Slide 1: 2017 Group Results
2017 Group Results Presentation to Investors & Analysts
Slide 2: Disclaimer
Disclaimer This presentation is based on the consolidated financial statements of Zenith Bank Plc, a company incorporated in Nigeria on 30 May 1990, and its subsidiaries (hereinafter collectively referred to as "the Group"). The financial statements are prepared in accordance with the International
Slide 3: Agenda
Agenda Overview & Operating Environment Slides 4 – 6 Group Results Slides 7 – 22 Risk Management Slides 23 – 28 Strategy & Outlook Slides 29 – 33 Q&A 3
Slide 4: 1. Overview & Operating Environment
1. Overview & Operating Environment
Slide 5: Nigerian Economy and Key Developments in the Banking Sector
Nigerian Economy and Key Developments in the Banking Sector With improving macroeconomic environment, Nigeria remains Africa’s largest economy with strong sectors and significant opportunities. Real GDP Growth (Rebase): GDP Growth Rate Nigeria recorded a real GDP growth of 1.90% YoY in Q4 2017, up
Slide 6: Our Investment Proposition
Our Investment Proposition Strong earnings capacity and growth, solid and liquid capital base, strengthened ERM practices, Key good returns on investment and excellent customer service Theme A dominant player in the Nigerian Banking Industry: Controls a significant share of the high end corporat
Slide 7: 2. Group Results
Z Zz ZENITH BANK® 2. Group Results
Slide 8: Financial Highlights – FYE 2017
Financial Highlights – FYE 2017 Efficiency and Risk Management for Superior Performance Key Themes Building A Shock-Proof Balance Sheet Gross Earnings: N745.2bn +46.7% YoY Net Interest Income: N258.0bn +7.4% YoY Non-Interest Income: N270.6bn +119.2% YoY P or L Profit Before Tax: N203..5bn +29.8% YoY
Slide 9: Profit or Loss Statement
Profit or Loss Statement • Strong bottom-line profitability, driven by robust core earnings generation and continued cost control to deliver improved operating leverage. Group Group YOY (N’million) 12M 17 12M 16 Change Gross earnings 745,189 507,997 46.69% Interest Income 474,628 384,557 23.42% Inte
Slide 10: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability • In spite of the macroeconomic backdrop, Zenith Bank has delivered an attractive earnings profile, supported by increasing revenue and improving operating efficiency. Comments Net Interest Margin 9.0% 8.7% Net Interest Margin (NIM) increased YoY by 16.9% 8
Slide 11: Revenue Base: Interest Income Diversification
Revenue Base: Interest Income Diversification • Attractive YoY growth in interest income (+23%) to support the Bank’s net interest margin • Growth in interest income is attributed to the high yielding environment 2017. • The Group has maintained a consistent mix of interest income across the various
Slide 12: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income Diversification • The increase in most lines of non-interest income resulted in a YoY growth of +119% • Trading and derivative activities led to the increase in trading income 2017 2016 Other fees & Corporate commissions Corporate Other fees & finance fee N'million
Slide 13: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies • Interest expense increased by 50% due to the tight monetary environment and the additional $500m Eurobond issued in 2017, resulting in elevated cost of funding. Interest Expenses 2017 Current accounts Borrowed 4.6% Savings N'million 2017 2016 YoY fun
Slide 14: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies • High inflation rate, Naira devaluation and Information Technology cost contributed significantly to the 30% increase in total operating expenses. Total Operating Expenses 2017 N'million 2017 2016 YoY Q3 2016 Security Depreciation & armortisation & ca
Slide 15: Balance Sheet – Assets
Balance Sheet – Assets Strong and liquid balance sheet led by loans and securities portfolio. Group Group YOY (N‘million) Dec-17 Dec-16 Change Cash and balances with central banks 957,663 669,058 43.14% Treasury bills 936,817 557,359 68.08% Assets pledged as collateral 468,010 328,343 42.54% Due fro
Slide 16: Balance Sheet – Liabilities & Equity
Balance Sheet – Liabilities & Equity Assets are well funded by a significant deposit base and the balance sheet remains robustly capitalised, providing a buffer for further growth. Group Group YOY (N'million) Dec-17 Dec-16 Change Customers deposits 3,437,915 2,983,621 15.23% Derivative liabilities 2
Slide 17: Balance Sheet – Currency Breakdown
Balance Sheet – Currency Breakdown Diversification of funding base contributes to matching FX loan exposures. The short USD on- balance sheet position is covered by off-balance sheet derivative assets in the form of swaps Loans and Advances (Gross) (N’million) @ December 31, 2017 Naira Dollar GBP
