements of the International
Financial Reporting Standards (IFRS) and directives issued by the Central Bank of Nigeria (CBN) 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 27th January, 2025.
Mrs. Adebimpe Balogun
Chairman Audit Committee
FRC/2017/CITN/00000017467
MEMBERS OF THE COMMITTEE
Shareholders Representative
1. Mrs Adebimpe Balogun - Chairman
2. Mr. Michael Olusoji Ajayi
3. Prof. (Prince) L.F.O Obika
Directors· Representative
Non-Executive Director
1.Dr. Al-Mujtaba Abubakar, MFR
2. Engr. Mustafa Bello
26
Zenith Bank Plc Annual Report - 31 December 2024
z
ZENITH
1) All significant deficiencies and material weaknesses in the design or operation of the internal control
system which are reasonably likely to adversely affect the entity's ability to record, process, SL.Jmmarize and
report financial information; and
2) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the entity's internal control system.
n The entity's other significant certifying officer(s) and I have identified, in the report whether or not there
were significant changes in internal controls or other facts that could significantly affect internal controls
subsequent lo the date of their evaluation including any corrective actions with regard to significant
deficiencies and material weaknesses.
Name: Durosinmi Abiodun
FRC No: FRC/2013/ICAN/00000001308
Date: 30/01/2025
Designation: Chief Financial Officer
Signature: _________ _
z
ZENITH
1) All significant deficiencies and material weaknesses iin the design or operation of the internal control
system which are reasonably likely to adversely affect the entity's ability to record, process, summarize and
report financial information; and
2) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the entity's internal control system.
D The entity's other certifying officer(s) and I have identified, in the report whether or not there were
significant changes in internal controls or other facts that could significantly affect internal controls
subsequent to the date of their evaluation including any corrective actions with regard to significant
deficiencies and material weaknesses.
Name: Dame (Dr.) Adaora Umeoji
FRC No: FRC/2024/PRODIR/003/967545
Date: 3 0/01/2025
Designation: Group Managing Director/ CEO
Signature:
ZENITH BANK PLC
Consolidated and Separate Statements of Profit or Loss and Other Comprehensive Income
for the Year ended 31 December 2024
Group
Bank
In millions of Naira
Note(s)
31 December
2024
31 December
2023
31 December
2024
31 December
2023
Interest and similar income
6
2,721,377
1,144,674
2,284,763
926,232
Interest and similar expense
7
(992,474)
(408,492)
(839,111)
(355,228)
Net interest income
1,728,903
736,182
1,445,652
571,004
Impairment charge on financial and non-financial instruments
8
(658,805)
(409,616)
(668,913)
(398,412)
Net interest income after impairment loss on financial and non-financial
instruments
1,070,098
326,566
776,739
172,592
Net income on fees and commission
9
206,867
109,307
149,861
71,080
Trading gains
10
1,100,002
566,973
1,053,127
538,286
Other operating (loss)/income
11
(206,764)
242,588
(146,665)
264,063
Depreciation of property and equipment
26
(44,228)
(29,857)
(33,198)
(26,090)
Amortisation of intangible assets
27
(8,318)
(3,469)
(5,860)
(2,447)
Personnel expenses
36
(204,170)
(124,415)
(128,644)
(88,083)
Operating expenses
12
(586,636)
(291,731)
(532,071)
(261,686)
Profit before tax
1,326,851
795,962
1,133,289
667,715
Income tax expense
13a
(293,956)
(119,053)
(197,131)
(72,114)
Profit for the year after tax
1,032,895
676,909
936,158
595,601
Other comprehensive income:
Items that will never be reclassified to profit or loss
Fair value movements on equity instruments at FVOCI
151,011
122,252
151,011
122,252
Impact of adopting IAS 29 on 1 January
109,202
81,408
-
-
Total items that will not be reclassified to profit or loss
260,213
203,660
151,011
122,252
Items that are or may be reclassified to profit or loss:
Foreign currency translation differences for foreign operations
220,288
162,942
-
-
Fair value movement on debt securities at FVOCI
6,046
10,280
-
-
Income tax effect relating to fair value movement on debt securities at FVOCI
(2,841)
(2,603)
-
-
Other comprehensive income for the year net of taxation
483,706
374,279
151,011
122,252
Total comprehensive income for the year
1,516,601
1,051,188
1,087,169
717,853
Profit attributable to:
Equity holders of the parent
1,032,711
676,569
936,158
595,601
Non-controlling interest
184
340
-
-
1,032,895
676,909
936,158
595,601
Total comprehensive income attributable to:
Equity holders of the parent
1,515,864
1,050,373
1,087,169
717,853
Non-controlling interest
737
815
-
-
1,516,601
1,051,188
1,087,169
717,853
Earnings per share
Basic and diluted (Naira)
14
32.87
21.55
29.79
18.97
The accompanying notes are an integral part of these consolidated and separate financial statements.
34
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Consolidated and Separate Statements of Financial Position
as at 31 December 2024
Group
Bank
In millions of Naira
Note(s)
31 December
2024
31 December
2023
31 December
2024
31 December
2023
Assets
Cash and balances with central banks
15
5,888,216
4,253,374
5,249,789
3,965,386
Treasury bills
16
2,678,929
2,736,273
2,437,464
2,529,966
Assets pledged as collateral
17
266,866
308,638
89,062
255,061
Due from other banks
18
4,935,707
1,834,314
4,442,436
1,691,722
Derivative assets
19
280,626
534,739
271,213
507,942
Loans and advances
20
9,965,364
6,556,470
8,708,775
5,928,796
Investment securities
21
5,098,044
3,290,895
2,248,587
1,205,724
Investments in subsidiaries
22
-
-
34,625
34,625
Deferred tax asset
24
21,542
17,251
1,756
-
Current tax receivable
13
6,869
18,975
-
-
Other assets
25
326,725
474,976
184,136
417,419
Property and equipment
26
400,441
295,532
290,273
230,267
Intangible assets
27
88,196
47,018
80,203
44,185
Total assets
29,957,525
20,368,455
24,038,319
16,811,093
Liabilities
Customers' deposits
28
21,959,369
15,167,740
17,163,424
12,154,824
Derivative liabilities
32
9,258
70,486
4,465
45,514
Current income tax payable
13
256,168
33,877
248,613
28,080
Deferred tax liabilities
24
5,502
59,310
-
59,233
Other liabilities
29
1,402,045
1,039,712
1,323,440
1,003,947
On lending facilities
30
250,725
263,065
250,725
263,065
Borrowings
31
2,045,185
1,410,885
1,951,616
1,450,182
Total liabilities
25,928,252
18,045,075
20,942,283
15,004,845
Capital and reserves
Share capital
33
20,535
15,698
20,535
15,698
Share premium
34
594,113
255,047
594,113
255,047
Retained earnings
34
2,015,513
1,179,390
1,538,189
893,938
Other reserves
34
1,396,747
871,617
943,199
641,565
Attributable to equity holders of the parent
4,026,908
2,321,752
3,096,036
1,806,248
Non-controlling interest
34
2,365
1,628
-
-
Total shareholders' equity
4,029,273
2,323,380
3,096,036
1,806,248
Total liabilities and equity
29,957,525
20,368,455
24,038,319
16,811,093
The accompanying notes are an integral part of these consolidated and seperate financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 30th January 2025 and signed on its behalf by:
Jim Ovia, CFR.
Chairman
FRC/2013/CIBN/00000002406
Dame (Dr.) Adaora Umeoji, OON
Group Managing Director/CEO
FRC/2024/PRO/DIR/003/967545
Durosinmi Abiodun Akanbi
Chief Financial Officer
FRC/2013/ICAN/00000001308
35
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Consolidated and Separate Statements of Changes in Equity
for the Year Ended 31 December 2024
In millions of Naira
Note(s)
Share capital
Share
premium
Foreign currency
translation
reserve
Fair value
reserve
Statutory
reserve
SMIEIS
reserve
Credit risk
reserve
Retained
earnings
Total
Non-controlling
interest
Total equity
Group
1 January 2024
15,698
255,047
187,892
176,909
409,104
3,729
93,982
1,179,391
2,321,752
1,628
2,323,380
Profit for the year
-
-
-
-
-
-
-
1,032,711
1,032,711
184
1,032,895
Other comprehensive income:
-
-
-
-
-
-
-
-
-
-
-
Impact of adopting IAS 29 at 1 January 2024
-
-
-
-
-
-
-
108,646
108,646
556
109,202
Foreign currency translation differences
-
-
220,291
-
-
-
-
-
220,291
(3)
220,288
Fair value movements on equity instruments
-
-
-
151,011
-
-
-
-
151,011
-
151,011
Fair value movements on debt securities
-
-
-
6,046
-
-
-
-
6,046
-
6,046
Income tax effect relating to fair value
movement on debt securities at FVOCI
-
-
-
(2,841)
-
-
-
-
(2,841)
-
(2,841)
Total Comprehensive Income
-
-
220,291
154,216
-
-
-
1,141,357
1,515,864
737
1,516,601
Issue of shares
34
4,837
339,066
-
-
-
-
-
-
343,903
-
343,903
Share issue cost
34
-
-
-
-
-
-
-
(13,329)
(13,329)
-
(13,329)
Transfer between reserves
34
-
-
-
-
140,424
-
10,200
(150,624)
-
-
-
Transactions with owners of the Parent
Dividends
39
-
-
-
-
-
-
-
(141,284)
(141,284)
-
(141,284)
Balance at 31 December 2024
20,535
594,113
408,183
331,125
549,528
3,729
104,182
2,015,513
4,026,908
2,365
4,029,273
1 January 2023
15,698
255,047
24,953
46,980
311,411
3,729
95,304
625,005
1,378,127
813
1,378,940
Profit for the year
-
-
-
-
-
-
-
676,569
676,569
340
676,909
Other Comprehensive income:
Impact of adopting IAS 29 at 1 January 2023
-
-
-
-
-
-
-
80,936
80,936
472
81,408
Foreign currency translation differences
-
-
162,939
-
-
-
-
-
162,939
3
162,942
Fair value movements on equity instruments
-
-
-
122,252
-
-
-
-
122,252
-
122,252
Fair value movements on debt securities
-
-
-
10,280
-
-
-
-
10,280
-
10,280
Income tax effect relating to fair value
movement on debt securities at FVOCI
-
-
-
(2,603)
-
-
-
-
(2,603)
-
(2,603)
Total comprehensive income for the year
-
-
162,939
129,929
-
-
-
757,505
1,050,373
815
1,051,188
Transfer between reserves
35
-
-
-
-
97,693
-
(1,322)
(96,371)
-
-
-
Transactions with owners of the Parent
Dividends
40
-
-
-
-
-
-
-
(106,748)
(106,748)
-
(106,748)
Balance at 31 December 2023
15,698
255,047
187,892
176,909
409,104
3,729
93,982
1,179,391
2,321,752
1,628
2,323,380
36
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Consolidated and Separate Statements of Changes in Equity
for the year ended 31 December 2024
In Millions of Naira
Note(s)
Share capital
Share
premium
Fair value
reserve
Statutory
reserve
SMIEIS
reserve
Credit risk
reserve
Retained
earnings
Total equity
Bank
Balance at 1 January 2024
15,698
255,047
175,983
367,942
3,729
93,911
893,938
1,806,248
Profit for the year
-
-
-
-
-
-
936,158
936,158
Other comprehensive income
Fair value movements on equity instruments
-
-
151,011
-
-
-
-
151,011
Total comprehensive income for the period
-
-
151,011
-
-
-
936,158
1,087,169
Issue of shares
4,837
339,066
-
-
-
-
-
343,903
Transfer between reserves
34
-
-
-
140,424
-
10,200
(150,624)
-
Dividends
39
-
-
-
-
-
-
(141,284)
(141,284)
Balance at 31 December 2024
20,535
594,113
326,994
508,366
3,729
104,111
1,538,190
3,096,038
Balance at 1 January 2023
15,698
255,047
53,731
278,602
3,729
93,911
494,429
1,195,147
Profit for the year
-
-
-
-
-
-
595,601
595,601
Other comprehensive income:
Fair value movements on equity instruments
-
-
122,252
-
-
-
-
122,252
Total comprehensive income for the period
-
-
122,252
-
-
-
595,601
717,853
Transfer between reserves
34
-
-
-
89,340
-
-
(89,340)
-
Dividends
39
-
-
-
-
-
-
(106,748)
(106,748)
Balance at 31 December 2023
15,698
255,047
175,983
367,942
3,729
93,911
893,938
1,806,248
The accompanying notes are an integral part of these consolidated and separate financial statements.
37 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Consolidated and Separate Statements of Cash Flows
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
Note(s)
31 December
2024
31 December
2023
31 December
2024
31 December
2023
Cash flows from operating activities
Profit before tax for the year
1,326,851
795,962
1,133,289
667,715
Adjustments for:
Net impairment loss on financial and non-financial instruments
8
658,805
409,616
668,913
398,412
Unrealised fair value change in trading bond, bills and derivatives
43(xii)
(261,785)
495,591
(257,165)
(493,766)
Depreciation of property and equipment
26
44,228
29,857
33,198
26,090
Amortisation of intangible assets
27
8,318
3,469
5,860
2,447
Dividend income
11
(8,645)
(5,661)
(14,645)
(19,777)
Foreign exchange revaluation (gain)/loss
44(xx)
(1,099,619)
358,103
(736,639)
308,353
Interest income
6
(2,828,801)
(1,144,674)
(2,284,763)
(926,232)
Interest expense
7
993,011
408,492
839,111
355,228
Loss /(Gain) on sale of property and equipment
43(vi)
994
(189)
1,013
(186)
(Gain)/loss on lease derecognition
43(xviii)
-
(14)
-
2
Net monetary loss arising from hyperinflationary economy
11
33,783
10,485
-
-
Recognition of utilized withholding tax
(8,866)
-
(8,866)
-
Gain/(loss) on modification of financial asset
42,518
-
-
-
(1,099,208)
369,854
(620,694)
318,286
Changes in operating assets and liabilities:
Net (increase) in loans and advances
43(iii)
(3,853,588)
(3,001,962)
(3,225,860)
(2,623,642)
Net decrease/ (increase) in other assets
43(viii)
141,599
(258,867)
211,213
(222,544)
Net decrease/(increase) in treasury bills (FVTPL) including bills pledged
43(iib)
(559,300)
451,645
(559,300)
451,645
Net (increase)/decrease in investment securities including bonds pledged (FVTPL
and FVOCI)
43(i)
(18,462)
(9,545)
(16,669)
(6,666)
Net (increase) in restricted balances (cash reserves)
43(x)
(1,372,721)
(2,233,799)
(1,094,650)
(2,144,031)
Net (increase)/decrease in due from banks with maturity greater than three
months
43(vii)
(840,238)
37,147
(1,240,144)
106,055
Net increase in derivatives
43(ix)
464,253
43,549
462,428
42,811
Net increase in customer deposits
43(iv)
6,809,014
6,195,403
5,001,368
4,713,057
Net increase in Other liabilities
43(v)
313,904
470,960
276,602
454,570
(14,747)
2,064,385
(805,706)
1,089,541
Interest received from operating activities
43(xiiia)
1,471,304
803,644
1,319,580
711,069
Interest paid
43(xi)
(639,393)
(310,064)
(481,431)
(243,790)
Tax paid
13
(101,135)
(107,535)
(28,723)
(62,367)
Net cash flows generated from operations
716,029
2,450,430
3,720
1,494,453
Cash flows from investing activities
Purchase of property and equipment
43(xivb)
(101,993)
(50,281)
(92,728)
(40,580)
Proceeds from Sale of property and equipment
43(vi)
3,520
1,382
1,647
1,341
Purchase of intangible assets
27
(49,371)
(24,035)
(43,444)
(22,674)
Additions to treasury bills
43(iia)
(798,943)
(4,547,984)
(705,643)
(2,824,475)
Disposal of treasury bills
43(iia)
2,092,066
3,836,384
1,730,853
2,245,622
Interest received from treasury bills and investment securities
43(xiiib)
443,331
85,081
180,678
62,434
Acquisition of Right of Use Asset
43(xiva)
(131)
(859)
(64)
(811)
Additions to other Investment securities
43(XV)
(2,011,587)
(2,378,357)
(1,087,128)
(539,842)
Disposal of other Investment securities
43(i)
414,354
980,761
376,950
82,885
Dividends received
11
8,645
5,661
14,645
19,777
Net cash (used in)/from investing activities
(109)
(2,092,246)
375,766
(1,016,323)
38 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Consolidated and Separate Statements of Cash Flows
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
Note(s)
31 December
2024
31 December
2023
31 December
2024
31 December
2023
Cash flows from financing activities
Proceeds on share issue
33
343,903
-
343,903
-
Cash inflow from long term borrowings
31
2,860,580
1,148,702
2,771,322
1,197,352
Repayment of long term borrowings
31
(2,735,376)
(1,569,493)
(2,735,376)
(1,569,493)
Interest paid on long term borrowing
31
(192,475)
(97,895)
(160,647)
(97,569)
Cash inflow from onlending facility
30
16,860
-
16,860
-
Repayment of onlending facility
30
(31,812)
(48,080)
(31,812)
(48,080)
Interest paid on onlending facility
30
(1,357)
(5,778)
(1,357)
(5,778)
Repayment of principal for lease liability
43(v)
(4,899)
(1,543)
(1,088)
(979)
Interest paid on lease liability
43(v)
(485)
(224)
(484)
(212)
Unclaimed dividend received
43(xv)
484
352
484
352
Dividends paid to shareholders
39
(141,284)
(106,748)
(141,284)
(106,748)
Share issue cost
(13,329)
-
-
-
Net cash from/(used in) financing activities
100,810
(680,707)
60,521
(631,155)
Net increase/(decrease) in cash and cash equivalents
816,730
(322,523)
440,007
(153,025)
Analysis of changes in cash and cash equivalents:
Cash and cash equivalent at the beginning of the year
2,304,511
1,940,758
2,018,402
1,657,186
Net increase/(decrease) in cash and cash equivalents
816,730
(322,523)
440,007
(153,025)
Effect of exchange rate movement on cash balances
1,671,032
686,276
1,017,461
514,241
Cash and cash equivalents at the end of the year
40
4,792,273
2,304,511
3,475,870
2,018,402
The accompanying notes are an integral part of these consolidated and separate financial statements.
39
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
1 General information
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 adress 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 2024 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 2024 were approved and authorised for issue by the Board of Directors on 28 February 2025. 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) New and amended IFRS Accounting Standards that are effective for the current year
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, 2024:
i.
Classification of Liabilities as Current or Non-current - Amendments to IAS 1 Non-current Liabilities with Covenants - Amendments to IAS 1
Amendments made to IAS 1 Presentation of Financial Statements in 2020 and 2022 clarified that liabilities are classified as either current or noncurrent,
depending on the rights that exist at the end of the reporting year. Classification is unaffected by the entity's expectations or events after the reporting
date (e.g. the receipt of a waiver or a breach of covenant). Covenants of loan arrangements will not affect classification of a liability as current or non-
current at the reporting date if the entity must only comply with the covenants after the reporting date. However, if the entity must comply with a
covenant either before or at the reporting date, this will affect the classification as current or non-current even if the covenant is only tested for
compliance after the reporting date. The amendments require disclosures if an entity classifies a liability as noncurrent and that liability is subject to
covenants that the entity must comply with within 12 months of the reporting date. The disclosures include: the carrying amount of the liability,
information about the covenants, and facts and circumstances, if any, that indicate that the entity may have difficulty complying with the covenants.
The amendments also clarify what IAS 1 means when it refers to the 'settlement' of a liability. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the transfer of the entity's own equity instrument can only be ignored for the purpose of classifying the liability
as current or non-current if the entity classifies the option as an equity instrument. However, conversion options that are classified as a liability must be
considered when determining the current/non-current classification of a convertible note. The amendments must be applied retrospectively in
accordance with the normal requirements in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Special transitional rules apply if an
entity had early adopted the 2020 amendments regarding the classification of liabilities as current or non-current.
The effective date is 1 January 2024.
The impact of this amendment on the Group's financial statement is currently under assessment.
This amendment did not have a significant impact on the Group financial statements.
There are no other new standards or amendments applicable to the Group with an effective date of 1 January 2024.
(b) Standards issued but not yet effective
The following standard had been issued but was not mandatory for year ended on 31 December 2024. The Group has not early adopted the underlisted
standard in preparing the financial statements as it plans to adopt it at the effective date, if applicable.
i.
IFRS 18 ‘Presentation and Disclosure in Financial Statements’
40
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
In April 2024, the IASB issued IFRS 18 ‘Presentation and Disclosure in Financial Statements’, effective for annual reporting periods beginning on or after 1
January 2027. The new accounting standard aims to give users of financial statements more transparent and comparable information about an entity’s
financial performance. It will replace IAS 1 ‘Presentation of Financial Statements’ but carries over many requirements from that IFRS Accounting
Standard unchanged. In addition, there are three sets of new requirements relating to the structure of the income statement, management-defined
performance measures and the aggregation and disaggregation of financial information.
While IFRS 18 will not change recognition criteria or measurement bases, it might have a significant impact on presenting information in the financial
statements, in particular the income statement. The Group is currently assessing any impacts as well as data readiness before developing a more
detailed implementation plan.
ii
Amendments to IAS 21 ‘Lack of Exchangeability’
In August 2023, the IASB published amendments to IAS 21 ‘Lack of Exchangeability’ effective from 1 January 2025. The Group is undertaking an
assessment of the potential impact, which is not expected to be significant.
iii
Amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’
In May 2024, the IASB issued amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’, effective for annual reporting
periods beginning on, or after, 1 January 2026. In addition to guidance as to when certain financial liabilities can be deemed settled when using an
electronic payment system, the amendments also provide further clarification regarding the classification of financial assets that contain contractual
terms that change the timing or amount of contractual cash flows, including those arising from ESG-related contingencies, and financial assets with
certain non-recourse features. The Group is undertaking an assessment of the potential impact.
There are no other new standards or amendments issued but not yet effective that are applicable to the Group.
41 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
(c) Material 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.
2.1 Basis of preparation
(a). Statement of compliance
The financial statements are prepared in accordance with the IFRS Accounting Standards and in the manner required by the Companies and Allied
Matters Act of Nigeria, the Financial Reporting Council of Nigeria (Amendment) Act 2023, the Banks and other Financial Institutions Act of Nigeria, and
relevant Central Bank of Nigeria circulars. The financial statements comply with the IFRS Accounting Standards as issued by the International Accounting
Standards Board (IASB).
(b) Basis of measurement
The financial statements have been prepared under the historical cost convention with the exception of the following:
Derivative financial instruments which are measured at fair value; and
Non-derivative financial instruments, carried at fair value through profit or loss, or fair value through other comprehensive income which are
measured at fair value.
(c) Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the consolidated and separate financial statements are disclosed in Note 4.
2.2
Basis of Consolidation
(a) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity if it is exposed to, or has the rights to variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. The Group reassesses whether it has control if there are
changes to one or more elements of control. This includes circumstances in which protective rights held become substantive and lead to the Group
having control over an investee.
The financial statements of subsidiaries are consolidated from the date the Group acquires control, up to the date that such effective control ceases.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (transactions with owners).
When the proportion of the equity held by Non Controlling Interests (NCIs) changes, the carrying amounts of the controlling and NCIs are adjusted to
reflect the changes in their relative interests in the Subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and
the fair value of the consideration paid or received is recognised directly in equity and attributed to the Group.
Inter-company transactions, balances and unrealised gains on transactions between companies within the Group are eliminated on consolidation.
Unrealised losses are also eliminated in the same manner as unrealised gains, but only to the extent that there is no evidence of impairment. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
In the separate financial statements, investments in subsidiaries are measured at cost less accumulated impairment.
(b) Loss of Control
On loss of control, the Group derecognises the assets and liabilities of the subsidiary, any related non-controlling interests and the other components of
equity relating to a subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the
previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, that retained interest is accounted for as
an equity-accounted investee or as a financial asset depending on the level of influence retained.
(c) Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and
50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The
Group's investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.
42 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.2
Basis of Consolidation (continued)
The Group's share of its associates' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in
reserves are recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the
Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have
been changed where necessary to ensure consistency with the policies adopted by the Group.
(d) Non-controlling interests
Non-controlling interests are measured at their proportionate share of the acquiree's identifiable net assets at the acquisition date. Changes in the
Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
2.3
Translation of foreign 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
Except for those subsidiaries operating in a hyper-inflationary economy (as shown in note 2.27), the results and financial position of all the Group entities
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 year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at historical cost are translated to the functional currency using
the exchange rate at the transaction date, and those measured at fair value are translated to the functional currency at the exchange rate at the date
that the fair value was determined and are recognised in the profit or loss. When a gain or loss on non-monetary item is recognised in other
comprehensive income, any exchange component of that gain or loss shall be recognised in other comprehensive income. Conversely, when a gain or
loss on a non-monetary item is recognised in profit or loss, any exchange of that gain or loss shall be recognised in profit or loss.
Translation differences on equities measured at fair value through other comprehensive income are included in other comprehensive income and
transferred to the fair value reserve in equity.
43 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.3
Translation of foreign currencies (continued)
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
In the statement of financial position, cash and balances with central bank comprises cash on hand and balances with central bank.
For the purposes of the statement of cash flow, cash and cash equivalents comprise balances with original maturities of three (3) months or less than
three months from the date of acquisition that are subject to an insignificant risk of changes in their fair value, and are used by the Group in the
management of its short-term commitments. They include cash and non-restricted balances with central banks, treasury bills and other eligible bills,
amounts due from other banks and short-term government securities.
2.5
Financial instruments
(a) Initial recognition and measurement
Financial instruments are recognised initially when the Group becomes a party to the contractual provisions of the instruments.
Financial instruments carried at fair value through profit or loss are initially recognised at fair value with transaction costs, which are directly attributable
to the acquisition or issue of the financial instruments, being recognised immediately through profit or loss. Financial instruments that are not carried at
fair value through profit or loss are initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issue of the
financial instruments.
Financial instruments are recognised or de-recognised on the date the Group settles the purchase or sale of the instruments (settlement date
accounting).
(b) Subsequent measurement
Subsequent to initial measurement, financial instruments are measured either at amortised cost or fair value depending on their classification category.
(c) Classification
(i) Financial assets
Subsequent to initial recognition, all financial assets within the Group are measured at:
Amortised cost;
Fair value through other comprehensive income (FVOCI); or
Fair value through profit or loss (FVTPL)
The Group's financial assets are subsequently measured at amortised cost if they meet both of the following criteria and are not designated as at FVTPL:
'Hold to collect' business model test - The asset is held within a business model whose objective is to hold the financial asset in other to collect
contractual cash flows; and
'SPPI' contractual cash flow characteristics test - The contractual terms of the financial asset give rise to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding on a specified date. Interest in this context is the consideration for the time
value of money and for the credit risk associated with the principal amount outstanding during a particular period of time.
Debt instruments are measured at amortised cost by the Group if they meet both of the following criteria and are not designated as at FVTPL:
'Hold to collect and sell' business model test: The asset is held within a business model whose objective is achieved by both holding the
financial asset in order to collect contractual cash flows and selling the financial asset; and
'SPPI' contractual cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
All other financial assets including equity investments are measured at fair value.
44 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.5
Financial instruments (continued)
A financial asset is classified and measured at fair value through profit or loss (FVTPL) by the Group if the financial asset is:
A debt instrument that does not qualify to be measured at amortised cost or FVOCI;
An equity investment which the Group has not irrevocably elected to classify as at FVOCI and present subsequent changes in fair value in OCI;
A financial asset where the Group has elected to measure the asset at FVTPL under the fair value option.
(ii) Financial liabilities
Financial liabilities are either classified by the Group as:
Financial liabilities at amortised cost; or
Financial liabilities as at fair value through profit or loss (FVTPL).
Financial liabilities are measured at amortised cost by the Group unless either:
The financial liability is held for trading and is therefore required to be measured at FVTPL, or
The Group elects to measure the financial liability at FVTPL (using the fair value option).
(iii) Financial guarantees contracts and loan commitments
A financial guarantee contract is a contract that requires the Group (issuer) to make specified payments to reimburse the holder for a loss it incurs
because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
Loan commitments are firm commitments to provide credit under pre-specified terms and conditions. Financial guarantees issued or commitments to
provide a loan at a below-market interest rate are initially measured at fair value. 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 higher than 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;
45 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.5
Financial instruments (continued)
– how managers of the business are compensated (e.g. whether compensation is based on the fair value of the assets managed or the contractual cash
flows collected); and
– the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future sales activity. However,
information about sales activity is not considered in isolation, but as part of an overall assessment of how the Group’s stated objective for managing the
financial assets is achieved and how cash flows are realised.
Financial assets that are held for trading or managed and whose performance is evaluated on a fair value basis are measured at FVTPL because they are
neither held to collect contractual cash flows nor held both to collect contractual cash flows and to sell financial assets.
Assessment of whether contractual cash flows are solely payments of principal and 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 year after the Group changes its business model for managing
financial assets.
(d) Derecognition
(i) Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire (see also (e)), or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are
transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the
financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the
asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any
cumulative gain or loss that had been recognised in OCI is recognised in profit or loss.
Any cumulative gain/loss recognised in OCI in respect of equity investment securities designated as at FVOCI is not recognised in profit or loss on
derecognition of such securities. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the Group is
recognised as a separate asset or liability.
The Group sometimes enters into transactions whereby it transfers assets recognised on its statement of financial position, but retains either all or
substantially all of the risks and rewards of the transferred assets or a portion of them. In such cases, the transferred assets are not derecognised.
Examples of such transactions are securities lending and sale-and-repurchase transactions.
When assets are sold to a third party with a concurrent total rate of return swap on the transferred assets, the transaction is accounted for as a secured
financing transaction similar to sale-and-repurchase transactions, because the Group retains all or substantially all of the risks and rewards of ownership
of such assets.
46 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.5
Financial instruments (continued)
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.
47 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.5
Financial instruments (continued)
(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.
Subsequent to initial recognition, the fair value of a financial instrument is based on quoted market prices or dealer price quotation for financial
instruments. If a market for a financial instrument is not active, then the Group establishes fair value using a valuation technique. Valuation techniques
include using recent arm's length transactions between knowledgeable, willing parties (if available), reference to the current fair value of other
instruments that are substantially the same, discounted cash flow analyses and option pricing models. The chosen valuation technique makes maximum
use of market inputs, relies as little as possible on estimates specific to the Group, incorporates all factors that market participants would consider in
setting a price, and is consistent with accepted economic methodologies for pricing financial instruments. Inputs into valuation techniques reasonably
represent market expectations and measures of the risk-return factors inherent in the financial instrument.
See note 3.5 on fair valuation methods and assumptions.
(i) Assets pledged as collateral
Financial assets transferred to external parties and which do not qualify for de-recognition are reclassified in the statement of financial position from
treasury bills and investment securities to assets pledged as collateral, if the transferee has received the right to sell or re-pledge them in the event of
default from agreed terms. Assets pledged as collateral are initially recognised at fair value, and are subsequently measured at amortised cost or fair
value as appropriate. These transactions are performed in accordance with the usual terms of securities lending and borrowing.
(j) Assets under repurchase agreement
Assets under repurchase agreement are transactions in which the Group sells a security and simultaneously agrees to repurchase it (or an asset that is
substantially the same as the one sold) at a fixed price on a future date. The Group continues to recognise the securities in their entirety in the statement
of financial position because it retains substantially all of the risks and rewards of ownership. The cash consideration received is recognised as a financial
asset and a financial liability is recognised for the obligation to pay the repurchase price. Because the Group sells the contractual rights to the cash flows
of the securities, it does not have the ability to use the transferred assets during the term of the arrangement.
2.6
Derivative instruments
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
48 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
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 instrument has expired, is sold, terminated, or exercised
•
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 in a hedging relationship are
recognized immediately in profit or loss and are included in Trading gains/(losses).
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’.
Financial instruments for which lifetime ECL is recognised which are credit impaired are referred to as 'Stage 3 financial instruments".
Loss allowances for other assets and lease receivables are always measured at an amount equal to lifetime ECL.
The Group considers debt investment securities to have low credit risk when its credit risk rating is equivalent to the globally understood definition of
‘investment grade’.
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;
49 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.7
Impairment (continued)
• 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 4.2.
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.
• The probability of debt being restructured, resulting in holders suffering losses through voluntary or mandatory debt forgiveness.
50 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.7
Impairment (continued)
• 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 amounts of assets written off during the year ended 31 December 2024 was N94.9 billion (31 December 2023: N13.4
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. The
reclassification is applied prospectively from the reclassification date. Accordingly, any previously recognised gains, losses or interest are not reinstated.
Changes in the business model for managing financial assets are expected to be very infrequent.
2.9 Restructuring of financial 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 diffculties 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.
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)
51 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
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
4 years
Furniture, fittings and equipment
5 years
Computer equipment
3 years
Buildings
50 years
Leasehold improvement
Over the remaining lease period
Aircraft
25 years
Right of use assets: Buildings
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.
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 year 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)
it is technically feasible to complete the software product so that it will be available for use;
ii)
management intends to complete the software product and use or sell it;
52 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
iii)
there is an ability to use or sell the software product;
iv)
it can be demonstrated how the software product will generate probable future economic benefits
v)
adequate technical, financial and other resources to complete the development and to use/sell the software product are available
vi)
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 year-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 years 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.
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 identified asset.
The Group has elected not to recognize right-of-use assets and lease liabilities for some leases of low value assets. The Group recognizes expenses
associated with these leases as an expense on straight line basis over the lease term.
Payments associated with short term leases are recognised on a straight line basis as an expense in profit or loss. Short term leases are leases with a
lease term of 12 months or less without a purchase option.
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.
53 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.14
Leases (continued)
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its
incremental borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It is remeasured when there
is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a
residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised
or a termination option is reasonably certain not to be exercised.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The
assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease
liabilities and right-of-use assets recognized.
C. Group / Bank as a lessor
Lease and instalment sale contracts are primarily financing transactions in banking activities, with rentals and instalments receivable, less unearned
finance charges, being included in Loans and advances to customers in the statement of financial position. Finance charges earned are computed using
the effective interest method which reflects a constant periodic return on the investment in the finance lease. Initial direct costs paid are capitalized to
the value of the lease amount receivable and accounted for over the lease term as an adjustment to the effective interest rate method.
The Group recognizes assets held under a finance lease in its statement of financial position and present them as a receivable at an amount equal to the
net investment in the lease. Initially, the Group will recognize a finance lease receivable at the amount equal to the net investment in the lease.
