Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — H1 2021 Earnings Presentation
40 slides from Zenith Bank's earnings presentation, 2021
Slide 1: Presentation to Investors & Analysts
> : 2021 | Hate year | —— REPORT Presentation to Investors & Analysts PEOPLE TECHNOLOGY SERWICE
Slide 2: Agenda
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: 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 4: Overview of Operating Environment
Overview of Operating Environment © 2021 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 5: Nigerian Economy and Key Developments in the Banking Sector
Nigerian Economy and Key Developments in the Banking Sector Real GDP Growth: GDP Growth Rate Nigeria’s real GDP grew by 5.01% y/y in Q2 2021, a significant improvement of 4.5% points over the 0.51% y/y growth rate recorded in Q1 2021. 5.01% The oil sector contracted by -12.65% y/y and contribute
Slide 6: Nigerian Economy and Key Developments in the Banking Sector
Nigerian Economy and Key Developments in the Banking Sector Expected commencement of the proposed Central Bank Digital Currency initiative: CBN digital currency has gained traction with the recent appointment of Bitt Inc. as technical partner. FX sales to the retail end users now handled by bank
Slide 7: Our Investment Proposition
Our Investment Proposition Market leadership, growth capacity, formidable capital and liquidity buffer, strengthened ERM practices, good returns on investment and excellent customer service. A dominant player in the Nigerian Banking Industry: Controls a significant share of the high-end corporate
Slide 8: Non-financial Highlights
Non-financial Highlights © 2021 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts | Page 7
Slide 9: Group Results
Group Results © 2021 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 10: Financial Highlights – H1 2021
Financial Highlights – H1 2021 Key Themes Income Statement Balance Sheet Gross earnings: Customers’ deposits: Efficiency and risk N5.77Tn +8.1% YtD N345.6Bn -0.15% YoY management for superior performance. Gross loans: Net-interest income: N159.9Bn +1.6% YoY N2.99Tn +2.5% YtD Building a shock-pro
Slide 11: Financial Highlights – H1 2021 Contd.
Financial Highlights – H1 2021 Contd. Key Ratios 30-Jun-21 30-Jun-20 % change Earnings per share (EPS) N3.38 N3.30 2.4% Return on average equity (RoAE) 18.8% 21.5% (12.%) Return on average assets (RoAA) 2.5% 3.0% (16.7%) Net interest margin - NIM 6.5% 9.0% (27.8%) Cost of funds 1.3% 2.2% (40.9%) Cos
Slide 12: Profit or Loss Statement
Profit or Loss Statement • Strong bottom line, boosted by strong growth in fees and commission income and cost of funds reduction. Group Group YoY (N’million) 6M 21 6M 20 Change Gross income 345,559 346,088 -0.15% Interest and similar income 203,934 216,954 -6.00% Interest and similar expense (43,99
Slide 13: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability Zenith Group continues to deliver PBT (N’Bn) 112 114 117 attractive earnings profile, supported 107 92 by diversified revenue base. PBT increased by 2.6% YoY from N114.1 billion in H1 2020 to N117.7 billion in Q1 2021 despite the marginal Jun 17 Jun 18 Jun
Slide 14: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. Cost of Funds & Net Interest Margin Net Interest Margin - NIM contracted from 9.0% in H1 2020 to 6.5% in H1 2021 due to the lower yield environment. 8.6% 10.1% 8.6% 9.0% 6.5% 6.4% Cost of Funds dropped to 1.3% in H1 2021 from 2.2% 3.4% 3.0% 2.2% 1.
Slide 15: Evolution of Revenue Base
Evolution of Revenue Base % to Total % to Total N'million H1 2021 H1 2020 YoY Revenue Revenue • Contribution of non- Interest income 203,934 59.0% 216,954 62.7% -6.0% interest income to total Trading income 59,275 17.2% 58,832 17.0% 0.8% revenue increased from Fees and commissions income 62,521 18.1
Slide 16: Revenue Base: Interest Income Lines
Revenue Base: Interest Income Lines • Interest income declined by 6% YoY due to the prevailing low yield environment which affected yields on some marketable securities. Interest Income N'million H1 2021 H1 2020 YoY H1 2020 H1 2021 Loans and advances 135,426 128,367 5% Placement with Others Placemen
Slide 17: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income (NII) Diversification • The impressive growth recorded in fees on electronic products (91%), account maintenance fee (51%) and agency & collection (50%) sustained net non-interest income which grew by 9% YoY. N'million H1 2021 H1 2020 YoY Account H1 2021 H1 2020 mai
Slide 18: Interest Expense: Funding Cost Reduction
Interest Expense: Funding Cost Reduction Interest Expenses H1 2021 Current accounts Borrowed 10.6% • Interest expense declined by 26% YoY as a result funds Savings of rebalancing of deposit mix and the declining 40.5% accounts 16.5% yield environment. Time N'million H1 2021 H1 2020 YoY deposits 32.4
Slide 19: Continuous Efforts Towards Cost Optimisation
Continuous Efforts Towards Cost Optimisation. • Total operating expenses grew by 10% YoY, which is below 17.6% inflation. Total Operating Expenses N'million H1 2021 H1 2020 YoY H1 2020 H1 2021 Personnel expenses 37,577 38,868 -3% Depreciation & Security & cash Depreciation & armortisation Advertisem
Slide 20: Balance Sheet – Assets
Balance Sheet – Assets • Robust balance sheet - well positioned for growth opportunities as the economy continues to recover. Group Group YTD (N ‘million) Jun-21 Dec-20 Change Cash and balances with central banks 1,424,811 1,591,768 -10.49% Treasury bills 1,714,411 1,577,875 8.65% Assets pledged as
