Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — FY2019 Earnings Presentation
40 slides from Zenith Bank's earnings presentation, 2020
Slide 1: Presentation to Investors and Analysts
Presentation to Investors and 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: Disclaimer and 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 4: Operating Environment Overview
Operating Environment Overview © 2019 ZENITH BANK PLC | Full Year 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 • As we continue monitoring the macroeconomic fundamentals, Nigeria remains Africa’s largest economy with strong sectors and significant opportunities. GDP Growth Rate Real GDP Growth: 2.38% 2.55% Nigeria recorded a real GDP growth of 2.5
Slide 6: Our Investment Proposition
Our Investment Proposition Market leadership, growth capacity, solid and liquid capital base, 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 clients in
Slide 7: Non-financial Highlights
Non-financial Highlights © 2019 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts | Page 7
Slide 8: Group Results
Group Results © 2019 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts
Slide 9: Financial Highlights – FYE 2019
Financial Highlights – FYE 2019 Key Themes Income Statement Balance Sheet Gross earnings: Customers’ deposits: Efficiency and risk N4.26Tn +15.5% YTD N662.3Bn +5.1% YoY management for superior performance. Gross loans: Profit before tax: N243.3Bn +5.0% YoY N2.46Tn +22.1% YTD Building a shock-pro
Slide 10: Financial Highlights – FYE 2019 Contd.
Financial Highlights – FYE 2019 Contd. Key Ratios 31-Dec-19 31-Dec-18 % change Earnings per share (EPS) N6.65 N6.15 8.13% Return on average assets (RoAA) 3.40% 3.35% 1.49% Return on average equity (RoAE) 23.76% 23.80% (0.17%) Net interest margin - NIM 8.23% 8.90% (7.35%) Cost of funds 3.00% 3.10% (3
Slide 11: Profit or Loss Statement
Profit or Loss Statement • Strong top and bottom lines, driven by growth in non-interest income and continued cost optimization. Group Group YoY (N’million) 2019 2018 Change Gross income 662,251 630,344 5.06% Interest and similar income 415,563 440,052 (5.57%) Interest and similar expense -148,532 -
Slide 12: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability Zenith Group has been consistent in 232 243 PBT (N’Bn) delivering attractive earnings profile, 204 supported by an improved operating 157 efficiency. 126 PBT increased YoY by 5.0% from N231.7bn in 2018 to N243.3bn in 2019, driven by Non-interest income whic
Slide 13: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. Net Interest Margin - NIM compressed by 7.5% YoY Cost of Funds & Net Interest Margin (from 8.9% in 2018 to 8.2% in 2019) as a result of decline in the yield environment which led to a drop in average 8.9% 8.9% interest rate on our interest bearing as
Slide 14: Evolution of Revenue Base
Evolution of Revenue Base • Contribution of non-interest income to the total revenue base (less other income) continues to grow over the years, growing from 26.9% in 2018 to 34.4% in 2019. 475 440 416 384 348 158 118 100 83 81 82 68 N’Bn 18 61 20 2015 2016 2017 2018 2019 Interest Income Trading inco
Slide 15: Revenue Base: Interest Income Lines
Revenue Base: Interest Income Lines • Interest income declined by 6% YoY as a result of the decrease in yields on interest bearing assets. Interest Income 2018 2019 Placement with N'million 2019 2018 YoY Placement with banks & discount banks & discount houses Others Loans and advances 232,946 273,17
Slide 16: Revenue Base: Non-Interest Income (NII) Diversification
Revenue Base: Non-Interest Income (NII) Diversification • Significant growth was recorded in almost all • The Group is committed to continually improve on its the lines of Non-Interest Income (NII) as Net income diversification and leverage on its retail drive to NII grew by an impressive 29% YoY. g
Slide 17: Interest Expense: Funding Cost Optimization
Interest Expense: Funding Cost Optimization Interest Expenses 2019 • Interest expense grew by 3% YoY, driven by the Current accounts significant growth in deposits (16% YoY). 7.8% Savings accounts • Cost of funds declined from 3.1% in 2018 to 3.0% 14.6% in 2019 despite the growth in interest expense
Slide 18: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies. • The group’s drive towards cost optimization continues to yield positive results as total operating expense increased by only 3% YoY (Dec’19 Inflation: 11.98%) while cost-to- income ratio improved from 49.3% to 48.8% YoY. Total Operating Expenses 201
Slide 19: Balance Sheet – Assets
Balance Sheet – Assets • Strong and liquid balance sheet led by investments in securities portfolio and interbank placements. • Loans and advances grew significantly (Gross loans: 22% YoY) without compromising on the Group’s risk acceptance criteria. • Total assets crossed the 6 trillion mark, growi
Slide 20: 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 YoY Liabilities 2019 2018 Change Customers deposits 4,262,289 3,690,295 15.50% Derivative liabilities 14,762 16,995 -13.14% Current inc