Subsequently, finance income will be recognized at a constant rate on the net investment. During any ‘payment free’ period, this will result in the
accrued finance income increasing the finance lease receivable.
For finance leases, the lease payments included in the measurement of the net investment in a lease at commencement date includes variable lease
payments that depend on an index or a rate; other variable payments (e.g. those linked to future performance or use of an underlying asset) are
excluded from the measurement of the net investment and are instead recognized as income when they arise. The treatment adopted for variable lease
payments under operating leases are consistent with these requirements.
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.
54 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.16
Employee benefits (continued)
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 year in which they are approved by the Bank’s shareholders. Dividends for the year that are
declared after the end of the reporting year 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 nondistributable. 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.
55 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.17
Share capital and reserves (continued)
(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 carried at FVOCI.
(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.
2.18
Recognition of interest income and 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:
– the gross carrying amount of the financial asset; or
– the amortised cost of the financial liability.
When calculating the effective interest rate for financial instruments other than purchased or originated credit-impaired assets, the Group estimates
future cash flows considering all contractual terms of the financial instrument, but not ECL. For purchased or originated credit impaired financial assets, a
credit adjusted effective interest rate is calculated using estimated future cash flows including ECL.
The calculation of the effective interest rate includes transaction costs and fees and points paid or received that are an integral part of the effective
interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or financial liability.
Amortised cost and gross carrying 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 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.
For information on when financial assets are credit-impaired, see Note 2.7.2.
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 interest on
financial liabilities measured at amortised cost.
56 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
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, foreign withdrawal charges,
commission on letters of credit, foreign currency transaction fees, placement fees and syndication fees – is recognised as the related services are
performed. If a loan commitment is not expected to result in the draw-down of a loan, then the related loan commitment fee is recognised on a straight-
line basis over the commitment period.
A contract with a customer that results in a recognised financial instrument in the Group’s financial statements may be partially in the scope of IFRS 9
and partially in the scope of IFRS 15. If this is the case, then the Group first applies IFRS 9 to separate and measure the part of the contract that is in the
scope of IFRS 9 and then applies IFRS 15 to the residual.
Other fee and commission expenses relate mainly to transaction and service fees, which are expensed as the services are received.
Dividend income is recognised when the right to receive income is established. Usually, this is the ex dividend 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 maintanace fees and fees on electronic products charged
monthly. Fees recognised at a point in time include credit related fees other than those recognised over time, auction fees, commission on agency and
collection services, fees on electronic products (recognised at point in time), foreign currency transaction fees, foreign withdrawal charges and
commission on letters of credit.
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 year 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 year is recognized as an expense. Expenses that
are not related to the income earned during the reporting year, 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 year when they are incurred in cases when it is not probable to directly relate them to particular income
earned during the current reporting year 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.
The Bank had determined that interest and penalties relating to income taxes do not meet the definition of income taxes, and therefore are accounted
for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
57 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation
and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Bank measures its tax balances either based on
the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.
(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 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.
(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 applied. Future taxable profits are determined based on the reversal of relevant taxable
temporary differences.
If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of
existing temporary differences, are considered, based on the business plans of the Company. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability
of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable
profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date, and reflects uncertainty related to income taxes, if any.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting
date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset the current tax liabilities against the current 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 simultaneously.
2.23
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 affects the numbers of share issued, those shares are considered in calculating the diluted earnings per share. There are currently no shares
that could potentially dilute the total issued shares.
58 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
2.24
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 line/structure to management.
2.25
Fiduciary activities
The Group acts as trustees and in other fiduciary capacities through its subsidiaries, Zenith Pensions Custodian Limited and Zenith Nominees Limited that
results in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and income arising
thereon are excluded from these financial statements, as they are not assets of the Group. The fees earned on these activities are recognised as assets
based fees.
2.26
Deposit for Investment in AGSMEIS
The Agri-Business/Small and Medium Enterprises Investment Scheme is an initiative of Banker's committee of Nigeria. The contributed funds is 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.
2.27
Hyperinflationary accounting
Hyperinflationary accounting is applied to those subsidiary operations in countries where the three-year cumulative inflation rate is approaching or
exceeding 100%. In 2023, this affected the Group's operations in Ghana and Sierra Leone. The Group applies IAS 29 Financial Reporting in
Hyperinflationary Economies to the underlying financial information of relevant subsidiaries to restate their local currency results and financial position
so as to be stated in terms of the measuring unit current at the end of the reporting period. Those restated results are translated into the Group's
presentation currency (the Nigerian Naira) for consolidation at the closing rate at the balance sheet date. Group comparatives are not restated for the
effect of hyperinflation and consequential adjustments to the opening balance sheet in relation to the hyperinflationary subsidiaries are presented in
Other comprehensive income and reported in retained earnings. The hyperinflationary gain or loss in respect of the net monetary position of the
relevant subsidiary is included in profit or loss and separately disclosed within other operating income.
59 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
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 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)
Risk management is a shared responsibility. Therefore the Group aims to build a shared perspective on risks that is grounded in consensus.
(c)
There is clear segregation of duties between market-facing business units and risk management functions.
(d)
Risk Management is governed by well-defined policies which are clearly communicated across the Group.
(e)
Risk related issues are taken into consideration in all business decisions.
3.1.2 Risk 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 audit 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 Management 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 Management Risk committee drives the management of the financial risks (Market, Liquidity and Credit Risk), operational
risks as well as strategic and reputational risks.
In addition, Zenith Group manages its risks in a structured, systematic and transparent manner through a global risk policy which embeds comprehensive
risk management processes into the organisational structure, risk measurement and monitoring activities. This structure ensures that the Group’s overall
risk exposures are within the thresholds set by the Board.
The key features of the Group’s risk management policy are:
(a)
The Board of Directors provides overall risk management direction and oversight;
(b)
The Group’s risk appetite is approved by the Board of Directors;
(c)
Risk management is embedded in the Group as an intrinsic process and is a core competence of all its employees;
(d)
The Group manages its credit, market, operational and liquidity risks in a coordinated manner within the organisation;
60 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
(e)
The Group’s risk management function is independent of the business divisions; and
(f)
The Group’s internal audit function reports to the Board Audit Committee and provides independent validation of the business units’
compliance with risk policies and procedures, and the adequacy and effectiveness of the risk management framework on an enterprise-wide
basis.
The Group continuously modifies and enhances its risk management policies and systems to reflect changes in markets, products and international best
practices. Training, individual responsibility and accountability, together with a disciplined and cautious culture of control, are an integral part of the
Group’s management of risk.
The Board of Directors ensures strict compliance with relevant laws, rules and standards issued by the industry regulators and other law enforcement
agencies, market conventions, codes of practices promoted by industry associations and internal policies.
The compliance function, under the leadership of the Chief Compliance Officer of the Bank, has put in place a robust compliance framework, which
includes:
(a)
Comprehensive compliance manual detailing the roles and responsibilities of all stakeholders in the compliance process:
(b)
Review and analysis of all relevant laws and regulations, which are adopted into policy statements to ensure business is conducted
professionally;
(c)
Review of the Bank's Anti-Money Laundering Policy in accordance with changes in the Money Laundering Prohibition Act 2011 and Anti-
Terrorism Act 2011 as amended; and
(d)
Incorporation of new guidelines in the Bank's "Know Your Customer" policy 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 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. These techniques are implemented as risk policies and procedures that drive the strategic direction and risk
appetite as specified by the Board. Techniques employed in meeting these objectives culminate in the following roles for the risk control functions of the
Group:
(a)
Develop and implement procedures and practices that translate the Board's goals, objectives, and risk tolerances into operating standards that
are well understood by staff;
(b)
Establish lines of authority and responsibility for managing individual risk elements in line with the Board’s overall direction;
(c)
Risk identification, measurement, monitoring, and control procedures;
(d)
Establish effective internal controls that cover each risk management process;
(e)
Ensure that the Group’s risk management processes are properly documented;
(f)
Create adequate awareness to make risk management a part of the corporate culture of the Group;
(g)
Ensure that risk remains within the boundaries established by the Board; and
(h)
Ensure that business lines comply with risk parameters and prudent limits established by the Board;
The CBN Risk Management Guidelines prescribes quantitative and qualitative criteria for the identification of significant activities and sets a threshold of
contributions for determining significant activities in the Bank and its subsidiaries. This practice is essentially to drive the risk control focus of financial
institutions.
Zenith Bank applies a mix of qualitative and quantitative techniques in the determination of its significant activities under prescribed broad headings. The
criteria used in estimating the materiality of each activity is essentially based on the following:
(a)
The strategic importance of the activity and sector;
(b)
The contribution of the activity/sector to the total assets of the Bank;
61 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
(c)
The net income of the sector; and
(d)
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 Nigerian economy, measured by Gross Domestic Product (GDP), grew by 3.46% (year-on-year) in real terms in the third quarter of 2024. The growth
in the third quarter 2024 was due to performance in the services sector while the oil & gas sector contributed to the growth with average daily crude oil
production of 1.47 million barrels per day. The International Monetary Fund (IMF) maintained Nigeria growth forecast at 3.2% for 2025.
The year (2025) witnessed significant volatility in the foreign exchange of naira against the dollar, from about N977/US$ in Q4 2024 to 1,535/US$ as of 31
December 2024. The CBN narrowed the spread between the various foreign exchange segments of the market, an indication of price discovery and
improved market efficiency, thus reducing opportunities for arbitrage and speculation. Nigeria’s external reserves stood at US$40 billion as at end
December 2024.
In March 2024, the Central Bank of Nigeria (CBN) announced an increase in the capital requirements for banks operating in Nigeria across the different
license categories. The CBN has set a timeline of 24 months for banks to comply with the new requirements commencing April 1, 2024, and terminating
on March 31, 2026. Consequently, zenith bank has successfully carried out a capital raise exercise through rights issue and public offer between August
and September 2024. Verification and allotment of shares by SEC are being done. We hope these processes will be completed soon.
Also, the Central Bank of Nigeria (CBN) is engaging at the highest level to facilitate Nigeria’s removal from the Financial Action Task Force’s (FATF) “grey
list,” an anti-money laundering watch list by May 2025.
The Monetary Policy Committee of the CBN at its November 2024 meeting raised the MPR by 125 basis points to 27.50 per cent, up from 26.25 per cent
with asymmetric corridor around the MPR of +500/-100 basis points. The Committee also retained CRR at 50% and Liquidity Ratio at 30%. The
Committee noted the persistence of food inflation, which continues to undermine price stability. We anticipate that the CBN may continue to raise or
maintain interest rates in the near term if inflationary pressures persist.
Headline inflation rose to 34.80% in December 2024 up from 34.19% in June 2024, the highest since April 1996. The largest drivers of inflation were food
(39.12%) while core inflation stood at 28.75%. This was driven by rising cost of production due to high energy and electricity prices, persistent disruptions
to power supply, continued insecurity in food producing areas and the impact of the Ukraine/Russia war on the supply of fertilizer inputs wheat and
other grains.
Upside remains the recapitalization of Banks and stability in the prices of crude oi in the global commodity markets. While the downside risk to outlook
remains deteriorating security conditions, civil unrest, ongoing and expected shocks from the global economy especially from supply blockages of
essential products from both Russia and Ukraine, impact of declining crude oil revenue in spite of higher crude oil prices, currency depreciation, hike in
electricity tariff, potential increase in fuel pump price, etc.
In spite of these challenges, Zenith Bank remains resilient and focused on maintaining its leading role in the Nigerian Banking Industry. The bank intends
to realize the opportunities that exists within the headwinds as we reassess the risk environment and operating model continuously. .
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)
Credit is only extended to suitable and well identified customers and never where there is any doubt as to the ethical standards and record of
the intending borrower;
(b)
Exposures to any industry or customer will be determined by the regulatory guidelines, clearly defined internal policies, debt service capability
and balance sheet management guidelines;
(c)
Credit is not extended to customers where the source of repayment is unknown or speculative, and also where the destination of funds is
unknown. There must be clear and verifiable purpose for the use of the funds and sources of repayment;
62 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
(d)
Credit is not given to a customer where the ability of the customer to meet obligations is based on the most optimistic forecast of events. Risk
considerations will always have priority over business and profit considerations
(e)
The primary source of repayment for all credits must be from an identifiable cash flow from the counterparty’s normal business operations or
other financial arrangements. The realization of security remains a fall back option;
(f)
A pricing model that reflects variations in the risk profile of various credits to ensure that higher risks are compensated by higher returns is
adopted;
(g)
All insiders’ related credits are limited to regulatory and strict internal limits and are disclosed as required;
(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:
(a)
Adherence to the strict credit selection criteria, which includes defined target market, credit history, the capacity and character of customers;
(b)
Credit rating of obligor;
(c)
The likelihood of failure to pay over the period stipulated in the contract;
(d)
The size of the facility in case default occurs; and
(e)
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.
Zenith Group Rating
Description of the grade
AAA
Investment Risk (Extremely Low Risk)
AA
Investment Risk (Very Low Risk)
A
Investment Risk (Low Risk)
BBB
Upper Standard Grade (Acceptable Risk)
BB
Lower Standard Grade (Moderately High Risk)
B
Non Investment Grade (High Risk)
CCC
Non Investment Grade (Very High Risk)
CC
Non Investment Grade (Extremely High Risk)
C
Non Investment Grade (High Likelihood of Default)
D
Non Investment Grade (Lost)
Unrated
Individually insignificant (unrated)
(b) Other debt instruments
With respect to other debt instruments, the Group takes the following into consideration in the management of the associated credit risk:
i)
Internal and external research and market intelligence reports; and
ii)
Regulatory agencies reports
63 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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 reviews the following:
(a)
Credit assessment of the borrower’s industry, and macro-economic factors;
(b)
The purpose of credit and source of repayment;
(c)
The track record / repayment history of borrower;
(d)
Assess/evaluate the repayment capacity of the borrower;
(e)
The proposed terms and conditions and covenants;
(f)
Adequacy and enforceability of collaterals; and
(g)
Approval from appropriate authority.
64 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.2.4 Group Credit Risk Management
Zenith's approach to managing credit risk is a key element in achieving its strategic objective of maintaining and further enhancing its asset quality and
credit portfolio risk profile. The credit standards, policies and procedures, risk methodologies and framework, solid structure and infrastructure, risk
monitoring and control activities enable the Group to deal with the emerging risks and challenges with a high level of confidence and determination.
The framework for credit risk assessment at Zenith is well-defined and institutionally predicated on:
(a)
Clear tolerance limits and risk appetite set at the Board level, well communicated to the business units and periodically reviewed and
monitored to adjust as appropriate;
(b)
Well-defined target market and risk asset acceptance criteria;
(c)
Rigorous financial, credit and overall risk analysis for each customer/transaction;
(d)
Regular portfolio examination in line with key performance indicators and periodic stress testing;
(e)
Continuous assessment of concentrations and mitigation strategies;
(f)
Continuous validation and modification of early warning system to ensure proper functioning for risk identification;
(g)
Systematic and objective credit risk rating methodologies that are based on quantitative, qualitative and expert judgment;
(h)
Systematic credit limits management which enables the Bank to monitor its credit exposure on daily basis at country, borrower, industry,
credit risk rating and credit facility type levels;
(i)
Solid documentation and collateral management process with proper coverage and top-up triggers and follow-ups; and
(j)
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.
The Group has in place various portfolio concentration limits (which are subject to periodic review). These limits are closely monitored and reported on
from time to time.
The Group’s internal credit approval limits for the various authorities levels are as indicated below.
Zenith Group Rating
Approval limit (% of Shareholders' Fund)
Board Credit Committee
N5 billion and above (Not exceeding 20% of total shareholders' fund)
Management Global Credit Committee
Below N5 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.
65 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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 of 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 good quality Risk
Assets Portfolio across the Group.
A specialised and focused loan recovery and workout team handles the management and collection of problematic credit facilities.
3.2.7 (a) Credit Risk Mitigation, Collateral, and other Credit 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:
(a)
Real estate, plant and equipment collateral (usually all asset or mortgage debenture or charge), which have to be registered and enforceable
under Nigerian law;
(b)
Collateral consisting of inventory, accounts receivable, machinery equipment, patents, trademarks, farm products, general intangibles, etc.
These require a security agreement (usually a floating debenture) which must be registered and must be enforceable under Nigerian law;
(c)
Stocks and shares of publicly quoted companies;
(d)
Domiciliation of contracts proceeds;
(e)
Documents of title to goods such as shipping documents consigned to the order of Zenith Bank or any of its subsidiaries;
(f)
Letter of lien; and
(g)
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 the Group's comfort is on the issuer’s credit rating, i.e. Federal
Government of Nigeria (FGN) and other sovereigns.
As part of its Credit risk management strategy, the Group emphasizes on the robustness of its credit analysis and diagonsis prior to disbursment of loans
and advances to its customers.
66 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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. One major measure adopted by the bank is restructuring of credit facilities to
terms more favourable to the customer and at the same time guarantee full recovery of the loans.
Fore closure of collateral is usually the last measure adopted by the bank in the realization of its funds. The Group’s policies regarding obtaining
collateral have not significantly changed during the reporting period and there has been no significant change in the overall quality of the collateral held
by the Group since the prior period. The Group did not take legal repossession of any collateral in the year.
Details of collateral pledged by customers against the carrying amount of loans and advances as at 31 December 2024 are as follows:
In millions of Naira
Group
Bank
Total exposure
Fair value of
collateral
Total exposure
Fair value of
collateral
Secured against real
estate
603,062
816,116
394,840
313,272
Secured by shares of
quoted companies
26,744
12,051
26,744
12,051
Cash Collateral, lien over
fixed and floating assets
5,129,785
3,912,017
4,549,166
3,298,165
Unsecured
5,234,225
-
4,751,910
-
Total Gross amount
10,993,816
4,740,184
9,722,660
3,623,488
ECL Allowance
(1,028,452)
-
(1,013,885)
-
Net carrying amount
9,965,364
4,740,184
8,708,775
3,623,488
Group
31 December 2024
Term loan
Overdrafts
Onlending
Total
Disclosure by Collateral
Property/Real estate
615,966
193,705
4,257
813,928
Equities
4,917
7,134
-
12,051
Cash Collateral, lien over fixed and floating assets
3,352,041
525,437
36,727
3,914,205
Grand total: Fair value of collateral
3,972,924
726,276
40,984
4,740,184
Grand total: Gross loans
8,912,221
2,003,446
78,149
10,993,816
Grand total: ECL Allowance
(798,818)
(223,113)
(6,521)
(1,028,452)
Grand total: Net amount
8,113,403
1,780,333
71,628
9,965,364
Grand total: Amount of overcollaterization/(undercollaterization)
(4,140,479)
(1,054,057)
(30,644)
(5,225,180)
67 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
Term loan
Overdrafts
Onlending
Total
Against 12 months ECL loans and advances
Property/Real estate
361,852
176,601
3,093
541,546
Equities
4,709
3,080
-
7,789
Cash Collateral, lien over fixed and floating assets
1,829,616
191,916
31,334
2,052,866
Fair value of collateral
2,196,177
371,597
34,427
2,602,201
Gross loans
6,005,480
1,214,301
67,065
7,286,846
ECL Allowance
(124,852)
(25,236)
(1,275)
(151,363)
Net amount
5,880,628
1,189,065
65,790
7,135,483
Grand total: Amount of overcollaterization/(undercollaterization)
(3,684,451)
(817,468)
(31,363)
(4,533,282)
31 December 2024
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL not credit-impaired loans and advances
Property/Real estate
240,094
6,703
337
247,134
Equities
18
-
-
18
Cash Collateral, lien over fixed and floating assets
1,494,475
314,042
2,230
1,810,747
Fair value of collateral
1,734,587
320,745
2,567
2,057,899
Gross loans
2,715,685
643,543
3,107
3,362,335
ECL Allowance
(537,863)
(95,906)
(1,984)
(635,753)
Net amount
2,177,822
547,637
1,123
2,726,582
Grand total: Amount of overcollaterization/(undercollaterization)
(443,235)
(226,892)
1,444
(668,683)
31 December 2024
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL credit-impaired loans and advances
Property/Real estate
14,019
10,401
826
25,246
Equities
190
4,055
-
4,245
Cash Collateral, lien over fixed and floating assets
27,950
19,478
3,163
50,591
Fair value of collateral
42,159
33,934
3,989
80,082
Gross loans
191,056
145,602
7,977
344,635
ECL Allowance
(136,103)
(101,971)
(3,262)
(241,336)
Net amount
54,953
43,631
4,715
103,299
Grand total: Amount of overcollaterization/(undercollaterization)
(12,794)
(9,697)
(726)
(23,217)
68 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Bank
31 December 2024
Term loan
Overdrafts
Onlending
Total
Disclosure by Collateral
Property/Real estate
266,389
42,627
4,257
313,273
Equities
4,917
7,134
-
12,051
Cash Collateral, lien over fixed and floating assets
2,788,302
473,135
36,727
3,298,164
Grand total: Fair value of collateral
3,059,608
522,896
40,984
3,623,488
Grand total: Gross loans
7,821,586
1,822,925
78,149
9,722,660
Grand total: ECL Allowance
(789,286)
(218,078)
(6,521)
(1,013,885)
Grand total: Net amount
7,032,300
1,604,847
71,628
8,708,775
Grand total: Amount of overcollaterization/(undercollaterization)
(3,972,692)
(1,081,951)
(30,644)
(5,085,287)
31 December 2024
Term loan
Overdrafts
Onlending
Total
Against 12 months ECL loans and advances
Property/Real estate
42,752
36,377
3,093
82,222
Equities
4,709
3,080
-
7,789
Cash Collateral, lien over fixed and floating assets
1,270,170
146,331
31,334
1,447,835
Fair value of collateral
1,317,631
185,788
34,427
1,537,846
Gross loans
4,927,972
1,037,700
67,065
6,032,737
ECL Allowance
(116,067)
(20,846)
(1,275)
(138,188)
Net amount
4,811,905
1,016,854
65,790
5,894,549
Grand total: Amount of overcollaterization/(undercollaterization)
(3,494,274)
(831,066)
(31,363)
(4,356,703)
31 December 2024
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL not credit-impaired loans and advances
Property/Real estate
222,673
2,842
337
225,852
Equities
18
-
-
18
Cash Collateral, lien over fixed and floating assets
1,490,181
307,497
2,230
1,799,908
Fair value of collateral
1,712,872
310,339
2,567
2,025,778
Gross loans
2,705,303
643,072
3,107
3,351,482
ECL Allowance
(537,116)
(95,633)
(1,984)
(634,733)
Net amount
2,168,187
547,439
1,123
2,716,749
Grand total: Amount of overcollaterization/(undercollaterization)
(455,315)
(237,100)
1,444
(690,971)
31 December 2024
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL credit-impaired loans and advances
Property/Real estate
963
3,408
826
5,197
Equities
190
4,055
-
4,245
Cash Collateral, lien over fixed and floating assets
27,950
19,307
3,163
50,420
Fair value of collateral
29,103
26,770
3,989
59,862
Gross loans
188,311
142,153
7,977
338,441
ECL Allowance
(136,103)
(101,599)
(3,262)
(240,964)
Net amount
52,208
40,554
4,715
97,477
Grand total: Amount of overcollaterization/(undercollaterization)
(23,105)
(13,784)
(726)
(37,615)
69 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Details of collateral pledged by customers against carrying amount of loans and advances as at 31 December 2023 are as follows:
In millions of Naira
Group
Bank
Total exposure
Fair Value of
collateral
Total exposure
Value of
collateral
Secured against real estate
449,911
3,214,994
319,439
126,676
Secured by shares of quoted companies
13,967
9,199
13,967
9,199
Cash collateral, lien over fixed and floating assets
2,533,205
2,270,505
2,203,420
1,928,631
Unsecured
4,058,365
-
3,876,153
-
Total Gross amount
7,055,448
5,494,698
6,412,979
2,064,506
ECL Allowance
(498,977)
-
(484,183)
-
Net carrying amount
6,556,471
5,494,698
5,928,796
2,064,506
Group
31 December 2023
Term loan
Overdrafts
Onlending
Total
Disclosure by Collateral
Property/Real estate
3,118,408
81,402
15,184
3,214,994
Equities
1,788
4,788
2,622
9,198
Cash Collateral, lien over fixed and floating assets
1,692,916
202,472
375,118
2,270,506
Grand total: Fair value of collateral
4,813,112
288,662
392,924
5,494,699
Grand total: Gross loans
5,291,535
1,098,703
665,210
7,055,449
Grand total: ECL Allowance
(336,420)
(125,258)
(37,299)
(498,977)
Grand total: Net amount
4,955,115
973,446
627,911
6,556,473
Grand total: Amount of overcollaterization/(undercollaterization)
(142,003)
(684,784)
(234,986)
(1,061,773)
31 December 2023
Term loan
Overdrafts
Onlending
Total
Against 12 months ECL loans and advances
Property/Real estate
232,635
73,121
14,286
320,042
Equities
930
1,365
794
3,089
Cash Collateral, lien over fixed and floating assets
1,202,510
99,070
195,589
1,497,169
Fair value of collateral
1,436,075
173,556
210,669
1,820,300
Gross loans
3,522,061
348,802
443,581
4,314,444
ECL Allowance
(36,667)
(4,825)
(5,855)
(47,347)
Net amount
3,485,394
343,977
437,726
4,267,097
Grand total: Amount of overcollaterization/(undercollaterization)
(2,049,318)
(170,422)
(227,057)
(2,446,797)
70 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2023
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL not credit-impaired loans and advances
Property/Real estate
2,832,953
3,117
843
2,836,913
Equities
858
235
1,828
2,921
Cash Collateral, lien over fixed and floating assets
441,123
88,005
174,007
703,135
Fair value of collateral
3,274,934
91,357
176,678
3,542,969
Gross loans
1,556,619
658,239
215,799
2,430,657
ECL Allowance
(98,041)
(46,347)
(27,160)
(171,548)
Net amount
1,458,577
611,892
188,640
2,259,109
Grand total: Amount of overcollaterization/(undercollaterization)
1,816,357
(520,535)
(11,962)
1,283,860
31 December 2023
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL credit-impaired loans and advances
Property/Real estate
52,820
5,164
55
58,039
Equities
-
3,189
-
3,189
Cash Collateral, lien over fixed and floating assets
48,292
16,388
5,521
70,201
Fair value of collateral
101,112
24,741
5,576
131,429
Gross loans
212,855
91,662
5,830
310,347
ECL Allowance
(201,712)
(74,086)
(4,284)
(280,082)
Net amount
11,143
17,576
1,546
30,265
Grand total: Amount of (undercollaterization)/overcollaterization
89,969
7,165
4,030
101,164
Bank
31 December 2023
Term loan
Overdrafts
Onlending
Total
Disclosure by Collateral
Property/Real estate
83,454
28,038
15,184
126,676
Equities
1,788
4,789
2,622
9,199
Cash Collateral, lien over fixed and floating assets
1,372,755
180,759
375,117
1,928,631
Grand total: Fair value of collateral
1,457,997
213,586
392,923
2,064,506
Grand total: Gross loans
4,714,937
1,032,834
665,208
6,412,979
Grand total: ECL Allowance
(326,300)
(120,584)
(37,299)
(484,183)
Grand total: Net amount
4,388,637
912,250
627,909
5,928,796
Grand total: Amount of overcollaterization/(undercollaterization)
(2,930,640)
(698,664)
(234,986)
(3,864,290)
71 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2023
Term loan
Overdrafts
Onlending
Total
Against 12 months ECL loans and advances
Property/Real estate
23,378
21,076
14,286
58,740
Equities
930
1,365
794
3,089
Cash Collateral, lien over fixed and floating assets
882,349
77,584
195,590
1,155,523
Fair value of collateral
906,657
100,025
210,670
1,217,352
Gross loans
2,952,899
284,365
443,582
3,680,846
ECL Allowance
(26,960)
(1,924)
(5,854)
(34,738)
Net amount
2,925,939
282,441
437,728
3,646,108
Grand total: Amount of overcollaterization/(undercollaterization)
(2,019,282)
(182,416)
(227,058)
(2,428,756)
31 December 2023
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL not credit-impaired loans and advances
Property/Real estate
7,488
3,117
843
11,448
Equities
858
235
1,828
2,921
Cash Collateral, lien over fixed and floating assets
441,123
87,862
174,008
702,993
Fair value of collateral
449,469
91,214
176,679
717,362
Gross loans
1,549,326
658,189
215,799
2,423,314
ECL Allowance
(97,678)
(45,872)
(27,160)
(170,710)
Net amount
1,451,648
612,317
188,639
2,252,604
Grand total: Amount of overcollaterization/(undercollaterization)
(1,002,179)
(521,103)
(11,960)
(1,535,242)
31 December 2023
Term loan
Overdrafts
Onlending
Total
Against lifetime ECL credit-impaired loans and advances
Property/Real estate
52,588
3,845
55
56,488
Equities
-
3,189
-
3,189
Cash Collateral, lien over fixed and floating assets
48,292
16,303
5,520
70,115
Fair value of collateral
100,880
23,337
5,575
129,792
Gross loans
212,712
90,279
5,828
308,819
ECL Allowance
(201,662)
(72,789)
(4,284)
(278,735)
Net amount
11,050
17,490
1,544
30,084
Grand total: Amount of overcollaterization/(undercollaterization)
89,830
5,847
4,031
99,708
(ii) Balance Sheet Netting Arrangements
Risk reduction by way of current account set-off is recognised for exposures to highly rated and creditworthy customers. Customers are required to
enter into formal agreements giving Zenith Bank Plc the right to set-off gross credit and debit balances in their nominated accounts to determine the
Groups net exposure. Cross-border set-offs are not permitted.
(iii) Guarantees and Standby Letters of Credit
Guarantees and Standby Letters of Credit are perceived to have comparable level of credit risk as loans and advances. In accordance with the Group’s
credit policies, banks and creditworthy companies and individuals with high net worth are accepted as guarantors, subject to credit risk assessment.
Furthermore, Zenith Bank Plc. only recognises unconditional irrevocable guarantees or standby letters of credit provided they are not related to the
underlying obligor.
72 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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 2024 and 31 December 2023 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 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 2024.
In millions of Naira
Group
Bank
Maximum
exposure to
credit risk
Maximum
exposure to
credit risk
Trading assets
- Treasury bills
1,656,226
1,656,226
- Investment in securities
41,891
35,238
- Derivatives Asset -Hedging Instrument
251,523
251,523
- Derivatives Asset-Non Hedging Instrument
29,104
19,690
- Assets pledged as collateral
-
-
The following table contains an analysis of the maximum credit risk exposure from financial assets not subject to impairment as at 31 December 2023.
In millions of Naira
Group
Bank
Maximum
exposure to
credit risk
Maximum
exposure to
credit risk
Trading assets
- Treasury bills
749,606
749,606
- Investment in securities
24,293
19,433
- Derivatives Asset -Hedging Instrument
462,376
462,376
-Derivatives Asset - Non Hedging Instrument
72,363
45,566
- Assets pledged as collateral
-
-
73 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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 2024
Maximum
exposure to
credit risk
Maximum
exposure to
credit risk
In millions of Naira
Group
Bank
Financial assets measured at amortised cost
- Balances with central bank
5,721,839
5,153,964
- Treasury bills
1,022,703
781,238
- Investment in securities
2,739,998
1,846,205
- Assets pledged as collateral
266,865
89,061
- Loans and advances to customers
9,965,364
8,708,776
- Due from banks
4,935,710
4,442,437
- Other financial assets
237,026
114,288
Financial assets measured through other comprehensive income
- Investment in securities
1,949,011
-
Off balance sheet exposures
4,858,039
4,741,303
The following table contains an analysis of the maximum credit risk exposure from financial assets subject to impairment as at 31 December 2023
Maximum
exposure to
credit risk
Maximum
exposure to
credit risk
In millions of Naira
Group
Bank
Financial assets measured at amortised cost
- Balances with central bank
4,107,110
3,860,124
- Treasury bills
1,986,667
1,780,360
- Investment in securities
1,521,682
970,157
- Assets pledged as collateral
308,638
255,061
- Loans and advances to customers
6,556,470
5,928,796
- Due from banks
1,834,314
1,691,722
- Other financial assets
445,597
394,540
Financial assets measured through other comprehensive income
- Investment in securities
1,528,786
-
Off balance sheet exposures
2,044,034
1,840,885
74 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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 2024 and 31 December 2023 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
2024 and 31 December 2023 respectively. For this table, the Group has allocated exposures to regions based on the regions the counterparties are
domiciled. Financial assets included in the table below represents other assets excluding prepayment.
In millions of Naira
Group
Bank
31 December 2024
Nigeria
Rest of Africa Outside Africa
Nigeria
Rest of
Africa
Outside Africa
Balances with central bank
5,153,964
567,877
-
5,153,964
-
-
Treasury bills
2,437,464
241,465
-
2,437,464
-
-
Assets pledged as collateral
89,061
-
177,804
89,061
-
-
Due from other banks
4,447,704
124,328
363,678
4,442,437
-
-
Investment securities
1,958,127
798,147
1,974,625
1,799,941
81,502
-
Derivative Asset - Hedging
Instrument
251,523
-
-
251,523
-
-
Derivative Asset-Non Hedging
Instrument
19,690
7,062
2,351
19,690
-
-
Other financial assets
104,822
124,348
7,855
106,423
1,486
6,379
Total
14,462,355
1,863,227
2,526,313
14,300,503
82,988
6,379
Financial Guarantees
Usance
2,567,161
-
-
2,801,850
-
-
Letters of credit
274,043
49,850
33,844
33,994
-
-
Performance bond and guarantees
1,549,747
112,272
10,236
1,644,573
-
-
Undrawn Overdraft Balance
260,887
-
-
260,887
-
-
Total
4,651,838
162,122
44,080
4,741,304
-
-
In millions of Naira
Group
Bank
31 December 2023
Nigeria
Rest of Africa Outside Africa
Nigeria
Rest of
Africa
Outside Africa
Balances with central bank
3,860,124
246,986
-
3,860,124
-
-
Treasury bills
2,529,966
206,307
-
2,529,966
-
-
Assets pledged as collateral
308,638
-
-
255,061
-
-
Due from other banks
127,067
35,581
1,671,666
126,766
1,076
1,563,880
Investment securities
1,054,597
483,190
1,536,974
956,400
33,190
-
Derivative Asset - Hedging
Instrument
462,376
-
-
462,376
-
1
Derivative Asset- Non Hedging
instrument
45,564
-
26,799
45,565
-
-
Other financial assets
389,071
50,309
6,217
389,137
651
4,752
Total
8,777,403
1,022,373
3,241,656
8,625,395
34,917
1,568,633
Financial Guarantees
Usance
433,926
-
-
433,926
-
-
Letters of credit
424,890
18,574
123,342
424,903
-
-
Performance bond and guarantees
718,207
101,323
12,063
770,347
-
-
Undrawn overdraft
211,708
-
-
211,709
-
-
Total
1,788,731
119,897
135,405
1,840,885
-
-
75 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Gross loans and advances to customers and the impairment allowance per geographical region as at 31 December 2024
Carrying amounts presented in the table below is determined as gross loans less impairment allowances.
