Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — H1 2018 Earnings Presentation
39 slides from Zenith Bank's earnings presentation, 2018
Slide 1: Presentation to Investors & Analysts
k ZENITH Presentation to Investors & 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 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 Overview Inter
Slide 4: Overview & Operating Environment
Overview & Operating Environment © 2018 ZENITH BANK PLC | Half 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 With improving macroeconomic environment, Nigeria GDP Growth Rate remains Africa’s largest economy with strong sectors 2.11% 1.95% and significant opportunities. 0.72% 1.40% -0.52% Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Real GDP G
Slide 6: Our Investment Proposition
Our Investment Proposition Strong earnings capacity and growth, 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: Group Results
Group Results © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts
Slide 8: Financial Highlights – H1 2018
Financial Highlights – H1 2018 Key Themes P or L Balance Sheet Gross Earnings: Gross Loans & N322.2Bn (15.3%) YoY Advances: N2.1Tn (6.3%) YtD Efficiency and Risk Management for Superior Net Interest Income: Total Assets: N5.3Tn (6.1%) YtD Performance N154.0Bn +10.8% YoY Customers’ Deposits: Building
Slide 9: Financial Highlights – H1 2018 Contd.
Financial Highlights – H1 2018 Contd. Key Ratios 30-Jun-18 30-Jun-17 % change Return on average equity (RoAE) 21.2% 21.2% 0% Return on average assets (RoAA) 3.0% 3.1% (3%) EPS N2.6 N2.4 8% Net interest margin - NIM (Adjusted) 10.1% 8.6% 17% Cost of funds 3.4% 6.4% (47%) Cost of risk 0.9% 3.6% (75%)
Slide 10: Profit or Loss Statement
Profit or Loss Statement Strong bottom-line profitability, driven by improved operating efficiencies in: Funding cost Risk cost Operational cost Group Group YoY (N’million) 6M 18 6M 17 Change Gross earnings 322,201 380,440 (15.31)% Interest and similar income 228,670 262,257 (12.81)% Interest
Slide 11: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability In spite of the macroeconomic backdrop, Zenith Bank has delivered an attractive earnings profile, supported by improving operating efficiency Comments 107 PBT (N’Bn) 92 PBT increased YoY by 16.5% from N92.18bn in H1 2017 to 72 N107.36bn in H1 2018. The 23.7
Slide 12: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. In spite of the macroeconomic backdrop, Zenith Bank has delivered an attractive earnings profile, supported by improving operating efficiency. Comments Cost of Funds & Net Interest Margin (Adjusted) Net Interest Margin - NIM (Adjusted) increased YoY
Slide 13: Evolution of Revenue Base
Evolution of Revenue Base Fees and commission income increased YoY by 23.7% in June 2018. Decline in interest income and trading income was due to the lower yielding environment in 2018 compared to 2017. 262 229 176 181 147 N’Bn 65 37 47 31 38 7 29 37 12 -1 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Interes
Slide 14: Revenue Base: Interest Income Diversification
Revenue Base: Interest Income Diversification Interest income declined by 13% YoY as a result of the decline in total loans to customers and lower yielding environment The Group has maintained a consistent mix of interest income across the various interest-generating assets over the years Interest I
Slide 15: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income Diversification The bank is committed to continually improve on its income diversification and growth. H1 2018 H1 2017 N’Million H1 2018 H1 2017 YoY Other fees & Credit Credit related fees 8,781 8,627 2% commissions related Other fees & Other 3.9% fees Account maint
Slide 16: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies Despite the significant increase in AMCON charge, the Group was able to contain its operating expenses growth at 6% YoY. We expect a moderation in operating expenses for the remaining part of the year as we continue to improve on our operational effici
Slide 17: 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-18 Dec-17 Change Jun-17 Cash and balances with central banks 843,674 957,663 (11.90%) 679,915 Treasury bills 923,847 936,817 (1.38%) 691,514 Assets pledg
Slide 18: Balance Sheet – Liabilities & Equity
Balance Sheet – Liabilities & Equity Assets are well funded by a significant deposit base and the balance sheet remains robustly capitalised, providing a buffer for further growth. Group Group YTD Group (N’Million) Jun-18 Dec-17 Change Jun-17 Customers deposits 3,165,955 3,437,915 -7.91% 2,974,938 D
Slide 19: Balance Sheet – Currency Breakdown
