The International Monetary Fund (IMF) estimated that the World output grew by five per cent in 2010, higher than the 4.8 per cent released in October, 2010. The Fund added that the global economic activity expanded by an annualized rate of 3.5 per cent in the third quarter of 2010, a slow down from five per cent growth rate in the second quarter of the year. IMF released these figures in its World Economic Outlook (WEO), January 2011 Update titled ―Global Recovery Advances but Remains Uneven. However, there was a divergence in the economic performance of advanced, emerging and developing economies all through 2010. Economic uncertainties unleashed by the global financial crises sustained the weak recovery of the advanced economies. As a result, growth was sluggish and concerns about inflation were dominant on account of the rising oil and commodity prices in the international markets and fears of fiscal stress in the years ahead. On the other hand however, robust economic growth was recorded in emerging markets and developing economies based essentially on strong domestic demand which offset weak export demand. Financial market conditions in the advanced economies were, however, more stable than in the preceding two years while some emerging economies were confronted with challenges posed by large volatile capital inflows.

In specific terms, the softening of economic recovery in the US reflected the renewed deterioration in the housing market and the lackluster labour market performance, with private sector job creation still weak. However, China's massive official stimulus packages, estimated at 14 per cent of GDP and focused on infrastructure and housing, did not only boost aggregate demand but also fed into a property bubble which the government is yet confronting. Consequent upon this, growth in China, which overtook that of Japan early in 2010 and made the former the world's second-largest economy, ended the year on a declining trend.

In the Euro Zone, a degree of calmness returned to the debt market following the approval of the European Financial Stability Facility (EFSF). Thus, despite high risk aversion in the market and the dependence of the region's banks on the wholesale markets, various countries of the Zone were able to make progress in fiscal reforms. On the other hand, the rebounding of commodity prices after their crash in the wake of the global financial crises kept pulling most developing economies to sustained recovery in 2010. For instance, according to the United Nations' 'World Economic Situation and Prospects 2011', the world price of crude oil fluctuated around US $78 per barrel during 2010, up from the average of US$62 for 2009. Most commodity prices similarly rebounded during 2010.

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According to the International Monetary Fund (IMF), economic activity in sub-Saharan Africa is projected to expand by five per cent in 2010. This means that economic growth in most countries of the region have largely bounced back to nearly their pre- crises levels. The IMF in its 'Regional Economic Outlook' for the region in October 2010 attributed the resilience to sound economic policy implementation. Such policy regimes were characterized by low inflation, steady growth, sustainable fiscal balances, rising foreign exchange reserves and declining government debt, among others.

Growth in the region, according to the IMF was also driven by strong domestic demand as a result of rising real incomes and sustained private and public investment. Also, exports benefited from increased reorientation of trade towards fast-growing markets in Asia. However, the legacy of the global financial crises remained evident in most countries of the region as reflected in macroeconomic indicators. Unemployment rose substantially in countries with more developed manufacturing sectors; fiscal balances deteriorated –particularly in middle-income countries and oil exporters. Exports had not climbed up to pre-crisis levels, just as credit growth remained subdued.

Economic and structural reforms prevailed in the Nigerian economy all through 2010. This led to an impressive growth marked by continuing recovery of the capital market, improving stability in the banking sector, relatively stable foreign exchange market, relatively high inflation rate and declining stock of external reserves. Provisional data from the National Bureau of Statistics (NBS) indicated that the real Gross Domestic Product (GDP) grew by 8.29 per cent in the fourth quarter of 2010, up from 7.84 per cent recorded in the third quarter. The overall GDP growth for 2010 was estimated to be 7.85 per cent, compared to the revised growth rate of 6.96 per cent recorded in 2009. The non-oil sector remained the major driver of the overall growth, with agriculture, wholesale and trade, and services contributing 2.39, 2.04 and 2.08 per cent, respectively.

But while the economy in GDP terms was doing relatively well, inflation remained a major challenge to the Government all through the year under review. In fact, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) noted at its meeting on January 24, 2011 that although inflation had been trending downwards, the single digit benchmark was not achieved in 2010. This was despite the relatively good harvest, improved supply of petroleum products and lower growth in monetary aggregates. Thus, the Consumer Price Index (CPI) for the month of December 2010, released by the National Bureau of Statistics (NBS), showed that inflation rate (year-on-year) in Nigeria dropped marginally by 1% to 11.8% from 12.8% recorded in the month of November 2010. The latest inflation figure of 11.80% represents the lowest level recorded since October 2009. According to NBS, the Composite Consumer Price Index (CCPI) stood at 114.2 points in the month of December 2010 an increase from 112.8 points recorded in November 2010. The percentage change in the average CPI for the twelve-month period ended December 2010 over the average of the CPI for the previous twelve-month period was 13.7%, slightly lower than 13.9% recorded in the previous month.