31 December 2024
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
491,017
(23,195)
467,822
490,259
(23,163)
467,096
South West Nigeria
8,447,985
(835,920)
7,612,065
8,335,139
(833,393)
7,501,746
South East Nigeria
190,738
(36,250)
154,488
190,738
(36,250)
154,488
North Central Nigeria
505,612
(48,598)
457,014
503,531
(48,510)
455,021
North West Nigeria
59,633
(11,753)
47,880
59,409
(11,744)
47,665
North East Nigeria
143,585
(60,825)
82,760
143,584
(60,825)
82,759
Rest of Africa
778,386
(11,169)
767,217
-
-
-
Outside Africa
376,860
(742)
376,118
-
-
-
10,993,816
(1,028,452)
9,965,364
9,722,660
(1,013,885)
8,708,775
31 December 2023
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
531,653
(14,615)
517,038
531,653
(14,615)
517,038
South West Nigeria
5,404,929
(435,348)
4,969,581
5,224,294
(433,179)
4,791,115
South East Nigeria
209,958
(12,804)
197,154
209,958
(12,804)
197,154
North Central Nigeria
210,427
(11,918)
198,509
210,427
(11,918)
198,509
North West Nigeria
68,967
(4,311)
64,656
68,967
(4,311)
64,656
North East Nigeria
167,680
(7,356)
160,324
167,680
(7,356)
160,324
Rest of Africa
309,739
(9,790)
299,949
-
-
-
Outside Africa
152,094
(2,836)
149,258
-
-
-
7,055,447
(498,977)
6,556,469
6,412,979
(484,183)
5,928,796
76 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
(b) Industry sectors
Gross loans and advances to customers per industry sector as at 31 December 2024
Carrying amounts presented in the table below are determined as gross loans less impairment allowances.
31 December 2024
In millions of Naira
Group
Bank
Loans and advances to customers
Loans and advances to customers
Gross
loans
Impairment
allowance
Carrying
amount
Gross loans
Impairment
allowance
Carrying
amount
Agriculture
335,680
(22,468)
313,212
281,225
(21,481)
259,744
Oil and gas
4,105,443
(560,706)
3,544,737
3,996,809
(558,922)
3,437,887
Consumer Credit
336,532
(28,553)
307,979
180,604
(25,637)
154,967
Manufacturing
2,647,825
(114,193)
2,533,632
2,565,081
(113,002)
2,452,079
Real estate and construction
150,686
(3,615)
147,071
46,204
(1,370)
44,834
Finance and insurance
440,168
(9,707)
430,461
270,305
(8,465)
261,840
Government
1,021,000
(136,269)
884,731
812,815
(135,080)
677,735
Power
217,051
(62,567)
154,484
214,583
(62,463)
152,120
Transportation
229,748
(29,661)
200,087
154,193
(28,998)
125,195
Communication
379,310
(5,054)
374,256
370,764
(4,793)
365,971
Education
31,838
(739)
31,099
28,899
(613)
28,286
General Commerce
1,098,535
(54,920)
1,043,615
801,178
(53,061)
748,117
10,993,816
(1,028,452)
9,965,364
9,722,660
(1,013,885)
8,708,775
31 December 2023
In millions of Naira
Group
Bank
Loans and advances to customers
Loans and advances to customers
Gross loans
Impairment
allowance.
Carrying
amount
Gross loans
Impairment
allowance
Carrying
amount
Agriculture
337,124
(6,566)
330,558
328,984
(6,243)
322,741
Oil and gas
2,111,589
(175,455)
1,936,134
2,109,033
(175,345) 1,933,690
Consumer Credit
148,642
(28,439)
120,203
126,491
(27,604)
98,887
Manufacturing
1,598,506
(157,356)
1,441,149
1,520,684
(154,544) 1,366,140
Real estate and construction
258,090
(14,077)
244,013
198,922
(12,173)
186,749
Finance and Insurance
153,750
(2,608)
151,142
43,032
(339)
42,693
Government
875,619
(30,322)
845,297
785,577
(29,535)
756,042
Power
124,580
(9,389)
115,191
124,580
(9,389)
115,191
Transportation
150,809
(18,448)
132,361
129,314
(17,617)
111,697
Communication
108,612
(461)
108,151
100,876
(218)
100,658
Education
31,547
(521)
31,026
26,455
(316)
26,139
General Commerce
1,156,582
(55,337)
1,101,245
919,031
(50,862)
868,169
7,055,447
(498,977)
6,556,470
6,412,979
(484,183) 5,928,796
77 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Group
Financial assets excluding loans and advances per industry sector as at 31 December 2024.
31 December 2024
In millions of naira
Balances with
central bank
Treasury bills Assets pledged
as collateral
Due from other
banks
Investment
securities
Derivatives
Hedging
Instrument
Derivatives
Non Hedging
Instrument
Other financial
assets
Government
5,721,841
2,678,967
266,877
-
3,890,005
251,523
27,123
-
Manufacturing
-
-
-
-
6,798
-
-
-
Finance and Insurance
-
-
-
4,688,870
811,594
-
1,979
288,660
Communication
-
-
-
259,425
40,713
-
-
-
Gross amount
5,721,841
2,678,967
266,877
4,948,295
4,749,110
251,523
29,102
288,660
Impairment allowance
-
(38)
(11)
(12,588)
(18,210)
-
-
(51,443)
Carrying amount
5,721,841
2,678,929
266,866
4,935,707
4,730,900
251,523
29,102
237,217
Financial assets excluding loans and advances per industry sector as at 31 December 2023
31 December 2023
In millions of naira
Balances with
central bank
Treasury bills Assets pledged
as collateral
Due from other
banks
Investment
securities
Derivatives
Hedging
Instrument
Derivatives Non
Hedging
Instrument
Other financial
assets
Government
4,107,110
2,736,344
308,667
-
1,862,577
462,376
45,565
-
Manufacturing
-
-
-
-
156,646
-
-
-
Finance and Insurance
-
-
-
1,835,249
992,817
-
26,798
476,740
Communication
-
-
-
-
105,033
-
-
-
Gross amount
4,107,110
2,736,344
308,667
1,835,249
3,117,073
462,376
72,363
476,740
Impairment allowance
-
(71)
(29)
(935)
(42,312)
-
-
(31,143)
Carrying amount
4,107,110
2,736,273
308,638
1,834,314
3,074,761
462,376
72,363
445,597
Bank
Financial assets excluding loans and advances per industry sector as at 31 December 2024
31 December 2024
In millions of naira
Balances with
central bank
Treasury bills Assets pledged
as collateral
Due from other
banks
Investment
securities
Derivatives
Hedging
Instrument
Derivative
Non Hedging
Instrument
Other financial
assets
Government
5,153,964
2,437,502
89,073
-
1,789,447
251,523
17,710
-
Manufacturing
-
-
-
-
4,721
-
-
-
Finance and Insurance
-
-
-
4,455,005
52,678
-
1,980
165,617
Communication
-
-
-
-
39,602
-
-
-
Gross amount
5,153,964
2,437,502
89,073
4,455,005
1,886,448
251,523
19,690
165,617
Impairment allowance
-
(38)
(11)
(12,569)
(5,005)
-
-
(51,329)
Carrying amount
5,153,964
2,437,464
89,062
4,442,436
1,881,443
251,523
19,690
114,288
78 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Financial assets excluding loans and advances per industry sector as at 31 December 2023.
31 December 2023
In millions of naira
Balances with
central bank
Treasury bills Assets pledged
as collateral
Due from other
banks
Investment
securities
Derivatives
Hedging
Instrument
Derivatives Non
Hedging
Instrument
Other financial
assets
Government
3,860,124
2,530,037
255,090
-
660,464
462,376
45,565
-
Manufacturing
-
-
-
-
143,500
-
-
-
Finance and Insurance
-
-
-
1,692,657
86,605
-
1
425,601
Communication
-
-
-
-
104,472
-
-
-
Gross amount
3,860,124
2,530,037
255,090
1,692,657
995,041
462,376
45,566
425,601
Impairment allowance
-
(71)
(29)
(935)
(5,451)
-
-
(31,061)
Carrying amount
3,860,124
2,529,966
255,061
1,691,722
989,590
462,376
45,566
394,540
3.2.9 Credit quality analysis
Group
31 December 2024
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
5,172,502
2,437,502
266,877
3,641,151
3,394,551
-
2,351
71,854
BBB to BB
-
34,144
-
1,027,450
873,665
251,523
19,690
33,700
CCC to C
-
-
-
42,828
35,362
-
-
-
Unrated
549,337
207,321
-
236,869
445,500
-
7,062
183,106
Gross amount
5,721,839
2,678,967
266,877
4,948,298
4,749,078
251,523
29,103
288,660
ECL - impairment
-
(38)
(11)
(12,588)
(18,210)
-
-
(51,443)
Carrying amount
5,721,839
2,678,929
266,866
4,935,710
4,730,868
251,523
29,103
237,217
Loans and Advances
Term loans
Overdraft
Onlending
Total
12 months ECL
6,005,480
1,214,301
67,065
7,286,846
Lifetime ECL not credit impaired
2,715,685
643,541
3,107
3,362,333
Lifetime ECL credit impaired
191,056
145,602
7,979
344,637
Gross loans and advances
8,912,221
2,003,444
78,151
10,993,816
Less allowances for impairment
12 - months ECL
124,852
25,236
1,275
151,363
-
-
Lifetime ECL not credit impaired
537,863
95,904
1,984
635,751
Lifetime ECL credit impaired
136,103
101,971
3,264
241,338
Total allowances for impairment
798,818
223,111
6,523
1,028,452
Net loans and advances
8,113,403
1,780,333
71,628
9,965,364
79 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Credit rating for loans and advances with 12 month ECL
Loans and advances
Term loans
Overdraft
Onlending
Total
A
946,423
303,967
15,811
1,266,201
AA
748,027
193,383
4,271
945,681
B
17,360
7,746
-
25,106
BB
802,533
15,786
-
818,319
BBB
3,283,690
539,408
46,983
3,870,081
CC
-
-
-
-
CCC
(53)
-
-
(53)
Below C
-
-
-
-
Unrated
207,499
154,012
-
361,511
Gross amount
6,005,479
1,214,302
67,065
7,286,846
ECL-Impairment
(124,852)
(25,236)
(1,275)
(151,363)
Carrying amount
5,880,627
1,189,066
65,790
7,135,483
Bank
31 December 2024
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
5,153,964
2,437,502
89,073
3,008,105
1,619,327
-
-
71,854
BBB to BB
-
-
-
871,933
258,423
251,523
19,690
33,700
CCC to C
-
-
-
557,970
8,698
-
-
-
Unrated
-
-
-
16,998
-
-
-
60,063
Gross amount
5,153,964
2,437,502
89,073
4,455,006
1,886,448
251,523
19,690
165,617
ECL - impairment
-
(38)
(11)
(12,569)
(5,005)
-
-
(51,329)
Carrying amount
5,153,964
2,437,464
89,062
4,442,437
1,881,443
251,523
19,690
114,288
Loans and Advances
Term loans
Overdraft
Onlending
Total
12 months ECL
4,927,972
1,037,700
67,065
6,032,737
Lifetime ECL not credit impaired
2,705,303
643,072
3,107
3,351,482
Lifetime ECL credit impaired
188,311
142,153
7,977
338,441
Gross loans and advances
7,821,586
1,822,925
78,149
9,722,660
Less allowances for impairment
12 - months ECL
(116,067)
(20,846)
(1,275)
(138,188)
-
-
Lifetime ECL not credit impaired
(537,116)
(95,633)
(1,984)
(634,733)
Lifetime ECL credit impaired
(136,103)
(101,599)
(3,262)
(240,964)
Total allowances for impairment
(789,286)
(218,078)
(6,521)
(1,013,885)
Net loans and advances
7,032,300
1,604,847
71,628
8,708,775
80 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Loans and advances
Term loan
Onlending
Overdraft
Total
A
925,477
297,161
15,811
1,238,449
AA
747,887
193,383
4,271
945,541
BB
10,363
7,748
-
18,111
BBB
3,244,245
539,408
46,983
3,830,636
C
-
-
-
-
CC
-
-
-
-
CCC
-
-
-
-
Below C
-
-
-
-
UNRATED
-
-
-
-
Gross amount
4,927,972
1,037,700
67,065
6,032,737
ECL-Impairment
(116,067)
(20,846)
(1,275)
(138,188)
Carrying amount
4,811,905
1,016,854
65,790
5,894,549
Group
31 December 2023
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
3,867,620
2,562,050
308,667
1,509,797
2,055,135
-
1,733
70,821
BBB to BB
-
-
-
133,317
710,549
462,376
70,109
291,938
Below B
239,490
174,294
-
48,829
346,662
-
-
62,064
Unrated
-
-
-
143,306
4,727
-
521
51,917
Gross amount
4,107,110
2,736,344
308,667
1,835,249
3,117,073
462,376
72,363
476,740
ECL - impairment
-
(71)
(29)
(935)
(42,312)
-
-
(31,143)
Carrying amount
4,107,110
2,736,273
308,638
1,834,314
3,074,761
462,376
72,363
445,597
In millions of Naira
Loans and Advances
Term loan
Overdraft
Onlending
Total
12 months ECL
3,522,061
348,802
443,581
4,314,444
Lifetime ECL not credit impaired
1,556,619
658,239
215,799
2,430,657
Lifetime ECL credit impaired
212,855
91,662
5,830
310,347
Gross loans and advances
5,291,535
1,098,703
665,210
7,055,448
Less allowances for impairment
12 - months ECL
36,667
4,825
5,855
47,347
-
-
Lifetime ECL not credit impaired
98,041
46,347
27,160
171,548
Lifetime ECL credit impaired
201,712
74,086
4,284
280,082
Total allowances for impairment
336,420
125,258
37,299
498,977
Net loans and advances
4,955,115
973,445
627,911
6,556,471
81 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Credit rating for loans and advances with 12 month ECL
Loans and advances
Term loan
Overdraft
Onlending
Total
A
945,918
117,111
181,281
1,244,310
AA
599,565
122,750
48,754
771,069
B
291,783
2,382
-
294,165
BB
124,801
829
642
126,272
BBB
1,541,093
105,663
212,904
1,859,660
C
-
-
-
-
CC
-
-
-
-
CCC
1,413
-
-
1,413
Below C
-
-
-
-
Unrated
17,489
67
-
17,556
Gross amount
3,522,061
348,802
443,581
4,314,444
ECL-Impairment
(36,667)
(4,825)
(5,855)
(47,347)
Carrying amount
3,485,394
343,977
437,726
4,267,097
Bank
31 December 2023
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
Hedging
Instruments
Derivative Non
Hedging
Instruments
Other financial
assets
AAA to A
3,965,386
2,530,037
255,090
1,346,978
618,736
-
-
70,228
BBB to BB
-
-
-
126,350
370,491
462,376
45,566
293,308
CCC to C
-
-
-
211,466
5,814
-
-
-
Unrated
-
-
-
7,863
-
-
-
62,065
Gross amount
3,965,386
2,530,037
255,090
1,692,657
995,041
462,376
45,566
425,601
ECL - impairment
-
(71)
(29)
(935)
(5,451)
-
-
(31,061)
Carrying amount
3,965,386
2,529,966
255,061
1,691,722
989,590
462,376
45,566
394,540
In millions of Naira
Loans and Advances
Term loans
Overdraft
Onlending
Total
12 months ECL
2,952,899
284,365
443,582
3,680,846
Lifetime ECL not credit impaired
1,549,326
658,190
215,799
2,423,315
Lifetime ECL credit impaired
212,712
90,279
5,827
308,818
Gross loans and advances
4,714,937
1,032,834
665,208
6,412,979
Less allowances for impairment
12 - months ECL
(26,960)
(1,924)
(5,855)
(34,739)
-
-
Lifetime ECL not credit impaired
(97,680)
(45,871)
(27,159)
(170,710)
Lifetime ECL credit impaired
(201,660)
(72,789)
(4,285)
(278,734)
Total allowances for impairment
(326,300)
(120,584)
(37,299)
(484,183)
Net loans and advances
4,388,637
912,250
627,909
5,928,796
82 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Loans and advances
Term loan
Ovrdraft
On-lending
Total
A
813,952
55,501
181,281
1,050,734
AA
597,064
122,746
48,754
768,564
B
927
669
642
2,238
BB
1,540,956
105,449
212,905
1,859,310
BBB
-
-
-
-
C
-
-
-
-
CC
-
-
-
-
CCC
-
-
-
-
Below C
-
-
-
-
Unrated
-
-
-
-
Gross amount
2,952,899
284,365
443,582
3,680,846
ECL-Impairment
(26,960)
(1,924)
(5,855)
(34,739)
Carrying amount
2,925,939
282,441
437,727
3,646,107
Credit rating for loans and advances with 12 month ECL
3.2.10Amounts Arising from ECL
For inputs, assumptions and techniques used for estimating impairment see accounting policy in note 2.7
3.2.11Amounts 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
– Affordability metrics
– External data from credit reference agencies,
including industry-standard credit scores
– Payment record – this includes overdue status
as well as a range of variables about payment
ratios
– Utilisation of the granted limit
– Requests for and granting of forbearance
– Existing and forecast changes in business,
financial and economic conditions
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.
83 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.2.12Internal 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 generates 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 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 povision 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.
3.2.13Significant increase in credit risk
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.
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 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).
84 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.2.14Modified financial assets
The contractual terms of a financial asset 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 Group Audit Committee regularly reviews reports on forbearance activities.
For financial assets modified as part of the Group’s forbearance policy, the estimate of PD reflects whether the modification has improved or restored
the Group’s ability to collect interest and principal and the Group’s previous experience of similar forbearance action. As part of this process,the Group
evaluates the borrower’s payment performance against the modified contractual terms and considers various behavioural indicators.
Generally, forbearance is a qualitative indicator of a significant increase in credit risk and an expectation of forbearance may constitute evidence that an
exposure is credit-impaired/in default. A customer needs to demonstrate consistently good payment behaviour over a period of time before the
exposure is no longer considered to be credit-impaired/in default or the PD is considered to have decreased such that the loss allowance reverts to being
measured at an amount equal to 12-month ECL.
85 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.2.15Definition 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 has 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.
3.2.16Incorporation 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 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 two or more additional economic scenarios and considering the relative probabilities of
each outcome. External information includes economic data and forecasts published by governmental bodies and monetary authorities in the countries where
the Group operates, supranational organisations such as the OECD and the International Monetary Fund, and selected private-sector and academic forecasters.
The base case represents a most-likely outcome while the other scenarios represent more optimistic and more pessimistic outcomes. Periodically, the Group
carries out stress testing of more extreme shocks to calibrate its determination of these other representative scenarios.
The Group has identified and documented key drivers of credit risk and credit losses for its financial assets and, using an analysis of historical data, has
estimated relationships between macro-economic variables and sectorial historical loan performance. Some of the macroeconomic variables considered
include Crude Oil price, Foreign Exchange rate, GDP growth rate, Inflation rate, Monetary policy rate and Crude production. However from the statistical
analysis of the various macroeconomic variables, the result infers that the key drivers vary across the different sectors. The macro economic variables used
across the different sectors are as follows:
Oil and gas portfolio - Inflation, Crude production and crude prices
Public sector Portfolio - Inflation, prime lending and crude production
Manufacturing sector Portfolio - Inflation, prime lending and crude production
Consumer Credit sector portfolio - Inflation, prime lending and crude production
Agriculture sector portfolio- Crude production
Others - Crude production
Predicted relationships between the historical loan performance of the Bank's portfolio and the macroeconomic variables have been developed by
analysing historical data over the past five years. The result of this analysis in addition to a 5-year forecast was used to determine the scalars used in
adjusting ECL.
The weightings assigned to each economic scenario as at 31 December 2024 were as follows:
Base
Upturn
Downturn
Loans and advances and off-balance sheet exposures
37%
32%
31%
Investment securities and placements
37%
32%
31%
86 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.2.17Measurement 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 by 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 gradings
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.
87 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.2.18(a) 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 2023 represent allowance account for credit losses and reflect measurement basis under IFRS 9.
Group
31 December 2024
31 December 2023
In millions of naira
12-month ECL
12-month ECL
Treasury bills at amortised cost
Balance at 1 January
71
407
Impairment Charge/(writeback) (see note 8)
(33)
(336)
Closing balance
38
71
Gross amount
1,022,741
1,986,738
31 December 2024
31 December 2023
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
Off balance sheet exposure
(Financial Guarantees)
Balance at 1 January
6,991
2,990
86
10,067
5,811
65
738
6,614
Impairment/(writeback) (see note
8)
38,251
(2,611)
4,756
40,396
(640)
2,925
(651)
1,634
Effect of Hyperinflation
2,616
2,616
947
947
Foreign exchange and other
movements
1,021
4
2
1,027
872
-
-
872
Closing balance
48,879
383
4,844
54,106
6,990
2,990
87
10,067
Gross amount
4,829,546
15,325
13,167
4,858,038
1,887,760
120,383
35,891
2,044,034
31 December 2024
31 December 2023
In millions of naira
12-month ECL
12-month ECL
Assets pledged as collateral at amortised cost
Balance at 1 January
29
19
Impairment Charge/(writeback) (see note 8)
(18)
10
Closing Balance
11
30
Gross amount
266,877
308,667
88 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
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
Balance at 1 January
47,347
171,548
280,083
498,978
29,501
35,370
45,390
110,261
- Transfer to 12-month ECL
7,807
(5,344)
(2,463)
-
2,542
(1,109)
(1,433)
-
- Transfer to lifetime ECL not
credit-impaired
(1,140)
1,466
(326)
-
(6,495)
6,728
(233)
-
- Transfer to lifetime ECL credit-
impaired
(400)
(2,912)
3,312
-
(279)
(3,338)
3,617
-
Impairment charge/(write back)
(see note 8)
96,622
441,417
56,135
594,174
19,308
132,836
248,506
400,650
Derecognized assets other than
write off
-
-
-
-
-
-
-
-
Write off
-
-
(96,484)
(96,484)
-
-
(13,386)
(13,386)
Effect of Hyperinflation
(5,016)
-
-
(5,016)
(1,215)
-
-
(1,215)
Foreign exchange and other
movements
6,142
29,577
1,081
36,800
3,985
1,061
(2,379)
2,667
Closing balance
151,362
635,752
241,338
1,028,452
47,347
171,547
280,081
498,977
Gross amount
7,286,846
3,362,335
344,635
10,993,816
4,314,443
2,430,657
310,347
7,055,447
31 December 2024
31 December 2023
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
Balance at 1 January
(7,557)
(1,934)
(32,610)
(42,101)
(3,323)
(9,907)
(49,008)
(62,238)
Transfer to lifetime ECL credit-
impaired
-
-
9,310
(9,310)
Impairment Charge/(writeback)
(see note 8)
10,111
758
(1,432)
9,437
(1,992)
(655)
(5,256)
(7,903)
Financial assets derecognised
during the year other than
write-offs
-
27,409
27,409
-
-
Modification of contractual
cash flows
-
-
-
-
42,533
42,533
Foreign exchange and other
movements
(4,200)
(881)
(7,842)
(12,923)
(2,426)
(683)
(11,595)
(14,704)
Closing balance
(1,646)
(2,057)
(14,475)
(18,178)
(7,741)
(1,935)
(32,636)
(42,312)
Gross amount
4,213,697
17,275
476,214
4,707,186
964,805
257,571
341,617
1,563,993
89 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
In millions of naira
12-month ECL
Lifetime ECL not credit-
impaired
12-month ECL
Lifetime ECL not credit-
impaired
Other financial assets
Balance at 1 January
(31,143)
-
(28,970)
-
Impairment Charge/(writeback) (see note 8)
(20,259)
-
(2,173)
-
-
Foreign exchange and other movements
(41)
-
-
-
Closing balance
(51,443)
-
(31,143)
-
Gross amount subject to simplified ECL
223,179
-
411,264
-
31 December 2024
31 December 2023
In millions of naira
12-month ECL
12-month ECL
Due from other banks
Balance at 1 January
(935)
(75)
Impairment/(writeback) (see note 8)
(11,653)
(860)
Foreign exchange and other movements
-
-
Closing balance
(12,588)
(935)
Gross amount
4,948,297
1,835,249
Bank
31 December 2024
31 December 2023
In millions of naira
12-month ECL
12-month ECL
Treasury bills at ammortised cost
Balance at 1 January
71
39
Impairment Charge/(writeback) (see note 8)
(33)
32
Closing balance
38
71
Gross amount
781,276
1,780,431
31 December 2024
31 December 2023
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
Off balance sheet exposure
Balance at 1 January
3,499
2,990
88
6,577
4,487
65
739
5,291
Impairment/(writeback) (see note
8)
39,165
(2,611)
4,756
41,310
(988)
2,925
(651)
1,286
Closing balance
42,664
379
4,844
47,887
3,499
2,990
88
6,577
Gross amount
4,712,810
15,325
13,167
4,741,303
1,684,611
120,383
35,891
1,840,885
31 December 2024
31 December 2023
In millions of naira
12-month ECL
12-month ECL
Assets pledged as collateral at ammortised cost
Balance at 1 January
29
19
Impairment Charge/(writeback) (see note 8)
(18)
10
Closing balance
11
29
Gross amount
89,073
255,090
90 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
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
Balance at 1 January
34,738
170,709
278,736
484,183
25,269
34,341
43,519
103,129
- Transfer to 12-month ECL
7,803
(5,340)
(2,463)
-
2,542
(1,109)
(1,433)
-
- Transfer to lifetime ECL not
credit-impaired
(1,140)
1,231
(91)
-
(5,909)
6,142
(233)
-
- Transfer to lifetime ECL credit-
impaired
(136)
(2,908)
3,044
-
(264)
(1,500)
1,764
-
Impairment charge (see note 8)
96,923
441,338
56,136
594,397
13,100
132,835
248,505
394,440
Write-offs
-
-
(94,398)
(94,398)
-
-
(13,386)
(13,386)
New financial assets originated
or purchased
-
-
-
-
-
-
-
-
Derecognised asset other than
write off
-
-
-
-
-
-
-
-
Effects of changes in EAD, LGD
and PD
-
-
-
-
-
-
-
-
Foreign exchange and other
movements
-
29,703
-
29,703
Closing balance
138,188
634,733
240,964
1,013,885
34,738
170,709
278,736
484,183
Gross amount
6,032,737
3,351,482
338,441
9,722,660
3,680,846
2,423,314
308,819
6,412,979
31 December 2024
31 December 2023
In millions of naira
Lifetime ECL not credit-impaired
Lifetime ECL not credit-impaired
Other financial assets
-
-
Balance at 1 January
31,061
28,868
Impairment Charge (see note 8)
20,268
2,193
Closing balance
51,329
31,061
Gross amount subject to simplified approach ECL
98,654
358,753
91 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
In millions of naira
12-month ECL
12-month ECL
Due from other Banks
Balance at 1 January
935
75
Impairment/(writeback) (see note 8)
11,634
860
Closing balance
12,569
935
Gross amount
4,455,006
1,692,657
31 December 2024
31 December 2023
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
-
-
Balance at 1 January
2,178
538
2,735
5,451
1,277
-
1,307
2,584
-
-
-
-
-
-
Impairment
Charge/(writeback)(see note 8)
(1,406)
(472)
1,432
(446)
901
538
1,428
2,867
-
-
-
-
-
-
-
-
Closing balance
772
66
4,167
5,005
2,178
538
2,735
5,451
Gross amount
1,841,160
1,353
8,698
1,851,211
720,663
249,308
5,636
975,607
92 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.2.18 (b) Significant changes in gross carrying amount
Significant changes in the gross carrying amount of financial assets that contributed to changes in the loss allowance were as follows:
Group
31 December 2024
31 December 2023
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 amortised cost
Gross carrying amount at 1
January
1,986,738
-
-
1,986,738
1,003,732
177
-
1,003,909
Financial assets derecognised
during the year other than
write-offs
(1,913,238)
-
-
(1,913,238)
(3,284,100)
(306)
-
(3,284,406)
Changes in amortised cost value
150,529
-
-
150,529
38,186
-
-
38,186
New financial assets originated
or purchased
726,625
-
-
726,625
4,197,072
-
-
4,197,072
Foreign exchange and other
movements
72,087
-
-
72,087
31,849
129
-
31,978
Closing gross carrying amount
1,022,741
-
-
1,022,741
1,986,739
-
-
1,986,739
31 December 2024
31 December 2023
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
Off balance sheet exposure
Gross carrying amount at 1 January
1,887,316
121,360
35,358
2,044,034
1,010,968
1,056
12,194
1,024,218
Transfers:
Transfer to 12 month ECL
8,985
(7,692)
(1,293)
-
3,574
(1,788)
(1,786)
-
Transfer to lifetime ECL not credit-
impaired
(184,673)
185,273
(600)
-
(44,363)
44,910
(547)
-
Transfer to lifetime ECL credit-
impaired
(1,073)
(85)
1,158
-
(18,901)
-
18,901
-
Financial assets derecognised during
the year
(731,602)
(89,939)
(35,985)
(857,526)
(411,890)
(5,266)
(12,330)
(429,486)
New financial assets originated or
purchased
4,251,708
13,773
9,809
4,275,290
875,878
70,183
14,367
960,428
Foreign exchange and other
movements
(401,115)
(207,365)
4,721
(603,759)
472,050
12,265
4,559
488,874
Closing gross carrying amount
4,829,546
15,325
13,168
4,858,039
1,887,316
121,360
35,358
2,044,034
93 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
Stage 1
Stage 1
In millions of naira
12-month ECL
12-month ECL
Assets pledged as collateral at amortised cost
Gross carrying amount at 1 January
308,667
228,395
Transfers:
Financial assets derecognised during the period other than
write-offs
(99,568)
(156,160)
Changes in amortised cost value
8,903
(1,001)
New financial assets originated or purchased
90,609
53,577
Transfers from investment securities
(75,352)
183,856
Foreign exchange and other movements
33,618
-
Closing gross carrying amount
266,877
308,667
31 December 2024
31 December 2023
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
4,314,443
2,430,656
310,348
7,055,447
3,139,107
905,393
79,466
4,123,966
Transfers:
Transfer from stage 1 to stage 2
166,236
(162,745)
(3,491)
-
(593,133)
470,115
123,018
-
Transfer from stage 1 to stage 3
(173,124)
173,563
(439)
-
-
-
-
-
Transfer from stage 2 to stage 3
(10,244)
(45,109)
55,353
-
(21,914)
(4,179)
26,093
-
Transfer from stage 3 to stage 2
-
-
-
-
-
-
-
-
Transfer from stage 2 to stage 1
-
-
-
-
-
-
-
-
Transfer from stage 3 to stage 1
-
-
-
-
133,119
(130,079)
(3,040)
-
Financial assets derecognised
during the period other than
write-offs
(1,941,725)
(1,387,334)
(119,760)
(3,448,819)
(918,671)
(129,405)
(24,323)
(1,072,399)
New financial assets originated or
purchased
4,431,965
2,211,380
115,686
6,759,031
2,513,310
852,633
82,036
3,447,979
Write-offs
-
-
(94,398)
(94,398)
-
-
(13,386)
(13,386)
Foreign exchange and other
movements
499,295
141,924
81,336
722,555
62,625
466,178
40,484
569,287
Closing gross carrying amount
7,286,846
3,362,335
344,635
10,993,816
4,314,443
2,430,656
310,348
7,055,447
94 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
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
1,883,277
710,949
498,554
3,092,780
1,400,136
90,253
195,605
1,685,994
Transfers:
Transfer from stage 1 to stage
2
44,339
(44,339)
-
-
(45,607)
45,607
-
-
Transfer from stage 1 to stage
3
-
-
-
-
-
-
-
-
Transfer from stage 2 to stage
3
-
-
-
-
-
(77,900)
77,900
-
Transfer to pledged
-
-
-
-
(92,337)
-
-
(92,337)
Financial assets derecognised
during the period other than
write-offs
(113,339)
(203,632)
2,185
(314,786)
(168,771)
(9,432)
(250,775)
(428,978)
Changes in amortised cost value
8,983
16
-
8,999
56,201
7,069
26,339
89,609
New financial assets originated
or purchased
622,379
(4,124)
33,728
651,984
365,743
196,632
217,574
779,949
Modification of contractual
cash flows of financial assets
-
-
(42,518)
(42,518)
-
-
-
-
Transfer to assets pledged
75,352
-
-
75,352
-
-
-
-
Foreign exchange and other
movements
1,692,738
(441,594)
(15,735)
1,235,409
367,912
458,720
231,911
1,058,543
Closing gross carrying amount
4,213,729
17,276
476,214
4,707,219
1,883,277
710,949
498,554
3,092,780
95 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
In millions of naira
12-month ECL
Lifetime ECL not credit-
impaired
12-month ECL
Lifetime ECL not credit-
impaired
Other financial assets
Gross carrying amount at 1 January
-
411,263
168,692
-
Transfers:
New financial assets originated or
purchased
-
55,695
229,490
-
Financial assets derecognised during the
period other than write offs
-
(260,197)
(448)
-
Foreign exchange and other movements
-
16,417
13,530
-
Closing gross carrying amount of assets
subject to simplified approach
-
223,179
411,264
-
31 December 2024
31 December 2023
Stage 1
Stage 1
In millions of naira
12-month ECL
12-month ECL
Due from other banks
Gross carrying amount at 1 January
1,835,249
1,302,886
Transfers:
Financial assets derecognised during the period other than
write-offs
(782,772)
(1,075,935)
New financial assets originated or purchased
2,489,304
556,381
Foreign exchange and other movements
1,406,514
1,051,917
Closing gross carrying amount
4,948,295
1,835,249
Bank
31 December 2024
31 December 2023
Stage 1
Stage 1
In millions of naira
12-month ECL
Total
12-month ECL
Total
Treasury bills at amortised cost
Gross carrying amount at 1 January
1,780,431
1,780,431
963,669
963,669
Transfers:
Financial assets derecognised during the
period other than write-offs
(1,876,309)
(1,876,309)
(3,283,800)
(3,283,800)
Changes in amortised cost value
150,529
150,529
38,154
38,154
New financial assets originated or
purchased
726,625
726,625
4,062,409
4,062,409
Closing gross carrying amount
781,276
781,276
1,780,431
1,780,431
96 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
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
Off balance sheet exposure
Gross carrying amount at 1
January
1,684,611
120,383
35,891
1,840,885
972,357
8,263
15,143
995,763
Transfers:
Transfer from stage 1 to stage
2
(184,673)
184,673
-
-
(44,320)
44,320
-
-
Transfer from stage 1 to stage
3
(1,073)
-
1,073
-
(18,894)
-
18,894
-
Transfer from stage 3 to stage
2
-
600
(600)
-
-
547
(547)
-
Transfer from stage 2 to stage
3
-
(85)
85
-
-
(634)
634
-
Transfer from stage 2 to stage
1
7,692
(7,692)
-
-
1,456
(1,456)
-
-
Transfer from stage 3 to stage
1
1,293
-
(1,293)
-
1,786
-
(1,786)
-
Financial assets derecognised
during the period other than
write-offs
(812,567)
(89,068)
(35,836)
(937,471)
(381,858)
(4,911)
(12,330)
(399,099)
New financial assets originated
or purchased
4,204,304
14,406
9,265
4,227,975
891,932
70,183
14,321
976,436
Foreign exchange and other
movements
(186,774)
(207,892)
4,581
(390,085)
262,152
4,071
1,562
267,785
Closing gross carrying amount
4,712,813
15,325
13,166
4,741,304
1,684,611
120,383
35,891
1,840,885
97 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
Stage 1
Stage 1
In millions of naira
12-month ECL
12-month ECL
Assets pledged as collateral at amortised cost
Gross carrying amount at 1 January
255,090
228,397
Transfers:
Transfer (to)/from investment securities
(75,352)
-
Financial assets derecognised during the period other than
write-offs
(99,568)
(156,160)
Changes in amortised cost value
8,903
(1,001)
New financial assets originated or purchased
-
183,854
Closing gross carrying amount
89,073
255,090
31 December 2024
31 December 2023
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
3,680,845
2,423,315
308,819
6,412,979
2,862,479
899,745
76,580
3,838,804
Transfers:
Transfer from stage 1 to stage
2
(173,124)
173,124
-
-
(592,065)
592,065
-
-
Transfer from stage 1 to stage
3
(8,212)
-
8,212
-
(21,914)
-
21,914
-
Transfer from stage 2 to stage
3
-
(40,606)
40,606
-
-
(123,018)
123,018
-
Transfer from stage 3 to stage
2
-
439
(439)
-
-
1,474
(1,474)
-
Transfer from stage 2 to stage
1
157,608
(157,608)
-
-
130,079
(130,079)
-
-
Transfer from stage stage 3 to
stage 1
3,491
-
(3,491)
-
3,040
-
(3,040)
-
New financial assets originated
or purchased
4,289,478
2,210,585
115,686
6,615,749
2,186,176
861,614
83,529
3,131,319
Financial assets derecognised
during the period other than
write-offs
(1,941,725)
(1,387,334)
(110,266)
(3,439,325)
(918,615)
(129,405)
(16,605)
(1,064,625)
Write-offs
-
-
(94,398)
(94,398)
-
-
(13,386)
(13,386)
Foreign exchange and other
movements
24,377
129,566
73,712
227,655
31,665
450,919
38,283
520,867
Closing gross carrying amount
6,032,738
3,351,481
338,441
9,722,660
3,680,846
2,423,314
308,819
6,412,979
98 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2024
31 December 2023
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
Gross carrying amount at 1
January
720,663
249,308
5,636
975,607
518,217
-
2,703
520,920
Transfers:
Transfer from stage 1 to stage
2
44,339
(44,339)
-
-
(45,607)
45,607
-
-
Transfer from/(to) assets
pledged as collateral
75,352
-
-
75,352
-
-
-
-
Transfer to pledge
-
-
-
-
(92,337)
-
-
(92,337)
Financial assets derecognised
during the period other than
write-offs
(94,980)
(203,632)
2,185
(296,427)
(82,885)
-
-
(82,885)
Changes in amortised cost value
8,983
16
-
8,999
56,201
7,069
57
63,327
New financial assets originated
or purchased
1,086,802
-
326
1,087,128
343,210
196,632
-
539,842
Modification of contractual
cash flows of financial assets
-
-
(2,986)
(2,986)
-
-
-
-
Foreign exchange and other
movements
-
-
3,537
3,537
23,864
-
2,876
26,740
Closing gross carrying amount
1,841,159
1,353
8,698
1,851,210
720,663
249,308
5,636
975,607
31 December 2024
31 December 2023
In millions of naira
Lifetime ECL
Lifetime ECL
Other financial assets
-
-
Gross carrying amount at 1 January
358,753
150,690
Transfers:
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
-
-
Financial assets derecognised during the period other than
write-offs
(260,099)
208,063
New financial assets originated or purchased
-
-
New financial assets originated or purchased
-
-
Modification of contractual cash flows of financial assets
-
-
Changes in interest accruals
-
-
Write-offs
-
-
Closing gross carrying amount of assts subject to simplified
approach
98,654
358,753
31 December 2024
31 December 2023
Stage 1
Stage 1
In millions of naira
12-month ECL
12-month ECL
Due from other banks
Gross carrying amount at 1 January
1,692,657
1,132,870
Transfers:
Financial assets derecognised during the period other than
write-offs
(781,908)
(701,509)
New financial assets originated or purchased
2,558,035
775,049
Foreign exchange and other movements
986,222
486,247
Closing gross carrying amount
4,455,006
1,692,657
99 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Summary of loss allowance by class of financial instruments also showing ECL coverage ratio as at 31 December 2024.
