Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — Q1 2019 Earnings Presentation
40 slides from Zenith Bank's earnings presentation, 2019
Slide 1: First Quarter Report: Presentation to Investors and Analysts
FIRST QUARTER REPORT R 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 Quarter 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 GDP Growth Rate fundamentals, Nigeria remains Africa’s largest 2.11% 2.38% 1.95% economy with strong sectors and significant 1.40% 1.50% 1.81% opportunities. 0.72% Real GDP Growth: Nigeria rec
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 Quarter Group Results Presentation to Investors & Analysts | Page 7
Slide 8: Group Results
Group Results © 2019 ZENITH BANK PLC | First Quarter Group Results Presentation to Investors & Analysts
Slide 9: Financial Highlights – Q1 2019
Financial Highlights – Q1 2019 Key Themes Income Statement Balance Sheet Gross earnings: Gross loans: N1.94Tn (3.9%) YTD N158.1Bn (6.6%) YoY Efficiency and risk Total assets: N5.88Tn (1.3%) YTD management for superior Net interest income: performance N86.1Bn +23.1% YoY Customers’ deposits: N3.57Tn (
Slide 10: Financial Highlights – Q1 2019 Contd.
Financial Highlights – Q1 2019 Contd. Key Ratios 31-Mar-19 31-Mar-18 % change Return on average equity (RoAE) 25.2% 24.3% 4.1% Return on average assets (RoAA) 3.4% 3.3% 1.8% Earnings per share (EPS) N1.6 N1.5 6.7% Net interest margin - NIM 8.9% 9.3% 4.5% Cost of funds 3.0% 4.0% (26.8%) Cost of risk
Slide 11: Profit or Loss Statement
Profit or Loss Statement Strong profitability, driven by the 3 C’s: cost of funding cost of risk cost to income Group Group YOY (N’million) 3M 19 3M 18 Change Gross income 158,111 169,192 -6.55% Interest and similar income 122,480 116,712 4.94% Interest and similar expense (36,343) (46,720) -2
Slide 12: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability Zenith Group has been consistent in 57 PBT (N’Bn) 54 delivering attractive earnings profile, 44 supported by an improved operating 33 efficiency 32 Comments PBT increased YoY by 6.1% from N47.1bn in Q1 2018 to N50.2bn in Q1 2019. The 23.1% YoY growth in net
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 4.5% (from 9.3% in Q1 2018 to 8.9% in Q1 2019) as a result of 10.1% 9.6% decline in the yield environment for money market 9.3% 8.9% 8.9% instruments and drop in
Slide 14: Evolution of Revenue Base
Evolution of Revenue Base • Over the years, the Group has experienced a consistent growth in interest income and fees & commission income lines of revenue. • Trading income declined as some of the matured swaps were not rolled over while those rolled over were done at lower margins. 123 118 117 84 8
Slide 15: Revenue Base: Interest Income Diversification
Revenue Base: Interest Income Diversification • Interest income inched up by 5% YoY as a • The growth in interest income in a relatively result of the increased investment in declining yield environment underscores the government treasury bills and bonds. bank’s brilliant balance sheet management. I
Slide 16: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income Diversification • Fees on electronics products grew by 148%, • The bank is committed to contributing about 25% of NII. The Group will continually improve on its income continue to improve on its electronic platforms diversification and growth. and increase its share
Slide 17: Interest Expense: Funding Cost Optimization
Interest Expense: Funding Cost Optimization Interest expense dropped by 22%, reflecting our drive towards cost of funds Interest Expenses optimization which declined from 4.0% to 3.0% YoY. Current Q1 2019 accounts Savings 8.3% accounts 12.6% N'million Q1 2019 Q1 2018 YoY Borrowed funds Time 49.4% Cu
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 declined by 4% YoY and cost to income ratio also declined from 53.3% to 50.9% YoY. Total Operating Expenses Q1 2019 Q1 2018 Security & cash Depreciation &
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) Mar-19 Dec-18 Change Mar-18 Cash and balances with central banks 965,833 954,416 1.20% 940,981 Treasury bills 810,086 1,000,560 -19.04% 986,571 Assets pled
