Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — H1 2023 Earnings Presentation
41 slides from Zenith Bank's earnings presentation, 2023
Slide 1: Presentation to Investors & Analysts
ni y a ZENITH << 202 S REPORT Presentation to Investors & Analysts
Slide 2: 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 3: 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 4: Overview of Operating Environment
Overview of Operating Environment © 2023 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Anal
Slide 5: Nigerian Economy and Key Developments in the Banking Sector
Nigerian Economy and Key Developments in the Banking Sector Real GDP Growth: GDP Growth Rate Nigeria’s real GDP grew by 2.51% y/y in Q2 2023, a marginal growth from 2.31% recorded in the first quarter of 2023. The slow growth rate has been attributed to the adverse economic conditions currently
Slide 6: Nigerian Economy and Key Developments in the Banking Sector
Nigerian Economy and Key Developments in the Banking Sector Zenith Bank Plc’s market capitalization crossed the N1 trillion mark amid renewed investors’ interest arising from recent foreign exchange reforms. Liberalization of the FX market towards unification of the exchange rate and the re-intr
Slide 7: Our Investment Proposition
Our Investment Proposition Market dominance in both corporate and retail space, excellent capital and liquidity buffer, enhanced ERM practices and excellent value creation for shareholders. A formidable player in the Nigerian banking industry: Controls a significant share of the top rated corporat
Slide 8: QR Banking
QR Banking © 2023 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts | Page 7
Slide 9: Non-financial Highlights
Non-financial Highlights © 2023 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts | Page 8
Slide 10: Non-financial Highlights
Non-financial Highlights Social Impact/ESG Footprint Awards • Rehabilitation and upgrade of Iga • Number One Bank in Nigeria by Tier-1 Capital Idunganran Comprehensive Health 2023 – The Banker. Centre. • Best Commercial Bank, Nigeria 2023 – World • Reconstruction of Alpha Beach Road Finance. in Eti-
Slide 11: Group Results
Group Results © 2023 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 12: Financial Highlights – H1 2023
Financial Highlights – H1 2023 Income Statement Balance Sheet Gross earnings: Customers’ deposits: N967.3Bn +139.0% YoY N11.63Tn +29.5% YtD Net-interest income: Gross loans: N261.9Bn +41.7% YoY N5.38Tn +30.5% YtD Non-interest income: N515.7Bn +246.1% YoY Total assets: N16.03Tn +30.5% YtD Profit befo
Slide 13: Financial Highlights – H1 2023 Contd.
Financial Highlights – H1 2023 Contd. Key Ratios 30-Jun-23 30-Jun-22 % change Earnings per share (EPS) N9.29 N3.55 161.7% Return on average equity (RoAE) 36.9% 17.5% 111.0% Return on average assets (RoAA) 4.1% 2.3% 79.1% Net interest margin - NIM 5.9% 7.1% (17.5%) Cost of funds 2.6% 1.4% (86.4%) Cos
Slide 14: Profit or Loss Statement
Profit or Loss Statement • Strong bottom line, boosted by growth in non-interest income. Group Group YoY (N’million) 6M 23 6M 22 Change Gross income 967,261 404,763 139.0% Interest and similar income 415,425 241,726 71.9% Interest and similar expense (153,564) (56,983) 169.5% Net interest income 261
Slide 15: Consolidating on Earnings and Profitability
Consolidating on Earnings and Profitability Zenith Group continues to record Gross earnings (N’bn) attractive earnings profile, supported 967 by diversified revenue base. 332 346 405 346 Gross earnings grew by 139% YoY from NGN405 billion in H1 2022 to NGN967 billion in H1 2023. Jun 19 Jun 20 Jun