Slide 18: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match Deposit funded loan portfolio, with largely term loans to top-rated corporates and a predominantly demand deposit funding base that supports attractive net interest margin extraction. Loans & Advances Loan Growth 2,360.8 2017 Advances under finance 2016 Advances
Slide 19: Continued Market Dominance through Strong Liquid Asset Base and Funding Mix
Continued Market Dominance through Strong Liquid Asset Base and Funding Mix High quality and liquid balance sheet, with diversified source of funding. Liquid Assets 2016 2017 Assets N'million 2017 2016 YoY Due from Assets pledged pledged as other Due from Cash 150,883 36,953 308% as collateral colla
Slide 20: Performance by Geography
Performance by Geography Nigeria continues to be the main driver of profitability, providing about 90% of gross revenue. FYE December 2017 Gross Revenue Nigeria (N’million) 2017 91.0% Nigeria Rest of Africa Europe Eliminations Consolidated Total revenue 683,969 53,822 14,204 (6,806) 745,189 Total ex
Slide 21: Performance – By Business Segments
Performance – By Business Segments Continuous diversification and improved profitability across core business segments FYE December 2017 Gross Revenue (N’million) 2017 Corporates Public Retail SMEs Consolidated SMEs Total revenue 481,571 70,993 28,317 164,308 745,189 22.0% Retail Total expenses (352
Slide 22: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments Corporate-oriented franchise, with recently improved retail component. Gross Loans Total Deposits 2017 Gross Loans – N2.25 Trillion 2017 Total Deposits – N3.44 Trillion SMEs 18.6% SMEs 22.9% Retail 0.5% Corporates Retail 55.4% Corporates 17.9% Public 67.0% 13.
Slide 23: 3. Risk Management
Z Zz ZENITH BANK® 3. Risk Management
Slide 24: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio Historically strong risk management have resulted in a contained NPL ratio, with robust coverage levels that compare favourably with peers and the sector. NPL Coverage Ratio Our Risk Management Strategy 143.4% The Group adopts a complete and integrated approach to ris
Slide 25: Focused Risk Management via Portfolio Diversification
Focused Risk Management via Portfolio Diversification Well diversified loan portfolio across sectors supports asset quality. Loans by Sector – 2017 Loans by Sector – 2016 Real Estate Communication Real Estate and and 4.22% Construction Construction Transportation 5.85% 5.02% Transportation 2.35% Flo
Slide 26: NPL by Sectors
NPL by Sectors Zenith Bank continues to develop its risk management strategy and improve on the quality of its loan portfolio. 2017 2016 General Agriculture Commerce/Trading General 0.90% 18.54% Oil and Gas 15.17% Commerce/Trading Agriculture 28.19% 2.29% Consumer Credit Education 0.73% 0.23% Oil an
Slide 27: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Well diversified loan portfolio across sectors support asset quality. Foreign Currency Loans – 2017 Cumulative Restructured Loans – 2017 % to % to % to Gross % to US$ Restructured Loans by sector N'm Restructured USD loans by sector US#039; m N'm Gross loans
Slide 28: Strong Capitalisation and Liquidity
Strong Capitalisation and Liquidity Liquidity buffer well in excess of regulatory requirements. Solid and high-quality capital position provides room for further growth and has supported Zenith Bank’s historically strong dividend payout ratio. Liquidity and Capital Adequacy 70% 60% 60% 51% 47% Capit
Slide 29: 4. Strategy & Outlook
Z Zz ZENITH BANK® 4. Strategy & Outlook
Slide 30: Strategies for driving our vision
Strategies for driving our vision 1 The Bank focuses on cost 2 The Bank accomplishes this strategy by: Compete effective deposits from the Use of robust digital platform aggressively for retail end of the market to Delivering superior Consistent focus and investment in market share, but lend to
Slide 31: Our Key Growth Target Sectors
Our Key Growth Target Sectors Driving profitability with our competitive advantages Identified Growth Sectors Competitive Advantage • Agriculture • Strong capital and liquidity • Infrastructure • Strong brand • Manufacturing • Strong international rating • Petrochemicals • Extensive branch network •
Slide 32: Outlook and Prospects for FY2018
Outlook and Prospects for FY2018 Retail Banking: The bank will continue to grow its retail Customer Services: At the center of the Group’s pursuit of business especially in liability generation. This will be excellent customer service, we would continue to focus on achieved through the deploymen
Slide 33: Guidance for FYE 2018
Guidance for FYE 2018 FYE 2018 Guidance FYE 2017 Achieved FYE 2017 Guidance PBT N210.0bn N203.5bn N160.0bn Effective Tax Rate 13.00% 12.55% 18.00% PAT N182.7bn N177.9bn N131.2bn ROAE 23.40% 23.30% 19.00% ROAA 3.45% 3.40% 3.00% NIMBusiness line & 8.69% 9.00% 7.50% Cost ofGeography Funds 4.00% 5.20% 4
Slide 34: Thank you
Z Zz ZENITH BANK® Thank you