One key feature of 2010 was the relatively but consistently high price of crude oil in the international market. This reflected in the average price of oil in 2010 being above the benchmark for oil price of US$67 per barrel in the 2010 budget. The price of Nigeria's Bonnylight grade averaged US$80.9 per barrel, compared with the preceding year's average of US$62.2 per barrel; an increase of about 30.30 per cent. Also, the OPEC Reference Basket (ORB) averaged US$77.47 per barrel in 2010, compared with US$56.71per barrel in 2009. The highest level of ORB in 2010 was US$90.87 per barrel, which was attained on December 27, 2010. There was also improved oil production, due mainly to the implementation of the amnesty and post-amnesty programmes of the Federal Government that severely reduced youth restiveness in the Niger Delta. Hence, crude oil production which stood at around 1.9 million barrels per day in December 2009 was estimated to be around 2.47 million barrels per day by year-end 2010.

This trend was driven by positive market sentiments, weak US dollar, growing demand especially from India and China, drop in the US crude oil inventories and instances of geo-political tensions. The upshot of all these was stable foreign exchange inflow into the coffers of Government all through the year. This in turn reflected in the generally stable foreign exchange market-where the Naira remained largely within CBN target of N150/US$--with a few instances of breaching. The exchange rate depreciated only by about 0.72 per cent, from N148.10/US$ to N149.16/US$ on a year-on-year basis. The official exchange rate oscillated between N147.60/US$ and N150.05/US$.

The reform policies and development efforts of the CBN impinged on the economy in several ways in 2010. These efforts include the setting up of the Asset Management Corporation of Nigeria (AMCON), creation of Special Purpose Vehicles (SPVs) for the stimulation of manufacturing, the real sector and infrastructural development. Two of these SPVs are: the N200 billion Small and Medium Enterprises Credit Guarantee Scheme (SMECGS) for the promotion of access to credit by manufacturers and SMEs and the N500 billion Power and Aviation Intervention Fund (PAIF)-with the Bank of Industry as the managing agent. The apex bank also during 2010 released new prudential guidelines; set tenure limits for managing directors as well as non-executive directors of banks; issued guidelines for the introduction of merchant banking and commenced the implementation of the Nigerian Uniform Bank Account Number (NUBAN) scheme.

The apex bank also took initiatives to influence the cost and availability of credit and asset prices as well as encourage credit flow to productive investments. This it did by adjusting the Monetary Policy Rate (MPR) and other variables during the period under review. Thus, the MPR which stood at 6.00 per cent at end-December 2009 was raised by 25 basis points to 6.25 per cent while the 'asymmetric corridor' was adjusted to 200 basis points above and 300 basis points below the MPR for the Standing Lending Facility and Standing Deposit, respectively. This measure effectively increased interest payable on standing deposits with the CBN by 200 basis points.

The capital market recorded significant recovery in 2010, after the decline associated with the global financial and economic crises in 2008/2009. The performance of the market during the period was influenced by a combination of several factors which either contributed to the recovery or slowed it down. The market recorded its highest performance in the first quarter 2010 as investors were taking positions ahead of the full year earnings season. Decline in deposit interest rates during the quarter also enabled the recovery of the market. Thus, the Nigerian Stock Exchange (NSE) All-Share Index closed the year 2010 at 24,770.52 points, up from 20,827.17 points at the end of year 2009, representing an appreciation of 18.9 per cent, compared to a depreciation of 33.78 per cent in 2009.

The market capitalization gained 58.61 per cent to close 2010 at N7.91trillion, compared to the loss of 28.29 per cent in 2009 at N4.99trillion. In terms of trading activities, total shares of 93.36 billion worth N797.56billion were traded in 1,893,807 deals in 2010, compared to a total volume of 102.83billion worth N685.72 billion traded in 1,709,002 deals in 2009. This showed a decline of 9.24per cent in terms of volume, 18.19 per cent appreciation in value and 10.81per cent increase in the number of deals compared to 2009. A breakdown of sectoral contribution to market capitalization as at December 31, 2010 shows that the Banking sector had the highest contribution of 34.27 per cent. This is followed by the Building Materials subsector with a contribution of 26.07 per cent as a result of Dangote Cement which accounted for about 23.49 per cent of the market capitalization as at December 2010.

