Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — FY2011 Earnings Presentation
40 slides from Zenith Bank's earnings presentation, March 2012
Slide 1: Zenith Bank Plc Group Results for 12 Months Ended December 31, 2011
ZENITH BANK PLC GROUP RESULTS For 12 Months Ended December 31, 2011 Presentation to Analysts and Investors March 2012
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 under the historical cost convention
Slide 3: Speakers
Speakers Godwin Emefiele – Managing Director/Chief Executive Officer Udom Emmanuel – Executive Director/Chief Financial Officer PeterAmangbo – Executive Director – Corporate Banking Andy Ojei– Executive Director/ Chief Risk Officer 3
Slide 4: Agenda
Agenda Operating Environment Results P&L Group Balance By Segment Sheet By Geography Key Ratios Company Risk Management Strategy and Outlook Operational Highlights Q&A 4
Slide 5: Macro-Economic Environment
Macro-Economic Environment GDP Growth: Nigeria’s economy recorded a growth of 8.68% in 2011 compared to 8.29% in 2010. This performance is largely driven by the activities in the non-oil sector as well as recovery in crude oil output. Zenith Bank Plc leveraged on the robust growth witnessed in bot
Slide 6: Macro-Economic Environment
Macro-Economic Environment Headline Inflation: Inflation rate in 2011 fluctuated within the lower double-digits range in the early part of the year but moderated thereafter. It dropped to 10.3% in Q4 2011 from 12.1% in January 2011. This trend may not be unconnected with the hikes seen in MPR as i
Slide 7: Our Investment Proposition
Our Investment Proposition Strong earnings capacity, Solid capital adequacy, High liquidity, Declining NPLs, Excellent technology and Well-motivated staff A dominant player in Corporate Banking. The Bank controls a significant share of the corporate clients in strategic sectors of the Nigerian eco
Slide 8: Agenda
Agenda Operating Environment Results P&L Group By Segment By Geography Key Ratios Company Risk Management Strategy and Outlook Operational Highlights Q&A 8
Slide 9: Financial Highlights
Financial Highlights Efficiency and Risk Management for Superior Performance Key Surpassing Performance Commitment Theme Building A Shock-Proof Balance Sheet Gross Earnings: N244.1bn +26.81% YoY Net Interest Income: N125.6bn +37.27% YoY P&L Net Interest Margin: 7.47% +16.17% YoY PBT: N60.7bn +21.40%
Slide 10: Profit & Loss Statement
Profit & Loss Statement Group Group 12 mths to 12 mths to YOY Dec-11 (N’m) Dec-10 (N’m) Change Audited Audited Gross Income 244,070 192,488 26.80% Interest Income 160,519 127,265 26.13% Interest Expense -34,906 -35,719 -2.28% Net Interest Income 125,613 91,546 37.21% Fees and Commission Income 48,96
Slide 11: Sustained earnings and profitability growth
Sustained earnings and profitability growth…. Gross Revenue PBT PAT ROE/ROA ROAE/ROAA growth weakened by higher than anticipated impairments 11
Slide 12: Revenue Base – well diversified
Revenue Base – well diversified…. 2011 Interest Income 2010 Still leveraging on strong deposit base to continue dominance of the money market space to drive up income and profitability 2011 Non-Interest Income 2010 Still sustaining market share of the FX/WDAS market in the industry to drive FX incom
Slide 13: Revenue Composition
Revenue Composition Interest Income/ Income 26.13% YoY growth in Interest Income driven primarily by improved credit & money market rates on the back of MPR hikes. Non-Interest Income / Income 28.1% YoY growth in non-interest income due to improved Fx trading income amongst others Revenue compositio
Slide 14: Continuous efforts at cost reduction yielding results
Continuous efforts at Cost reduction yielding results… 2011 Interest Expenses 2010 2.28% drop in interest expense despite 25.5% increase in customer deposit. 2011 Operating Expenses 2010 20.96 growth in OPEX fueled by over 31% increase in Staff cost. 14
Slide 15: Cost Analysis
Cost Analysis Cost Income Ratio Various cost curtailing strategies, policies and procedures initiated by the Group have continued to yield the desired results with improvements in both our total cost to income and operating cost to income ratios in 2011 The Group achieved total & operating costs to
Slide 16: Balance Sheet - Assets
Balance Sheet - Assets Group Group Dec-11 (N’m) Dec-10 (N’m) Cash and balances with central banks 223,688 141,724 Treasury bills 516,142 298,869 Due from other banks 272,622 399,503 Loans and advances 832,828 713,285 On-lending facilities 43,199 22,536 Advances under finance lease 7,120 13,188 Insur
Slide 17: Balance Sheet - Liabilities & Equity
Balance Sheet- Liabilities & Equity Group Group Dec-11 (N’m) Dec-10 (N’m) Customer deposits 1,653,570 1,318,072 Claims Payable 420 218 Liabilities on insurance contracts 2,819 2,287 On-lending facilities 49,370 26,049 Borrowings 20,766 27,975 Current income tax 15,231 3,735 Other liabilities 180,915
Slide 18: Loan and Deposit Growth
Loan and Deposit Growth Loan Growth 16.6% loan growth still in line with Management’s commitment for the year notwithstanding sale of some legacy loans to AMCON Deposit Growth Successfully leveraging on extensive and strategically located branches to drive deposit mobilization. Over 25% YoY growth i
Slide 19: Low cost and appropriately mixed deposit base
Low cost and appropriately mixed deposit base..driving up income and profitability Dec’11 Loans and Advances Dec’10 Dec’11 Deposits Dec’10 Still well focused on low cost deposits….driving down funding cost 19