Slide 21: Balance Sheet – Liabilities & Equity
Balance Sheet – Liabilities & Equity • Assets are largely funded by deposits with a strong capital base providing buffer for further growth. (N'million) Group Group YTD Liabilities Jun-21 Dec-20 Change Customers deposits 5,770,434 5,339,911 8.06% Derivative liabilities 9,309 11,076 -15.95% Current i
Slide 22: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • The 8.1% growth in customers’ deposits in H1 2021 is a reflection of the increasing confidence in the Zenith brand. Gross Loans Loans & Advances H1 2021 FYE 2020 2,984 2,992 2,887 2,919 Overdrafts On-lending 2,799 On-lending facilities 9.3% facilities Overdraft
Slide 23: Strong Liquid Asset Base & Funding Mix
Continued Market Dominance - Strong Liquid Asset Base & Funding Mix • High quality balance sheet with diversified funding sources. Liquid Assets H1 2021 Debt FYE 2020 securities N'million H1 2021 FYE 2020 YTD 27.4% Due from Due from Cash 81,425 104,544 -22% Debt securities other banks other Operatin
Slide 24: Risk Management
Risk Management © 2021 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 25: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio NPL Coverage Ratio Credit Risk Management Amidst Covid-19 132.0% 126.8% 112.2% 114.0% 115.0% Engaging our customers in key sectors of the economy to better understand their current challenges and provide effective and bespoke actions to alleviate their hardships while
Slide 26: Focused Risk Management via Portfolio Diversification
Focused Risk Management via Portfolio Diversification • Well diversified loan portfolio across sectors supports asset quality. Loans by Sector – H1 2021 Loans by Sector – FYE 2020 Communication Flour Mills Communication Flour Mills 2.8% Real Estate and 3.7% 4.1% Finance&Insur. 2.9% Finance&Insur. Re
Slide 27: NPL by Sectors
NPL by Sectors H1 2021 FYE 2020 General Commerce Agriculture General Commerce 24.30% 4.35% 24.70% Agriculture 4.44% Education Education Oil and Gas 1.44% Oil and Gas 1.27% 29.87% 29.92% Communication Communication Consumer Consumer 24.27% 24.13% Credit Credit 6.27% 6.01% Manufacturing Transportation
Slide 28: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Foreign Currency Loans Cumulative Restructured Loans H1 2021 H1 2021 % to % to Restructured % to % to USD loans US$' m N'm US$ Gross Loans by N'm Restructured Gross by sector Public loans loans Others sector loans loans Others 21.5% Oil and gas 17.3% 5.1%
Slide 29: Strong Capitalisation
Strong Capitalisation • Solid and high-quality capital position provides room for further growth. Liquidity & Capital Adequacy 67.4% 66.2% 70.0% 69.9% 50.8% Capital and liquidity ratios – well above regulatory requirements of 21.5% 23.0% 21.1% 22.0% 30% for Liquidity and 15% for 20.0% Capital Adequa
Slide 30: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2021 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 31: Performance – By Business Segments
Performance – By Business Segments • Continuous diversification and improved profitability across core business segments. • Contribution of retail segment to the group’s gross revenue increased from 12.1% to 12.5% YoY while its PBT contribution increased from 17.1% to 18.1% YoY. Gross Revenue H1 202
Slide 32: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments Gross Loans Total Deposit H1 2021 Gross Loans – N2.99 Trillion H1 2021 Total Deposits – N5.77 Trillion Corporates Commercial 19.5% & SMEs Commercial 18.9% & SMEs 38.4% Retail 4.7% Corporates Public 60.4% 11.6% Public 15.9% Retail 30.5% FYE 2020 Gross Loans – N
Slide 33: Electronic Banking Products Performance by Channels
Electronic Banking Products Performance by Channels. Value of Electronic Product Transactions Number of Electronic Product Transactions H1 2021 H1 2020 YoY H1 2021 H1 2020 YoY Total Transaction Total Number of 39,358 17,319 127% 907 416 118% Value (N'bn) Transactions (million) 16,408 17,087 250 257
Slide 34: Geographical Presence
Geographical Presence © 2021 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts | Page 33
Slide 35: Performance by Geography
Performance by Geography Total Revenue 6 Months Ended June 2021 (N’million) Nigeria Nigeria Rest of Africa Europe Eliminations Consolidated H1 2021 86.6% Total revenue 313,644 39,418 9,077 (16,580) 345,559 Total expense (197,369) (22,733) (7,279) (1,119) (228,500) Profit before tax 116,275 16,685 1,
Slide 36: Strategy & Outlook
Strategy & Outlook © 2021 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 37: Strategies for Driving our Vision
Strategies for Driving our Vision 1 2 Attracting cost effective Adopting efficient digital Compete aggressively deposits from the retail end channels. for market share while of the market for Deliver superior Attracting talented people and focusing on high deployment in the corporate service e
Slide 38: Our Key Growth Target Sectors
Our Key Growth Target Sectors Driving Profitability with our Competitive Advantages Identified Growth Sectors Competitive Advantage Retail/SMEs Strong capital and liquidity Agriculture Strong brand Healthcare/Pharmaceuticals Robust risk management framework Infrastructure Extensive b
Slide 39: Guidance for FYE 2021
Guidance for FYE 2021 H1 2021 Achieved FYE 2021 Guidance FYE 2020 Achieved PBT N117.1Bn N270Bn N255.9Bn Effective Tax Rate 9.3% 13.0% 9.9% PAT N106.1Bn N235Bn N230.6Bn ROAE 18.8% 23.0% 22.4% ROAA 2.5% 3.2% 3.1% NIM 6.5% 8.0% 7.9% Cost of Funds 1.3% 2.0% 2.1% Cost of Risk 1.3% 2.0% 1.5% Cost to Incom
Slide 40: Thank You
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