Group
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial
Statement Items
Stage 1
Stage
2/Lifetime
ECL
Stage 3
Total
Stage 1
Stage
2/Lifetime
ECL
Stage 3
Total
Stage 1
Stage
2/Lifetim
e ECL
Stage 3
Total
In millions of Naira
%
%
%
%
On-balance sheet
items
Assets pledged as
collateral
266,877
-
-
266,877
11
-
-
11
-
-
-
-
Treasury bills
1,022,741
-
-
1,022,741
38
-
-
38
-
-
-
-
Loans and
advances to
customers at
amortised cost
7,286,846
3,362,335
344,635
10,993,816
151,362
635,752
241,338
1,028,452
2.08
18.91
70.03
9.35
Debt investment
securities at
amortised cost
and FVOCI
4,213,729
17,276
476,214
4,707,219
1,645
2,057
14,475
18,177
0.04
11.91
3.04
0.39
Other financial
assets measured
at amortised cost
-
223,179
-
223,179
-
51,439
-
51,439
-
23.05
-
23.05
Due from other
Banks
4,948,295
-
-
4,948,295
12,588
-
-
12,588
0.25
-
-
0.25
Subtotal
17,738,488
3,602,790
820,849
22,162,127
165,644
689,248
255,813
1,110,705
0.93
19.13
31.16
5.01
Off-balance sheet
items
Loans and other
credit related
commitments
Letters of credit
357,738
-
-
357,738
106
-
-
106
0.03
-
-
0.03
Usance
2,549,524
10,878
6,759
2,567,161
47,237
379
3,437
51,053
1.85
3.48
50.85
1.99
Financial
guarantee and
similar contracts
Financial
guarantee and
similar contracts
1,666,752
3,003
2,499
1,672,254
128
-
8
136
0.01
-
0.32
0.01
Undrawn
overdraft balance
255,532
1,444
3,910
260,886
1,406
6
1,399
2,811
0.55
0.39
35.78
1.08
Subtotal
4,829,546
15,325
13,168
4,858,039
48,877
385
4,844
54,106
1.01
2.51
36.79
1.11
Total
22,568,034
3,618,115
834,017
27,020,166
214,521
689,633
260,657
1,164,811
0.95
19.06
31.25
4.31
* The Group adopted the simplified approach in estimating the ECL for other financial asset. Under this approach, all ECL allowance are lifetime ECL.
100 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Bank
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial Statement
Items
Stage 1
Stage
2/Lifetime
ECL
Stage 3
Total
Stage 1
Stage
2/Lifetim
e ECL
Stage 3
Total
Stage 1
Stage
2/Lifetim
e ECL
Stage 3
Total
In millions of Naira
%
%
%
%
On-balance sheet
items
Assets pledged as
collateral
89,073
-
-
89,073
11
-
-
11
0.01
-
-
0.01
Treasury bills
781,276
-
-
781,276
38
-
-
38
0.00
-
-
-
Loans and advances
to customers at
amortised cost
6,032,738
3,351,481
338,441
9,722,660
138,188
634,733
240,965
1,013,886
2.29
18.94
71.20
10.43
Debt investment
securities at
amortised cost
1,841,159
1,353
8,698
1,851,210
772
66
4,167
5,005
0.04
4.88
47.91
0.27
Other financial
assets measured at
amortised cost
-
98,654
-
98,654
-
51,329
-
51,329
-
52.03
-
52.03
Due from other
banks
4,455,006
-
-
4,455,006
12,569
-
-
12,569
0.28
-
-
0.28
Subtotal
13,199,252
3,451,488
347,139
16,997,879
151,578
686,128
245,132
1,082,838
1.15
19.88
70.61
6.37
Off-balance sheet
items
Loans and other
credit related
commitments
Letters of credit
33,994
-
-
33,994
106
-
-
106
0.31
-
-
0.31
Usance
2,784,213
10,878
6,759
2,801,850
41,024
374
3,436
44,834
1.47
3.44
50.84
1.60
Performance bonds
and guarantees
1,639,071
3,003
2,499
1,644,573
128
-
8
136
0.01
-
0.32
0.01
Undrawn overdraft
balance
255,533
1,444
3,910
260,887
1,406
6
1,399
2,811
0.55
0.42
35.78
1.08
Subtotal
4,712,811
15,325
13,168
4,741,304
42,664
380
4,843
47,887
0.91
2.48
36.78
1.01
Total
17,912,063
3,466,813
360,307
21,739,183
194,242
686,508
249,975 1,130,725
1.08
19.80
69.38
5.20
* The Group adopted the simplified approach in estimating the ECL for other financial asset. Under this approach, all ECL allowance are lifetime ECL.
101 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Summary of loss allowance by class of financial instruments also showing ECL coverage ratio as at 31 December 2023.
Group
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial
Statement Items
Stage 1
Stage
2/Lifetime
ECL
Stage 3
Total
Stage 1
Stage
2/Lifetime
ECL
Stage 3
Total
Stage 1
Stage
2/Lifetim
e ECL
Stage 3
Total
In millions of Naira
%
%
%
%
On-balance sheet
items
Assets pledged as
collateral
308,667
-
-
308,667
29
-
-
29
0.01
-
-
0.01
Treasury bills
1,986,738
-
-
1,986,738
71
-
-
71
-
-
-
-
Loans and
advances to
customers at
amortised cost
4,314,444
2,430,657
310,347
7,055,448
47,128
170,811
281,040
498,979
1.09
7.03
90.56
7.07
Debt investment
securities at
amortised cost
1,883,276
710,949
498,555
3,092,780
7,741
1,934
32,637
42,312
0.41
-
-
1.37
Other financial
assets measured
at amortised cost
411,264
-
-
411,264
31,143
-
-
31,143
-
-
-
7.57
Due from other
Banks
1,835,249
-
-
1,835,249
935
-
-
935
0.05
-
-
0.05
Subtotal
10,739,638
3,141,606
808,902
14,690,146
87,047
172,745
313,677
573,469
0.81
5.50
38.78
3.90
Off-balance sheet
items
Loans and other
credit related
commitments
Letters of credit
385,141
43,254
5,532
433,927
2,305
1,304
-
3,609
0.60
3.01
-
0.60
Usance
518,020
43,254
5,532
566,806
1,638
876
21
2,535
0.32
2.03
100.00
0.45
Financial
guarantee and
similar contracts
Performance
bonds and
guarantees
787,789
13,635
30,169
831,593
2,466
632
65
3,163
0.31
4.64
0.22
0.38
Undrawn
overdraft balance
175,345
36,265
98
211,708
582
178
-
760
0.33
0.49
-
0.36
Subtotal
1,866,295
136,408
41,331
2,044,034
6,991
2,990
86
10,067
0.37
2.19
0.21
0.49
Total
12,605,933
3,278,014
850,233 16,734,180
94,038
175,735
313,763
583,536
0.75
5.36
36.90
3.49
* The Group adopted the simplified approach in estimating the ECL for other financial asset. Under this approach, all ECL allowance are lifetime ECL.
102 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Bank
Gross Carrying Amount
ECL Provision
ECL Coverage Ratio
Financial
Statement Items
Stage 1
Stage
2/Lifetime
ECL
Stage 3
Total
Stage 1
Stage
2/Lifetime
ECL
Stage 3
Total
Stage 1
Stage
2/Lifetim
e ECL
Stage 3
Total
In millions of Naira
%
%
%
%
On-balance sheet
items
Assets pledged as
collateral
255,089
-
-
255,089
29
-
-
29
0.01
-
-
0.01
Treasury bills
1,780,431
-
-
1,780,431
71
-
-
71
-
-
-
-
Loans and
advances to
customers at
amortised cost
3,680,845
2,423,315
308,819
6,412,979
34,738
170,709
278,736
484,183
0.94
7.04
90.26
7.55
Debt investment
securities at
amortised cost
720,663
249,308
5,637
975,608
1,278
538
3,635
5,451
0.18
0.22
48.53
0.56
Other financial
assets measured
at amortised cost
-
358,753
-
358,753
-
31,061
-
31,061
-
6.80
-
6.80
Due from other
banks
1,692,657
-
-
1,692,657
935
-
-
935
0.06
-
-
0.06
Subtotal
8,129,685
3,031,376
314,456
11,475,517
37,051
202,308
282,371
521,730
0.46
6.67
89.80
4.55
Off-balance sheet
items
Loans and other
credit related
commitments
Letters of credit
397,582
27,229
92
424,903
2,305
1,304
-
3,609
0.58
4.79
-
0.85
Usance
385,141
43,254
5,532
433,927
581
1,497
21
2,099
0.15
3.46
0.38
0.48
Performance
bonds and
guarantees
726,543
13,635
30,169
770,347
30
12
67
109
-
0.09
0.22
0.01
Undrawn
overdraft balance
175,345
36,265
98
211,708
582
178
-
760
0.33
0.49
-
0.36
Subtotal
1,684,611
120,383
35,891
1,840,885
3,498
2,991
88
6,577
0.21
2.48
0.25
0.36
Total
9,814,296
3,151,759
350,347
13,316,402
40,549
205,299
282,459
528,307
0.41
6.51
80.62
3.97
* The Group adopted the simplified approach in estimating the ECL for other financial asset. Under this approach, all ECL allowance are lifetime ECL.
103 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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.
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:
(i) Trading Market Risks - These are risks that arise primarily through trading activities and market making activities. These activities include position-
taking in foreign exchange and fixed income securities (Bonds and Treasury Bills).
(ii) Non Trading Market Risks -These are risks that arise from assets and liabilities that are usually on the books for a longer period of time, but where the
intrinsic value is a function of the movement of financial market parameter.
104 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.3.1 Management of market risk (continued)
'In millions of Naira
Group
At 31 December 2024
At 31 December 2023
Note
Carrying amount
Trading
Non-trading
Carrying amount
Trading
Non-trading
Assets
Cash and balances with central bank
15
5,888,216
-
5,888,216
4,253,374
-
4,253,374
Treasury bills
16
2,678,929
1,656,226
1,022,703
2,736,273
749,606
1,986,667
Assets pledged as collateral
17
266,865
-
266,865
308,638
-
308,638
Due from other banks
18
4,935,707
-
4,935,707
1,834,314
-
1,834,314
Derivative Asset - Hedging Instrument
19
251,523
251,523
-
462,376
462,376
-
Derivative Asset -Non Hedging
Instrument
19
29,103
29,103
-
72,363
72,363
-
Loans and advances
20
9,965,364
-
9,965,364
6,556,470
-
6,556,470
Investment securities
21
5,098,043
41,891
5,056,152
3,290,895
24,293
3,266,602
Other financial assets
25
237,217
-
237,217
445,597
-
445,597
Liabilities
Customer deposits
28
21,959,367
-
21,959,367
15,167,740
-
15,167,740
Derivative liabilities
32
9,258
9,258
-
70,486
70,486
-
Other financial liabilities
29
1,269,462
-
1,269,462
991,354
-
991,354
On-lending facilities
30
250,727
-
250,727
263,065
-
263,065
Borrowings
31
2,045,184
-
2,045,184
1,410,885
-
1,410,885
Bank
At 31 December 2024
At 31 December 2023
Carrying amount
Trading
Non-trading
Carrying amount
Trading
Non-trading
Assets
Cash and balances with central bank
15
5,249,789
-
5,249,789
3,965,386
-
3,965,386
Treasury bills
16
2,437,464
1,656,226
781,238
2,529,966
749,606
1,780,360
Assets pledged as collateral
17
89,061
-
89,061
255,061
-
255,061
Due from other banks
18
4,442,437
-
4,442,437
1,691,722
-
1,691,722
Derivative Asset - Hedging Instrument
19
251,523
251,523
-
462,376
462,376
-
Derivative Asset -Non Hedging
Instrument
19
19,690
19,690
-
45,566
45,566
-
Loans and advances
20
8,708,775
-
8,708,775
5,928,796
-
5,928,796
Investment securities
21
2,248,587
35,238
2,213,349
1,205,724
19,433
1,186,291
Other financial assets
25
114,288
-
114,288
394,540
-
394,540
Liabilities
Customer deposits
28
17,163,424
-
17,163,424
12,154,824
-
12,154,824
Derivative liabilities
32
4,465
4,465
-
45,514
45,514
-
Other financial liabilities
29
1,226,971
-
1,226,971
970,792
-
970,792
On-lending facilities
30
250,725
-
250,725
263,065
-
263,065
Borrowings
31
1,951,616
-
1,951,616
1,450,182
-
1,450,182
105 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.3.2 Measurement of Market Risk
The Group adopts both VAR and 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 daily. 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
i. Net Open Position (NOP- for foreign exchange);
ii. Aggregate Control Limits (for Securities);
iii. Management Action Trigger (MAT);
iv. Duration;
v. Factor Sensitivities (Pv01);
vi. Permitted Instrument and Tenor Limits;
vii. 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 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.
106 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Group
The table below summarizes the Group’s exposure to foreign currency exchange rate risk at 31 December 2024 and 31 December 2023. Included in the
table are the Group’s financial instruments at carrying amounts, categorised by currency.
In millions of Naira
At 31 December 2024
Naira
Dollar
GBP
Euro
Others
Total
Assets
Cash and balances with central banks
5,186,881
146,324
16,215
35,012
503,784
5,888,216
Treasury bills
2,437,464
-
-
-
241,465
2,678,929
Assets pledged as collaterals
89,061
177,804
-
-
-
266,865
Due from other banks
345,392
3,838,382
186,713
443,249
121,970
4,935,707
Derivative assets-hedging instruments
-
251,523
-
-
-
251,523
Derivative assets-non hedging
instruments
499
21,542
-
-
7,062
29,103
Loans and advances to customers
4,186,443
5,061,929
70,031
267,420
379,541
9,965,364
Investment securities
2,053,093
2,276,000
377,766
79,766
311,419
5,098,044
Other financial assets
106,276
7,888
-
-
123,053
237,217
Liabilities
Customer's deposits
9,996,787
9,435,325
830,890
452,463
1,243,904
21,959,369
Derivative liabilities
499
3,966
-
-
4,793
9,258
Other financial liabilities
261,558
933,884
26,708
27,044
20,268
1,269,462
On-lending facilities
250,725
-
-
-
-
250,725
Borrowings
824,246
1,119,271
405
532
100,731
2,045,185
As at 31 December 2024, 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 810 million while the Naira payable at various maturities is:
In millions of Naira
At 31 December 2023
Naira
Dollar
GBP
Euro
Others
Total
Assets
Cash and balances with central banks
3,883,601
122,586
7,820
22,873
216,494
4,253,374
Treasury bills
2,529,966
-
-
-
206,307
2,736,273
Assets pledged as collaterals
255,061
41,737
11,840
-
-
308,638
Due from other banks
116,854
1,466,031
62,338
170,697
18,394
1,834,314
Derivative assets-Hedging instrument
-
462,376
-
-
-
462,376
Derivative assets-Non Hedging
instrument
45,640
24,643
2,005
20
55
72,363
Loans and advances to customers
2,950,511
3,186,826
53,878
181,007
184,248
6,556,470
Investment securities
1,176,001
1,161,572
254,903
97,346
201,073
3,290,895
Other financial assets
389,549
6,122
16
193
49,717
445,597
Liabilities
Customer's deposits
8,364,360
5,224,605
534,189
330,768
713,818
15,167,740
Derivative liabilities
45,513
24,748
225
-
-
70,486
Other financial liabilities
927,150
39,632
8,547
2,268
13,757
991,354
On-lending facilities
263,065
-
-
-
-
263,065
Borrowings
-
1,396,823
56
376
13,630
1,410,885
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 63% (31 December 2023: 106%, with all other variables held constant.
107 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December
2024
31 December
2023
US Dollar effect of 63% (31 December 2023: 106%) up movement on profit before tax and statement of
financial position size (in millions of Naira)
181,302
198,027
31 December
2024
31 December
2023
US Dollar effect of 63% (31 December 2023: 106%) up movement on OCI and statement of financial position
size (in millions of Naira)
226,358
96,805
108 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Bank
The table below summarizes the Bank’s exposure to foreign currency exchange rate risk at 31 December 2024 and 31 December 2023. Included in the
table are the Bank’s financial instruments at carrying amounts, categorised by currency.
In millions of Naira
At 31 December 2024
Naira
Dollar
GBP
Euro
Others
Total
Assets
Cash and balances with central banks
5,186,881
33,200
13,904
15,804
-
5,249,789
Treasury bills
2,437,464
-
-
-
-
2,437,464
Assets pledged as collaterals
89,062
-
-
-
-
89,062
Due from other banks
342,868
3,628,636
84,342
379,535
7,055
4,442,436
Derivative assets-Hedging instruments
-
251,523
-
-
-
251,523
Derivative assets-non hedging
instruments
499
19,191
-
-
-
19,690
Loans and advances to customers
4,186,230
4,477,234
2,147
42,982
182
8,708,775
Investment securities
2,025,918
222,669
-
-
-
2,248,587
Other financial assets
106,400
7,888
-
-
-
114,288
Liabilities
Customer's deposit
9,998,949
6,835,603
67,782
258,229
2,861
17,163,424
Derivative liabilities
499
3,966
-
-
-
4,465
Other financial liabilities
238,963
952,219
3,172
27,254
5,363
1,226,971
On-lending facilities
250,725
-
-
-
-
250,725
Borrowings
824,246
1,126,434
405
531
-
1,951,616
As at 31 December 2024, 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 810 million while the Naira equivalent of treasury bills will mature to the respective
counter parties.
109
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
In millions of Naira
At 31 December 2023
Naira
Dollar
GBP
Euro
Others
Total
Assets
Cash and balances with central banks
3,883,601
62,423
4,986
14,376
-
3,965,386
Treasury bills
2,529,966
-
-
-
-
2,529,966
Assets pledged as collaterals
255,061
-
-
-
-
255,061
Due from other banks
126,765
1,356,978
47,768
154,409
5,802
1,691,722
Derivative Asset - Hedging Instrument
-
462,376
-
-
-
462,376
Derivative Asset -Non Hedging
Instrument
45,565
-
-
1
-
45,566
Loans and advances to customers
2,950,400
2,885,201
2,743
88,369
2,083
5,928,796
Investment securities
1,140,970
34,340
-
30,414
-
1,205,724
Other financial assets
389,614
4,657
16
193
60
394,540
Liabilities
Customer's deposits
8,379,922
3,532,122
45,438
196,377
965
12,154,824
Derivative liabilities
45,514
-
-
-
-
45,514
Other financial liabilities
927,622
39,014
1,349
2,241
566
970,792
On-lending facilities
263,065
-
-
-
-
263,065
Borrowings
-
1,449,750
56
376
-
1,450,182
Debt securities issued
-
-
-
-
-
-
The Bank’s exposure to foreign currency risk is largely concentrated in US Dollar. Movement in exchange rate between the US Dollar and the Nigerian
Naira affects reported earnings through revaluation gain or loss and statement of financial position size through increase or decrease in the revalued
amounts of assets and liabilities denominated in US Dollars. The Group's closing and average Dollar rate as at 31 December 2024 was N1,549/USD and
N1,546.85/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 63% (31 December 2023: 106%), with all other variables held constant.
In millions of Naira
31 December
2024
31 December
2023
US Dollar effect of 63% (31 December 2023: 106%) up movement on profit before tax and balance sheet size
(174,360)
(228,702)
31 December
2024
31 December
2023
US Dollar effect of 63% (31 December 2023: 106%) up movement on OCI and statement of financial position
size (in millions of Naira)
225,136
96,282
110 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
3.3.3.1
Foreign exchange risk
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 savings 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 currrency gain is recognised if
the Naira depreciates, and a loss recognised if it appreciates. For the hedged items - foreign currency liabilities, a foreign currrency 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.
In millions of Naira
Bank
Total exposure to foreign exchange risk- fair value hedge
- Interest bearing borrowings
35,238
- Saving deposits
251,523
- Term deposits
19,690
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 December 2024 and 31 December 2023:
In millions of Naira
At 31 December 2024
Risk Category Average Strike
Price
Nominal
Amount of
Hedging
Instrument
Carrying
Amount of
Hedging
Instrument
Changes in fair value
used for calculating
Hedging
ineffectiveness
Line Item in the
statement of financial
position where the
hedging instrument is
located
Hedge Type: Fair Value hedge
Number
Assets
Assets
CBN Currency Swap
Foriegn Exchange
risk
1,228
872,255
248,529
265,522
Derivative assets
111
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
In millions of Naira
At 31 December 2024
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
Hedge Type: Fair Value hedge
Liabilities
Foreign exchange risk on savings
deposits
Foreign exchange
risk
1,061,065
(275,920)
Customers' deposits
In millions of Naira
At 31 December 2024
Hedge ratio
Effectiveness
recognized in
profit or loss
Hedge
ineffectiveness
recognized in
profit or loss
Line item in
profit or loss
that includes
hedge
ineffectiveness
Fair Value hedge
Foreign exchange risk
Foriegn Exchange
-
%
100
265,522
(10,398)Other operating
income
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.
112 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
The following table shows the profile of the timing of the nominal amount of the hedging instrument
At 31 December 2024
In millions of Naira
Up to 1 month 1-3 months 3-6 months
6-12 months
Derivative assets – Hedging
-
Gross settled
Receivable
266,103
-
606,152
-
Payable
(266,103)
-
(606,152)
-
In millions of Naira
Bank
Total exposure to foreign exchange risk- fair value hedge
- Interest bearing borrowings
144,701
- Term deposits
273,230
- Savings deposits
50,550
In millions of Naira
At 31 December 2023
Risk Category Average Strike
Price
Nominal
Amount of
Hedging
Instrument
Carrying
Amount of
Hedging
Instrument
Changes in fair value
used for calculating
Hedging
ineffectiveness
Line Item in the
statement of financial
position where the
hedging instrument is
located
Hedge Type: Fair Value hedge
Number
Assets
Assets
CBN Currency Swap
Foriegn Exchange
risk
630
1,342,024
462,376
458,478
Derivative assets
In millions of Naira
At 31 December 2023
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
Hedge Type: Fair Value hedge
Liabilities
Foreign exchange risk on foreign
currency interest bearing borrowing
Foriegn Exchange
risk
283,954
(144,701)
Borrowings
Foreign exchange risk on savings
deposits
Foreign Exchange
risk
803,311
(273,230)
Customer's deposits
Foreign exchange risk on term deposits
Foreign Exchange
risk
256,032
50,550
Customer's deposits
113 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
In millions of Naira
At 31 December 2023
Hedge ratio
Effectiveness
recognized in
profit or loss
Hedge
ineffectiveness
recognized in
profit or loss
Line item in
profit or loss
that includes
hedge
ineffectiveness
Fair Value hedge
Foreign exchange risk
Foriegn Exchange
- 100%
458,478
(10,004) 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.
114 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
The following table shows the profile of the timing of the nominal amount of the hedging instrument
At 31 December 2023
In millions of Naira
Less than 3
months
3-6 months
6-12 months
Derivative assets – Hedging
Gross settled
Receivable
172,776
200,350
331,030
Payable
(172,776)
(200,350)
(331,030)
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 2024
In millions of Naira
Note
Carrying amount
Rate sensitive
Non rate
sensitive
Assets
Cash and balances with central banks
15
5,888,216
-
5,888,216
Treasury and other eligible bills (Amortized cost)
16
1,022,703
-
1,022,703
Assets pledged as collateral (Amortised cost)
17
266,865
177,804
89,061
Due from other banks
18
4,935,710
756,564
4,179,146
Derivative Asset - Hedging Instrument
41
251,523
-
251,523
Derivative Asset -Non Hedging Instrument
41
29,103
7,062
22,041
Loans and advances to customers
20
9,965,364
3,577,488
6,387,876
Investment securities (Amortized cost and Fair value through OCI)
21
5,056,153
2,280,706
2,775,447
Other financial assets
25
237,217
-
237,217
27,652,854
6,799,624
20,853,230
Liabilities
Customer deposits
28
21,959,369
9,412,078
12,547,291
Derivative liabilities
9,258
-
9,258
Other financial liabilities
29
1,269,462
-
1,269,462
On-lending facilities
30
250,725
-
250,725
Borrowings
31
2,045,185
928,224
1,116,961
Debt securities issued
-
-
-
25,533,999
10,340,302
15,193,697
Total interest rate gap
2,118,855
(3,540,678)
5,659,533
115 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
The table shows the maturity profile of financial instruments that are rate sensitive.
At 31 December 2024
Up to 1 month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Total rate
sensitive
In millions of Naira
Assets
Assets pledged as collateral
-
-
15,759
54,976
107,069
177,804
Due from other banks
-
-
-
-
756,564
756,564
Loans and advances to customers
85,006
312,011
200,181
776,264
2,204,026
3,577,488
Investment securities (Amortized cost
and fair value through OCI)
106,231
541,210
321,783
321,784
989,698
2,280,706
191,237
853,221
537,723
1,153,024
4,057,357
6,792,562
Liabilities
Customer deposits
8,294,387
350,009
200,662
320,130
246,890
9,412,078
Borrowings
187,699
740,525
-
-
-
928,224
8,482,086
1,090,534
200,662
320,130
246,890
10,340,302
Total interest repricing gap
(8,290,849)
(237,313)
337,061
832,894
3,810,467
(3,547,740)
At 31 December 2023
Note Carrying amount
Rate sensitive
Non rate
sensitive
In millions of Naira
Assets
Cash and balances with central banks
15
4,253,374
-
4,253,374
Treasury and other eligible bills (Amortized cost)
16
1,986,667
-
1,986,667
Assets pledged as collateral (Amortised cost)
17
308,638
-
308,638
Due from other banks
18
1,834,314
262,728
1,571,586
Derivative assets
41
462,376
-
462,376
Derivatives Asset- Non Hedging instrument
41
72,363
-
72,363
Loans and advances to customers
20
6,556,470
2,078,232
4,478,238
Investment securities (Amortized cost and Fair value through OCI)
21
3,266,602
280,285
2,986,317
Other financial assets
25
445,597
-
445,597
19,186,401
2,621,245
16,565,156
Liabilities
Customer deposits
28
15,167,740
5,962,092
9,205,648
Derivative liabilties
70,486
-
70,486
Other financial liabilities
29
991,354
-
991,354
On-lending facilities
30
263,065
-
263,065
Borrowings
31
1,410,885
527,660
883,225
Debt securities issued
-
-
-
17,903,530
6,489,752
11,413,778
Total interest rate gap
1,282,871
(3,868,507)
5,151,378
The table shows the maturity profile of financial instruments that are rate sensitive.
In millions of Naira
At 31 December 2023
Up to 1 month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Total rate
sensitive
In millions of Naira
Assets
Loans and advances to customers
169,958
269,198
245,866
788,772
604,438
2,078,232
169,958
269,198
245,866
788,772
604,438
2,078,232
Liabilities
Customer deposits
5,462,692
103,071
59,267
153,263
183,799
5,962,092
Derivative liabilities
-
430,231
97,429
-
-
527,660
5,462,692
533,302
156,696
153,263
183,799
6,489,752
Total interest repricing gap
(5,292,734)
(264,104)
89,170
635,509
420,639
(4,411,520)
116 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Group
Interest rate sensitivity showing fair value interest rate risk
31 December
2024
31 December 2023
In millions of Naira
Financial assets at FVPL
Treasury bills
1,656,226
749,606
Bonds
41,891
24,293
Assets pledged as collateral
-
-
Total
1,698,117
773,899
Impact on income statement:
Favourable change at 47% reduction in interest rate (2023: 14%)
160,841
108,346
Unfavourable change at 47% increase in interest rate (2023: 14%)
(160,841)
(108,346)
FVOCI investment securities
Government bonds
1,949,011
1,528,786
Impact on other comprehensive income statement:
Favourable change at 17% reduction in interest rate (2023: 14%)
13,144
214,030
Unfavourable change at 17% increase in interest rate (2023: 14%)
(13,144)
(214,030)
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 2024
In millions of Naira
Note Carrying amount
Rate sensitive
Non-rate
sensitive
Assets
Cash and balances with central banks
15
5,249,789
-
5,249,789
Treasury and other eligible bills (Amortized cost)
16
781,238
-
781,238
Assets pledged as collateral
17
89,062
-
89,062
Due from other banks
18
4,442,436
756,564
3,685,872
Derivative Asset - Hedging Instrument
19
251,523
-
251,523
Derivative Asset -Non Hedging Instrument
19
19,690
-
19,690
Loans and advances to customers
20
8,708,775
2,689,259
6,019,516
Investment securities (Amortized cost and Fair value through OCI)
21
2,213,349
-
2,213,349
Other financial assets
25
114,288
-
114,288
21,870,150
3,445,823
18,424,327
Liabilities
Customer deposits
28
17,163,424
7,377,305
9,786,119
Derivative liabilities
4,465
-
4,465
Other financial liabilities
29
1,226,971
-
1,226,971
On-lending facilities
30
250,725
-
250,725
Borrowings
31
1,951,616
928,224
1,023,392
Debt securities issued
-
-
-
20,597,201
8,305,529
12,291,672
Total interest rate gap
1,272,949
(4,859,706)
6,132,655
117 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
The table shows the maturity profile of financial instruments that are rate sensitive.