Slide 16: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. Net Interest Margin Net interest margin - NIM contracted from 7.1% in H1 2022 to 5.9% in H1 2023 due to re-pricing lag. 8.6% 9.0% 7.1% 6.5% 5.9% Cost of funds rose to 2.6% in H1 2023 from 1.4% recorded in H1 2022 also as a result of rise in interes
Slide 17: Evolution of Revenue Base
Evolution of Revenue Base • Contribution of non- N'million H1 2023 % to Total H1 2022 % to Total YoY interest income to total revenue revenue Interest income 415,425 42.9% 241,726 59.7% 71.9% revenue grew from 40% to 57% in H1 2023. Trading income 103,025 10.7% 85,192 21.1% 20.9% • Significant growt
Slide 18: Revenue Base: Interest Income Lines
Revenue Base: Interest Income Lines • Interest income grew by 72% YoY, as a result of re-pricing of our risk assets. This was also supported by commendable growth in other interest-earning assets. Interest Income H1 2023 H1 2022 Placement with Placement with banks & discount N'million H1 2023 H1 202
Slide 19: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income (NII) Diversification • The 246% increase in non-interest income was propelled by remarkable growth across a number of income lines. N'million H1 2023 H1 2022 YoY Credit related fees 3,865 2,746 40.8% Account maintenance fee/COT 21,021 19,771 6.3% Fees on electronic
Slide 20: Interest Expense Mix
Interest Expense Mix Interest Expenses H1 2023 Current Borrowed accounts funds 15.6% • Interest expense rose by 169% YoY as a result of 21.7% hike in rates and growth in the funding base. Savings accounts 21.1% Time deposits N'million H1 2023 H1 2022 YoY 41.7% Current accounts 23,886 8,816 170.9% Sa
Slide 21: Continuous Efforts Towards Cost Optimisation
Continuous Efforts Towards Cost Optimisation • Total operating expenses grew by 23% YoY, driven majorly by increases in regulatory cost, personnel expenses and outsourcing services. This is in line with current inflation realities. Total Operating Expenses H1 2023 N'million H1 2023 H1 2022 YoY H1 20
Slide 22: Balance Sheet – Assets
Balance Sheet – Assets • Robust balance sheet - well positioned for growth opportunities. The growth in the balance sheet size is partly attributable to revaluation of foreign currency assets. Group Group YTD Group (N ‘million) Jun-23 Dec-22 Change Jun-22 Cash and balances with central banks 2,730,3
Slide 23: Balance Sheet – Liabilities & Equity
Balance Sheet – Liabilities & Equity • Assets are largely funded by deposits with a formidable capital base providing capacity for further growth. (N'million) Group Group YTD Group Liabilities Jun-23 Dec-22 Change Jun-22 Customers deposits 11,626,105 8,975,653 29.50% 7,152,964 Derivative liabilities
Slide 24: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • 30% Ytd growth in gross loans which are largely made up of term loans. • Deposit base is predominantly current account and savings account balance (CASA). Gross loans Loans & Advances 5,381 H1 2023 FYE 2022 4,147 On-lending On-lending Overdrafts 4,059 4,124 Ove
Slide 25: Strong Liquid Asset Base & Funding Mix
Continued Market Dominance - Strong Liquid Asset Base & Funding Mix • High quality and liquid balance sheet with diversified funding base. Liquid assets H1 2023 N'million H1 2023 FYE 2022 YTD FYE 2022 Investment Due from Cash 114,364 85,437 33.9% Investment Due from securities other banks securities
Slide 26: Risk Management
Risk Management © 2023 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 27: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio Our Risk Management Strategy NPL coverage ratio 201.1% The Group adopts a holistic and integrated approach to risk management and therefore, brings all risks together 128.5% 122.3% 117.0% 115.9% under one or a limited number of oversight functions. Risk management i
Slide 28: Focused Risk Management via Portfolio Diversification