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 Liabilities Mar-19 Dec-18 Change Mar-18 Customers deposits 3,571,370 3,690,295 -3.22% 3,396,182 Derivative liabilities 9,258
Slide 21: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • Deposit funded loan portfolio, with largely term loans to top-rated corporates. • Deposit base is predominantly current accounts which supports attractive net interest margin extraction with increasing savings account balance. Gross Loans Loans & Advances Q1 20
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 Q1 2019 FYE 2018 Assets Due from Due from other N'million Q1 2019 FYE 2018 YTD pledged as other Assets pledged as banks collateral banks Cash
Slide 23: Risk Management
Risk Management © 2019 ZENITH BANK PLC | First Quarter Group Results Presentation to Investors & Analysts
Slide 24: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio • Strong risk management has contained NPL ratio with adequate coverage levels Our Risk Management Strategy NPL Coverage Ratio 320.7% The Group adopts a complete and integrated approach to risk management that is driven from the Board level to the 229.2% 238.4% 192.4%
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 – Q1 2019 Loans by Sector – FYE 2018 Communication Flour Mills 2.8% Communication 6.7% Flour Mills Real Estate and Transportation 2.8% Transportation 6.6% Re
Slide 26: NPL by Sectors
NPL by Sectors Q1 2019 FYE 2018 Education General Communication General Communication 0.17% Commerce/Trading Education Commerce/Trading 2.37% 9.92% 2.80% Agriculture 0.17% 10.04% 1.17% Government Agriculture Government 0.17% Power 1.18% 0.17% 0.06% Power 0.06% Transportation Oil and Gas 0.18% Transp
Slide 27: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans • Well diversified loan portfolio across sectors support asset quality. Foreign Currency Loans – Q1 2019 Cumulative Restructured Loans – Q1 2019 USD loans by % to US$ % to Gross % to US$' m N'm Restructured Loans by % to Gross sector loans loans N'm Restru
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% 70.5% 72.0% 72.0% 66.7% Capital and liquidity ratios for the 25.0% Bank – well above industry
Slide 29: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2019 ZENITH BANK PLC | First Quarter 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 • Percentage of gross revenue attributable to retail segment grew from 6.2% to 9% YoY. We expect this segment to continue to grow in line with our retail drive. Gross Revenue 3 Mo
Slide 31: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments • Corporate-oriented franchise, with improving retail component (percentage contributions from retail deposits and loans continues to grow). Gross Loans Total Deposit Q1 2019 Gross Loans – N1.94 Trillion Q1 2019 Total Deposits – N3.57 Trillion Commercial/ SMEs
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 148% (ref.: slide 16) growth in income on electronic products Value of Electronic Product Transactions Volume of Electronic Product Transactions
Slide 33: Geographical Presence
Geographical Presence © 2019 ZENITH BANK PLC | First Quarter Group Results Presentation to Investors & Analysts | Page 33
Slide 34: Performance by Geography
Performance by Geography • Subsidiaries contribution to revenue has improved YoY from 9.6% to 10.1%, improving revenue diversification by geography 3 Months Ended March 2019 (N’million) Gross Revenue Q1 2019 Nigeria Nigeria Rest of Africa Europe Eliminations Consolidated 86.4% Total revenue 137,159
Slide 35: Strategy & Outlook
Strategy & Outlook © 2019 ZENITH BANK PLC | First Quarter 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 Agriculture Strong capital and liquidity Infrastructure Strong brand Manufacturing Strong international rating Petrochemicals Extensive branch network
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 3 Months – March 2019 FYE 2019 Guidance FYE 2018 Achieved Achieved PBT N240.0Bn N57.3Bn N231.7Bn Effective Tax Rate 15.0% 12.3% 16.5% PAT N204.0Bn N50.2Bn N193.4Bn ROAE 24.0% 25.2% 23.8% ROAA 3.6% 3.4% 3.4% NIM 9.1% 8.9% 8.9% Cost of Funds 3.5% 3.0% 3.1% Cost of Risk 1.0% 0.4%
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