There are indications that one of the strong banks in this clime,Zenith, is making a sharp ,strategic business move,as oil revenue declines globally..Zenith Bank is one of the banks that seem to have shifted focus from the oil and gas to lending to the real sector and the bank is making money from it, as its lending to the oil and gas sector dropped by seven per cent to N362.48 billion.
Total assets of the bank had risen by 6.7 per cent to N4.006 trillion in 2015 compared to N3.755 trillion just as total liabilities rose to N3.412 trillion a 6.5 per cent increase compared to N3.202 trillion which it was at the end of 2014.
Zenith Bank’s lending to general commerce and the manufacturing sector significantly increased by 326 and 54.9 per cents respectively. The bank increased the loans it gave to customers involved in general commerce to N464.91 billion from N108.92 billion while loans to customers in the manufacturing sector rose to N462.8 billion from N298.83 billion.
This is an indication that banks in Nigeria have been forced to shift lending focus away from oily monies to something much more real, with the depressing state of the oil and gas industry and its attendant effect of dwindling revenues on companies operating in the sector.
Zenith Bank Plc that has apparently left the era of banking where banks rely more on frivolous charges to beef up their bottom line. For Zenith Bank, it is now all about customer satisfaction, thus giving out loans, that eventually make up a huge part of their income and eventually leading to an honest profit.
Implication is that banks in Nigeria are working their way into fulfilling their role in the economy of the country. In the past, banks made money by taking deposits from customers and “gambling” with it at the stock, bond and foreign exchange market amongst others.
However, the trend is changing as banks have continued to increase their lending to the real sector. Zenith Bank for example had a substantial part of its interest income in 2015 coming from loans and advances to its customers.
Specifically, 73.3 per cent or N255.14 billion of the N348.17 billion interest and similar income of the bank in 2015 came from loans and advances to customers.
The financials of the bank showed that it is increasing the percentage of its assets that go into lending to customers. In 2014, 46 per cent of the total assets of Zenith had been given out as loans, but the figure increased to 49.6 per cent in 2015.
Although deposits had risen by just 0.8 per cent from N2.27 trillion in 2014 to N2.33 trillion in 2015, loans had grown by 15 per cent to N1.98 trillion last year from N1.73 trillion. The bank’s loan to deposit ratio for 2015 stood at 67 per cent.
According to the Group Managing Director and Chief Executive of the bank, Peter Amangbo, it is enhancing its participation and momentum in the retail end of the market in response to the changing dynamics of the banking sector where retail banking has become a critical success and survival factor.