Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — Q3 2019 Earnings Presentation
40 slides from Zenith Bank's earnings presentation, 2019
Slide 1: Third Quarter Presentation to Investors and Analysts
THIRD QUARTER reer i 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: 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 | Third 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 fundamentals, GDP Growth Rate Nigeria remains Africa’s largest economy with strong sectors and significant opportunities. 2.38% 1.95% 1.81% 2.01% 1.94% 1.50% 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 | Third Quarter Group Results Presentation to Investors & Analysts | Page 7
Slide 8: Group Results
Group Results © 2019 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts
Slide 9: Financial Highlights – Q3 2019
Financial Highlights – Q3 2019 Key Themes Income Statement Balance Sheet Gross earnings: Customers’ deposits: N3.95Tn +7.1% YTD N491.3Bn +3.5% YoY Efficiency and risk management for superior Profit before tax: Gross loans: performance N176.2Bn +5.3% YoY N2.20Tn +9.3% YTD Building a shock-proof Profi
Slide 10: Financial Highlights – Q3 2019 Contd.
Financial Highlights – Q3 2019 Contd. Key Ratios 30-Sept-19 30-Sept-18 % change Earnings per share (EPS) N4.80 N4.58 4.80% Return on average assets (RoAA) 3.37% 3.40% 0.0% Return on average equity (RoAE) 23.82% 24.00% (0.8%) Net interest margin - NIM 8.69% 9.60% (9.4%) Cost of funds 2.95% 3.30% (10.
Slide 11: Profit or Loss Statement
Profit or Loss Statement • Strong bottom-line, driven by growth in gross earnings and continued cost optimization. Group Group YoY (N’million) 9M 19 9M 18 Change Gross income 491,268 474,607 3.51% Interest and similar income 321,938 339,063 (5.05%) Interest and similar expense (107,311) (110,546) (2
Slide 12: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability Zenith Group has been consistent in 167 176 PBT (N’Bn) delivering attractive earnings profile, 153 supported by an improved operating 121 104 efficiency. Comments PBT increased YoY by 5.3% from N167.3bn in Q3 2018 to N176.2bn in Q3 2019. The 21.8% YoY growt
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 9.4% (from 10.1% in Q3 2018 to 8.7% in Q3 2019) as a result of decline in the yield environment for money market 10.1% 8.3% 8.0% 8.6% 8.7% instruments and drop in
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. 362 339 322 286 257 82 70 67 74 67 16 55 53 N’Bn 16 46 Sept 15 Sept 16 Sept 17 Sept 18 Sept 19 Interest Income Trading income Fees & Commission Income © 2019 ZENITH BANK PLC |
Slide 15: Revenue Base: Interest Income Lines
Revenue Base: Interest Income Lines • Interest income declined by 5% YoY as a result of the decrease in yields on interest bearing assets. Interest Income Q3 2018 Q3 2019 N'million Q3 2019 Q3 2018 YoY Placement with Placement with banks & discount Loans and advances 175,178 214,060 -18% banks & disc
Slide 16: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income (NII) Diversification • The bank is committed to continually • Fees on electronics products grew by 100%, 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 3%, reflecting our drive towards cost of funds Interest Expenses optimization which declined from 3.4% to 2.9% YoY. Current Q3 2019 accounts 8.0% Savings accounts N'million Q3 2019 Q3 2018 YoY 17.2% Current accounts 8,613 8,277
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: 11.4%) while cost-to- income ratio improved from from 51.2% to 50.1% YoY. Total Operating Expenses Q3 2019 Q3 2018 S
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) Sep-19 Dec-18 Change Sep-18 Cash and balances with central banks 913,830 954,416 -4.25% 904,235 Treasury bills 854,328 1,000,560 -14.62% 818,395 Assets ple
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 Sep-19 Dec-18 Change Sep-18 Customers deposits 3,951,829 3,690,295 7.09% 3,275,547 Derivative liabilities 10,587
Slide 21: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • Gross loans grew by 9% from N2.02 trillion to N2.2 trillion YTD, propelled by both corporate lending activities and new retail loan products. • The growth in customers’ deposits is a reflection of the increasing confidence in the Zenith brand. Gross Loans Loans
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 our May 2022 Eurobond notes. Liquid Assets Q3 2019 FYE 2018 Assets Due Due from fro
Slide 23: Risk Management
Risk Management © 2019 ZENITH BANK PLC | Third Quarter 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 192.4% management that is dr
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 – Q3 2019 Loans by Sector – FYE 2018 Communication 2.5% Communication Flour Mills Real Estate and Flour Mills Transportation 2.8% Transportation 6.2% Constru
Slide 26: NPL by Sectors
NPL by Sectors Q3 2019 FYE 2018 General Commerce/Trading Education General Education 9.21% Communication 0.17% Commerce/Trading 2.09% 9.92% Agriculture 2.37% Agriculture 0.34% 1.17% Government Oil and Gas 0.17% Communication 24.51% Power 28.34% 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 – Q3 2019 Cumulative Restructured Loans – Q3 2019 % to US$ % to Gross Restructured Loans by % to Restructured % to Gross USD loans by sector US$' m N'm N'm loans loans sector loans loans Oil and gas 1,107 400,786 46% 18.18% Oil and g
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% 72.0% 74.6% 66.7% 63.8% Capital and liquidity ratios for the 25.0% 25.0% 25.0% Bank – well ab
Slide 29: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2019 ZENITH BANK PLC | Third 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 • Contribution of retail segment to gross revenues and PBT increased respectively from 6.7% and 9.4% to 11.0% and 16.5% 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 Q3 2019 Gross Loans – N2.20 Trillion Q3 2019 Total Deposits – N3.95 Trillion Commercial/ SMEs Commercial 18.9% & SMEs 29.9% Corporates Reta
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 100% (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 | Third Quarter Group Results Presentation to Investors & Analysts | Page 34
Slide 34: Performance by Geography
Performance by Geography • Subsidiaries contribution to revenue increased from 13.2% to 14.5% YoY, improving revenue diversification by geography while PBT contribution grew from 14.4% to 16.1% YoY. 9 Months Ended September 2019 (N’million) Gross Revenue Rest of Q3 2019 Nigeria Nigeria Europe Elimin
Slide 35: Strategy & Outlook
Strategy & Outlook © 2019 ZENITH BANK PLC | Third 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 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 9 Months – Q3 2019 FYE 2019 Guidance FYE 2018 Achieved Achieved PBT N240.0Bn N176.2Bn N231.7Bn Effective Tax Rate 15.00% 14.45% 16.50% PAT N204.0Bn N150.7Bn N193.4Bn ROAE 24.00% 23.80% 23.80% ROAA 3.60% 3.37% 3.40% NIM 9.00% 8.69% 8.90% Cost of Funds 3.20% 2.95% 3.10% Cost of R
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