Focused Risk Management via Portfolio Diversification • Diversified loan portfolio across sectors supports asset quality. Loans by sector – H1 2023 Loans by sector – FYE 2022 Communication Communication Real Estate Finance and Flour Mills 1.9% Flour Mills 0.6% Finance and 3.4% and Transportation Ins
Slide 29: NPL by Sectors
NPL by Sectors H1 2023 FYE 2022 General General Education Commerce Communication Education Commerce 25.35% Agriculture 0.05% 0.25% 14.71% 0.40% 1.10% Agriculture Communication Transportation 1.20% 0.08% 5.27% Power Transportation Oil and Gas 0.11% 5.80% 33.00% Government Oil and Gas 0.27% 44.37% Pow
Slide 30: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Foreign currency loans Cumulative restructured loans H1 2023 H1 2023 USD loans by % to US$ % to Gross Restructured loans by % to Restructured % to Gross US$' m N'm N'm sector loans loans sector loans loans Oil and gas 1,699 1,284,520 50.8% 23.9% Oil and ga
Slide 31: Robust Capital Base
Robust Capital Base • Solid and high-quality capital position provides room for further growth. Liquidity & Capital adequacy 75.0% 72.0% 68.9% 60.5% 61.0% Capital and liquidity ratios – well above regulatory requirements of 21.0% 19.1% 19.8% 19.5% 22.0% 30% for Liquidity and 15% for Capital adequacy
Slide 32: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2023 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 33: Performance – By Business Segments
Performance – By Business Segments 6 Months ended June 2023 Gross revenue H1 2023 (N’million) Commercial/ Corporates Corporates Public Retail Consolidated SMEs 61.4% Public 9.7% Gross revenue 593,717 93,547 207,518 72,479 967,261 Total expenses (383,913) (63,653) (130,710) (38,625) (616,901) Retail
Slide 34: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments Gross loans Total deposit H1 2023 Gross loans – N5.38 trillion H1 2023 Total deposits – N11.63 trillion Commercial & SMEs Corporates 19.8% 22.2% Commercial & SMEs 27.8% Retail Corporates 7.7% 58.9% Public 5.3% Public 13.6% Retail 44.7% FYE 2022 Gross loans – N
Slide 35: Electronic Banking Products Performance by Channels
Electronic Banking Products Performance by Channels. Value of electronic product transactions Number of electronic product transactions H1 2023 H1 2022 YoY H1 2023 H1 2022 YoY Total transaction Total number of 54,026 49,512 9.1% 1,013 1,112 (8.9%) value (N'bn) transactions (N’mn) 22,943 22,386 373 3
Slide 36: Geographical Presence
Geographical Presence © 2023 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts | Page 35
Slide 37: Group Performance
Group Performance 6 Months ended June 2023 (N’million) Zenith Zenith Bank United Sierra Zenith Ghana Gambia Pension Eliminations Consolidated Nigeria Kingdom Leone Nominee Ltd Custodian Total revenue 896,609 42,067 38,457 3,128 1,990 6,490 205 (21,685) 967,261 Total expense (577,931) (19,255) (19,22
Slide 38: Strategy & Outlook
Strategy & Outlook © 2023 ZENITH BANK PLC | First Half Group Results Presentation to Investors & Analysts
Slide 39: Strategies for Driving our Vision
Strategies for Driving our Vision 1 2 Attracting cost effective Adopting efficient digital Compete aggressively deposits from the retail end channels. for market share while of the market for Deliver superior Attracting talented people and deployment in the corporate service experience focusin
Slide 40: Guidance for FYE 2023
Guidance for FYE 2023 H1 2023 Achieved FYE 2023 Guidance FYE 2022 Achieved PBT N350.4Bn N510Bn N285Bn Effective Tax Rate 16.7% 15% 21% PAT N291.7Bn N433.5Bn N224Bn ROAE 36.9% 35.0% 16.8% ROAA 4.1% 4.0% 2.1% NIM 5.9% 8.0% 7.3% Cost of Funds 2.6% 2.2% 1.9% Cost of Risk 8.8% 8.8% 3.2% Cost to Income 38
Slide 41: 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