Slide 20: Maintaining good safety - strong liquidity and right funding mix
Maintaining good safety - strong liquidity and right funding mix 2011 Liquid Assets 2010 2011 Funding Mix 2010 20
Slide 21: Agenda
Agenda Operating Environment Results P&L Group Balance By Segment Sheet By Geography Key Ratios Company Risk Management Strategy and Outlook Operational Highlights Q&A 21
Slide 22: P&L – By Segment
P&L – By Segment Investment General 12 Months Ended Dec 2011 (N’m) Corporate & Mgmt & Health & Life (Audited) Retail Banking Stockbroking Insurance Others Eliminations Consolidated Total Revenue 232,187 1,210 10,325 3,909 -3,561 244,070 Operating Expenses 177,380 390 8,739 424 -3,561 -183,372 Profit
Slide 23: P&L – By Segment
P&L – By Segment 2011 2010 Gross Revenue PBT The synergy between our Corporate and Retail Banking business continues to yield commanding performance… 23
Slide 24: Agenda
Agenda Operating Environment Results P&L Group Balance By Segment Sheet By Geography Key Ratios Company Risk Management Strategy and Outlook Operational Highlights Q&A 24
Slide 25: P&L – By Geography
P&L – By Geography 12 Months Ended Dec 2011 (N’m) (Audited) Nigeria Rest of Africa Europe Eliminations Consolidated Total Revenue 230,974 12,731 3,926 -3,561 244,070 Operating Expenses 174,025 9,806 3,102 -3,561 183,372 Profit Before Tax 56,949 2,925 824 - 60,698 Tax -15,659 -626 -224 - -16,509 Prof
Slide 26: P&L – By Geography
P&L – By Geography 2011 2010 Gross Revenue PBT Contribution margins from Nigeria account for a significant portion of the Group’s revenue base 26
Slide 27: Agenda
Agenda Operating Environment Results P&L Group Balance By Segment Sheet By Geography Key Ratios Company Risk Management Strategy and Outlook Operational Highlights Q&A 27
Slide 28: Our Risk Management Strategy
Our Risk Management Strategy The Group considers sound risk management to be the foundation of long lasting financial institution. It continues to adopt a holistic and integrated approach to risk management hence, brings all risks together under one or a limited “Effective management of number o
Slide 29: Focused risk management via portfolio diversification
Focused risk management…via portfolio diversification Loans by Sector – Dec’11 Sustaining loan policy of no concentration risk 29
Slide 30: NPL Analysis
NPL Analysis Loans/Provisions The Group’s NPL ratio at 3.99% (an Group Group improvement over the 5.93% in 2010) is (N’m) Dec-11 Dec-10 a positive step towards attaining pre- 2008 NPL levels Gross Loans and Advances 869,837 746,051 Coverage ratio improved to over 100% Non-Performing Loans 34,712 44,
Slide 31: NPL Analysis
NPL Analysis 2011 NPLs by Sector 2010 NPLs by Sector NPLs by Sector/Total Loans 2011 2010 General commerce NPLs/ Total Loans 0.51% 1.07% Oil and gas NPLs/ Total Loans 0.62% 0.96% Transportation NPLs/ Total Loans 0.22% 0.94% Capital market NPLs/ Total Loans 0.74% 0.85% Manufacturing NPLs/ Total Loans
Slide 32: Strong Capitalization and Liquidity
Strong Capitalization and Liquidity Liquidity and Capital Adequacy Capital and liquidity ratios for the Bank – well above industry requirements. Capital Mix Capital base – predominantly made up of Tier 1 capital. The increase inTier II capital was fueled by the general provisioning. 32
Slide 33: Agenda
Agenda Operating Environment Results P&L Group By Segment By Geography Key Ratios Company Risk Management Strategy and Outlook Operational Highlights Q&A 33
Slide 34: Strategies for driving our vision
Strategies for driving our vision 1 The Bank focuses on cost 2 The Bank accomplishes this effective deposits from the strategy by: Compete retail end of the market to lend Consistent focus and aggressively for to the corporate end with Delivering superior investment in attracting and market sh
Slide 35: Creating quality and robust business models
Creating quality and robust business models Aggressive growth driven by a focus on quality and robust business models Sector Business Segments Business Model Operational Efficiency & Business line & Innovation Geography Large Corporate MNC Prompt service delivery Process review and realignment Fin
Slide 36: Our Key Growth Target Sectors
Our Key Growth Target Sectors Driving profitability with our competitive advantages Sector Identified Growth Competitive Advantage Sectors Business line & Geography Infrastructure Strong capital and liquidity Manufacturing Strong brand Oil and Gas (Upstream & Strong international rating Downst
Slide 37: Our Growth Horizon: A Sustainable Pace
Our Growth Horizon…… A Sustainable Pace Short Term Medium Term Long Term Efficient and robust risk Identifying all risk exposures, Strengthen our institutional management structure driving down threats and opportunities which are brand by focusing on best banking NPL ratios then managed throug
Slide 38: Outlook and Prospects for FY2012
Outlook and Prospects for FY2012 Agriculture: The Federal government’s resolve to boost the Mobile Banking: In a bid to encourage and promote person- agricultural sector in the country would no doubt create quite to-person payments and leverage on mobile phone channels as a a number of opportuni
Slide 39: Outlook and Prospects for FY2012
Outlook and Prospects for FY2012 Representative Office: We remain optimistic of the Deposit Base: Our drive for low cost and appropriately business opportunities inherent in the Peoples Republic of mixed deposit base to fund our credit and money market China hence, our resolve to officially open
Slide 40: Q&A
Q&A 40