Slide 21: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • Gross loans grew by 22% YoY, propelled by both corporate lending activities and new retail loan products. • The 16% YoY growth in customers’ deposits is a reflection of the increasing confidence in the Zenith brand. Gross Loans Loans & Advances 2,462 FYE 2019 F
Slide 22: Strong Liquid Asset Base & Funding Mix
Continued Market Dominance - Strong Liquid Asset Base & Funding Mix • High quality and liquid balance sheet, with diversified source of funding. • Debt securities issued declined by 89% due to the early redemption of the May 2022 Eurobond notes. Liquid Assets FYE 2019 FYE 2018 Assets Due Due from fr
Slide 23: Risk Management
Risk Management © 2019 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts
Slide 24: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio • Strong risk management has mostly contained NPL ratio below recommended regulatory threshold with adequate coverage levels Our Risk Management Strategy NPL Coverage Ratio 192.4% The Group adopts a complete and integrated approach to risk 143.4% 148.2% management tha
Slide 25: Focused Risk Management via Portfolio Diversification
Focused Risk Management via Portfolio Diversification • Well diversified loan portfolio across sectors supports asset quality. • Loans and advances grew significantly (Gross loans: 22% YoY) without compromising on the Group’s risk acceptance criteria. Loans by Sector – FYE 2019 Loans by Sector – FYE
Slide 26: NPL by Sectors
NPL by Sectors • NPL ratio improved from 4.98% in 2018 to 4.30% in 2019 FYE 2019 FYE 2018 General Commerce 9.21% Education General Commerce Education Communication 0.17% 9.92% 1.13% Agriculture 2.37% Agriculture 0.36% 1.17% Government 0.17% Communication Oil and Gas Power 29.47% 30.75% 0.06% Transpo
Slide 27: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Foreign Currency Loans – FYE 2019 Cumulative Restructured Loans – FYE 2019 % to US$ % to Gross % to % to USD loans by sector US$' m N'm Restructured Loans by loans loans N'm Restructured Gross sector loans loans Oil and gas 1,510 550,852 56.98% 22.37% Oil
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. Liquidity & Capital Adequacy 80.9% 69.7% 59.6% 57.3% 51.4% Capital and liquidity ratios for the Bank – well above industry 23.0%
Slide 29: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2019 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts
Slide 30: Performance – By Business Segments
Performance – By Business Segments • Continuous diversification and improved profitability across core business segments • Contribution of retail segment to gross revenues increased from 6.7% to 12.5% YoY while PBT contribution increased from 10.1% to 16.5% YoY, as the Group continues on its retail
Slide 31: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments • The bank will continue to grow the contribution of retail deposits and loans to its business as retail deposits contribution grew from 23% to 26% YoY while loans grew from 1.5% to 6.2% YoY. Gross Loans Total Deposit FYE 2019 Gross Loans – N2.46 Trillion FYE
Slide 32: Electronic Banking Products Performance
Electronic Banking Products Performance. • The bank recorded a remarkable growth in both value and volume of electronic product transactions, resulting in a 108% (ref.: slide 16) growth in income on electronic products. Value of Electronic Product Transactions Volume of Electronic Product Transactio
Slide 33: Geographical Presence
Geographical Presence © 2019 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts | Page 34
Slide 34: Performance by Geography
Performance by Geography • Subsidiaries contribution to revenue increased from 13.8% to 14.0% YoY, improving revenue diversification by geography while PBT contribution grew from 12.9% to 14.0% YoY. 12 Months Ended December 2019 Gross Revenue (N’million) 2019 Nigeria Rest of Nigeria Europe Eliminati
Slide 35: Strategy & Outlook
Strategy & Outlook © 2019 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts
Slide 36: Strategies for Driving our Vision
Strategies for Driving our Vision The Bank accomplishes this 1 2 strategy by: Compete aggressively The Bank focuses on cost Use of robust digital platform. effective deposits from the Delivering superior for market share, but Consistent focus and investment in retail end of the market to foc
Slide 37: Our Key Growth Target Sectors
Our Key Growth Target Sectors Driving Profitability with our Competitive Advantages Identified Growth Sectors Competitive Advantage Retail Strong capital and liquidity Agriculture Strong brand Infrastructure Robust risk management framework Manufacturing Extensive branch network Pe
Slide 38: Outlook and Prospects for FY2020
Outlook and Prospects for FY2020 Customer Services: At the center of the Group’s pursuit of Retail Banking: The bank is committed to continue to grow its excellent customer service, we would continue to focus on retail business. This will be achieved through the deployment of strengthening our r
Slide 39: Guidance for FYE 2020
Guidance for FYE 2020 FYE 2019 FYE 2019 FYE 2020 Guidance Guidance Achieved PBT N240.0Bn N243.3Bn N253.0Bn Effective Tax Rate 15.00% 14.16% 12.00% PAT N204.0Bn N208.8Bn N222.6Bn ROAE 24.00% 23.76% 24.00% ROAA 3.60% 3.40% 3.50% NIM 9.00% 8.23% 8.00% Cost of Funds 3.20% 3.00% 3.00% Cost of Risk 1.00%
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