Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — H1 2019 Earnings Presentation
40 slides from Zenith Bank's earnings presentation, 2019
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 | 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 • As we continue monitoring the macroeconomic fundamentals, GDP Growth Rate Nigeria remains Africa’s largest economy with strong sectors and significant opportunities. 2.11% 1.95% 2.38% 2.01% 1.50% 1.81% Real GDP Growth: Nigeria recorded
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 | First Half Group Results Presentation to Investors & Analysts | Page 7
Slide 8: Group Results
Group Results © 2019 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 9: Financial Highlights – H1 2019
Financial Highlights – H1 2019 Key Themes Income Statement Balance Sheet Gross earnings: Customers’ deposits: N3.81Tn +3.2% YTD N331.6Bn +2.9% YoY Efficiency and risk management for superior Profit before tax: Gross loans: performance N111.7Bn +4.0% YoY N1.95Tn (3.2%) YTD Building a shock-proof Prof
Slide 10: Financial Highlights – H1 2019 Contd.
Financial Highlights – H1 2019 Contd. Key Ratios 30-Jun-19 30-Jun-18 % change Return on average equity (RoAE) 21.7% 21.2% 2.4% Return on average assets (RoAA) 3.0% 3.0% 0.0% Earnings per share (EPS) N2.83 N2.60 8.8% Net interest margin - NIM 8.6% 10.1% (14.8%) Cost of funds 3.0% 3.4% (11.8%) Cost of
Slide 11: Profit or Loss Statement
Profit or Loss Statement • Strong bottom-line profitability, driven by growth in gross earnings and continued cost optimization. Group Group YOY (N’million) 6M 19 6M 18 Change Gross income 331,586 322,201 2.91% Interest and similar income 214,601 228,670 -6.15% Interest and similar expense -72,086 -
Slide 12: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability Zenith Group has been consistent in 112 PBT (N’Bn) 107 delivering attractive earnings profile, 92 supported by an improved operating 72 efficiency. 63 Comments PBT increased YoY by 4.0% from N107.3bn in H1 2018 to N111.7bn in H1 2019. The 23.9% YoY growth i
Slide 13: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. Comments Cost of Funds & Net Interest Margin Net Interest Margin - NIM decreased YoY by 14.8% (from 10.1% in H1 2018 to 8.6% in H1 2019) as a result of decline in the yield environment for money market 10.1% 8.3% 8.0% 8.6% 8.6% instruments and drop i
Slide 14: Evolution of Revenue Base
Evolution of Revenue Base • Contribution of non-interest income to the total revenue base continues to grow over the years. 262 229 215 181 176 65 45 56 38 37 42 12 37 31 N’Bn -1 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Interest Income Trading income Fees & Commission Income © 2019 ZENITH BANK PLC | First
Slide 15: Revenue Base: Interest Income Diversification
Revenue Base: Interest Income Diversification • Interest income declined by 6% YoY as a result of the decrease in yields on interest bearing assets. Interest Income N'million H1 2019 H1 2018 YoY H1 2018 H1 2019 Loans and advances 115,043 146,434 -21% Placement with Treasury bills 53,039 51,412 3% Pl
Slide 16: Revenue Base: Non-Interest Income (NII) Diversification
Revenue Base: Non-Interest Income (NII) Diversification • The bank is committed to continually • Fees on electronics products grew by 169%, improve on its income diversification contributing about 23% of NII. The Group will and growth as net non-interest income continue to improve on its electronic
Slide 17: Interest Expense: Funding Cost Optimization
Interest Expense: Funding Cost Optimization Interest expense dropped by 4%, reflecting our drive towards cost of funds Interest Expenses optimization which declined from 3.4% to 3.0% YoY. Current H1 2019 accounts 7.7% Savings accounts 15.2% N'million H1 2019 H1 2018 YoY Borrowed Current accounts 5,5
Slide 18: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies. • The group’s drive towards cost optimization yielded positive results as total operating expense increased by only 1% YoY (Inflation: 11.2%) while cost-to- income ratio improved from 53.9% to 53.2% YoY. Total Operating Expenses H1 2019 H1 H1 H1 2018
Slide 19: Balance Sheet – Assets
Balance Sheet – Assets • Strong and liquid balance sheet led by securities portfolio and interbank placements. Group Group YTD Group (N‘million) Jun-19 Dec-18 Change Jun-18 Cash and balances with central banks 769,455 954,416 -19.38% 843,674 Treasury bills 1,006,717 1,000,560 0.62% 923,847 Assets pl
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 YTD Group Jun-19 Dec-18 Change Jun-18 Liabilities Customers deposits 3,810,025 3,690,295 3.24% 3,165,955 Derivative liabilities 6,685 1
Slide 21: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • Deposit base is predominantly current accounts with increasing domiciliary and savings account balance. Gross Loans Loans & Advances H1 2019 FYE 2018 2,110 Advances 2,066 2,017 1,938 1,952 under Advances under finance Overdrafts finance lease lease 12.7% On- 0.
