Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — FY2020 Earnings Presentation
39 slides from Zenith Bank's earnings presentation, 2021
Slide 1: Full Year Report: Presentation to Investors and Analysts 2020
ya ZENITH FULL YEAR REPORT Presentation to Investors and Analysts 2020 wall - PEOPLE Ti TECHNOLOGY, | mia SERVICE
Slide 2: 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 © 2020 ZENITH BANK PLC | Full 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 Real GDP Growth: GDP Growth Rate Nigeria’s economy exited recession in Q4 2020 as real GDP grew by 0.11% y/y, an improvement of 3.73% points over the -3.62% y/y growth rate recorded in Q3 2020. 2.12% 2.28% 2.55% 1.87% The oil sector con
Slide 6: Our Response to Covid-19 Pandemic
Our Response to Covid-19 Pandemic As we operate in the new normal amid this pandemic, the health and safety of our employees, customers and other stakeholders are of utmost importance to us while we remain focused on preserving value for our shareholders. • We have set a clear direction and communic
Slide 7: 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 8: Non-financial Highlights
Non-financial Highlights © 2020 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts | Page 8
Slide 9: Group Results
Group Results © 2020 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts
Slide 10: Financial Highlights – FYE 2020
Financial Highlights – FYE 2020 Key Themes Income Statement Balance Sheet Gross earnings: Customers’ deposits: Efficiency and risk N5.34Tn +25.3% YoY N696.5Bn +5.2% YoY management for superior performance. Gross loans: Net-interest income: N299.7Bn +12.2% YoY N2.92Tn +18.6% YoY Building a shock-
Slide 11: Financial Highlights – FYE 2020 Contd.
Financial Highlights – FYE 2020 Contd. Key Ratios 31-Dec-20 31-Dec-19 % change Earnings per share (EPS) N7.34 N6.65 10.4% Return on average equity (RoAE) 22.4% 23.8% (5.9%) Return on average assets (RoAA) 3.1% 3.4% (8.8%) Net interest margin - NIM 7.9% 8.2% (3.7%) Cost of funds 2.1% 3.0% (30.0%) Cos
Slide 12: Profit or Loss Statement
Profit or Loss Statement • Strong top and bottom lines, boosted by growth in net interest income, trading and other income. Group Group YoY (N’million) 2020 2019 Change Gross earnings 696,450 662,251 5.2% Interest and similar income 420,813 415,563 1.3% Interest and similar expense (121,131) (148,53
Slide 13: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability Zenith Group continues to deliver PBT (N’Bn) 256 232 243 attractive earnings profile, supported 204 by robust revenue base. 157 PBT increased by 5.2% YoY from N243.3bn in 2019 to N255.9bn in 2020 despite the challenging operating environment. 2016 2017 2018
Slide 14: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. Cost of Funds & Net Interest Margin Net Interest Margin - NIM contracted from 8.2% in 2019 to 7.9% in 2020 due to the declining yield environment. 8.9% 8.9% 8.2% 7.9% 7.7% Cost of Funds dropped to 2.1% in 2020 from 3.0% 5.2% 4.2% recorded in 2019 a
Slide 15: Evolution of Revenue Base
Evolution of Revenue Base % to Total % to Total N'million 2020 2019 YoY Revenue Revenue • Contribution of non- Interest income 420,813 60.4% 415,563 62.8% 1.3% interest income to total revenue continues to Trading income 121,678 17.5% 117,798 17.8% 3.3% grow, increasing from Gross fees and commissio
Slide 16: Revenue Base: Interest Income Lines
Revenue Base: Interest Income Lines • Treasury bills (T-bills) interest income dipped by 34% YoY due to the significant decline in treasury bills rates. Interest Income N'million 2020 2019 YoY 2019 2020 Loans and advances 250,812 232,946 8% Placement with Others Placement with banks & discount 1.5%
Slide 17: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income (NII) Diversification • Sustained growth in net non-interest income which grew by 8% YoY. N'million 2020 2019 YoY 2020 Fees on electronic products 27,078 42,511 -36% 2019 Account maintenance Credit related fees 13,913 21,879 -36% Fees on fee Account maintenance fee
Slide 18: Interest Expense: Funding Cost Optimization
Interest Expense: Funding Cost Optimization Interest Expenses 2020 Current Time accounts • Interest expense declined by 18% YoY as a result deposits 24.5% of rebalancing of deposit mix and the declining 24.2% yield environment. Savings Borrowed accounts funds and 18.3% lease N'million 2020 2019 YoY
Slide 19: Continuous Efforts Towards Cost Optimisation
Continuous Efforts Towards Cost Optimisation. • Total operating expense grew by 10% YoY due to exchange rate and inflationary pressures. Total Operating Expenses N'million 2020 2019 YoY 2019 2020 Personnel expenses 79,258 77,858 2% Security & cash handling Depreciation & Depreciation & 28,662 24,514
Slide 20: Balance Sheet – Assets
Balance Sheet – Assets • Robust balance sheet - well positioned to take on growth opportunities as the economy begins to recover. Group Group YoY (N’million) Dec 20 Dec 19 Change Cash and balances with central banks 1,591,768 936,278 70.0% Treasury bills 1,577,875 991,393 59.2% Assets pledged as col
