Nigeria 2015 | FINANCE | INTERVIEW

TBY talks to Peter Amangbo, GMD and CEO, Zenith Bank on expansion, international partnerships, and promoting financial inclusion.

Peter Amangbo
Peter Amangbo has garnered over two decades of banking experience spanning various departments of the bank, from Corporate Finance and Investment Banking, to Business Development, Credit and Marketing, Treasury, Financial Control, and Strategic Planning and Operations. Before his appointment to the board of Zenith Bank and its subsidiary companies in 2005, Mr. Amangbo was a pioneer non-Executive Director of Zenith Bank UK. Before joining the banking industry, he was a senior consultant with PriceWaterhouseCooper. An alumnus of INSEAD and a fellow of the Institute of Chartered Accountants of Nigeria, Mr. Amangbo holds an MBA from the Warwick Business School and a Bachelor’s of Engineering degree in Electrical and Electronics Engineering from the University of Benin.

The past 9M results showed considerable growth for Zenith compared to the 2013 results. What were the main drivers of this growth?

The economy itself is growing across most of the sectors. If you compare this with 2013, you note that the power sector is a major growth area, as a result of its privatization. There is now considerable activity in both generation and distribution, and to a certain extent even transmission. We are committed to the sector, given its potential to become a major catalyst of economic growth. In 2014, activities in the upstream oil and gas sector were also a considerable driver, primarily the divestment by Shell of four major assets, which totaled in excess of $5 billion, and which was largely financed by local banks. There is still a range of capacities to be developed in the upstream segment and the power sector, whereby these areas will remain key drivers throughout 2015 and beyond.

Zenith's foreign banking subsidiaries are contributing increasingly to group profit. Are you looking to expand the current number of subsidiaries?

We are not too bullish about this prospect. At Zenith Bank UK, we are doing well in terms of numbers. We broke even in our first year and continue to achieve notable growth there. Today, our non-performing loans are at 0%, after operating for eight years in that particular economy. Most of our trade finance activities are gaining increased market shares, not just in the UK, but also by transactions routed through the UK to China. There are still growth opportunities for Zenith Bank UK. In Ghana, we have about 40 branches and rank among the top five banks there. Furthermore, in 2013, we were voted bank of the year in Ghana. Our objective is to consolidate, as we do not want a universal presence, but rather to be in the major economies, such as Ghana.

Our readership includes foreign investors who are looking to enter the Nigerian market. What makes Zenith Bank a suitable partner for such individuals?

As a bank, we stand for consistency, predictability, and stability. We will always do things at the highest level of governance, which has brought us to where we are today. Zenith Bank is only 24 years old, but we are the largest banking institution in Nigeria in terms of shareholder funds, while in total asset terms we rank number two. With regard to profitability, however, we are the number one entity. Zenith Bank is seen as being genuinely focused on service and innovation, and we will continue to do this, and to focus on our service quality, people, and technology in order to excite our customers. If we continue in this vein, there is no reason why investors would not turn to us. In fact, we have a greater number of multinational clients than any other bank in Nigeria.

How is Zenith Bank making the most of the IT revolution unfolding in Nigeria?

At Zenith Bank, we are deeply interested in technology. Prior to 2000, teledensity in Nigeria was less than 1 million, while today, it is at around 100 million. Aware of this infrastructure deficiency at the time, we established the necessary services to enable us to provide a telecommunications network for all of our branches. This helped in terms of our real-time banking at that time. And if we were able to accomplish that then, you can imagine what we can do now. We have broadband access everywhere. In 1990, all of our branches were already linked on a real-time basis. There were many people who could not afford that at the time. Yet this helped us a lot with multinationals, because it enabled companies to pay from anywhere in the country, and that was part of the reason why most of the multinationals preferred to use Zenith Bank.

How is Zenith bank promoting financial inclusion in Nigeria?

There are a number of initiatives in place from the Central Bank and the finance committee. We all need to have a common front to ensure that we have many people involved. We have over 400 locations, but in a country as big as Nigeria with a population of 150 million people that is not sufficient. If you look at all the other banks, you see that we need innovation to gain adequate coverage. We were one of the first banks to launch mobile money. We are investing in this area because we believe the benefits will come quickly and help in terms of enhancing the payment system. One of the ways in which we promote financial inclusion is by leveraging agency banking, which offers banking services to villages.

Banks are facing some regulatory headwinds because of a tighter monetary policy. Do you see room for improvement in the regulations?

If you consider monetary tightening objectively, the truth is that this is the right way to go. You cannot have your cake and eat it too—either you want stable exchange rates, or else you want high interest rates, but you cannot have both at the same time. In a developing economy such as this, where we rely so much on imports, exchange rate stability is key. Therefore, we support the CBN's attempt to stabilize the exchange rate. The good thing is that while tightening the money supply, the CBN has managed to control interest rates to a large extent, which is normally hard to accomplish.

What is your outlook on the Nigerian economy for the next two years, especially in light of falling oil prices and the subsequent pressure on the Naira?

Both the CBN and the Minister for the Economy have taken swift, proactive steps and implemented measures to offset pressures on the economy stemming from falling oil prices. I am somewhat bullish about the future of the economy, although there are quite a number of steps that need to be taken to reduce our import dependence. Refineries need to be established to lower the amount of foreign exchange consumption on petroleum products. We are also undergoing rapid agricultural development. Nigeria, for example, is the second largest importer of rice, but we are going to reduce this considerably. Once we reduce our dependence on imports, we will ease the pressure on our currency, and in general I predict that we will see exciting developments over the next two years.