At 31 December 2024
In millions of Naira
Up to 1 month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Total rate
sensitive
Assets
Due from other banks
-
-
-
-
756,564
756,564
Loans and advances to customers
45,518
113,300
38,436
635,113
1,856,892
2,689,259
45,518
113,300
38,436
635,113
2,613,456
3,445,823
Liabilities
Customer deposits
7,377,305
-
-
-
-
7,377,305
Borrowings
187,698
740,526
-
-
-
928,224
7,565,003
740,526
-
-
-
8,305,529
Total interest repricing gap
(7,519,485)
(627,226)
38,436
635,113
2,613,456
(4,859,706)
At 31 December 2023
In millions of Naira
Note Carrying amount
Rate sensitive
Non rate
sensitive
Assets
Cash and balances with central banks
15
3,965,385
-
3,965,385
Treasury and other eligible bills (Amortized cost)
16
1,780,360
-
1,780,360
Assets pledged as collaterals
17
255,061
-
255,061
Due from other banks
18
1,691,722
-
1,691,722
Derivative assets
41
462,376
-
462,376
Derivatives Asset- Non Hedging instrument
41
45,566
-
45,566
Loans and advances to customers
20
5,928,796
1,407,917
4,520,879
Investment securities (Amortized cost and Fair value through OCI)
21
1,186,291
-
1,186,291
Other financial assets
25
394,540
-
394,540
15,710,097
1,407,917
14,302,180
Liabilities
Customer deposits
28
12,154,824
4,955,730
7,199,094
Derivative liabilities
29
45,514
-
45,514
Other financial liabilities
13
970,792
-
970,792
On-lending facilities
30
263,065
-
263,065
Borrowings
31
1,450,182
527,660
922,522
Debt securities issued
-
-
-
14,884,377
5,483,390
9,400,988
Total interest rate gap
825,720
(4,075,473)
4,901,192
118 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
The table shows the maturity profile of financial instruments that are rate sensitive.
At 31 December 2023
Up to 1 month
1 - 3 months
3 - 6 months
6 - 12 months
Over 1 year
Total rate
sensitive
In millions of Naira
Assets
Loans and advances to customers
9,257
124,127
187,942
736,970
349,621
1,407,917
9,257
124,127
187,942
736,970
349,621
1,407,917
Liabilities
Customer deposits
4,955,730
-
-
-
-
4,955,730
Borrowings
-
430,231
97,429
-
-
527,660
4,955,730
430,231
97,429
-
-
5,483,390
Total interest repricing gap
(4,946,473)
(306,104)
90,513
736,970
349,621
(4,075,473)
Interest rate sensitivity showing fair value interest rate risk
31 December
2024
31 December
2023
In millions of Naira
Financial assets at FVPL
Treasury bills
1,656,226
749,606
Bonds
35,238
19,433
Assets pledged as collateral
-
-
Total
1,691,464
769,039
Impact on income statement:
Favourable change at 47% reduction in interest rate (2023: 14%)
160,841
107,665
Unfavourable change at 47% increase in interest rate (2023: 14%)
(160,841)
(107,665)
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 750 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) 6.444% equity holding in African Finance Corporation (AFC) valued at N358.28 billion and cost N40 billion.
(ii) 3.6% equity holding in Nigerian Interbank Settlement Scheme (NIBBS) valued at N2.64 billion and cost N50 million.
(iii) 2.31% equity holding in FMDQ holdings plc valued at N4.99 billion.
(iv) 0.79% equity holding in Unified Payment Services (UPS) valued at N639.2 million.
(v) 0.024% equity holdings in AFREXIM valued N521.33 million.
(vi) 5.88% equity holding in Shared Agent Network expansion facility Limited (SANEF) valued at N50 million.
The AFC is a private sector-led investment bank and development finance institution which has the Central Bank of Nigeria (CBN) as the single major
shareholder (39.9%) 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.
119 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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 costs 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)
Projecting cash flows and considering the level of liquid assets necessary in relation thereto.
(b)
Monitoring balance sheet liquidity ratios against internal and regulatory requirements.
(c)
Maintaining a diverse range of funding sources with adequate back-up facilities.
(d)
Managing the concentration and profile of debt maturities.
(e)
Monitoring deposit concentration in order to avoid undue reliance on large individual depositors and ensure a satisfactory overall funding mix.
(f)
Maintaining up-to-date liquidity and funding contingency plans. These plans identify early indicators of stress conditions and describe actions
to be taken in the event of difficulties arising from systemic or other crises while minimizing any adverse long-term implications for the
business.
(g)
Regular conduct of stress testing, coupled with testing of contingency funding plans from time to time.
The Maximum Cumulative Outflow has remained positive all through the short tenor maturity buckets. Assessments are carried out on contractual basis.
These reveal the 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 to be able to withstand a range of different
stress events and adequately diversify funding structure and access to funding sources. Those events are regularly reviewed and monitored by the Asset
and Liability Committee (ALCO). Alternative scenarios on liquidity positions and on risk mitigants are considered. In line with standard risk management
practice and global best practice, the Group:
(a). Conducts on a regular basis appropriate stress tests to:
i)
Identify sources of potential liquidity strain; and
ii)
Ensure that current liquidity exposures continue to conform to the liquidity risk tolerance established by the board.
(b). Analyses the separate and combined impact of possible future liquidity stresses on:
i)
Cash flows;
ii)
Liquidity position; and
iii)
Profitability.
120
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
The Board and the Asset and Liability Committee (ALCO) regularly review the stresses and scenarios tested to ensure that their nature and severity
remain appropriate and relevant to the Bank. These reviews take into the account the following:
(a)
Changes in market conditions;
(b)
Changes in the nature, scale or complexity of the Bank's business model and activities; and
(c)
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)
outlines strategies, policies and plans to manage a range of stresses.
(b)
establishes a clear allocation of roles and clear lines of management responsibility.
(c)
is formally documented.
(d)
includes clear invocation and escalation procedures.
(e)
is regularly tested and the result shared with the ALCO and Board.
(f)
outlines that Group's operational arrangements for managing a huge funding run.
(g)
is sufficiently robust to withstand simultaneous disruptions in a range of payment and settlement.
(h)
outlines how the Group will manage both internal communications and those with its external stakeholders; 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 ALCO and the Treasury Group in order to avoid undue reliance on large individual depositors and
to ensure that a satisfactory overall funding mix is maintained at all times. The funding strategy is geared toward ensuring effective diversification in the
sources and tenor of funding. The Group, however places greater emphasis on demand and savings deposits as against purchased funds in order to
minimize the cost of funding.
As part of the management of liquidity risk arising from financial liabilities, the Group holds liquid assets comprising cash and cash equivalents, and debt
securities issued by sovereigns, which can be readily sold to meet liquidity requirements. In addition, the Group maintains agreed lines of credit with
other banks.
(a) Exposure to liquidity 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.
121 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Group
Bank
31 December
2024
31 December
2023
31 December
2024
31 December
2023
At period/year end
83.00%
71.00%
48.00%
45.00%
Average for the period/year
71.00%
64.00% .
46.00%
48.00%
Maximum for the period/year
83.00%
72.00%
48.00%
50.00%
Minimum for the period/year
73.00%
55.00%
45.00%
45.00%
(b) Liquidity reserve
The table sets out the component of the Group's liquidity reserve. These are liquid instruments the Group uses to settle short term or current
obligations.
Group
31 December 2024
31 December 2023
In millions of naira
Gross value
Gross value
Cash and balances with central banks
532,088
269,967
Treasury bills
2,678,967
2,736,344
Balances with other banks
345,392
116,854
Investment securities
4,749,077
2,775,456
Total
8,305,524
5,898,621
Bank
In millions of naira
Gross value
Gross value
Cash and balances with central banks
95,825
126,449
Treasury bills
2,437,502
2,503,037
Balances with other banks
342,868
126,765
Investment securities
1,886,448
989,405
Total
4,762,643
3,772,656
122 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
(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
'In millions of Naira
At 31 December 2024
At 31 December 2023
Note
Encumbered
Unencumbered
Total
Encumbered
Unencumbered
Total
Cash and balances with central banks
15
5,356,128
532,088
5,888,216
3,983,407
269,967
4,253,374
Treasury bills
16
-
2,678,929
2,678,929
-
2,736,273
2,736,273
Assets pledged as collateral
17
266,866
-
266,866
308,638
-
308,638
Due from other banks
18
134,535
4,801,172
4,935,707
354,150
1,480,164
1,834,314
Derivative Assets
18
-
280,626
280,626
-
534,739
534,739
Loans and advances
20
-
9,965,364
9,965,364
-
6,556,470
6,556,470
Investment securities
21
-
5,098,044
5,098,044
-
3,290,895
3,290,895
Other financial assets
25
-
237,217
237,217
1,100
444,497
445,597
Bank
'In millions of Naira
At 31 December 2024
At 31 December 2023
Note
Encumbered
Unencumbered
Total
Encumbered
Unencumbered
Total
Cash and balances with central banks
15
4,933,588
316,202
5,249,789
3,838,937
126,449
3,965,386
Treasury bills
16
-
2,437,464
2,437,464
-
2,529,966
2,529,966
Assets pledged as collateral
17
89,062
-
89,062
255,061
-
255,061
Due from other banks
18
537,606
3,904,830
4,442,436
354,150
1,337,572
1,691,722
Derivative assets
20
-
271,213
271,213
-
507,942
507,942
Loans and advances
20
-
8,708,775
8,708,775
-
5,928,796
5,928,796
Investment securities
21
-
2,248,587
2,248,587
-
1,205,724
1,205,724
Other financial assets
25
-
114,288
114,288
1,100
393,440
394,540
(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 2024 and
31 December 2023 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 repledge 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 are to the extent of the drawn amount at any point in time.
The liquidity analysis of lease liability is disclosed in note 29c.
123 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Group
At 31 December 2024
In millions of Naira
Note Up to 1 month 1 - 3 months 3 - 6 months 6 - 12 months
Over 1 year Gross nominal
inflow/
(outflow)
Carrying
amount
Assets
Non-derivative assets
Cash and balances with central banks
15
347,241
-
-
-
5,540,975
5,888,216
5,888,216
Treasury bills
16
693,937
306,605
1,210,599
697,103
-
2,908,244
2,678,929
Assets pledged as collateral
17
5,819
-
-
5,819
378,334
389,972
266,866
Due from other banks
18
3,467,191
503,411
392,970
508,792
182,550
5,054,914
4,935,707
Loans and advances to customers
20
755,313
1,808,389
1,644,495
3,571,851
6,669,480
14,449,528
9,965,364
Investment securities
21
127,557
706,460
368,974
508,030
4,814,170
6,525,191
5,098,044
Other financial assets
25
215,734
7,330
43
72
65,481
288,660
237,217
5,612,793
3,332,194
3,617,081
5,291,667
17,650,990
35,504,725
29,070,344
Liabilities
Non-derivative liabilities
Customer's deposits
28
19,087,730
1,214,660
621,924
878,854
250,414
22,053,582
21,959,369
Other financial liabilities
29
690,565
537,163
2,173
1,465
44,908
1,276,275
1,269,462
On-lending facilities
30
199,313
37,435
2,637
9,296
2,850
251,530
250,725
Borrowings
31
29,767
759,043
734,555
232,115
447,541
2,203,021
2,045,185
20,007,376
2,548,300
1,361,289
1,121,730
745,715
25,784,409
25,524,742
Deriva ve Asset - Hedging Instrument
19
Gross settled:
-
-
-
-
-
-
-
Receivable
161,697
-
606,152
-
-
767,849
251,523
Payable
161,697
-
606,152
-
-
767,849
251,523
Derivative Asset -Non Hedging Instrument
Gross settled:
Receivable
238,996
168
1,111
172,464
2
412,741
28,604
Payable
245,474
-
-
171,978
-
417,452
28,604
Net settled
-
499
-
-
-
499
499
Derivative liabilities -Hedging Instrument 32
Gross settled:
Receivable
81,307
-
-
-
-
81,307
2,994
Payable
81,307
-
-
-
-
81,307
2,994
Derivative liabilities -Non Hedging
Instrument
Gross settled:
-
-
-
-
-
-
-
Receivable
64,766
252
-
1,451
235
66,704
5,765
Payable
61,911
-
-
-
-
61,911
5,765
Net settled
-
499
-
-
-
499
499
124 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
At 31 December 2023
In millions of Naira
Note Up to 1 month 1 - 3 months 3 - 6 months6 - 12 months Over 1 year
Gross
nominal
inflow/
(outflow)
Carrying amount
Assets
Non-derivative assets
Cash and balances with central banks
15
414,436
-
-
-
3,838,939
4,253,375
4,253,374
Treasury bills
16
727,947
360,019
590,643
1,197,269
-
2,875,878
2,736,273
Assets pledged as collateral
17
6,785
1,015
17,269
105,741
401,200
532,010
308,638
Due from other banks
18
1,694,780
123,941
13,353
5,891
-
1,837,965
1,834,314
Loans and advances to customers
20
1,190,084
808,188
1,400,530
1,016,031
3,964,754
8,379,587
6,556,470
Investment securities
21
163,318
479,801
431,711
213,007
3,018,662
4,306,499
3,290,895
Other financial assets
25
409,077
1,311
19
1,480
65,489
477,376
445,597
4,606,427
1,774,275
2,453,525
2,539,419
11,289,074
22,662,719
19,425,562
Liabilities
Non-derivative liabilities
Customer's deposits
28
13,124,934
830,978
671,685
374,588
192,136
15,194,321
15,167,740
Other financial Liabilities
29
618,211
354,262
170
8,555
18,387
999,585
991,354
On-lending facilities
30
3,056
21,165
22,107
20,692
222,819
289,839
263,065
Borrowings
31
83,846
498,553
313,032
94,290
503,441
1,493,162
1,410,885
Debt securities issued
-
-
-
-
-
-
-
13,830,047
1,704,958
1,006,994
498,126
936,783
17,976,908
17,976,908
Derivative assets- Hedging instruments
19
Gross settled:
-
-
-
-
-
-
-
Receivable
115,750
-
215,280
556,863
-
887,893
462,376
Payable
115,750
-
215,280
556,863
-
887,893
462,376
Net settled
-
-
-
-
-
-
-
Derivative assets-Non Hedging Instrument 32
Gross settled:
Receivable
33,618
193,523
654
-
-
227,794
72,363
Payable
193,523
-
-
-
193,523
72,363
Net settled
265,118
386,048
431,214
1,113,725
-
2,196,104
1,069,478
Derivative liabilities
32
Gross settled:
-
-
-
-
-
-
-
Receivable
318
200
-
-
-
518
70,486
Payable
27,936
-
-
-
-
27,936
70,486
Net settled
28,254
200
-
-
-
28,454
37,911
125 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Bank
At 31 December 2024
In millions of Naira
Note Up to 1 month 1 - 3 months 3 - 6 months6 - 12 months Over 1 year Gross nominal
inflow/
(outflow)
Carrying amount
Assets
Non-derivative assets
Cash and balances with central banks
15
316,202
-
-
-
4,933,588
5,249,789
5,249,789
Treasury bills
16
643,282
133,413
1,205,610
677,461
-
2,659,766
2,437,464
Assets pledged as collateral
17
5,819
-
-
5,819
200,530
212,168
89,062
Due from other banks
18
3,273,170
226,524
382,373
499,015
179,545
4,560,626
4,442,436
Loans and advances to customers
20
521,153
1,537,237
1,468,394
3,412,344
6,246,768
13,185,896
8,708,775
Investment securities
21
19,593
160,709
29,899
164,047
3,287,979
3,662,228
2,248,587
Other financial assets
25
92,681
6,739
-
-
66,196
165,616
114,288
4,871,899
2,064,623
3,086,276
4,758,686
14,914,606
29,696,089
23,290,401
Liabilities
Non-derivative liabilities
Customer's deposits
28
15,597,528
737,263
360,065
525,011
-
17,219,867
17,163,424
Other financial liabilities
29
677,992
537,634
94
736
18,674
1,235,130
1,226,971
On-lending facilities
30
199,313
37,435
2,637
9,296
2,852
251,533
250,725
Borrowings
31
4,589
704,630
733,744
232,115
447,540
2,122,618
1,951,616
Debt securities issued
-
-
-
-
-
-
-
16,479,422
2,016,962
1,096,540
767,157
469,067
20,829,148
20,592,736
Derivative Asset - Hedging Instrument
19
Gross settled:
-
-
-
-
-
-
-
Receivable
161,697
-
606,152
-
-
767,849
251,523
Payable
(161,697)
-
606,152
-
-
444,455
251,523
Derivative Asset - Non Hedging
Instrument
Gross settled:
Receivable
150,221
-
-
171,978
-
322,199
19,191
Payable
150,221
-
-
171,978
-
322,199
19,191
Net settled
-
499
-
-
-
499
499
Derivative liabilities - Hedging Instrument 32
Gross settled:
Receivable
81,307
-
-
-
-
81,307
2,994
Payable
81,307
-
-
-
-
81,307
2,994
Derivative liabilities- Non Hedging
Instrument
Gross settled:
Receivable
61,911
-
-
-
-
61,911
972
Payable
61,911
-
-
-
-
61,911
972
Net settled
-
499
-
-
-
499
499
126 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
At 31 December 2023
In millions of Naira
Note Up to 1 month 1 - 3 months 3 - 6 months
6 - 12
months
Over 1 year Gross nominal
inflow/
(outflow)
Carrying amount
Assets
Non-derivative assets
Cash and balances with central banks
15
126,449
-
-
-
3,838,937
3,965,385
3,965,385
Treasury bills
16
591,229
308,931
578,665
1,186,105
-
2,664,930
2,529,966
Assets pledged as collateral
17
6,785
1,015
17,269
96,036
357,327
478,432
255,061
Due from other banks
18
1,627,792
57,914
9,636
-
-
1,695,342
1,691,722
Loans and advances to customers
20
1,029,508
708,219
1,338,411
961,477
3,634,750
7,672,365
5,928,796
Investment securities
21
12,596
38,915
26,789
63,549
1,759,521
1,901,370
1,205,724
Other financial assets
25
359,405
-
-
-
66,196
425,601
394,540
3,753,764
1,114,994
1,970,770
2,307,167
9,656,730
18,803,426
15,971,195
At 31 December 2023
In millions of Naira
Note Up to 1 month 1 - 3 months 3 - 6 months
6 - 12
months
Over 1 year Gross nominal
inflow/
(outflow)
Carrying amount
Liabilities
Non-derivative liabilities
Customer's deposits
30
10,996,341
551,419
556,190
74,331
30
12,178,311
12,154,824
Other financial liabilities
29
606,172
354,204
56
576
18,899
979,907
970,792
On-lending facilities
30
3,056
21,165
22,107
20,692
222,819
289,839
263,065
Borrowings
31
71,617
550,067
313,032
94,290
503,441
1,532,447
1,410,885
Debt securities issued
-
-
-
-
-
-
-
11,677,186
1,476,855
891,385
189,889
745,189
14,980,504
14,799,566
Derivative assets-Hedging instruments
19
Gross settled:
-
-
-
-
-
-
-
Receivable
115,750
-
215,280
556,863
-
887,893
462,376
Payable
115,750
-
215,280
556,863
-
887,893
462,376
Net settled
-
-
-
-
-
-
-
Derivative assets-Non Hedging Instrument
Gross settled:
Receivable
192,525
192,525
45,566
Payable
192,525
192,525
45,566
Net settled
223
45,141
200
45,564
45,564
Derivative liabilities
32
Gross settled:
-
-
-
-
-
-
-
Receivable
14
-
-
-
-
14
-
Payable
14
-
-
-
-
14
-
Net settled
-
233
45,091
200
-
45,514
45,514
127 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Liquidity gap analysis (continued)
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
Issued financial guarantee contracts
Derivative financial liabilities and financial assets
Undiscounted cash flows, which include estimated interest payments.
Earliest possible contractual maturity. For issued financial guarantee
contracts, the maximum amount of the guarantee is allocated to the earliest
period in which the guarantee could be called.
Contractual undiscounted cash flows. The amounts shown are the gross
nominal inflows and outflows for derivatives that have simultaneous gross
settlement (e.g., forward exchange contracts and currency swaps) and the
net amounts for derivatives that are net settled.
The Group’s expected cash flows on some financial assets and financial liabilities vary significantly from the contractual cash flows. The principal
difference is on demand deposits from customers which are expected to remain stable or increase.
As part of the management of liquidity risk arising from financial liabilities, the Group holds liquid assets comprising cash and cash equivalents, and debt
securities issued by sovereigns, which can be readily sold to meet liquidity requirements. In addition, the Group maintains agreed lines of credit with
other banks and holds unencumbered assets that are eligible for use as collateral with central banks (these amounts are referred to as the ‘Group’s
liquidity reserves’).
Group
At 31 December 2024
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
2,567,161
298,646
130,186
2,369,115
3,903
-
Letters of Credit
357,738
145,217
146,319
49,853
16,348
-
Performance bonds and Guarantees
1,672,254
87,974
215,190
521,426
547,146
300,519
Undrawn overdraft
260,887
33,512
62,621
115,745
47,076
1,932
Total
4,858,040
565,349
554,316
3,056,139
614,473
302,451
At 31 December 2023
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
433,926
2,916
374,675
56,335
-
-
Letters of Credit
566,807
48,735
423,055
94,891
125
-
Performance bonds and Guarantees
831,593
160,356
213,880
228,236
217,133
11,988
Undrawn overdraft
211,709
17,883
155,255
38,325
245
-
Total
2,044,035
229,890
1,166,865
417,788
217,504
11,988
128 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Bank
At 31 December 2024
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
2,801,850
298,646
130,186
2,369,115
3,903
-
Letters of Credit
33,994
33,994
-
-
-
-
Performance bonds and Guarantees
1,644,573
60,292
215,190
521,426
547,146
300,519
Undrawn overdraft
260,887
33,512
62,621
115,745
47,076
1,932
Total
4,741,304
426,444
407,997
3,006,286
598,125
302,451
At 31 December 2023
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
433,926
2,916
374,675
56,335
-
-
Letters of Credit
770,347
180,996
197,641
179,427
200,296
11,988
Performance bonds and Guarantees
424,903
497
412,952
11,455
-
-
Undrawn overdraft
211,709
17,883
155,255
38,325
245
-
Total
1,840,885
202,292
1,140,522
285,542
200,541
11,988
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)
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
ii)
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
iii)
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
This hierarchy requires the use of observable market data when available. The Group considers relevant and observable market prices in its valuations
where possible.
129 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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.
31 December 2024
Fair value hierarchy
In millions of Naira
Note
Carrying
value
Total Fair
value
Level 1
Level 2
Level 3
Assets
Carried at FVTPL:
Treasury bills
16
1,656,226
1,656,222
684,366
971,856
-
Investment securities (Fixed income)
21
41,891
41,891
41,891
-
-
Derivative Asset - Hedging Instrument
19
251,523
251,523
-
251,523
-
Derivative Asset -Non Hedging Instrument
19
29,104
29,104
7,063
22,041
-
Asset pledged as collateral
17
-
-
-
-
Carried at FVOCI:
Equity securities (Unquoted)
21
367,144
367,144
358,283
8,860
Debt securities
21
1,949,011
1,949,011
1,949,011
-
-
Carried at amortized cost:
Treasury bills
16
1,022,703
1,016,226
942,295
73,931
-
Assets pledged as collateral
17
266,865
253,638
253,638
-
-
Investment securities
21
2,739,998
2,629,572
2,016,215
613,357
-
Liabilities
Carried at FVTPL
Derivative liabilities
32
9,258
9,258
9,258
-
The carrying values of the following assets and liabilities (which are measured at amortized cost) 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
Onlending
Borrowings
See additional disclosures on valuation methods in Note 3.5d
130 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2023
Fair value hierarchy
In millions of Naira
Note
Carrying
value
Total Fair
value
Level 1
Level 2
Level 3
Assets
Carried at FVTPL:
Treasury bills
16
749,606
749,606
189,849
559,757
-
Investment securities (Fixed income)
21
24,293
24,293
23,231
1,062
-
Derivative Asset Hedging Instrument
19
462,376
462,376
-
462,376
-
Derivative Asset -Non Hedging Instrument
19
72,364
72,364
36
72,328
-
Carried at FVOCI:
Equity securities (Unquoted)
21
216,134
216,134
-
209,394
6,741
Debt securities
21
1,528,786
1,528,786
1,528,786
-
-
Carried at amortized cost:
Treasury bills
16
1,986,667
1,940,525
884,461
881,770
174,294
Assets pledged as collateral
17
308,638
295,253
267,246
28,007
-
Investment securities
21
1,521,681
1,481,904
1,051,596
136,819
293,275
Liabilities
Carried at FVTPL
Derivative liabilities
32
70,486
70,486
-
70,486
-
131 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
Bank
The table below sets out the Bank's classification of each class of its financial assets and liabilities.
31 December 2024
Fair value hierarchy
In millions of Naira
Note
Carrying
value
Total Fair
value
Level 1
Level 2
Level 3
Assets
Carried at FVTPL:
Treasury bills
16
1,656,226
1,656,222
684,366
971,856
-
Investment securities (Fixed income)
21
35,238
35,238
35,238
-
-
Derivative Asset - Hedging Instrument
19
251,523
251,523
-
251,523
-
Derivative Asset -Non Hedging Instrument
19
19,690
19,690
-
19,690
-
Carried at FVOCI:
Equity securities (Unquoted)
21
367,114
367,144
-
358,283
8,860
Carried at amortized cost:
Treasury bills
16
781,238
774,761
700,830
73,931
-
Assets pledged as collateral
17
89,061
75,834
75,834
-
-
Investment securities
21
1,846,205
1,739,883
1,572,025
167,858
-
Liabilities
Carried at FVTPL
Derivative liabilities
32
4,465
4,465
-
4,465
-
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
Onlending
Borrowings
See additional disclosures on valuation methods in Note 3.5d
132 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
31 December 2023
Fair value hierarchy
In millions of Naira
Note
Carrying
value
Total Fair
value
Level 1
Level 2
Level 3
Assets
Carried at FVTPL:
Treasury bills
16
749,606
749,606
189,849
559,757
-
Investment securities (Fixed income)
21
19,433
19,433
18,371
1,062
-
Derivative assets
19
462,376
462,376
-
462,376
-
Derivative Asset -Non Hedging Instrument
19
45,566
45,565
-
45,565
-
Carried at FVOCI:
Equity securities (Unquoted)
21
216,134
216,134
-
209,394
6,741
Treasury bills
16
1,780,360
1,766,231
884,461
881,770
-
Assets pledged as collateral
17
255,061
245,452
217,445
28,007
-
Investment securities
21
970,157
934,586
797,767
136,819
-
Liabilities
Carried at FVTPL
Derivative liabilities
32
45,514
45,514
-
45,514
-
Carried at amortized cost:
Debt securities issued
3.5.b Financial instruments measured at fair value- Reconciliation of level 3.
Group and Bank
In millions of Naira
At 1 January 2023
93,883
Transfer due to non-availability of observable data
21
(89,359)
Gain recognised through other comprehensive income of equity investments
2,217
At 31 December 2023
6,741
Reconciliation of Level 3 items
At 1 January 2024
6,741
Addition
93
Transfer out due to availability of data
-
Gain recognised through other comprehensive income of equity investments
2,026
At 31 December 2024
8,860
There was a transfer between fair value hierarchy during the year from level 2 to level 3. In prior year, the Bank's investment in AFC was valued as a level
2 hierarchy because of the availability of observable market data arising from issue of AFC shares during that year. However, as there were no additional
issue during 2024 financial year, hence the absence of observable market data, the Bank valued its investment in AFC as a level 3 hierarchy.
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 2024 and 31 December 2023 in measuring financial
instruments categorized as level 3 in the fair value hierarchy.
Type of financial
instrument
Fair values at 31
December 2024
Valuation technique
Significant unobservable
input
Unquoted equity
investment
N8.86 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.
133 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
(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.
At 31 December 2024
In millions of Naira
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
FMDQ
5,062
4,931
4,996
NIBSS
2,706
2,593
2,649
UPSL
646
633
639
AFREXIM
511
531
521
The table below shows the effect of changes in cost of equity and terminal growth rate on other comprehensive income
In millions of Naira
31 December
2024
31 December 2023
Effect of 1% decrease in cost of equity and 0.25% increase in terminal growth rate
120
595
Effect of 1% increase in cost of equity and 0.25% decrease in terminal growth rate
(117)
(246)
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.
134
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
(vii) Derivatives
The Group uses widely recognised valuation models for determining the fair value of common and simple financial instruments, such as interest rate and
currency swaps that use only observable market data and require little management judgement and estimation. Observable prices or model inputs are
usually available in the market for listed debt and equity securities, exchange-traded derivatives, and simple OTC derivatives such as interest rate swaps.
Availability of observable market prices and model inputs reduces the need for management judgement and estimation and 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 a 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. Parental support and guidance are given at the Group level at
which the risk level in relation to capital level and adequacy is closely monitored. The Group meets 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 and provides adequate cover for the Group’s risk profile. The Group's capital
adequacy remains strong and the capacity to generate and retain reserves continues to grow.
The Group will only seek additional capital where it finds compelling business need for it and with the expectation that the returns would adequately
match the efforts and risks undertaken.
The following sources of funds are available to the Group to meet its capital growth requirements:
(a)
Profit from Operations: The Group has consistently reported good profit, which can easily be retained to support the capital base.
(b)
Issue of Shares: The Group has successfully assessed the capital market to raise equity and debt. With such experiences, the Group is
confident that it can access the capital market when the need arises.
(c)
Bank Loans (long term/short term): In 2014 financial year, Zenith Bank commenced capital computations in accordance with Basel II standard
under the guidelines issued by the Central Bank of Nigeria. The guidelines require capital adequacy computations based on the Standardized
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.
135 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
The table below shows the computation of the Group's capital adequacy ratio for the year ended 31 December 2024 as well 31 December 2023. During
those two periods, the individual entities within the Group complied with all of the externally imposed capital requirements.
The Group and Bank's capital adequacy ratio are above the minimum statutory requirement.
Group
Bank
In millions of Naira
31 December
2024
31 December 2023
31 December 2024 31 December 2023
Tier 1 capital
Basel II
Basel II
Basel II
Basel II
Share capital
20,535
15,698
20,535
15,698
Share premium
594,113
255,047
594,113
255,047
Statutory reserves
549,528
409,104
508,366
367,942
SMEIES reserve
3,729
3,729
3,729
3,729
Retained earnings
2,015,513
1,179,390
1,538,189
893,938
Non-controlling interest
2,365
1,628
-
-
Total qualifying Tier 1 capital
3,185,783
1,864,596
2,664,932
1,536,354
Deferred tax assets
(21,542)
(17,251)
(1,756)
-
Intangible assets
(88,196)
(47,018)
(80,203)
(44,185)
Investment in capital of financial subsidiaries
-
-
(17,313)
(17,313)
Unsecured lending to subsidiaries within the same group
-
-
(77,450)
-
Adjusted Total qualifying Tier 1 capital
3,076,045
1,800,327
2,488,210
1,474,856
Tier 2 capital
Other comprehensive income (OCI)
739,308
364,801
326,994
175,983
Total qualifying Tier 2 capital
739,308
364,801
326,994
175,983
Investment in capital and financial subsidiaries
-
-
(17,313)
(17,313)
Net Tier 2 Capital
739,308
364,801
309,681
158,670
Total regulatory capital
3,815,353
2,165,128
2,797,891
1,633,526
Risk-weighted assets
Credit risk
11,351,782
7,882,270
8,270,027
6,672,311
Market risk
206,990
214,752
104,027
153,007
Operational risk
3,342,575
1,894,809
2,837,480
1,667,274
Total risk-weighted assets
14,901,347
9,991,831
11,211,534
8,492,592
Risk-weighted Capital Adequacy Ratio (CAR)
%
26
%
22
%
25
%
19
3.7
Operational risk
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. Operational risk exists in all products, processes 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.
Operational risk objectives include the following:
(a)
To provide clear and consistent direction in all operations of the Group.
(b)
To provide a standardised framework and appropriate guidelines for creating and managing all operational risk exposures; and
(c)
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 Group 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.
136 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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 processes
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 a measure which indicate the risk profile of the bank and any change thereof. KRIs act as early warning
indicators and are used to monitor and predict potential operational loss events. KRIs are used in conjunction with system of thresholds. When the
threshold or tolerance level for any KRI is breached, it triggers review, escalation, or management action. Risk indicators help keep the operational risk
management dynamic and risk profile current.
Loss Incident Reporting – Loss incidents are reported by all business units using the Loss incident reporting template. The discipline of collecting loss data
is not only needed to understand the dimensions of risk the Bank faces but also used to motivate staff to consider and more actively control key
elements of risk. The Bank-wide data collection promotes a dialogue within the Bank about determining the major operational risk exposures and
reinforces more qualitative efforts to manage operational risk within each of the business lines.
Operational Risk Capital Computation – The bank, based on Central Bank of Nigeria guideline, adopted basic indicator approach (BIA) in the calculation of
its Operational Risk Capital adequacy. The estimated operational Risk Capital Charge is reported to the Board and management for capital planning and
decision making.
Business Continuity Management (BCM)
In line with ISO 22301 Standards, the bank has a robust documented Business Continuity Plan. The primary objective of this plan is to protect the bank in
the event of an undesired event in the form of fire outbreak, flood, theft or robbery, thunderstorm, unexpected breakdown of systems, networks,
equipment, etc or any other form of disaster. This plan ensures that the bank recovers 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 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.
137 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
3.
Risk management (continued)
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.
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:
(a)
Board and senior management oversee the proper set-up and effective functioning of the reputational risk management framework.
(b)
Enterprise Risk Management Policy/Strategy (ERSP) is responsible for supporting the Board and senior management in overseeing the
implementation of reputational risk management framework; and
(c)
Corporate Communications is responsible for managing both the internal and external communications that may impact the reputation of the
Bank.
The process of reputation risk management within the Bank encompasses the following steps:
i.
Identification: Recognizing potential reputational risk as a primary and consequential risk.
ii.
Assessment: Conducting qualitative assessment of reputational risk based on the potential events that have been identified as reputational
risk.
iii.
Monitoring: Undertaking frequent monitoring of the reputational risk drivers.
iv.
Mitigation and Control: Establishing preventive measures and controls for management of reputational risk and tracking mitigation actions.
v.
Independent review: Subjecting the reputational risk measures and mitigation techniques to regular independent review by internal auditors
and/or external auditors; and
vi.
Reporting: Generating regular, action-oriented reports for management review.
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
regulations.
The Group maintains zero tolerance posture for any regulatory breach in all its areas of operations.