Balance Sheet – Currency Breakdown Diversification of funding base contributes to matching FX loan exposures. The short USD on- balance sheet position is covered by off-balance sheet derivative assets in the form of swaps (N’Million) @June 30, 2018 Naira Dollar GBP Euro Others Total Loans and Advanc
Slide 20: 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. Loans & Advances Gross Loans Evolution
Slide 21: Continued Market Dominance through Strong Liquid Asset Base and Funding Mix
Continued Market Dominance through Strong Liquid Asset Base and Funding Mix High quality and liquid balance sheet, with diversified source of funding. Liquid Assets H1 2018 FYE 2017 Assets pledged as Assets collateral Due from pledged as N'million H1 2018 FYE 2017 YoY 24.2% other collateral Due from
Slide 22: Risk Management
Risk Management © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts
Slide 23: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio Historically strong risk management have resulted in a contained NPL ratio, with robust coverage levels that compare favourably with peers and the sector. NPL Coverage Ratio Our Risk Management Strategy The significant growth in Coverage Ratio for Q1 The Group adopt
Slide 24: 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 2018 Loans by Sector – FYE 2017 Flour Milling Communication Communication 5.4% 5.4% 4.2% Transportation Real Estate and Real Estate and Transportation 2.4
Slide 25: NPL by Sectors
NPL by Sectors Zenith Bank continues to develop its risk management strategy and maintain a good quality loan portfolio. H1 2018 FYE 2017 Agriculture Agriculture General 0.83% General 0.90% Commerce/Trading Commerce/Trading 26.26% 28.19% Education 0.35% Oil and Gas Oil and Gas 37.42% 45.52% Educatio
Slide 26: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Well diversified loan portfolio across sectors support asset quality. Foreign Currency Loans – H1 2018 Cumulative Restructured Loans – H1 2018 % to % to Gross % to US$ % to Total Restructured Loans by sector N'm Restructured USD loans by sector US$' m N'm
Slide 27: 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 and has supported Zenith Bank’s historically strong dividend pay-out ratio. Liquidity & Capital Adequacy 77.0% 69.7% 70.5% 61.1% 61
Slide 28: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts
Slide 29: Performance – By Business Segments
Performance – By Business Segments Continuous diversification and improved profitability across core business segments 6 Months Ended June 2018 Gross Revenue (N’million) Commercial/ H1 2018 Corporates Public Retail SMEs Consolidated Total revenue 193,939 37,693 21,114 69,455 322,201 Corporates 60.2%
Slide 30: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments Corporate-oriented franchise, with improving retail component. Gross Loans Total Deposits H1 2018 Gross Loans – N2.11 Trillion H1 2018 Total Deposits – N3.17 Trillion Commercial/ Commercial/ SMEs SMEs 18.8% 22.2% Retail 0.7% Corporates Retail 54.5% Corporates
Slide 31: 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 87% (ref.: slide 14) growth in income on electronic products Value of Electronic Product Transactions Volume of Electronic Product Transactions 10
Slide 32: Geographical Presence
Geographical Presence 21 © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts | Page 31
Slide 33: Performance by Geography
Performance by Geography Subsidiaries contribution to revenue has improved YoY from 8.5% to 12.9%, reducing concentration risk by geography 6 Months Ended June 2018 Gross Revenue Nigeria (N’Million) Nigeria Rest of Africa Europe Eliminations Consolidated H1 2018 87.1% Total Revenue 282,014 33,889 7,
Slide 34: Strategy & Outlook
Strategy & Outlook © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts
Slide 35: Strategies for driving our vision
Strategies for driving our vision 1 The Bank focuses on cost 2 The Bank accomplishes this strategy by: Compete effective deposits from the Use of robust digital platform aggressively for retail end of the market to Delivering superior Consistent focus and investment in market share, but service
Slide 36: 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 37: Outlook and Prospects for FY2018
Outlook and Prospects for FY2018 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 38: Guidance for FYE 2018
Guidance for FYE 2018 6 Months - June 2018 FYE 2018 Guidance FYE 2017 Achieved Achieved PBT N215.0Bn N107.4Bn N203.5Bn Effective Tax Rate 15.0% 23.9% 12.6% PAT N182.7Bn N81.7Bn N177.9Bn ROAE 23.4% 21.2% 23.3% ROAA 3.5% 3.0% 3.4% NIM (Adjusted) 9.0% 10.1% 9.0% Cost of Funds 3.5% 3.4% 5.2% Cost of Ris
Slide 39: 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