Without any iota of doubt, year 2010 was a very challenging one for operators in the banking industry. This notwithstanding, Zenith Bank, whether in company terms or Group consideration, was able to exploit the opportunities within the environment. This translated into a cheery performance that further attests to the durability and resilience of the Brand. These results are, once again, an eloquent testimony to the sound financial health of our Bank and the Group. For the Bank, total deposits was N1.29 trillion for the year ended December 31, 2010, representing a 16 per cent increase over the previous year's figure of N1.11 trillion. Profit after tax similarly jumped by 127 per cent, from N14.69 billion (annualized) in 2009 to N33.34 billion in 2010. During the same period, total assets of the Bank grew by 14 per cent, N1.57 trillion to N1.79 trillion; while shareholders' fund rose by seven per cent, from N328.38 billion to N350.41billion. Gross earnings however dropped from N203.32 billion (annualized) in year 2009 to N169.37 billion in 2010.

As a Group, the performance indices were no less impressive. The Group profit before tax grew by 78 per cent, from N28.07 billion (annualized) in year 2009 to N50.03 billion in 2010. Profit after tax thus jumped by a whopping 127 per cent during the period, from N16.48 billion (annualized) in 2009 to N37.41 billion. The Group total assets similarly rose by 14 per cent, from N1.66 trillion in 2009 to N1.90 trillion in 2010, while total deposits grew by 12 per cent during the same period, from N1.17 trillion to N1.32 trillion. Group shareholders' fund grew by eight per cent, from N337.79 billion in 2009 to N363.56 billion; gross earnings however declined during the period, from N277.30 billion to N192.49 billion.

Zenith Bank remains committed to delivering superior returns to our shareholders; and this, we once again demonstrate by ensuring that a good chunk of our profit is set aside for our valued investors. The Board is therefore pleased to recommend a dividend pay out of N26.69 billion; that is, 85 kobo per 50 kobo share.

My dear colleagues on the Board, may I seize this opportunity to express my gratitude and deepest appreciation to you for your support and cooperation that has enabled me to settle in as the Chairman. I wish to put it on record that you made it easy for the Board to remain stable even when the Founding Managing Director and Chief Executive of the Bank, Mr. Jim Ovia, and the former Chairman, Mr. Macaulay Pepple, exited the Board at the same time in the course of the year under review. I say a big 'thank you' to all of you. The two personages, the former Chief Executive and former Chairman, in compliance with the new Code of Corporate Governance issued by the Central Bank of Nigeria which limits the tenure of Directors to a maximum of ten years, exited the Board in the course of the year under review. Others that retired from the Board on the same ground were Chief Eddy Martins Egwuenu, Sir S. P. O. Fortune Ebie and Professor (Prince) L. F. O. Obika. I hereby express my infinite appreciation to these distinguished personalities for their commitment and vision that saw Zenith Bank grow into a leading financial institution that it is today. In deed, I am full of gratitude to you, one and all.

During the period under review, too, the Board approved the nomination of three distinguished Nigerians to fill the vacancies created by the retirement of the former directors. They are: Professor Chukwuka Enswemeka, Mr. Jeffery Efeyini and Ms. Amal Inyingiala Pepple. A new Group Managing Director/Chief Executive Officer in the person of Mr. Godwin I. Emefiele was also appointed and approved by the Central Bank of Nigeria. He assumed office on August 1, 2010. Mr. Emefiele was the Deputy Managing Director of the Bank for upwards of nine years before the appointment. And, sequel to the retirement of the former Chairman of the Board, the Board nominated and approved my humble self as its new Chairman. I hereby formally thank the Board for the confidence reposed in me.

May I inform you that in line with the new licensing regime in the banking industry, Zenith Bank has opted for a commercial bank license with international authorization. With your approval, the Board will take all necessary steps to ensure the Bank operates in accordance with the new order.

Distinguished shareholders, I feel proud to say that even in the face of a very challenging operating environment, Zenith Bank has maintained its culture of outstanding performance and industry leadership. As a bank, we are monitoring developments both in the local and global economy, and applying pragmatism and dynamism, as appropriate.

We are certainly not unmindful of the demands and obligations inherent in our environment; but this is why we have entrenched global best practices in every facet of our operations. We also ensure that all these are anchored on good corporate governance and strict risk management.

Ladies and Gentlemen, on behalf of the Board, I would like to thank you very sincerely for your unalloyed support. The future though challenging, remains promising for all of us. May God bless you all.