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. Liquid Assets H1 2019 FYE 2018 Assets Due Due from pledged as from other N'million H1 2019 FYE 2018 YTD collateral other Assets pledged banks Cash 17,551 1
Slide 23: Risk Management
Risk Management © 2019 ZENITH BANK PLC | First Half 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 238.4% The Group adopts a complete and integrated approach to risk 229.2% 192.4% 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 by Sector – H1 2019 Loans by Sector – FYE 2018 Communication 2.2% Communication Flour Mills Flour Mills Real Estate and Transportation 2.8% Transportation 6.5% 6.6% Co
Slide 26: NPL by Sectors
NPL by Sectors H1 2019 FYE 2018 General Commerce/Trading Education General Education 9.21% Communication 0.17% Commerce/Trading 1.17% 9.92% Agriculture 2.37% Agriculture 0.25% 1.17% Government Oil and Gas 0.17% Communication 24.51% 29.07% Power 0.06% Transportation Oil and Gas 0.18% 38.23% Governmen
Slide 27: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Foreign Currency Loans – H1 2019 Cumulative Restructured Loans – H1 2019 % to % to US$ % to Gross Restructured Loans by % to Gross USD loans by sector US$' m N'm N'm Restructured loans loans sector loans loans Oil and gas 1,013 365,148 45.28% 18.71% Oil an
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 77.0% 80.9% 72.0% 74.6% 66.7% Capital and liquidity ratios for the 25.0% 25.0% Bank – well above in
Slide 29: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2019 ZENITH BANK PLC | First Half 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 and PBT increased respectively from 6.6% and 8.8% to 11.0% and 16.9% YoY, as the Group continues on its retail expansion drive.
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 Gross Loans Total Deposit H1 2019 Gross Loans – N1.95 Trillion H1 2019 Total Deposits – N3.81 Trillion Commercial/ SMEs Commercial/ 18.6% SMEs 31.9% Corporate Retail
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 169% (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 Zenith Bank Plc. (Parent) () Established: 1990 Branches: 379 H1 2019 PBT: N91.5 Bn Total deposits: N2,988Bn Total assets: N4,923Bn, ROE: 22.0% Staff strength: 6,103 = Gambia | Established: 2009 Zenith ownership: 99.96% Branches: 6 H1 2019 PBT: N479M Total deposits: N12Bn Total
Slide 34: Performance by Geography
Performance by Geography • Subsidiaries contribution to revenue increased from 12.9% to 14.0% YoY, improving revenue diversification by geography while PBT contribution grew from 14.8% to 18.1% YoY. 6 Months Ended June 2019 (N’million) Gross Revenue H1 2019 Nigeria Nigeria Rest of Africa Europe Elim
Slide 35: Strategy & Outlook
Strategy & Outlook © 2019 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 36: Strategies for Driving our Vision
Strategies for Driving our Vision The Bank accomplishes this 1 The Bank focuses on cost 2 strategy by: effective deposits from Use of robust digital platform Compete the retail end of the Delivering superior Consistent focus and investment in aggressively for market to lend to the corporate
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 Strong international rating Manufacturing Extensive branch network Petroch
Slide 38: Outlook and Prospects for FY2019
Outlook and Prospects for FY2019 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 2019
Guidance for FYE 2019 6 Months – H1 2019 FYE 2019 Guidance FYE 2018 Achieved Achieved PBT N240.0Bn N111.7Bn N231.7Bn Effective Tax Rate 15.00% 20.40% 16.50% PAT N204.0Bn N88.9Bn N193.4Bn ROAE 24.00% 21.70% 23.80% ROAA 3.60% 3.00% 3.40% NIM 9.00% 8.60% 8.90% Cost of Funds 3.20% 3.00% 3.10% Cost of Ri
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