138 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
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
Modification of debt securities issued by the Government of Ghana and Ghana Cocoa Board
In assessing the modification gain for investments that are within the scope of the Government of Ghana's Domestic Debt Exchange Programme and
Cocoa Bill Exchange Programme, modification gain/loss is calculated as the difference between the carrying value of the old investments and the fair
value of new investments calculated as the present value of future cash flows using an appropriate discount rate.
Management applied a range of valuation assumptions to arrive at the appropriate discount rate due to the current complexities in Ghana's bond
market.
Detailed information about the judgements and estimates made by the Group in the above area is set out in note 3.2.18 and note 21.
4.2 Impairment losses on loans and advances
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:
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 estimates made by the Group in the above areas is set out in note 3.2.10 to 3.2.17.
The table below shows the impact on expected credit losses on loans and advances of changes in macroeconomic risk drivers and how credit losses
respond to 10% decrease and increase in macro-variables.
31 December 2024
In millions of Naira
10% increase
No change
10% decrease
Gross loans balance
9,722,660
9,722,660
9,722,660
Loss allowance
990,706
1,013,886
1,033,074
4.3 Determining fair value of equity instruments
All financial instruments are initially recognised at fair value. 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. The fair value of a financial instrument on initial recognition is generally
its transaction price (that is, the fair value of the consideration given or received). The majority of valuation techniques employ only observable market
data. However, equity instruments are classified on the basis of valuation techniques that features one or more significant market inputs that are
unobservable ('Level 3" assets and liabilities), and for them, the measurement of fair value is more judgemental. The degree of judgement depends on
liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific financial instrument.
Details on the Group's Level 3 financial instruments and the sensitivity of their valuation to the effect of applying reasonably possible alternative
assumptions in determining their fair value are set out in Note 3.5c.
4.4 Deferred tax assets and liabilities
The deferred tax assets and liabilities recognized by the Group are 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.
139 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
4.5 Uncertain Tax Position regarding the tax treatment of unrealised exchange gains on foreign currency assets.
At each reporting date, the Bank translates its foreign currency deominated assets into the presentation currency (Naira). This leads to the recognition of
unrealised exchange differences in the income statement. Based on the tax laws, the unrealised exchange differences are disallowed for tax purposes
and results in differences between the tax base and the carrying amount of the assets. The tax treatment of the unrealised exchange differences is
considered uncertain in terms of if this creates a temporary or permanent difference for deferred tax purposes. Also, uncertainty arise as to the tax rate
that will be applied on the unrealised gain if it eventually becomes realised.
The Directors have consulted widely on this uncertain tax position and have reflected the effect of the uncertainty by measuring the estimated tax
liability using the expected value method. The Directors have considered the range of possible outcomes and estimated the deferred tax liability as the
sum of the probability-weighted amounts within that range of the possible outcomes. The expected deferred tax liability has been appropriately factored
in our deferred tax computation.
It is anticipated that the reasonable possible outcome of the deferred tax liability sits within a range of 0% and 35% of the unrealized exchange
difference.
4.6 Hyperinflation accounting
The results of the Group’s operations with a functional currency of the Ghana cedis have been prepared in accordance with IAS 29 ‘Financial Reporting in
Hyperinflationary Economies’ as if the economy had always been hyperinflationary. The results of those operations for the year 31 December 2024 are
stated in the current purchasing power using the Consumer Price Index as at 31 December 2024 In accordance with IAS 21 ‘The Effects of Changes in
Foreign Exchange Rates’, the results have been translated and presented in Nigerian Naira at the prevailing rate of exchange on 31 December 2024.
Sierra Leone
The effects of hyperinflation accounting in Sierra Leone have not been deemed significant for group reporting purposes, therefore the Group's
operations with a functional currency of Sierra Leonean Leone have not been adjusted for the impacts of hyperinflation.
Impact of Hyperinflation
The application of the hyperinflation accounting procedures to the Group's operations in Ghana resulted in a N30 billion decrease in the Group profit
before tax for the year ended 31 December 2024. Included in this is a net monetary loss of N33.78 billion.
Other effects on the Group consolidated financial statements as at 31 December 2024 are:
- Total assets increased by N72.08 billion driven by non-monetary assets;
- Opening retained profit increased by N108.64 billion reflecting the impact of adjusting the historical cost of non-monetary assets and liabilities from the
date of their initial recognition to 1 January 2024 for the effect of inflation;
- Net Revenue increased by NGN 11.8 billion;
The CPI for Ghana was 248.30 (2023: 200.5) with an increase in the year of 47.8 (2023: 37.7).
140 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
5.
Segment Analysis
The Group's strategic divisions offer different products and services, and are managed seperately 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 seperately 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
This segment provide a broad range of banking services to a diverse group of corporations, financial institutions, investment funds, governments and
individuals outside Nigeria. The reportable segment 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 Board of Directors, 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.
No single external cutomer 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.
141 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
5. Segment Analysis (continued)
Information regarding each reportable segment is included in the tables below. The tables also show the reconciliation of the amounts in the statement of profit or loss and statement of financial position for the reportable segments to
the amounts in the Group's statement of profit or loss and statement of financial position.
Nigeria Corporate
retail and
pensions
custodian
services
Outside Nigeria
Africa---------------- Europe
Total (Outside
Nigeria)
Total reportable
segments
Eliminations
Consolidation
In millions of Naira
31 December 2024
Interest and similar income
2,288,747
233,477
232,766
466,243
2,754,990
(33,613)
2,721,377
Total Income on fee and commission
306,796
43,089
14,637
57,726
364,522
(8,178)
356,344
Other operating income
(146,392)
(47,259)
(13,113)
(60,372)
(206,764)
-
(206,764)
Trading gains
1,053,127
46,104
771
46,875
1,100,002
-
1,100,002
Total revenue
3,502,278
275,411
235,061
510,472
4,012,750
(41,791)
3,970,959
Revenue:
Derived from external customers
3,460,488
275,411
235,060
510,471
3,970,959
-
3,970,959
Derived from other business segments
41,790
-
-
-
41,791
(41,791)
-
Total revenue
3,502,278
275,411
235,060
510,471
4,012,750
(41,791)
3,970,959
Interest expense
(839,113)
(78,393)
(108,490)
(186,883)
(1,025,996)
33,522
(992,474)
Impairment loss on financial assets
(668,922)
(2,607)
12,723
10,116
(658,806)
-
(658,806)
Depreciation charge
(33,540)
(8,856)
(1,832)
(10,688)
(44,228)
-
(44,228)
Amortisation charge
(5,923)
(1,622)
(773)
(2,395)
(8,318)
-
(8,318)
Fees and commission expense
(143,026)
(6,450)
-
(6,450)
(149,476)
-
(149,476)
Admin and operating expenses
(665,619)
(77,154)
(57,941)
(135,095)
(800,714)
9,908
(790,806)
Profit / (loss) before tax
1,146,135
100,329
78,748
179,077
1,325,212
1,639
1,326,851
Tax expense
(200,635)
(71,967)
(21,355)
(93,322)
(293,957)
-
(293,956)
Profit / (loss) after tax
945,500
28,362
57,393
85,755
1,031,255
1,639
1,032,895
142 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
5. Segment Analysis (continued)
Nigeria
Corporate retail
and pensions
custodian
services
Outside Nigeria
Africa---------------- Europe
Total (Outside
Nigeria)
Total reportable
segments
Eliminations
Consolidation
In millions of Naira
31 December 2024
Expenditure on non-current assets
137,762
10,996
11,466
22,462
160,224
-
160,224
Nigeria Corporate
retail and
pensions
custodian
services
Outside Nigeria
Africa---------------- Europe
Total (Outside
Nigeria)
Total reportable
segments
Eliminations
Consolidation
In millions of Naira
31 December 2024
Total assets
24,075,319
2,338,659
4,102,198
6,440,857
30,516,176
(558,651)
29,957,525
Other measures of assets
Loans and advances to customers
8,708,989
401,913
861,626
1,263,539
9,972,528
(7,164)
9,965,364
Treasury bills
2,437,464
241,465
-
241,465
2,678,929
-
2,678,929
Investment securities
2,276,099
535,510
2,286,432
2,821,942
5,098,041
-
5,098,044
Total liabilities
20,945,853
1,991,457
3,512,820
5,504,277
26,450,130
(521,878)
25,928,252
Other measures of liabilities
Customer deposits
17,163,424
1,831,958
3,479,128
5,311,086
22,474,510
(515,141)
21,959,369
Borrowings
1,951,616
100,732
-
100,732
2,052,348
(7,163)
2,045,185
143 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
5. Segment Analysis (continued)
Nigeria Corporate retail and
pensions custodian services
Outside Nigeria
Africa---------------- Europe
Total outside
Nigeria
Total outside
Nigeria
Eliminations
Consolidation
In millions of Naira
31 December 2023
Interest and similar income
928,913
-
130,331
99,866
230,197
1,159,110
(14,436)
1,144,674
Total Income on fee and commission
152,508
-
23,568
5,902
29,470
181,978
(4,463)
177,515
Other operating income
264,192
-
(6,339)
(854)
(7,193)
256,999
(14,411)
242,588
Trading gains
538,286
-
27,007
1,680
28,687
566,973
-
566,973
Total revenue
1,883,899
-
174,567
106,594
281,161
2,165,060
(33,310)
2,131,750
Revenue:
Derived from external customers
1,850,589
-
174,567
106,594
281,161
2,131,750
-
2,131,750
Derived from other business segments
33,310
-
-
-
-
33,310
(33,310)
-
Total revenue
1,883,899
-
174,567
106,594
281,161
2,165,060
(33,310)
2,131,750
Interest expense
(355,230)
-
(32,828)
(34,941)
(67,769)
(422,999)
14,507
(408,492)
Impairment loss on financial assets
(398,476)
-
(10,341)
(520)
(10,861)
(409,337)
(279)
(409,616)
Depreciation charge
(26,231)
-
(2,901)
(725)
(3,626)
(29,857)
-
(29,857)
Amortisation charge
(2,510)
-
(588)
(371)
(959)
(3,469)
-
(3,469)
Fees and commission expense
(70,092)
-
(2,575)
-
(2,575)
(72,667)
4,459
(68,208)
Admin and operating expenses
(353,478)
-
(42,949)
(20,936)
(63,885)
(417,363)
1,217
(416,146)
Profit before tax
677,882
-
82,385
49,101
131,486
809,368
(13,406)
795,962
Tax expense
(75,021)
-
(31,205)
(12,116)
(43,321)
(118,342)
(711)
(119,053)
Profit after tax
602,861
-
(51,180)
36,985
(14,195)
691,026
(14,117)
676,909
144
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
5. Segment Analysis (continued)
Nigeria Corporate retail and
pensions custodian services
Outside Nigeria
Africa---------------- Europe
Total reportable
segments
Eliminations
Consolidation
In millions of Naira
31 December 2023
Expenditure on non-current assets
65,409
-
10,773
262
-
76,444
-
-
76,444
Nigeria Corporate retail and
pensions custodian services
Outside Nigeria
Africa---------------- Europe
Total outside
Nigeria
Total outside
Nigeria
Eliminations
Consolidation
In millions of Naira
31 December 2023
Total assets
16,843,187
-
1,279,688
2,531,841
3,811,529
20,654,716
-
(286,261)
20,368,455
Other measures of assets
Loans and advances to customers
5,928,907
-
197,615
482,875
680,490
6,609,397
-
(6,609,397)
-
Treasury bills
2,529,966
-
206,307
-
206,307
2,736,273
-
(2,736,273)
-
Investment securities
1,234,116
-
334,831
1,721,948
2,056,779
3,290,895
-
(3,290,895)
-
Total liabilities
15,009,095
-
1,075,664
2,212,021
3,287,685
18,296,780
-
(251,705)
18,045,075
Other measures of liabilities
Customer deposits
12,154,824
-
1,028,018
2,203,674
3,231,692
15,386,516
-
(15,386,516)
-
Borrowings
1,450,182
-
13,631
-
13,631
1,463,813
-
(1,463,813)
-
* Revenues are allocated based on the location of the operations.
** Capital expenditure consists of expenditure on intangible assets and property and equipment during the year.
145 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
6.
Interest and similar income
Loans and advances to customers
1,517,917
671,920
1,394,672
635,806
Placement with banks and discount houses
165,319
81,822
130,068
39,796
Treasury bills
579,918
178,967
488,716
145,646
Promissoy notes
5,734
3,205
5,734
3,204
Commercial papers
12,023
21,406
11,853
21,090
Government and other bonds
440,466
187,354
253,720
80,690
2,721,377
1,144,674
2,284,763
926,232
Interest and similar income represents interest income on financial assets measured at amortised cost and fair value through other comprehensive income.
The interest is calculated using the effective interest method.
Interest income accrued on impaired financial assets amount to N18,246 million and N18,246 million (31 December 2023: N29,093 million and N5,484
million) for Group and Bank respectively.
7.
Interest and similar expense
Current accounts
237,412
96,807
218,708
85,898
Savings accounts
156,427
85,593
155,235
84,995
Time deposits
228,169
124,348
114,720
79,858
Borrowed funds
367,404
99,166
349,287
103,443
Leases
3,062
2,578
1,161
1,034
992,474
408,492
839,111
355,228
Total interest expense are calculated using the effective interest rate method reported above and does not include interest expense on financial liabilities
carried at fair value through profit or loss.
8.
Impairment charge on financial and non-financial instruments
ECL on financial instruments:
Loans and advances( see note 3.2.18)
594,176
400,650
594,395
394,440
Investment securities (see note 3.2.18)
(9,430)
7,903
(445)
2,867
Treasury Bills (see note 3.2.18)
(33)
(337)
(33)
32
Other financial assets (see note 3.2.18)
20,259
2,173
20,268
2,193
Due from other banks (see note 3.2.18)
11,653
860
11,634
860
Asset pledged as collateral (see note 3.2.18)
(18)
10
(18)
10
-
-
-
-
Total ECL on financial instruments
616,607
411,259
625,801
400,402
Impairment (credit)/charge on non-financial instruments:
Off balance sheet (see note 3.2.18)
40,396
1,633
41,310
1,286
Other non-financial assets (see note 25)
1,802
(3,276)
1,802
(3,276)
658,805
409,616
668,913
398,412
146
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
9.
Net income on fee and commission
Credit related fees
17,478
3,980
6,383
3,045
Commission on turnover
3,500
2,054
-
-
Account maintenance fee
72,925
47,201
69,315
44,969
Income from financial guarantee contracts issued
31,301
16,247
13,712
8,157
Fees on electronic products
80,051
51,818
71,267
46,294
Foreign currency transaction fees and commission
13,480
4,190
13,378
3,072
Asset based management fees
15,649
10,956
-
-
Auction fees income
3,002
695
3,002
695
Corporate finance fees
438
128
438
128
Foreign withdrawal charges
78,525
19,718
78,525
19,718
Commission on letters of credit
27,918
12,068
26,760
7,596
Commission on agency and collection services
12,077
8,460
10,094
7,498
Total fee and commission income
356,344
177,515
292,874
141,172
Fees and commission expense
(149,477)
(68,208)
(143,013)
(70,092)
206,867
109,307
149,861
71,080
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 N254,731 million and N208,588 million for Group and Bank (31 December 2023:
N110,083 million and N84,361 million) respectively while an amount of N101,613 million and N84,287 million (31 December 2023: N71,025 million and
N56,811 million) was recognised over the service period.
10.
Trading gains
Gain on other trading books
1,116,343
463,371
1,078,708
438,360
(Loss)/Gain on treasury bills FVTPL
(29,841)
98,912
(31,749)
98,135
Gain/(loss) on bonds at FVTPL
9,528
1,100
2,196
(1,799)
Interest income on trading bonds
3,972
3,590
3,972
3,590
1,100,002
566,973
1,053,127
538,286
Included in gain on other trading books is N2.2 billion gains on derivatives for Group and Bank respectively (31 December 2023: Group N4.05 billion and Bank
N4.05 billion). Also included in Gains/loss on other trading books is N15.4 billion related to foreign currency trading gains for both bank and Group (2023: N6
billion).
Inns of Naira
In millions of Naira
Hedge ineffectiveness recognized comprises:
Fair value hedging
FV gains on the derivatives designated as hedging instruments
- (spot component only)
265,522
458,478
265,522
458,478
- Losses on the hedged items attributable to the hedged risk
(275,920)
(468,482)
(275,920)
(468,482)
-Fair value hedge ineffectiveness
(10,398)
(10,004)
(10,398)
(10,004)
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.
147
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
11.
Other operating income/(loss)
Dividend Income from equity instruments (See note a below)
8,645
5,661
14,645
19,777
Gain on disposal of property and equipment (see note 44(vi)
(995)
189
(1,013)
186
Income on cash handling
84
27
-
-
Loan and other recoveries (see note c below)
39,822
24,079
22,938
15,290
Foreign currency revaluation (loss)/gain(see note b below)
(178,019)
223,334
(183,235)
228,810
Net monetary loss arising from hyperinflationary economy (see note d below)
(33,783)
(13,225)
-
-
Derecognition loss on investment securities (see note e below)
(42,518)
2,523
-
-
(206,764)
242,588
(146,665)
264,063
a) Dividend income from equity investments represent dividend received from subsidiaries of N6 billion and N8.6 billion received from other equity
instruments held for strategic purposes and for which the Group has elected to present the fair value and loss in other comprehensive income.
b) Foreign currency revaluation (loss)/ gain represents net (loss)/ 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).
c) Included in this balance is Loan recoveries. This represents amount recovered for previously written-off facilities. The amount is recognised on a cash basis
only.
d) Net monetary loss arising from hyperinflationary economy relates to the remeasurement of monetary items in Ghana following its designation as a
hyperinflationary economy.
e) During the year, the Government of Ghana restructured its existing Eurobonds, presenting investors with two new bond options with varying terms. Zenith
Bank selected the Disco bond option, which indicated substantially different terms compared to the original bonds. Consequently, this triggered the
derecognition of the existing bonds and recognition of the new bonds, culminating in a loss on derecognition.
148
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
12.
Operating expenses
Directors' emoluments (see note 36 (b))
10,854
5,440
10,131
4,759
Auditors' remuneration
3,191
1,337
800
700
Deposit insurance premium
55,655
28,048
52,405
26,234
Professional fees
13,261
9,387
17,200
8,173
Training and development
4,719
3,857
3,997
3,299
Information Technology
67,301
33,596
59,872
28,678
Lease expense
695
3,495
16
2,496
Advertisement
31,451
11,450
30,887
11,205
Outsourcing services
30,730
24,876
30,649
24,845
Bank charges
16,809
5,807
12,696
4,055
Fuel and maintenance
100,900
41,171
90,834
36,009
Insurance
4,621
3,220
3,059
2,485
Licenses, registrations and subscriptions
41,194
10,139
33,656
6,594
Travel and hotel expenses
12,627
5,155
8,998
4,289
Printing and stationery
10,550
5,049
6,417
2,925
Security and cash handling
12,085
7,246
11,005
5,321
Fines & Penalties (see note 41)
15,428
21
15,428
21
Donations
4,925
5,765
4,750
5,673
AMCON levy
92,201
57,383
92,201
57,383
Telephone,postages and communication charges
11,784
9,262
10,969
8,843
Corporate promotions
22,704
15,890
22,263
15,723
General running expenses
22,951
4,137
13,838
1,976
586,636
291,731
532,071
261,686
Lease expense for the year ended 31 December 2024 amounting to N695 million and N16million, (31 December 2023: N3,495 million and N2,496 million)
respectively were recognised. They represent the amount of straight line amortisation on short term lease in which the Group/Bank has applied the
recognition exception.
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 N136 million. These non-audit services were for the following:
review of the bank's Risk assesment N65.4m, Corporate Governance N48m, Training N10m, Zenith bank capital raise Scrutineer service N5m (Wura
Olowofoyeku: FRC/2017/PRO/ICAN/004/00000016809) and Sustainability assessment N7.5m (Edafe Erhie: FRC/2013/PRO/ICAN/004/00000001143).
The Group auditors did not engage in any non-audit service for any of the Bank's subsidiaries.
Included in training and development is a total N657 million which the bank paid as contribution to the industrial training fund.
149
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
13.
Taxation
(a) Major components of the tax expense
Income tax expense
Corporate tax
201,617
35,465
153,740
16,824
Information technology tax
11,354
6,775
11,244
6,677
Tertiary Education tax
17,960
3,127
17,740
2,876
Police trust fund levy
56
33
56
33
National agency for science and engineering infrastructure levy (NASENI)
2,811
1,670
2,810
1,670
National Fiscal Stabilization Levy & Financial Sector Recovery
11,220
8,177
-
-
Effect of hyperinflation
2,609
1,622
-
-
Prior period underprovision
33,452
712
9,224
712
Windfall Tax Levy
63,306
-
63,306
-
Current income tax
344,385
57,581
258,120
28,792
Deferred tax expense
Origination of temporary differences
(50,429)
61,472
(60,989)
43,322
Income tax expense
293,956
119,053
197,131
72,114
Total tax expense
293,956
119,053
197,131
72,114
(b) Reconciliation of the tax expense
Profit before income tax
1,326,851
795,962
1,133,289
667,715
Tax calculated at the weighted average Group rate of 30% (2023: 30%)
398,055
238,789
339,987
200,315
Tax effect of adjustments on taxable income
Effect of difference of rate across different tax jurisdictions
(9,338)
(6,450)
-
-
Non-deductable expenses
163,706
32,003
185,830
56,730
Tax exempt income
(354,454)
(228,282)
(348,416)
(228,282)
Balancing charge
31,602
13,052
241
112
Origination of Temporary differences
(50,429)
61,472
(60,989)
43,322
Information technology levy
11,354
6,776
11,244
6,676
Capital allowance utilised
(25,368)
(12,050)
(23,904)
(12,050)
Tertiary education tax
17,960
3,126
17,740
2,876
Windfall tax
63,307
-
63,307
-
Prior period underprovision
33,452
737
9,224
712
National Fiscal Stabilization Levy & Financial Sector Recovery Levy
11,220
8,177
-
-
Police trust fund levy
78
33
56
33
NASENI
2,811
1,670
2,811
1,670
Total tax expense
293,956
119,053
197,131
72,114
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
(c) The movement in the current income tax payable balance is as follows:
At start of the year
33,877
64,856
28,080
61,655
Tax paid
(55,669)
(65,187)
(28,723)
(62,367)
Current income tax charge (see note 13a)
286,826
34,208
258,122
28,792
WHT Utilized
(8,866)
-
(8,866)
-
At end of the year
256,168
33,877
248,613
28,080
(d) The movement in the current income tax receivable balance is as follows:
At start of the year
(18,975)
-
-
-
Tax paid
(45,466)
(42,348)
-
-
Current income tax charge (see note 13a)
57,572
23,373
-
-
At end of the year
(6,869)
(18,975)
-
-
150 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
14.
Earnings per share (EPS)
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 year.
Profit attributable to shareholders of the Bank (N'million)
1,032,711
676,569
936,158
595,601
Number of issued shares at the end of the year (millions)
41,070
31,396
41,070
31,396
Weighted average number of ordinary shares in issue (millions)
31,423
31,396
31,423
31,396
Basic and diluted earnings per share (Naira)
32.87
21.55
29.79
18.97
Basic and diluted earnings per share are the same, as the Bank has no potentially dilutive ordinary shares.
151 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
15.
Cash and balances with central banks
Cash
166,374
146,264
95,825
105,262
Operating accounts and deposits with central banks
365,714
123,703
220,377
21,187
Mandatory reserve deposits with central bank (cash reserve)
5,329,200
3,902,718
4,906,659
3,758,248
Special cash reserve requirement
26,928
80,689
26,928
80,689
5,888,216
4,253,374
5,249,789
3,965,386
Current
532,088
269,967
316,202
126,449
Non-current
5,356,128
3,983,407
4,933,587
3,838,937
5,888,216
4,253,374
5,249,789
3,965,386
16.
Treasury bills
Treasury bills (FVTPL)
1,656,226
749,606
1,656,226
749,606
Treasury bills (Amortized cost)
1,022,741
1,986,738
781,276
1,780,431
ECL Allowance on treasury bills (Amortized cost) (see note 3.2.18)
(38)
(71)
(38)
(71)
2,678,929
2,736,273
2,437,464
2,529,966
Classified as:
Current
2,678,929
2,736,273
2,437,464
2,529,966
2,678,929
2,736,273
2,437,464
2,529,966
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 40)
218,724
209,246
11,403
209,246
218,724
209,246
11,403
209,246
17.
Assets pledged as collateral
Bonds pledged as collateral
136,492
217,446
89,073
163,869
Treasury bills/Bonds under repurchase agreement
130,385
91,221
-
91,221
ECL Allowance on assets pledged and under repo
(11)
(29)
(11)
(29)
266,866
308,638
89,062
255,061
Included in assets pledged as collateral for Group/Bank are bonds at amortised cost of N N184.6billion (Bank N89.06 billion) (31 December 2023: treasury
bills N91.22 billion and bonds N217.45 billion, Bank N163.87 billion). All other assets pledged as collateral for Group/Bank are treasury bills at fair value.
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) N4 billion (31 December
2023: N4 billion), being collateralized, Financial Market dealers Quotation (FMDQ) N5.58 billion (31 December 2023: 11.19 billion), E-Transact N15.05 billion
(31 December 2023: N50 million), V-pay: N50 million (31 December 2023: N50 million), Interswitch: N2.4 billion (31 December 2023: N2.4 billion), System
specs / Remitta N2.5 billion (31 December 2023: N2.5 billion), CBN Settlement clearing N16 billion (31 December 2023: N15 billion), CBN Real Sector Support
Fund: N23 billion (31 December 2023: N23 billion), Federal Inland Revenue Service: N9 billion (31 December 2023: N9 billion), Bank of Industries (BOING)
N34.05 billion (31 December 2023: N34 billion), Africa Finance Corporation N15.8 billion (31 December 2023: Nil) and EIB N31.7 billion (31 December 2023:
Nil).
152 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
18.
Due From Other Banks
Current balances with banks within Nigeria
616
-
-
-
Current balances with banks outside Nigeria
1,643,344
837,559
1,951,531
922,922
Placement with banks
3,304,335
997,690
2,503,474
769,735
ECL allowance
(12,588)
(935)
(12,569)
(935)
4,935,707
1,834,314
4,442,436
1,691,722
Classified as:
Current
4,179,144
1,834,314
3,685,873
1,691,722
Non-current
756,563
-
756,563
-
4,935,707
1,834,314
4,442,436
1,691,722
Included in balances with banks outside Nigeria are the amount of N134.5 billion and N537.61 billion for the Group and Bank respectively (31 December
2023: N254.47 billion and N363.72 billion) which represent 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).
Due from banks with maturity greater than 3 months and restricted balances:
894,246
272,851
1,294,171
363,715
19.
Derivative assets
Instrument types(fair value)
Forward and Swap Contracts
280,127
489,167
270,714
462,376
Futures contracts
499
45,572
499
45,566
280,626
534,739
271,213
507,942
Instrument types (Notional amount):
Forward and Swap contracts
1,449,884
1,190,997
1,090,047
889,583
Futures contracts
775
310,807
775
190,834
Total
1,450,659
1,501,804
1,090,822
1,080,417
a) Hedging derivative assets
The 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. As at 31 December 2024, the mark-to-market value of these hedged asset is N251 billion (31 December 2023: N462 bn).
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.
153 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
20.
Loans and advances
Overdraft
2,003,445
1,098,703
1,822,924
1,032,834
Term Loans
8,912,221
5,291,536
7,821,586
4,714,937
On Lending Facilities
78,150
665,208
78,150
665,208
Gross loans and advances to customers
10,993,816
7,055,447
9,722,660
6,412,979
Less: ECL Allowance (see note 3.2.18)
(1,028,452)
(498,977)
(1,013,885)
(484,183)
9,965,364
6,556,470
8,708,775
5,928,796
Net Loans classified as:
Current
4,768,544
2,855,923
4,588,021
2,790,053
Non-current
5,196,820
3,700,547
4,120,754
3,138,743
9,965,364
6,556,470
8,708,775
5,928,796
Movement in ECL Allowance as at 31 December 2024 is presented in Note 3.2.18.
21.
Investment Securities
Debt securities
At amortised cost
2,758,208
1,563,994
1,851,210
975,608
At FVTOCI
1,949,011
1,528,786
-
-
ECL allowance
(18,210)
(42,312)
(5,005)
(5,451)
Net debt securities measured at amortised cost and FVTOCI
4,689,009
3,050,468
1,846,205
970,157
Debt securities (measured at fair value through profit or loss)
41,891
24,293
35,238
19,433
Net debt securities
4,730,900
3,074,761
1,881,443
989,590
Equity securities
At fair value through other comprehensive income
367,144
216,134
367,144
216,134
5,098,044
3,290,895
2,248,587
1,205,724
Modification of financial assets
The following table provides summary information on investment securities issued by the Government of Ghana with lifetime ECL whose cash flows were
modified during the period and their respectve effect on the Group's financial performance:
Carrying amount before modification
135,351
250,775
-
-
Net derecognition loss
(42,518)
(2,523)
-
-
Movement in gross carrying amount and impairment allowance on investment securities are presented in Note 3.2.18
Classified as:
Current
76,437
314,392
65,153
309,532
Non-current
5,021,607
2,976,503
2,183,434
896,192
5,098,044
3,290,895
2,248,587
1,205,724
Sovereign (Federal)
2,416,954
1,061,763
1,723,895
580,306
Sub-sovereign (State)
39,756
34,765
38,568
34,765
Corporate bonds
277,831
196,509
66,192
89,580
Promissory note
22,555
43,539
22,555
43,539
Commercial papers
1,112
227,418
-
227,418
2,758,208
1,563,994
1,851,210
975,608
154 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
22.
Investment in subsidiaries
(a). The following table lists the entities which are controlled by the Group, either directly or indirectly through subsidiaries.