Slide 21: 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 Liabilities Dec-20 Dec-19 Change Customers deposits 5,339,911 4,262,289 25.3% Derivative liabilities 11,076 14,762 -25.0% Current i
Slide 22: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • The 25% growth in customers’ deposits in 2020 is a reflection of the increasing confidence in the Zenith brand. • Gross loans grew 19% YoY propelled by both corporate and retail lending activities. Gross Loans Loans & Advances 2,919 FYE 2020 FYE 2019 2,361 2,46
Slide 23: Strong Liquid Asset Base & Funding Mix
Continued Market Dominance - Strong Liquid Asset Base & Funding Mix • High quality balance sheet with diversified funding sources. Liquid Assets FYE 2020 Debt FYE 2019 N'million 2020 2019 YoY securities Due from 26.3% Due from Cash 104,544 55,255 89% Debt securities other other banks Operating accou
Slide 24: Risk Management
Risk Management © 2020 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts
Slide 25: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio NPL Coverage Ratio Credit Risk Management Amidst Covid-19 192.4% Engaging our customers in key sectors of the economy to 143.4% 148.2% better understand their current challenges and provide 100.1% 112.2% effective and bespoke actions to alleviate their hardships while
Slide 26: Focused Risk Management via Portfolio Diversification
Focused Risk Management via Portfolio Diversification • Well diversified loan portfolio across sectors supports asset quality. Loans by Sector – FYE 2020 Loans by Sector – FYE 2019 Communication Flour Mills Communication Finance and Flour Mills 4.5% Finance and Insurance 2.0% Real Estate and 3.7% 4.
Slide 27: NPL by Sectors
NPL by Sectors FYE 2020 FYE 2019 General Commerce General Commerce Education 9.21% 24.70% Agriculture 1.13% Agriculture 4.44% 0.36% Education Oil and Gas Communication 29.87% Oil and Gas 1.27% 29.47% 30.75% Communication Consumer Transportation 24.27% Credit 0.14% 6.27% Power Manufacturing 0.00% Con
Slide 28: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Foreign Currency Loans – FYE 2020 Cumulative Restructured Loans – FYE 2020 Restructured Loans % to Restructured % to Gross USD loans by % to US$ % to Gross N'm US$' m N'm by sector loans loans sector loans loans Oil and gas 465,403 71.5% 15.9% Oil and gas
Slide 29: Strong Capitalisation
Strong Capitalisation • Solid and high-quality capital position provides room for further growth. Liquidity & Capital Adequacy 80.9% 69.7% 66.2% 59.6% 57.3% Capital and liquidity ratios – well above regulatory requirements of 27.0% 25.0% 23.0% 22.0% 23.0% 30% for Liquidity and 15% for Capital Adequa
Slide 30: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2020 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts
Slide 31: Performance – By Business Segments
Performance – By Business Segments • Continuous diversification and improved profitability across core business segments. • Contribution of retail segment to the group’s gross revenue increased from 12.5% to 12.6% while PBT increased from 16.8% to 18.4%. Gross Revenue 2020 FY 2020 (N’million) Corpor
Slide 32: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments • Our intense retail drive continues to impact positively on our deposit growth and mix as the contribution of retail deposits to total deposits grew from 26.0% to 32.2% YOY while total deposits grew by 25.3% over the same period. Gross Loans Total Deposit FYE
Slide 33: Geographical Presence
Geographical Presence © 2020 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts | Page 34
Slide 34: Performance by Geography
Performance by Geography • Nigeria and the rest of Africa reported growth in profitability YoY. • Europe recorded a drop in profitability as it was the most impacted by Covid 19 (due to the prolonged lockdown). Total Revenue 12 Months Ended December 2020 (N’million) Nigeria Nigeria Rest of Africa Eu
Slide 35: Strategy & Outlook
Strategy & Outlook © 2020 ZENITH BANK PLC | Full Year Group Results Presentation to Investors & Analysts
Slide 36: 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 37: Our Key Growth Target Sectors
Our Key Growth Target Sectors Driving Profitability with our Competitive Advantages Identified Growth Sectors Competitive Advantage Retail/SMEs Strong capital and liquidity Agriculture Strong brand Healthcare/Pharmaceuticals Robust risk management framework Infrastructure Extensive b
Slide 38: Guidance for FYE 2021
Guidance for FYE 2021 FYE 2020 Guidance FYE 2020 Achieved FYE 2021 Guidance PBT N253.0Bn N255.9Bn N270Bn Effective Tax Rate 12.0% 9.9% 13% PAT N222.6Bn N230.6Bn N235Bn ROAE 22.0% 22.4% 23% ROAA 3.3% 3.1% 3.2% NIM 8.5% 7.9% 8.0% Cost of Funds 3.0% 2.1% 2.0% Cost of Risk 2.0% 1.5% 2.0% Cost to Income
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