Bank
Name of company
Jurisdiction of
Incorporation
Principal place of
business
31 December 2024
Ownership interest %
31 December 2024
Zenith Bank (Ghana) Limited
Ghana
Ghana
99.42%
7,066
Zenith Bank (UK) Limited
United Kingdom
United Kingdom
100.00%
21,482
Zenith Bank (Sierra Leone) Limited
Sierra Leone
Sierra Leone
99.99%
2,059
Zenith Bank (Gambia) Limited
Gambia
Gambia
99.96%
1,038
Zenith Pensions Custodian Limited
Nigeria
Nigeria
99.00%
1,980
Zenith Nominees Limited
Nigeria
Nigeria
99.00%
1,000
34,625
Name of company
Jurisdiction of
Incorporation
Principal place of
business
31 December 2023
Ownership interest %
31 December 2023
Zenith Bank (Ghana) Limited
Ghana
Ghana
99.42%
7,066
Zenith Bank (UK) Limited
United Kingdom
United Kingdom
100.00%
21,482
Zenith Bank (Sierra Leone) Limited
Sierra Leone
Sierra Leone
99.99%
2,059
Zenith Bank (Gambia) Limited
Gambia
Gambia
99.96%
1,038
Zenith Pensions Custodian Limited
Nigeria
Nigeria
99.00%
1,980
Zenith Nominees Limited
Nigeria
Nigeria
99.00%
1,000
34,625
155 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
(b) Condensed results of consolidated entities
31 December 2024
Zenith Group
Intra-group
transactions and
balances
Zenith Bank Plc
Zenith Bank
Ghana
Zenith Bank UK
Zenith Bank
Sierra Leone
Zenith Bank
Gambia
Zenith Pension
Custodian
Zenith Nominee
Limited
Condensed statement of profit or loss
Operating income
3,970,959
(47,782)
3,484,099
247,040
240,409
30,198
11,113
16,932
1,230
Expenses
(1,985,303)
41,783
(1,681,897)
(150,293)
(169,036)
(12,906)
(7,645)
(5,203)
(108)
(Impairment charge)/writeback for financial and non-financial assets
(658,805)
-
(668,913)
(14,545)
12,724
(313)
(28)
(15)
6
Profit before tax
1,326,851
(5,999)
1,133,289
82,202
84,097
16,979
3,440
11,714
1,128
Taxation
(293,956)
-
(197,131)
(67,009)
(21,355)
(4,278)
(679)
(3,296)
(208)
Profit for the year
1,032,895
(5,999)
936,158
15,193
62,742
12,701
2,761
8,418
920
Condensed statement of financial position
Assets
Cash and cash equivalents
5,888,216
-
5,249,789
607,374
49
20,264
10,736
-
-
Treasury bills
2,678,929
-
2,437,464
207,321
-
-
34,144
-
-
Assets pledged as collateral
266,866
-
89,062
-
177,804
-
-
-
-
Due From Other Banks
4,935,707
(515,142)
4,442,436
219,869
743,832
29,959
9,596
3,449
1,708
Derivative asset held for risk management
280,626
-
271,213
7,062
2,351
-
-
-
-
Loans and advances
9,965,364
(7,162)
8,708,775
360,977
861,626
26,602
14,333
213
-
Investment securities
5,098,044
-
2,248,587
445,499
2,286,432
75,153
14,858
25,364
2,151
Investment in subsidiaries
-
(34,625)
34,625
-
-
-
-
-
-
Current tax receivable
6,869
-
-
6,869
-
-
-
-
-
Deferred tax asset
21,542
-
1,756
18,175
1,205
321
85
-
-
Other assets
326,725
(1,728)
184,136
127,008
11,383
1,567
1,498
2,698
163
Property and equipment
400,441
-
290,273
90,838
13,728
1,141
3,375
1,081
5
Intangible assets
88,196
-
80,203
3,420
3,789
539
76
162
7
29,957,525
(558,657)
24,038,319
2,094,412
4,102,199
155,546
88,701
32,967
4,034
156 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
31 December 2024
Zenith Group
Elimination
entries
Zenith Bank Plc
Zenith Bank
Ghana
Zenith Bank UK
Zenith Bank
Sierra Leone
Zenith Bank
Gambia
Zenith Pension
Custodian
Zenith Nominee
Limited
Liabilities & Equity
Customer deposits
21,959,369
(515,143)
17,163,424
1,665,245
3,479,129
110,092
56,622
-
-
Derivative liabilities
9,258
-
4,465
-
4,793
-
-
-
-
Current income tax
256,168
-
248,613
-
1,670
1,935
428
3,301
221
Deferred income tax liabilities
5,502
38
-
5,383
-
-
-
81
38
Other liabilities
1,402,045
(1,740)
1,323,440
41,640
27,228
5,610
3,778
1,510
579
On-lending facilities
250,725
-
250,725
-
-
-
-
-
-
Borrowings
2,045,185
(7,163)
1,951,616
100,732
-
-
-
-
-
Equity and reserves
4,029,273
(34,626)
3,096,036
281,416
589,379
37,927
27,870
28,074
3,197
29,957,525
(558,634)
24,038,319
2,094,416
4,102,199
155,564
88,698
32,966
4,035
Condensed statement of cash flow
Net cash (used in)/from operating activities
716,029
375,282
3,720
8,982
321,204
15,733
(15,691)
6,274
525
Net cash (used in)/from financing activities
100,810
(49,086)
60,521
96,416
(1,041)
-
-
(6,000)
-
Net cash (used in)/from investing activities
(109)
(1,011,078)
375,766
584,006
851
8,847
37,789
2,638
1,072
Increase / (decrease) in cash and cash equivalents
816,730
(684,882)
440,007
689,404
321,014
24,580
22,098
2,912
1,597
157
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
31 December 2023
Zenith Group
Intra-group
transactions and
balances
Zenith Bank Plc
Zenith Bank
Ghana
Zenith Bank UK
Zenith Bank
Sierra Leone
Zenith Bank
Gambia
Zenith Pension
Custodian
Zenith Nominee
Limited
Condensed statement of profit or loss
Operating income
2,131,750
(33,310)
1,869,753
160,233
106,594
8,799
5,535
13,587
559
Expenses
(926,172)
20,183
(803,626)
(75,059)
(56,973)
(3,921)
(2,861)
(3,779)
(136)
Impairment charge for financial and non-financial assets
(409,616)
(279)
(398,412)
(9,968)
(520)
(200)
(173)
29
(93)
Profit/(loss) before tax
795,962
(13,406)
667,715
75,206
49,101
4,678
2,501
9,837
330
Taxation
(119,053)
(711)
(72,114)
(29,318)
(12,116)
(1,171)
(716)
(2,823)
(84)
Profit for the year
676,909
(14,117)
595,601
45,888
36,985
3,507
1,785
7,014
246
Condensed statement of financial position
Assets
Cash and balances with central banks
4,253,374
-
3,965,386
275,667
32
5,709
6,580
-
-
Treasury bills
2,736,273
-
2,529,966
174,294
-
-
32,013
-
-
Assets pledged as collateral
308,638
-
255,061
-
53,577
-
-
-
-
Due From Other Banks
1,834,314
(218,774)
1,691,722
78,567
262,727
12,415
6,979
557
121
Derivative asset held for risk management
534,739
(35)
507,942
24,538
2,294
-
-
-
-
Loans and advances
6,556,470
(52,927)
5,928,796
179,719
482,875
9,084
8,812
111
-
Investment securities
3,290,895
-
1,205,724
293,276
1,721,948
34,381
7,174
26,003
2,389
Investment in subsidiaries
-
(34,625)
34,625
-
-
-
-
-
-
Current tax receivable
18,975
-
-
18,433
542
-
-
-
-
Deferred tax asset
17,251
(3,110)
-
17,338
2,816
173
29
-
5
Other assets
474,976
(1,371)
417,419
52,350
2,799
677
892
2,146
64
Property and equipment
295,532
-
230,267
60,057
1,496
804
2,367
540
1
Intangible assets
47,018
-
44,185
1,369
735
409
86
216
18
20,368,455
(310,842)
16,811,093
1,175,608
2,531,841
63,652
64,932
29,573
2,598
158
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
31 December 2023
Zenith Group
Intra-group
transactions and
balances
Zenith Bank Plc
Zenith Bank
Ghana
Zenith Bank UK
Zenith Bank
Sierra Leone
Zenith Bank
Gambia
Zenith Pension
Custodian
Zenith Nominee
Limited
Liabilities & Equity
Customer deposits
15,167,740
(218,776)
12,154,824
937,694
2,203,674
44,608
45,716
-
-
Derivative liabilities
70,486
24,468
45,514
-
504
-
-
-
-
Current income tax
33,877
-
28,080
-
-
2,096
820
2,798
83
Deferred income tax liabilities
59,310
(3,110)
59,233
3,110
-
-
-
77
-
Other liabilities
1,039,712
(1,365)
1,003,947
24,849
7,843
1,567
1,567
1,057
238
On-lending facilities
263,065
-
263,065
-
-
-
-
-
-
Borrowings
1,410,885
(52,928)
1,450,182
13,631
-
-
-
-
-
Equity and reserves
2,323,380
(34,628)
1,806,248
171,821
319,821
15,382
16,820
25,640
2,276
20,368,455
(286,339)
16,811,093
1,151,105
2,531,842
63,653
64,923
29,572
2,597
Condensed statement of cash flow
Net cash (used in)/from operating activities
2,450,430
1,158,673
1,494,453
183,276
(389,240)
(2,365)
(5,552)
11,078
107
Net cash (used in)/from financing activities
(680,707)
(44,581)
(631,155)
18,557
(17,528)
-
-
(6,000)
-
Net cash (used in)/from investing activities
(2,092,246)
(1,074,823)
(1,016,323)
(75,017)
70,223
990
2,167
539
15
Increase / (decrease) in cash and cash equivalents
(322,523)
39,269
(153,025)
126,816
(336,545)
(1,375)
(3,385)
5,617
122
159
Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
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.
Investments 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 2024 (31 December 2023: Nil).
31 December 202431 December 2023
Carrying amount of Investment in associates
92
92
Less: Impairment
(92)
(92)
-
-
160 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
24.
Deferred tax balances
Deferred tax assets
(i) Deferred tax asset
Unutilised capital allowances
219
(5)
-
-
ECL allowance on not-credit impaired financial instruments
197,122
50,412
180,570
50,331
Other liabilities
2,000
-
2,000
-
Other assets
1,230
18,381
-
-
Lease liability
1,464
3,402
-
3,402
Foreign exchange difference
42
-
-
-
Fair value reserve
1,132
1,904
-
-
Total deferred tax asset
203,209
74,094
182,570
53,733
Set-off of deferred tax asset pursuant to set-off provisions (see (ii) below)
(181,667)
(56,843)
(180,814)
(53,733)
Net deferred tax asset
21,542
17,251
1,756
-
(ii) Deferred tax liability
Property and equipment
31,004
26,850
25,540
23,663
Unutilized capital allowances
853
-
-
-
Right of use asset
-
3,402
-
3,402
Foreign exchange differences
155,312
85,901
155,274
85,901
Total deferred tax liability
187,169
116,153
180,814
112,966
Set-off of deferred tax liabilities pursuant to set-off provisions (see
(i) above)
(181,667)
(56,843)
(180,814)
(53,733)
Net deferred tax liability
5,502
59,310
-
59,233
Group
31 December 2024
Movements in temporary differences during the
period
1 January 2024
Recognised in
profit or loss
Impact of
hyperinflation and
other FX
Recognised in
OCI
31 December 2024
Asset
Other assets
18,381
(24,093)
6,941
-
1,229
Unutilized capital allowances
(5)
223
-
-
219
ECL Allowance on not-credit impaired financial
instruments
50,412
146,711
-
-
197,122
Other liabilities
-
2,000
-
-
2,000
Fair value reserve
1,904
2,070
-
(2,841)
1,133
Lease liability
3,402
(1,938)
-
-
1,464
Foreign exchange differences
-
42
-
-
42
74,094
125,015
6,941
(2,841)
203,209
161 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
24.
Deferred tax balances (continued)
31 December 2024
Movements in temporary differences
during the year
1 January 2024
Recognised in
profit or loss
Impact of
hyperinflation and
other FX
Recognised in
OCI
31 December 2024
Liabilities
Property and equipment
26,850
4,154
-
-
31,004
Right of use asset
3,402
(3,402)
-
-
-
Unutilized capital allowances
-
853
-
-
853
Foreign exchange differences
85,901
72,981
(3,570)
-
155,312
116,153
74,586
(3,570)
-
187,169
Bank
31 December 2024
Movements in temporary differences during the year
1 January 2024
Recognised in
profit or loss
31 December 2024
Asset
ECL Allowance on not-credit impaired financial instruments
50,331
130,239
180,570
Other liabilities
-
2,000
2,000
Lease liability
3,402
(3,402)
-
53,733
128,837
182,570
31 December 2024
Movements in temporary differences during the year
1 January 2024
Recognised in
profit or loss
31 December 2024
Liability
Property and equipment
23,663
1,877
25,540
Right of use asset
3,402
(3,402)
-
Foreign exchange differences
85,901
69,373
155,274
112,966
67,848
180,814
Zenith Bank plc (the parent) and Zenith Bank Ghana have deferred tax assets and deferred tax liabilities which have been presented on a net basis in the
financial statements. Each entity has the legal right to settle current tax amounts on a net basis and the deferred tax amounts are levied by the same tax
authority.
The Group’s deferred tax asset is largely attributable to Zenith bank Ghana. The Group has recognised all of its deferred tax asset as at 31 December
2024. The Group, therefore, has no unrecognised deferred tax asset. The Group will continue to assess the recoverability of its deferred tax asset and
ensure that only amounts considered recoverable are recognised in the books and presented in the statement of financial position.
25.
Other assets
Non-financial assets
Prepayments
71,842
18,862
59,476
12,985
Other non-financial assets*
19,553
10,602
12,259
9,979
Gross other non-financial assetss
91,395
29,464
71,735
22,964
Less impairment (see note (i) below)
(1,887)
(85)
(1,887)
(85)
Net other non-financial assets
89,508
29,379
69,848
22,879
Other financial assets
E-card and settlement receivables
100,285
348,566
96,366
345,486
Intercompany receivables
-
-
767
651
Deposits for investment in AGSMEIS
65,476
65,476
65,476
65,476
Other receivables**
122,899
62,698
2,288
13,268
Deposits for shares
-
-
720
720
Gross other financial assets
288,660
476,740
165,617
425,601
Less: ECL allowance(see note 25(ii))
(51,443)
(31,143)
(51,329)
(31,061)
Net other financial assets
237,217
445,597
114,288
394,540
Total other assets (Net)
326,725
474,976
184,136
417,419
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.
162 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
25.
Other assets (continued)
*Other non-financial assets comprise withholding tax receivables and stock in trade relating to telecommunication products.
**Other receivables comprises of mobile electronic funds receivable from customer.
Classified as:
Current
261,249
409,500
117,940
351,223
Non-current
65,476
65,476
66,196
66,196
326,725
474,976
184,136
417,419
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
At start of the year
85
3,361
85
3,361
Charge for the year (see note 8)
1,802
(3,276)
1,802
(3,276)
At end of the year
1,887
85
1,887
85
163 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
26.
Property and equipment
(a) Property and equipment movement
Group
31 December 2024
Land
Buildings
Leasehold
improvements
Furniture,
fittings and
equipment
Computer
equipment
Aircraft
Motor vehicles
Right-of-use
assets - Buildings
Work in progress
Total
Cost
At 1 January 2024
41,996
99,691
30,699
123,123
63,457
25,704
44,973
51,109
50,260
531,012
Additions
1,106
2,824
1,117
17,512
15,890
5,324
19,058
14,089
39,162
116,082
Reclassifications from WIP
61
2,886
1,739
3,059
1,022
-
843
-
(9,610)
-
Modifications
-
-
-
-
-
-
-
497
-
497
Impact of Hyperinflation
-
20,017
801
2,069
2,476
-
2,168
11,974
3,465
42,970
Disposals/Write off
-
(66)
(228)
(2,482)
(809)
-
(3,300)
-
(1,714)
(8,599)
Exchange difference
-
886
1,863
1,515
423
-
496
3,393
112
8,688
At 31 December 2024
43,163
126,238
35,991
144,796
82,459
31,028
64,238
81,062
81,675
690,650
Land
Buildings
Leasehold
improvements
Furniture,
fittings and
equipment
Computer
equipment
Aircraft
Motor vehicles
Right-of-use
assets Buildings
Work in progress
Total
Accumulated Depreciation
At 1 January 2024
-
16,463
26,199
100,206
46,816
1,457
28,779
15,560
-
235,480
Charge for the year
-
2,694
2,682
11,271
12,222
1,135
9,065
5,159
-
44,228
Reclassifications/transfer from WIP
-
112
(100)
(72)
(30)
-
(568)
-
-
(658)
Disposals
-
(53)
(265)
(2,269)
(798)
-
(2,266)
-
-
(5,651)
Impact of Hyperinflation
-
2,656
1,025
2,298
1,139
-
1,832
1,746
-
10,696
Exchange difference
-
146
1,487
1,408
370
-
241
2,462
-
6,114
At 31 December 2024
-
22,018
31,028
112,842
59,719
2,592
37,083
24,927
-
290,209
Net book amount
At 31 December 2024
43,163
104,220
4,963
31,954
22,740
28,436
27,155
56,135
81,675
400,441
Expenses relating to short term lease and low value lease assets can be seen in note 12 as lease expense
There were no impairment losses on any class of property and equipment during the year (31 December 2023: Nil).
There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (31 December 2023: Nil).
All property and equipment are non-current. None of the Bank's assets were financed from borrowings, consequently no borrowing cost has been capitalized as part of asset cost.
164 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
26.
Property and equipment (continued)
For accounting policy and judgements on right of use see note 2.14. The Group has no ROU in respect of leases that are yet to commence.
There are no restrictions on the title of the properties and none of them are pledged as securities for liabilities.
165 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
26.
Property and equipment (continued)
Group
31 December 2023
Land
Buildings
Leasehold
improvements
Furniture,
fittings and
equipment
Computer
equipment
Aircraft
Motor vehicles
Right-of-use
assets
Buildings
Work in
progress
Total
Cost
At 1 January 2023
38,847
66,062
26,453
110,885
47,878
25,704
34,395
28,729
43,419
422,372
Additions
2,709
3,693
1,067
7,286
12,511
-
8,328
2,128
14,687
52,409
Reclassifications from WIP
440
3,812
149
2,258
1,650
-
269
-
(9,224)
(646)
Modifications
-
-
-
-
-
-
-
755
-
755
Impact of Hyperinflation
-
25,355
1,698
3,400
1,338
-
3,623
16,889
2,149
54,452
Disposals
-
(67)
(169)
(1,771)
(258)
-
(2,030)
(111)
(904)
(5,310)
Exchange difference
-
836
1,501
1,065
338
-
388
2,719
133
6,980
At 31 December 2023
41,996
99,691
30,699
123,123
63,457
25,704
44,973
51,109
50,260
531,012
Land
Buildings
Leasehold
improvements
Furniture,
fittings and
equipment
Computer
equipment
Aircraft
Motor vehicles
Right-of-use
assets
Buildings
Work in
progress
Total
Accumulated Depreciation
At 1 January 2023
-
11,338
21,915
88,352
38,916
357
22,719
7,932
-
191,529
Charge for the year
-
1,570
2,141
9,979
6,760
1,100
5,377
2,930
-
29,857
Reclassifications/Transfers from WIP
-
47
(76)
45
(16)
-
-
-
-
-
Disposals
-
(64)
(169)
(1,727)
(257)
-
(1,789)
(45)
-
(4,051)
Impact of Hyperinflation
-
3,407
1,218
2,763
1,125
-
2,193
2,920
-
13,626
Exchange difference
-
165
1,170
794
288
-
279
1,823
-
4,519
At 31 December 2023
-
16,463
26,199
100,206
46,816
1,457
28,779
15,560
-
235,480
Net book amount
At 31 December 2023
41,996
83,228
4,500
22,917
16,641
24,247
16,194
35,549
50,260
295,532
166 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
26.
Property and equipment (continued)
Bank
31 December 2024
Land
Buildings
Leasehold
improvements
Furniture,
fittings and
equipment
Computer
equipment
Aircraft
Motor vehicles
Right-of-use
assets -
Buildings
Work in
progress
Total
Cost
At 1 January 2024
41,996
65,979
25,208
115,381
57,379
25,704
37,684
23,188
42,674
435,193
Additions
1,107
2,771
754
15,086
13,923
5,324
15,414
1,075
38,349
93,803
Reclassifications /transfer from WIP
-
3,083
297
2,105
389
-
243
-
(6,117)
-
Disposals
-
(66)
(227)
(2,413)
(426)
-
(2,779)
-
(376)
(6,287)
Foreign exchange movements
-
-
-
-
-
-
-
497
-
497
At 31 December 2024
43,103
71,767
26,032
130,159
71,265
31,028
50,562
24,760
74,530
523,206
Land
Buildings
Leasehold
improvements
Furniture,
fittings and
equipment
Computer
equipment
Aircraft
Motor vehicles
Right-of-use
assets -
Buildings
Work in
progress
Total
Accumulated Depreciation
At 1 January 2024
-
11,667
21,974
94,365
43,557
1,457
24,435
7,472
-
204,927
Charge for the year
-
1,350
1,693
10,106
9,888
1,135
6,787
2,239
-
33,198
Reclassifications/transfer from WIP
-
112
(100)
3
(17)
-
2
-
-
-
Disposals
-
(53)
(265)
(2,238)
(426)
-
(2,210)
-
-
(5,192)
At 31 December 2024
-
13,076
23,302
102,236
53,002
2,592
29,014
9,711
-
232,933
Net book amount
At 31 December 2024
43,103
58,691
2,730
27,923
18,263
28,436
21,548
15,049
74,530
290,273
Expenses relating to short term lease and low value lease assets can be seen in note 12 as lease expense.
There were no impairment losses on any class of property and equipment during the year (31 December 2023: Nil).
There were no capitalised borrowing costs related to the acquisition of property and equipment during the year (31 December 2023: Nil).
All property and equipment are non-current. None of the Bank's assets were financed from borrowings, consequently no borrowing cost has been capitalized as part of asset cost.
For accounting policy and judgements on right of use, see note 2.14 and the bank has NIL ROU in respect of leases that are yet to commence.
167 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
26.
Property and equipment (continued)
There are no restrictions on the title of the properties and none of them are pledged as securities for liabilities.
168 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
26.
Property and equipment (continued)
Bank
31 December 2023
Land
Buildings
Leasehold
improvements
Furniture,
fittings and
equipment
Computer
equipment
Aircraft
Motor vehicles
Right-of-use
assets -
Buildings
Work in
progress
Total
Cost
At 1 January 2023
38,847
58,555
24,261
108,297
46,334
25,704
32,073
20,829
42,408
397,308
Additions
2,709
3,679
969
6,556
9,763
-
7,304
1,685
9,600
42,265
Reclassifications from WIP
440
3,812
147
2,258
1,522
-
251
-
(8,429)
-
Disposals
-
(67)
(169)
(1,730)
(240)
-
(1,944)
(81)
(904)
(5,135)
Modifications
-
-
-
-
-
-
-
755
-
755
At 31 December 2023
41,996
65,979
25,208
115,381
57,379
25,704
37,684
23,188
42,675
435,193
Land
Buildings
Leasehold
improvements
Furniture,
fittings and
equipment
Computer
equipment
Aircraft
Motor vehicles
Right-of-use
assets -
Buildings
Work in
progress
Total
Accumulated Depreciation
At 1 January 2023
-
10,479
20,428
86,525
37,768
357
21,583
5,595
-
182,734
Charge for the year
-
1,205
1,791
9,496
6,045
1,100
4,576
1,877
-
26,090
Reclassifications/transfer from WIP
-
47
(76)
45
(16)
-
-
-
-
-
Disposals
-
(64)
(169)
(1,701)
(240)
-
(1,724)
-
-
(3,898)
At 31 December 2023
-
11,667
21,974
94,365
43,557
1,457
24,435
7,472
-
204,926
Net book amount
At 31 December 2023
41,996
54,312
3,234
21,016
13,822
24,247
13,249
15,716
42,675
230,267
169 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
26.
Property and equipment (continued)
(b) Right of use amounts and lease liability amounts recognised in the statement of financial position
31 December 2024
31 December 2023
31 December 2024
31 December 2023
In millions of Naira
Right-of-use assets
Buildings (see note 26)
56,135
35,549
15,049
15,716
56,135
35,549
15,049
15,716
Additions to the right-of-use asset for during the year ended 31 December 2024 was N790 million and N1,075 million (31 December 2023: N1,207
million and N1,685 million respectively).
(c) Amounts recognised in the income statement
31 December 2024
31 December 2023
31 December 2024
30 December 2023
In millions of Naira
Depreciation charge of
right-of-use asset
Buildings (see note 26)
5,159
2,930
2,239
1,877
5,159
2,930
2,239
1,877
Interest expense (included in
finance cost)
3,599
2,578
1,161
1,034
Lease expense
695
3,495
16
2,496
The total cash outflow of leases as at 31 December 2024 was N1,674 million and N1,572 million respectively (31 December 2023: 1,601 million and
N1,191 million respectively).
170 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
27.
Intangible assets
Computer Software
Cost
At start of the year
78,046
49,274
67,789
45,115
Additions
49,371
24,035
43,444
22,674
Disposal
(5,218)
-
(5,218)
-
Impact of hyperinflation
(178)
2,449
-
-
Exchange difference
2,991
2,288
-
-
At the end of the year
125,012
78,046
106,015
67,789
Accumulated amortization
At start of the year
31,028
24,024
23,604
21,157
Charge for the year
8,318
3,469
5,860
2,447
Disposal
(3,652)
-
(3,652)
-
Impact of hyperinflation
(1,071)
1,839
-
-
Exchange difference
2,193
1,696
-
-
At the end of the year
36,816
31,028
25,812
23,604
Carrying amount at the end of the year
88,196
47,018
80,203
44,185
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.
171 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
28.
Customers' deposits
Demand
9,268,444
6,875,307
6,669,514
5,290,857
Savings
7,585,026
5,047,056
7,377,305
4,955,730
Term
5,105,899
3,245,377
3,116,605
1,908,237
21,959,369
15,167,740
17,163,424
12,154,824
Classified as:
Current
21,959,369
15,167,740
17,163,424
12,154,824
21,959,369
15,167,740
17,163,424
12,154,824
29.
Other liabilities
Other financial liabilities
Customer deposits for letters of credit
538,817
354,178
537,607
354,150
Managers' Cheques
25,738
22,052
25,312
21,330
Collections accounts
443,193
353,851
443,193
353,797
Unclaimed dividend
30,600
30,116
30,600
30,116
Lease liability (see note (c) below)
37,066
20,900
11,405
10,308
Electronic card and settlement payables
160,138
198,756
160,074
197,002
Customers' foreign transactions payables
18,780
4,089
18,780
4,089
Account payables
15,130
7,412
-
-
Total other financial liabilities
1,269,462
991,354
1,226,971
970,792
Non-financial liabilities
Tax collections
17,378
10,143
16,614
9,573
Deferred income on financial guarantee contracts
7,172
2,864
3,859
1,796
Other payables
53,926
25,284
28,109
15,209
Off Balance Sheet exposures impairment allowance
54,107
10,067
47,887
6,577
Total other non-financial liabilities
132,583
48,358
96,469
33,155
Total other liabilities
1,402,045
1,039,712
1,323,440
1,003,947
Classified as:
Current
1,368,564
1,029,704
1,311,159
993,939
Non-current
33,482
10,008
12,281
10,008
1,402,046
1,039,712
1,323,440
1,003,947
(a) ECL allowance for off balance sheet exposure
In millions of Naira
Bonds and guarantee contracts
19,479
1,597
17,239
109
Undrawn portion of loan commitments
34,087
3,105
30,169
2,858
Letters of credit
541
5,365
479
3,610
54,107
10,067
47,887
6,577
172 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
29.
Other liabilities (continued)
(c) Lease liability
This relates to lease rental for properties used by the Group. The net carrying amount of leased assets, included within property and equipment is N56.13
billion and N15.04 billion as at 31 December 2024. (31 December 2023: N35.55 billion and N15.72 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
5,209
3,697
890
524
Over one year but less than five years
25,408
11,063
4,065
3,679
More than five years
14,609
15,220
14,609
15,220
At end of the year
45,226
29,980
19,564
19,423
The table below shows the movement in lease liability during the year:
.
As at 1 January
20,900
14,990
10,308
8,916
Additions
13,958
1,269
1,011
874
Lease Termination
-
(80)
-
(80)
Principal repayment
(4,899)
(1,543)
(1,088)
(979)
Modification
497
755
497
755
Interest expense
3,599
2,578
1,161
1,034
Interest paid
(485)
(224)
(484)
(212)
Foreign exchange difference
3,496
3,155
-
-
At end of the year
37,066
20,900
11,405
10,308
31 December 2024
31 December 2023 31 December 2024
31 December 2023
In millions of Naira
Lease liabilities
Current
4,785
3,515
466
300
Non-current
32,281
17,385
10,939
10,008
37,066
20,900
11,405
10,308
30.
On lending facilities
(a) This comprises:
Central Bank of Nigeria (CBN) Commercial Agriculture Credit Scheme Loan (i)
2,062
12,653
2,062
12,653
Bank of Industry (BOI) Intervention Loan (ii)
17,816
25,024
17,816
25,024
Nigerian Export-Import Bank (NEXIM) rediscounting & refinancing facility (iii)
16,860
-
16,860
-
Central Bank of Nigeria (CBN) / Bank of Industry(BOI) - Power & Aviation
intervention Funds (iv)
-
1,585
-
1,585
CBN MSMEDF Deposit (v)
297
544
297
544
FGN SSB Intervention Fund (vi)
124,915
122,418
124,915
122,418
Excess Crude Loan Facilty Deposit (vii)
69,412
68,031
69,412
68,031
Real Sector Support Facility (viii)
16,480
13,417
16,480
13,417
Non-Oil Export Stimulation Facility (ix)
2,883
5,258
2,883
5,258
National Food Security Programme (x)
-
11,657
-
11,657
Accelerated Agricultural Development Scheme (xi)
-
2,478
-
2,478
250,725
263,065
250,725
263,065
173 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
30.
On lending facilities (continued)
Classified as:
Current
29,659
64,212
29,659
64,212
Non-current
221,066
198,853
221,066
198,853
250,725
263,065
250,725
263,065
Movement
At beginning of the year
263,065
311,192
263,065
311,192
Principal addition during the year
16,860
-
16,860
-
Principal repayment during the year
(31,812)
(48,080)
(31,812)
(48,080)
Interest expense during the year
3,969
5,731
3,969
5,731
Interest paid during the year
(1,357)
(5,778)
(1,357)
(5,778)
At end of the year
250,725
263,065
250,725
263,065
174 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
30.
On lending facilities (continued)
(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 (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.
(iii) These facilities are loans totaling N16.86 billion to eligible clients to support the working capital for export manufacturing related activities. This is a
rediscounting and refinancing facilitiy at a discount rate of 9% payable to Nexim and a maximum of 3% interest/discount rate allowable to Zenith Bank.
(iv) 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.
(v) 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.
(vi) 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.
(vii) 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.
(viii) 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.
(ix) 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.
(x) The National Food Security Program (NFSP) was launched in 2001. The main objective of this program was to improve food security by promoting
sustainable agricultural practices, providing credit facilities to farmers, and distributing agricultural input. The fund is disbursed to the bank at 5% interest
rate.
(xi) Accelerated Agricultural Development Scheme (AADS) was established by the Central Bank of Nigeria to help states develop at least 2 crops/agricultural
commodities in which they have comparative advantage. The fund is disbursed to the Bank at 2% per annum. Each state is allowed a facility of N1.5billion at
9% per annum and repayments are made via ISPO deductions.
175 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
31.
Borrowings
Long term borowings comprise:
Due to AFREXIM (i)
346,214
283,954
346,214
283,954
Due to IFC (ii)
394,311
243,705
394,311
243,705
Due to ABSA bank (iii)
-
249,786
-
249,786
Due to Mashreq (iv)
187,698
98,508
187,698
98,508
Interbank takings (v)
-
13,000
-
13,000
Due to banks for clean letters of credit (vi)
101,960
52,847
8,391
62,468
Due to BUNGESA (vii)
-
50,065
-
50,065
Due to CAIXA (viii)
84,266
186,372
84,266
186,372
Due to ADM (ix)
38,316
18,369
38,316
18,369
Due to AREDIN (x)
-
17,784
-
17,784
Due to CBN (xi)
824,246
-
824,246
-
Due to Africa Trade (xii)
-
48,921
-
48,921
Due to CARGILL (xiii)
68,174
-
68,174
-
Due to AXENDO (ix)
-
46,122
-
46,122
Due to Standard Chartered Bank UK
-
-
-
-
Due to CBN
-
-
-
-
Due to WILBENTRAD
-
23,338
-
23,338
Due to CITILON
-
28,898
-
28,898
Due to SUMITOMOBN
-
49,216
-
49,216
Due to ZENUK
-
-
-
29,676
2,045,185
1,410,885
1,951,616
1,450,182
The Group has not had any defaults of principal, interest,or other breaches with respect to the debt securities during the year (31 December 2023: nil). The
assets exchanged under repurchase agreements with counterparties are disclosed in note 17.
Classified as:
Current
1,762,442
1,001,635
1,668,873
1,040,932
Non-current
282,743
409,250
282,743
409,250
2,045,185
1,410,885
1,951,616
1,450,182
Movement in borrowings
At the beginning of the year
1,410,885
963,450
1,450,182
999,580
Addition during the year
2,860,580
1,148,702
2,771,322
1,197,352
Interest expense
363,439
93,435
345,318
97,712
Interest paid
(192,475)
(97,895)
(160,647)
(97,569)
Repayments (principal)
(2,735,376)
(1,569,493)
(2,735,376)
(1,569,493)
Foreign exchange difference
338,132
872,686
280,817
822,600
At the end of the year
2,045,185
1,410,885
1,951,616
1,450,182
176 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
31.
Borrowings (continued)
Details of Borrowings
i.
Due to AFREXIM (African Export-Import Bank)
The outstanding balance of N346.214 billion (US $223.51 million) due to AFREXIM represents the amount payable by the Bank from 3year term loan received
in 2023, with a one-year moratorium. The $300m facility received in January 2023 is priced at 3months Term SOFR+5% and will mature in December 2027.
Interest on the facility is payable quarterly.
ii.
Due to IFC (International Finance Corporation)
The amount of N394.311 billion (US $254.5 million) 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 semi-annually at 6 months Term SOFR+2.87% and the facility will mature
in June 2025.
iii
Due to ABSA (Amalgamated Banks of South Africa)
No outstanding balance due to ABSA at the year end
iv
Due to MASHREQ
The outstanding balance of N187.69 billion (US $121.17 million) due to MASHREQ represents the amount payable by the Bank from 1 year term loan receied
in 2024. The $120m facility recieved in February 2024 is priced at 3months SOFR+3% and will mature in January 2025. Interest on the facility is payable
quarterly.
v
Interbank takings
No outstanding balance as at the year end..
vi
Due to banks for clean letters of credit
The amount represents a clean line from various international banks for letter of credit.
vii
Due to BUNGE S.A
No outstanding balance due to Bunge S.A as at the year end.
viii
Due to CAIXA
The outstanding balance of N 84.266 billion (US $ 24.74million) due to CAIXA represents the amount payable by the Bank.
ix
Due to ADM
The outstanding balance of N 38.316billion (US $23.63 million) due to ADM represents the amount payable by the Bank.
x
Due to AREDIN
There is no outstanding balance due to Aredin as at the year end.
xi
Due to CBN
The outstanding balance of N824.246 billion due to CBN represents the amount payable by the BanK as at the year end.
xii
Due to Africa trade finance
There is no outstanding balance due to Africa Trade Finance as at the year end.
xiii Due to CARGILL
The outstanding balance of N 68.174 billion (US $ 44.01 million) due to Cargill represents the amount payable by the Bank.
ix Due to Axendo
There is no outstanding balance due to Axendo as at the year end
177 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
31.
Borrowings (continued)
32.
Derivative liabilities
Instrument types (Fair value):
Forward and swap contracts
8,759
504
3,966
-
Futures contracts
499
69,982
499
45,514
9,258
70,486
4,465
45,514
Instrument types (Notional Amount)
Forward and swap contracts
148,011
518
143,218
14
Futures contracts
775
96,131
775
96,131
148,786
96,649
143,993
96,145
Classified as:
Current
9,258
70,486
4,465
45,514
33.
Share capital
Issued and fully paid
41,069,830,000 ordinary shares of 50k each (December 2023: 31,396,493,787)
20,535
15,698
20,535
15,698
The bank issued additional 9,673,336,214 shares through a combination of right issue and public offer, with a nominal value was N0.5k.
Issued
Ordinary
20,535
15,698
20,535
15,698
178 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
34.
Share premium, retained earnings and other reserves
(a) There was movement in the Share premium account during the current year ,as a result of the issuance of 9,673,336,214 shares through a combination of
right issue and public offer. The shares were issued at a premium.
Share premium
594,113
255,047
594,113
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) Retained earnings: Retained earnings represent undistributed profits, net of statutory appropriations attributable to the ordinary shareholders.
(d) Statutory reserve: This represents the cumulative amount set aside from general reserves/retained earnings by the Bank and its subsidiaries. This amount
is non-distributable. The Bank's appropriation is in line with BOFIA 2020 which stipulates that an appropriation of 30% of profit after tax be made if the
statutory reserve is less than the paid-up share capital and 15% of profit after tax if the statutory reserve is greater than the paid-up share capital. In the
current year, a total of N140.42 billion (2023: N89.34 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) Fair value reserve: Comprises fair value movements on equity and debt instruments that are carried at fair value through Other Comprehensive Income.
(g) Foreign currency translation reserve: Comprises exchange differences resulting from the translation to Naira of the results and financial position of
Group companies that have a functional currency other than Naira.
(h) Credit risk reserve: This reserve represents the cumulative difference between the loan loss provision determined per the Prudential Guidelines of the
Central Bank of Nigeria and the Central Bank of other subsidiaries vis-a-viz the allowance/reserve for loan losses as determined in line with the principles of
IFRS 9.
As at 31 December 2024, the Bank has made a cumulative credit risk reserve of N104.11 billion, while the cumulative amount made by the Group is N104.18
billion (31 December 2023: Group N93.98 billion and Bank N93.91 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.
(j) Issue share cost: This relates to cost incured by the Bank's subsidiary for additional share capital issued during the year. These costs were associated with
regulatory processes required to increase the subsidiary's share capital base which were accounted for as a direct deduction from equity.
Movement in Non-controlling interest
31 December 2024
31 December 2023
At start of the year
1,628
813
Impact of adopting IAS 29 on 1 January
556
472
Profit for the period/year
184
340
Foreign currency translation differences
(3)
3
At end of the period/year
2,365
1,628
179 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
35.
Pension contribution
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 respective jurisdictions. The
contribution by the Group and the Bank during the year were N11.15billion and N3.22 billion respectively (31 December 2023: N6.01 billion and N2.79
billion).
180 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
36.
Personnel expenses
Compensation for the staff are as follows:
Salaries and wages
137,689
92,637
87,526
71,627
Other staff costs*
55,331
25,766
37,895
13,670
Pension contribution
11,150
6,012
3,223
2,786
204,170
124,415
128,644
88,083
*Other staff costs comprise benefits to staff other than salaries and pension. These benefits include productivity expenses, medical expenses and staff
professional subscriptions.
(a) The average number of persons employed during the year by category:
Number
Number
Number
Number
Executive directors
6
6
6
6
Management
571
572
514
519
Non-management
8,694
7,587
7,184
6,154
9,271
8,165
7,704
6,679
The table below shows the number of employees, whose earnings during the year, fell within the ranges shown below:
Number
Number
Number
Number
N300,001 - N2,000,000
109
183
-
-
N2,000,001 - N2,800,000
31
91
-
-
N2,800,001 - N4,000,000
3,127
1,795
2,972
1,719
N4,000,001 - N6,000,000
150
172
-
31
N6,000,001 - N8,000,000
1,338
1,462
1,280
1,406
N8,000,001 - N9,000,000
456
42
400
-
N9,000,001 - and above
4,060
4,420
3,052
3,523
9,271
8,165
7,704
6,679
(b) Directors' emoluments
Directors' renumeration excluding certain benefits are as follows:
Executive compensation
3,238
2,575
3,238
2,575
Fees and sitting allowances
1,243
1,039
519
358
Retirement Benefit costs
6,373
1,826
6,373
1,826
10,854
5,440
10,130
4,759
Fees and other emoluments disclosed above include amounts paid to:
The Chairman
64
46
The highest paid director
874
2,168
The number of directors who received fees and other emoluments (excluding pension contributions and reimbursable expenses) in the following ranges
was:
Number
Number
Number
Number
N5,500,001 and above
15
14
15
14
37.
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.
181 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
37.
Group subsidiaries and related party transactions (continued)
Subsidiaries:
The amount of N8,889billion 31 December 2023: N7,649 billion) represents the total pension assets under custody held by the Bank’s subsidiary, Zenith
Pensions Custodian Limited under the custodial business and guaranteed by the bank as required by the National Pensions Commission of Nigeria . Included
in the amount above is N254 billion which represents the amount of the Group’s cash held by the subsidiary under custody. Aside from the Guarantee on the
asset held by our subsidiary, Zenith Pension Custodian Limited, the Group does not have any contingent liabilities in respect of related parties.
Transactions between Zenith Bank Plc and its subsidiaries, are eliminated on consolidation and are not separately disclosed in the consolidated financial
statements. The Group's effective interests and investments in subsidiaries as at 31 December 2024 are shown below.
Entity
Effective
Holding
%
Nominal share
capital held
Zenith Bank (Ghana) Limited
99.42
7,066
Zenith Bank (UK) Limited
100.00
21,482
Zenith Bank (Sierra Leone) Limited
99.99
2,059
Zenith Bank (The Gambia ) Limited
99.96
1,038
Zenith Pension Custodians Limited
99.00
1,980
Zenith Nominees Limited
99.00
1,000
31 December 2024
Transactions and balances with subsidiaries
In millions of naira
Receivable from
Payable to
Income
received from
Expense paid
to
Zenith Bank (UK) Limited
757,549
284,087
22,077
16,618
Zenith Bank (Ghana) Limited
3
-
-
-
Zenith Bank (Sierra Leone) Limited
84
-
-
-
Zenith Bank (Gambia) Limited
1,405
-
-
-
Zenith Pensions Custodian Limited
-
482
6,000
-
Zenith Nominees Limited
-
1,681
-
-
31 December 2023
31 December 2023
Transactions and balances with subsidiaries
In millions of naira
Receivable from
Payable to
Income
received from
Expense paid
to
Zenith Bank (UK) Limited
198,112
29,676
16,411
4,866
Zenith Bank (Ghana) Limited
16
3,225
-
-
Zenith Bank (Sierra Leone) Limited
565
-
-
-
Zenith Bank (Gambia) Limited
71
4,503
-
-
Zenith Pensions Custodian Limited
-
-
6,000
-
Amounts payable to subsidiairies relate to short term borrowings mostly from Zenith bank UK. The balances with related parties relate to deposits with
Zenith Bank UK and salaries of seconded staff of Zenith Bank PLC receivable from the subsidiaries. Transactions during the year relate to dividends received
from subsidiaries and interest expense on borrowings with Zenith Bank UK.
Significant restrictions
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 for disclosures on liquidity and capital
adequacy requirements respectively. The carrying amounts of banking subsidiaries' assets and liabilities are N6,441 bn and N5,505 bn respectively (31
December 2023: N3,751 billion and N3,266 billion respectively).
Non-controlling interest in subsidiaries
The Group does not have any subsidiary that has material non-controlling interest.
182 Zenith Bank Plc Annual Report - 31 December 2024
37.
Group subsidiaries and related party transactions (continued)
Key management personnel
Key management personnel is defined as the Group's executive and non-executive directors, including their close 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.
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
Key management compensation
Salaries and other short-term benefits
3,238
2,575
3,238
2,575
Retirement benefit cost
6,373
1,826
6,373
1,826
Allowances
1,243
1,039
519
358
At the end of the year
10,854
5,440
10,130
4,759
Loans and advances to key management personnel
At start of the year
2,850
3,245
1,297
1,692
Granted during the year
32
272
32
272
Repayment during the year
(2,304)
(667)
(751)
(667)
At end of the year
578
2,850
578
1,297
Interest earned
23
50
23
50
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 2024
Name of company
Relationship/Name
Loans
Deposits
Interest
received
Interest paid
Directors
2,184
3,762
30
28
Quantum Fund Management
Common significant
shareholder/JimOvia
37
3
-
-
Zenith General Insurance Company Limited
Common
directorship/JimOvia
-
762
-
-
Sirius Lumina Limited
Common significant
shareholder/JimOvia
1
1
-
-
Cyberspace Network
Common significant
shareholder/JimOvia
-
2,609
-
-
Quantum Zenith Trustees & Inv. Ltd
Common significant
shareholder
-
28
-
-
-
-
-
-
2,222
7,165
30
28
31 December 2023
Name of company
Relationship/Name
Loans
Deposits
Interest
received
Interest paid
Directors
679
3,134
50
31
Quantum Fund Management
Common significant
shareholder/JimOvia
48
3
-
-
Zenith General Insurance Company Limited
Common
directorship/JimOvia
-
957
-
-
Cyberspace Network
Common significant
shareholder/JimOvia
-
466
-
-
Zenith Trustees Ltd
Common significant
shareholder/JimOvia
-
11
-
-
Oviation Limited
Common
directorship/Jim Ovia
-
-
-
-
Sirius Lumina Ltd
Director/Prof. Sam
Enwemeka
-
1
-
-
At end of the year
727
4,572
50
31
Loans granted to related parties are secured over real estate and other assets of the respective borrowers. Loans granted to related parties are performing.
No life time impairment has been recognised in respect of loans granted to related parties (31 December 2023: Nil).
During the year, Zenith Bank Plc paid N1.38 billion as insurance premium to Zenith General Insurance Limited (31 December 2023: N1.65 billion) and N1.23
billion to prudential Zenith (31 December 2023: N886 million). These expenses were reported as operating expenses.
The Bank paid N15.83 billion (31 December 2023:N3.99 billion) to Cyberspace Network for various Information technology services rendered during the year.
183 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
38.
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 N1.30 trillion (31 December 2023: N1 trillion). 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 N1,244 million (31 December 2023: N489 million) in respect of authorized and
contracted capital projects.
Group
Break down of capital commitments
Property and equipment:
31 December 2024
31 December 2023
Motor vehicles, Furniture and equipment
-
55
Property
673
434
Intangible assets:
Information technology
571
-
1,244
489
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:
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
Performance bonds and guarantees
1,672,254
740,714
1,644,573
770,347
Usance (see note ii below)
2,567,161
433,926
2,801,850
433,926
Letters of credit (see note ii below)
357,738
555,368
33,994
424,903
4,597,153
1,730,008
4,480,417
1,629,176
Pension Funds (See Note iii below)
8,758,164
7,648,625
8,758,164
7,648,625
i.
The transaction related performance bonds and guarantees are, generally, short-term commitments to third parties which are not directly
dependent on the customer's creditworthiness. As at 31 December 2024, performance bonds and guarantees worth N11.8 billion (31 December
2023: N12.19 billion) are secured by cash while others are otherwise secured.
ii.
Usance and letters of credit are agreements to lend to a customer in the future, subject to certain conditions. Such commitments are either made
for a fixed period, or have no specific maturity dates, but are cancellable by the Group (as lender) subject to notice requirements. These Letters of
credit are provided at market-related interest rates. Usance and letters of credit are secured by different types of collaterals similar to those
accepted for actual credit facilities.
iii.
The amount of N8,889 billion (31 December 2023: N7,649 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 N254 billion (31 December 2023: N130.2
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. Other than the Guarantee on the pension assets held by our subsidiary, Zenith Pension Custodian Limited, the Group does
not have any contingent liabilities in respect of related parties. The Group and Bank has undrawn loan commitments of N260.88 billion (31
December 2023: N211.71 billion).
184 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
38.
Contingent liabilities and commitments (continued)
39.
Dividend paid
Nominal value of shares
20,535
15,698
20,535
15,698
Number of share in issue and ranking for dividend
31,396
31,396
31,396
31,396
Proposed dividend per share (Naira)
1.00
0.50
1.00
0.50
Interim dividend per share paid (Naira)
1.00
0.50
1.00
0.50
Final dividend per share proposed
-
3.50
-
3.50
Final Dividend paid during the year
109,888
91,050
109,888
91,050
Interim Dividend paid during the year
31,396
15,698
31,396
15,698
Total dividend paid during the year
141,284
106,748
141,284
106,748
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 final dividend of N4.00 per share which in addition to the N1.00 per share as interim dividend amounts to N5.00 per share (2023:
Interim dividend of N0.50 per share, final dividend of N3.50 and a total dividend per share of N4.00) from the retained earnings accounts as at 31 December
2024. This will be presented for ratification by the 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 2024 and 31 December 2023
respectively.
Dividends are paid to shareholders' net of withholding tax at the rate of 10% in compliance with extant tax laws.
40.
Cash and cash equivalents
Cash and balances with central banks (less mandatory reserve deposits) (see note 15)
532,088
269,967
316,202
126,449
Treasury bills (3 months tenor) (see note 16)
218,724
209,246
11,403
209,246
Due from other banks(see note 18)
4,041,461
1,825,298
3,148,265
1,682,707
4,792,273
2,304,511
3,475,870
2,018,402
41.
Compliance with Banking Regulations
During the year, the bank paid the following penalties to Central Bank of Nigeria.
S/N
Description
Amount paid in Naira
1
Late resolution of customer's complaint
2,000,000
2
Non-compliance with CBN directive on reconciliation of customer charges
14,000,000
3
Penalty on Anti-money laundering findings
61,000,000
4
Non-compliance with CBN directives
20,000,000
5
Penalty as a result of infraction related to risk assessment examination
4,000,000
6
Penalty for cyber security breaches
4,000,000
7
Checks on customers onboarding documentation
322,000,000
8
Penalty for extant regulation violation
250,000,000
9
Penalty as a result of anti-money laundery reviews
103,250,000
10
Infractions from the foreign exchange examination
14,647,419,153
Total
15,427,669,153
185 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
42.
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 non-
distributable 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 credit 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 at 31 December
2024, the Bank holds a total of N93,911 million in its credit risk reserves.
Provision for loan losses per prudential guidelines
In millions of Naira
Bank
31 December 2024 31 December 2023
Loans and advances:
-Lost
151,916
61,483
-Doubtful
151,498
90,107
Sub-standard
706
5,002
-Watchlist
487,010
276,808
-Performing
138,499
102,402
-Other known losses
10,952
6,805
(a)
940,581
542,607
Impairment assessment under IFRS
Loans and advances
12 months ECL credit
138,188
34,739
Life time ECL not impaired
634,733
170,708
Life time ECL credit impaired
240,964
278,736
(b)
1,013,885
484,183
Due from Banks - 12 months ECL (c)
12,569
935
Treasury bills - 12 months ECL (d)
38
71
Asset pledged as collateral- 12 months ECL (e)
11
29
Investment securities- 12 months ECL (f)
5,005
5,451
Other financial assets- ECL allowance (g)
51,329
31,061
Other non-financial assets (h)
1,887
85
Off Balance Sheet Exposures- 12 months ECL (i)
47,887
6,577
(m)=(b)+(c)+(d)+(e)+(f)+(g)+(h)+(i)
1,132,611
528,392
Transfer to credit risk reserve (n)=(a)-(m)
-
14,215
As at 31 December 2024, the Bank holds a total of N104,111 million in its credit risk reserves.
186 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
43.
Statement of cash flow workings
31
31 December 2024
(i) Investment securities (see note 17 & 21)
Group
Bank
31 December 2024
Investment
securities (including
pledged
instruments) at
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 2024
1,739,098
1,769,213
1,133,997
235,567
Change in ECL allowance
9,448
-
463
-
Additions to Investment securities
1,640,256
371,331
1,087,128
-
Disposal of Investment securities
(414,354)
-
(376,950)
-
Unrealised gain from changes in fair value recognised in profit or loss
-
(864)
-
(864)
Fair value gain/loss OCI
-
157,057
-
151,011
Interest income
453,687
107,424
271,307
-
Interest received
(390,262)
(53,069)
(180,678)
-
Derecognition loss
(31,010)
(11,508)
-
-
Balance as at 31 December 2024
(3,006,863)
(2,358,046)
(1,935,267)
(402,382)
Recognised in cash flow statement
-
(18,462)
-
(16,668)
Group
Bank
31 December 2023
Investment securities
(including pledged
instruments) at
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 01 January 2023
907,188
940,273
637,367
104,443
Change in ECL allowance
(7,736)
-
(2,877)
-
Additions to Investment securities
820,166
1,558,191
539,842
-
Disposal to Investment Securities
(122,846)
(857,915)
(82,885)
-
Unrealised gain from changes in fair value recognised in profit or loss
-
2,206
-
2,206
Fair value gain/loss OCI
-
132,532
-
122,252
Interest income
165,255
46,709
104,984
-
Interest received
(22,929)
(62,328)
(62,434)
-
Balance as at 31 December 2023
(1,739,098)
(1,769,213)
(1,133,997)
(233,567)
Recognised in cash flow statement
-
(9,545)
-
(6,666)
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
(iia) Treasury bills (Amortised cost) (see note 16 & 17)
31 December 2024
Treasury bills (including pledged instrumets) at armotised cost as 1
January
(1,868,642)
(989,891)
(1,662,335)
(950,021)
Change in ECL allowance
(33)
(337)
(33)
32
Interest income
(239,830)
(166,813)
(144,080)
(133,492)
Additions
(798,943)
(4,547,984)
(705,643)
(2,824,475)
Redemptions
2,092,066
3,836,384
1,730,853
2,245,622
Balance as at 31 December 2024
(815,382)
(1,868,641)
(781,238)
(1,662,334)
-
-
-
-
187 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Interim Consolidated and Separate Financial Statements
for the six month period ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
43.
Statement of cash flow workings (continued)
(iib) Treasury bills (FVTPL) (see note 16)
31 December 2024
Treasury bills fair value through profit or loss (including pledged
instruments) as at 1 January
749,606
1,159,965
749,606
1,159,965
Unrealised fair value gain
(8,719)
29,132
(8,719)
29,132
Interest income
344,636
12,154
344,636
12,154
Balance as at end of year
(1,644,823)
(749,606)
(1,644,823)
(749,606)
Recognised in Cashflow
(559,300)
451,645
(559,300)
451,645
(iii) Loans and advances (see note 20)
31 December 2024
Loans and advances at 1 January
6,556,470
4,013,705
5,928,796
3,735,676
Changes in ECL allowance
(594,176)
(400,650)
(594,395)
(394,440)
Interest Income
1,517,917
671,919
1,394,672
635,806
Interest received
(1,362,644)
(722,437)
(1,246,158)
(671,888)
Impact of hyperinflation
(5,791)
(8,029)
-
-
Balance as at end of year
(9,965,364)
(6,556,470)
(8,708,775)
(5,928,796)
Recognised in Cash flow
(3,853,588)
(3,001,962)
(3,225,860)
(2,623,642)
(iv) Customer deposits
31 December 2024
As at 1 January
(15,167,740)
(8,975,653)
(12,154,824)
(7,434,806)
Interest expense
(622,008)
(306,748)
(488,663)
(250,751)
Interest paid
639,393
310,064
481,431
243,790
Balance as at end of year
21,959,369
15,167,740
17,163,424
12,154,824
Recognised in Cash flow
6,809,014
6,195,403
5,001,368
4,713,057
(v) Other liabilities (see note 29)
31 December 2024
As at 1 January
(1,039,712)
(568,559)
(1,003,947)
(546,347)
Changes in ECL allowance
(40,396)
(1,633)
(41,310)
(1,286)
Lease modification
(497)
(755)
(497)
(755)
Lease liability additions
(13,958)
(1,269)
(1,011)
(874)
Interest expense on lease liability
(3,599)
(2,578)
(1,161)
(1,034)
Lease interest paid
485
224
484
212
Principal repayment on lease liability
4,899
1,543
1,088
979
Unclaimed dividend received
(484)
(352)
(484)
(352)
Impact of hyperinflation
5,120
4,547
-
-
Lease terminations
-
80
-
80
Balance as at end of year
1,402,046
1,039,712
1,323,440
1,003,947
Net cash movement in operating activties
313,904
470,960
276,602
454,570
(vi) (Loss)/Gain on disposal of property and equipment and
Intangible assets
31 December 2024
Cost (see note 26 & 27)
(13,818)
(5,244)
(11,505)
(5,055)
Accumulated depreciation (see note 26 & 27)
9,304
4,051
8,845
3,900
Net book value
(4,514)
(1,193)
(2,660)
(1,155)
Sales proceed
3,520
1,382
1,647
1,341
Profit on Disposal (see note 10)
(994)
189
(1,013)
186
188 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
43.
Statement of cash flow workings (continued)
(vii) Due from Banks (greater than 90 days)
31 December 2024
As at 1 January
9,015
46,407
9,015
115,315
Changes in ECL allowance
(11,653)
(860)
(11,634)
(860)
Interest income
165,306
81,822
130,068
39,796
Interest received
(108,660)
(81,207)
(73,422)
(39,181)
Balance as at end of year
(894,246)
(9,015)
(1,294,171)
(9,015)
Recognised in cash flow statement
(840,238)
37,147
(1,240,144)
106,055
(viii) Other assets
31 December 2024
As at 1 January
474,976
213,523
417,419
193,792
Changes in ECL allowance
(22,061)
1,103
(22,070)
1,083
Reclassification
(658)
646
-
-
Impact of hyperinflation
16,067
837
-
-
Balance as at end of year
(326,725)
(474,976)
(184,136)
(417,419)
Net cash movement in operating activities
141,599
(258,867)
211,213
(222,544)
(ix) Net movement in Derivatives
Derivative assets
31 December 2024
As at 1 January
(534,739)
(49,874)
(507,942)
(48,851)
Unrealised fair value gain
(280,626)
(534,739)
(271,213)
(507,942)
Balance as at end of year
280,626
534,739
271,213
507,942
(534,739)
(49,874)
(507,942)
(48,851)
Derivative liabilities
31 December 2024
As at 1 January
70,486
(6,325)
45,514
(6,040)
Unrealised fair value changes
9,258
(70,486)
4,465
(45,514)
Balance as at end of year
(9,258)
70,486
(4,465)
45,514
Recognised in cash flow
70,486
(6,325)
45,514
(6,040)
Net movement in derivatives
(464,253)
(43,549)
(462,428)
(42,811)
(x) Restricted balances (Cash Reserve)
31 December 2024
Opening Balance
3,983,407
1,749,608
3,838,937
1,694,906
Mandatory Reserve deposit with Central Bank
5,329,200
3,902,718
4,906,659
3,758,248
Special Cash Reserve
26,928
80,689
26,928
80,689
Recognised in cashflow
(1,372,721)
(2,233,797)
(1,094,650)
(2,144,031)
(xia) Interest paid on operating activities
31 December 2024
Customer deposit (see note 43(iv))
(639,393)
(310,064)
(481,431)
(243,790)
(639,393)
(310,064)
(481,431)
(243,790)
(xib) Interest paid on financing activities
Onlending facilities (see note 30b)
(1,357)
(5,778)
(1,357)
(5,778)
Lease liabilities (see 43(v))
(485)
(224)
(484)
(212)
Borrowings (see note 31)
(192,475)
(97,895)
(160,647)
(97,569)
(194,317)
(103,897)
(162,488)
(103,559)
189 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
43.
Statement of cash flow workings (continued)
(xii) Unrealised fair value change
31 December 2024
Investment securities (see note 43(i))
864
(2,206)
864
(2,206)
Treasury bills (see note 43(ii))
8,719
(29,132)
8,719
(29,132)
Derivatives (see note 43(ix))
(271,368)
(464,253)
(266,748)
(462,428)
(261,785)
(495,591)
(257,165)
(493,766)
(xiiia) Interest received from operating activities
31 December 2024
Due from other banks (see note 41(vii))
108,660
81,207
73,422
39,181
Loans and advances (see note 41(iii))
1,362,644
722,437
1,246,158
671,888
1,471,304
803,644
1,319,580
711,069
(xiiib) Interest received from investment securities
31 December 2024
Investment securities (see note 41(i))
443,331
85,081
180,678
62,434
443,331
85,081
180,678
62,434
(xiva) Acquisition of Right of use asset
31 December 2024
Addition to right of use (see note 26)
(14,089)
(2,128)
(1,075)
(1,685)
Lease liability addition (see note 43(v))
13,958
1,269
1,011
874
(131)
(859)
(64)
(811)
(xivb) Additions to property,plant and equipment other than right
of use
31 December 2024
Addition to property, plant and equipment (see note 26)
(116,082)
(52,409)
(93,803)
(42,265)
Addition to right of use asset (see note 26)
14,089
2,128
1,075
1,685
(101,993)
(50,281)
(92,728)
(40,580)
(xv)Addition to investment securities
31 December 2024
Investment securities at amortized cost
(1,640,256)
(820,166)
(1,087,128)
(539,842)
Investment securities at FVOCI
(371,331)
(1,558,191)
-
-
(2,011,587)
(2,378,357)
(1,087,128)
(539,842)
(xvi)Lease Modification
31 December 2024
Right of use
497
755
497
755
Lease Liability
(497)
(755)
(497)
(755)
-
-
-
-
190 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Notes to the Consolidated and Separate Financial Statements
for the Year Ended 31 December 2024
Group
Bank
In millions of Naira
31 December
2024
31 December
2023
31 December
2024
31 December
2023
(xvii)Unclaimed dividend received
31 December 2024
As at 1 January
(30,116)
(29,764)
(30,116)
(29,764)
Balance as at 31 Dec 2024
30,600
30,116
30,600
30,116
484
352
484
352
(xviii)Lease derecognition
31 December 2024
Right of use- cost
-
66
-
81
lease liability
-
(80)
-
(79)
-
(14)
-
2
(xix)Dividend received
31 December 2024
Dividend Income
8,645
5,661
14,645
19,777
8,645
5,661
14,645
19,777
(xx) Foreign exchange revaluation loss
31 December 2024
Cash and bank balances
(31,234)
(28,194)
(31,234)
(28,002)
Due to other banks
(1,406,517)
(486,389)
(986,222)
(486,246)
Borrowings
338,132
872,686
280,817
822,600
(1,099,619)
358,103
(736,639)
308,352
44.
Comparatives
Certain disclosures and some prior year figures have been re-presented to conform with current year presentation.
45.
Events after the reporting period
On January 23, 2025, the Bank received approval for the allotment of its newly issued shares. The total number of additional shares raised by the bank through
the capital raise exercise is 9,673,336,214. This brings the total number of issued shares of the bank from a previous 31,396,493,787 units to a current
41,069,830,001 units.
See below analysis of the newly allotted shares:
Share range
No. of
Shareholders
(Right)
No of shares
(Right)
No. of
Applicants
No. of Shares
(Public offer)
Total no of
shareholders
Total no of
issued shares
1 - 50,000
38,169
410,937,059
116,643
815,302,250
154,812
1,226,239,309
50,001 - 100,000
637
85,569,449
5,700
465,710,250
6,337
551,279,699
100,001 - 500,000
660
410,622,233
3,834
877,405,500
4,494
1,288,027,733
500,001 - 1,000,000
121
97,269,348
756
649,132,500
877
746,401,848
1,000,001 - 5,000,000
115
353,919,902
411
915,262,500
526
1,269,182,402
5,000,001 - 10,000,000
19
177,806,321
30
214,104,000
49
391,910,321
10,000,001 - 50,000,000
23
633,280,993
21
391,340,750
44
1,024,621,743
50,000,001 and above
14
3,063,343,659
2
112,329,500
16
3,175,673,159
39,758
5,232,748,964
127,397
4,440,587,250
167,155
9,673,336,214
191 Zenith Bank Plc Annual Report - 31 December 2024
OTHER NATIONAL DISCLOSURES
ZENITH BANK PLC
Value Added Statement
In millions of Naira
31 December
2024
31 December
2024
31 December 2023 31 December
2023
%
%
Group
Value Added
Gross income
3,970,959
2,131,750
Interest and fee expense
-Local
(732,819)
(302,912)
-Foreign
(409,134)
(173,788)
2,829,006
1,655,050
Impairment loss on financial and non-financial instruments
(658,805)
(409,616)
2,170,201
1,245,434
Bought - in materials and services
-Local
(525,039)
(262,775)
-Foreign
(61,595)
(28,956)
Value added
1,583,567
100
953,703
100
Distribution
Employees
Salaries and benefits
204,170
13
124,415
16
Government
Income tax
293,956
19
119,053
15
Retained in the Group
Replacement of property and equipment / intangible assets
52,546
3
33,326
3
Profit for the year (including statutory reserves, small scale industry, and non-
controling interest)
1,032,895
65
676,909
71
Total Value Added
1,583,567
100
953,703
100
Value added represents the additional wealth which the group has been able to create by its own and employees efforts.
193 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Value Added Statement
In millions of Naira
31 December
2024
31 December
2024
31 December 2023 31 December
2023
%
%
Bank
Gross Income
3,484,099
1,869,753
Interest and fee expense
-Local
(732,817)
(321,877)
-Foreign
(249,307)
(103,443)
2,501,975
1,444,433
Impairment loss on financial and non-financial instruments
(668,914)
(398,412)
1,833,061
1,046,021
Bought-in material and services
-Local
(532,071)
(261,686)
-Foreign
-
-
Value added
1,300,990
100
784,335
100
Distribution
Employees
Salaries and benefits
128,643
10
88,083
11
Government
Income tax
197,131
15
72,114
9
Retained in the Bank
Replacement of property and equipment/intagible assets
39,058
3
28,537
4
Profit for the year (including staturory reserves and small scale industry)
936,158
72
595,601
76
Total Value Added
1,300,990
100
784,335
100
Value added represents the additional wealth which the Bank has been able to create by its own and employees efforts.
194 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Five-Year Financial Summary
In millions of Naira
31 December 202431 December 202331 December 202231 December 202131 December 2020
Group
Statement of Financial Position
Assets
Cash and balances with central banks
5,888,216
4,253,374
2,201,744
1,488,363
1,591,768
Treasury bills
2,678,929
2,736,273
2,246,538
1,764,946
1,577,875
Assets pledged as collateral
266,866
308,638
254,663
392,594
298,530
Due From Other Banks
4,935,707
1,834,314
1,302,811
691,244
810,494
Derivative assets
280,626
534,739
49,874
56,187
44,496
Loans and advances
9,965,364
6,556,470
4,013,705
3,355,728
2,779,027
Investment securities
5,098,044
3,290,895
1,728,334
1,303,725
996,916
Current tax receivable
6,869
18,975
-
-
-
Deferred tax
21,542
17,251
18,343
1,837
5,786
Other assets
326,725
474,976
213,523
168,210
169,967
Property and equipment
400,441
295,532
230,843
200,008
190,170
Intangible assets
88,196
47,018
25,251
25,001
16,243
Total assets
29,957,525
20,368,455
12,285,629
9,447,843
8,481,272
Liabilities
Customer deposits
21,959,369
15,167,740
8,975,653
6,472,054
5,339,911
Derivative liabilities
9,258
70,486
6,325
14,674
11,076
Current tax payable
256,168
33,877
64,856
16,909
11,690
Deferred tax liabilities
5,502
59,310
16,654
11,603
-
Other liabilities
1,402,045
1,039,712
568,559
487,432
703,292
On-lending facilities
250,725
263,065
311,192
369,241
384,573
Borrowings
2,045,185
1,410,885
963,450
750,469
870,080
Debt Securities issued
-
-
-
45,799
43,177
Total liabilities
25,928,252
18,045,075
10,906,689
8,168,181
7,363,799
Net assets
4,029,273
2,323,380
1,378,940
1,279,662
1,117,473
Equity
Share capital
20,535
15,698
15,698
15,698
15,698
Share premium
594,113
255,047
255,047
255,047
255,047
Retained earnings
2,015,513
1,179,390
625,005
607,203
521,293
Other Reserves
1,396,747
871,617
482,377
400,570
324,461
Attributable to equity holders of the parent
4,026,908
2,321,752
1,378,127
1,278,518
1,116,499
Non-controlling interest
2,365
1,628
813
1,144
974
Total shareholders' equity
4,029,273
2,323,380
1,378,940
1,279,662
1,117,473
Financed by:
195 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Five Year Financial Summary
In millions of Naira
31 December 202431 December 202331 December 202231 December 202131 December 2020
Statements of Profit or Loss and Other Comprehensive Income
Gross earnings
3,970,959
2,131,750
945,554
765,558
696,450
Share of profit/(loss) of associate
-
-
-
-
-
Interest expense
(992,474)
(408,492)
(173,539)
(106,794)
(121,131)
Operating and direct expenses
(992,829)
(517,680)
(364,113)
(318,458)
(279,924)
Impairment charge for financial and non-financial assets
(658,805)
(409,616)
(123,252)
(59,932)
(39,534)
Profit before taxation
1,326,851
795,962
284,650
280,374
255,861
Taxation
(293,956)
(119,053)
(60,739)
(35,816)
(25,296)
Profit after tax
1,032,895
676,909
223,911
244,558
230,565
Foreign currency translation differences
220,288
162,942
(28,768)
8,485
-
Impact of applying IAS 29 on 1 January 2023
109,202
81,408
-
-
-
Fair value movement on equity instruments
151,011
122,252
8,109
5,599
16,295
Fair value movements on debt securities at FVOCI
6,046
10,280
(6,602)
(2,227)
1,981
Income tax effect relating to fair value movement on debt
securities at FVOCI
(2,841)
(2,603)
-
-
(355)
Total Comprehensive income
1,516,601
1,051,188
196,650
256,415
248,486
Earnings per share
Basic and diluted (kobo)
3,287
2,155
714
778
734
196 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Five Year Financial Summary
In millions of Naira
31 December 202431 December 202331 December 202231 December 202131 December 2020
Bank
Statement of Financial Position
Assets
Cash and balances with central banks
5,249,789
3,965,386
2,102,394
1,397,666
1,503,245
Treasury bills
2,437,464
2,529,966
2,206,668
1,577,647
1,393,421
Assets pledged as collateral
89,062
255,061
254,565
357,000
298,530
Due From Other Banks
4,442,436
1,691,722
1,132,796
518,053
532,377
Derivatives
271,213
507,942
48,851
57,476
41,729
Loans and advances
8,708,775
5,928,796
3,735,676
3,099,452
2,639,797
Investment securities
2,248,587
1,205,724
622,781
477,004
333,126
Investment in subsidiaries
34,625
34,625
34,625
34,625
34,625
Investment in associates
-
-
-
-
-
Deferred tax
1,756
-
-
-
4,733
Other assets
184,136
417,419
193,792
152,326
159,625
Property and equipment
290,273
230,267
214,572
177,501
169,080
Intangible assets
80,203
44,185
23,958
23,542
14,699
Total assets
24,038,319
16,811,093
10,570,678
7,872,292
7,124,987
Liabilities
Customer deposits
17,163,424
12,154,824
7,434,806
5,169,199
4,298,258
Derivative liabilities
4,465
45,514
6,040
15,170
11,076
Current tax payable
248,613
28,080
61,655
14,241
9,117
Deferred income tax liabilities
-
59,233
15,911
11,596
-
Other liabilities
1,323,440
1,003,947
546,347
427,876
599,464
On Lending Facilities
250,725
263,065
311,192
369,241
384,573
Borrowings
1,951,616
1,450,182
999,580
769,395
874,090
Debt Securities issued
-
-
-
45,799
43,177
Total liabilities
20,942,283
15,004,845
9,375,531
6,822,517
6,219,755
Net assets
3,096,036
1,806,248
1,195,147
1,049,775
905,232
Equity
Share capital
20,535
15,698
15,698
15,698
15,698
Share premium
594,113
255,047
255,047
255,047
255,047
Retained earnings
1,538,189
893,938
494,429
466,250
382,292
Reserves
943,199
641,565
429,973
312,781
252,195
Attributable to equity holders of the parent
3,096,036
1,806,248
1,195,147
1,049,776
905,232
Total shareholder's equity
3,096,036
1,806,248
1,195,147
1,049,776
905,232
197 Zenith Bank Plc Annual Report - 31 December 2024
ZENITH BANK PLC
Five Year Financial Summary
In millions of Naira
31 December 202431 December 202331 December 202231 December 202131 December 2020
Statements of Profit or Loss and Other Comprehensive Income
Gross earnings
3,484,099
1,869,753
833,087
677,283
595,921
Interest expense
(839,111)
(355,228)
(153,019)
(82,718)
(102,111)
Other operating expenses
(842,786)
(448,398)
(324,122)
(281,223)
(246,566)
Impairments
(668,913)
(398,412)
(61,896)
(56,175)
(37,237)
Profit before tax
1,133,289
667,715
294,050
257,167
210,007
Taxation
(197,131)
(72,114)
(59,457)
(24,034)
(12,155)
Profit after taxation
936,158
595,601
234,593
233,133
197,852
Other comprehensive income
Fair value movements on equity instruments
151,011
122,252
8,109
5,599
16,295
151,011
122,252
8,109
5,599
16,295
Total Comprehensive income
1,087,169
717,853
242,702
238,732
214,147
Earning per share
Basic and diluted (kobo)
2,979
1,897
747
743
630
198
Zenith Bank Plc Annual Report - 31 December 2024