Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — FY2009 Earnings Presentation
55 slides from Zenith Bank's earnings presentation, 2009
Slide 1: Zenith Bank Plc Group Results
ZENITH BANK PLC GROUP RESULTS For the 15 Month Period Ended December 31, 2009 People Technology Service
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 preparedd under d the h historical hi i l cost
Slide 3: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 3
Slide 4: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 4
Slide 5: Despite dip in fundamentals in 2009, economy poised for recovery in 2010
Despite dip in fundamentals in 2009, economy poised for recovery in 2010… 2005 2006 2007 2008 2009 GDP Growth (%) 6.4 6.0 6.2 6.1 6.9 Inflation (%) 11 6 11.6 85 8.5 66 6.6 15 1 15.1 12 4 12.4 Oil Price 50.6 61.1 69.1 94.5 61.1 Exchange Rate (USD/NGN1) 132.2 128.7 125.8 126.5 149.6 F i Reserves Forei
Slide 6: Trickle down effect of global financial crisis evident in equity market
Trickle down effect of global financial crisis evident in local equity market’s 2009 performance… 2005 2006 2007 2008 2009 All Share Index 24,085.8 33,189.3 57,990.2 31,450.8 20,827.2 Market Capitalization (N’t) 2.9 5.1 13.3 9.6 7.0 Value of Shares Traded (N‘b) 262.9 470.3 2,100.0 2,400.0 685.7 Volu
Slide 7: 2010 Banking Sector Outlook
2010 Banking Sector Outlook + POSITIVE Keen interest from foreign players to acquire distressed banks could serve as a strong catalyst for re-rating of the sector. Bl Blueprint i t for f categorization t i ti off banks b k already l d underway. d Asset Management Company to help clean up toxic asset
Slide 8: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 8
Slide 9: Zenith Bank Plc
Zenith Bank Plc One of Nigeria’s largest companies by market Strong local capitalization capitalization. franchise Well capitalized with shareholders’ funds of N335bn Best asset Solid Total assets of N1.7trn. quality in management Nigeria Largest single dividend payment in history of Nigerian stock
Slide 10: A world-class brand offering full suite of banking solutions
A world-class brand offering our clients the full suite of banking and financial solutions… 010 Launched d January 20 10
Slide 11: Competitive Advantages
Competitive Advantages Highly motivated Exceptional customer Intellectual capital service Stable management Lead in corporate market Corporate and new generation Governance entrepreneurs Focus on quality Strong presence in main People Service financial centers with wide distribution Focus on quality
Slide 12: Key Events in 2009
Key Events in 2009 Nov. 2008 Zenith’s shareholders funds hits N346bn. Pays dividend of N28.5bn, highest ever by any Nigerian bank. Jun. 2009 Zenith issues 1 for 2 bonus. Oct. 2009 Zenith officially appoints Alhaji Lawal Sani as Independent Non Executive Director. Non-Executive Director Oct. 2009 Zen
Slide 13: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 13
Slide 14: Preface: Change in Accounting Year End
Preface Change in Accounting Year End IIn 2008, 2008 the th Bank B k changed h d its it accounting ti year endd from f 30 June J t to 30 September and as a result, prepared financial statements for fifteen months. In 2009, the Bank also changed its accounting year end from 30 September p to 31 Decem
Slide 15: Financial Highlights
Financial Highlights Proposed DPS of 45 kobo Shareholder Proposed Bonus Issue of one(1) for every four (4) Returns shares held N277bn Gross Earnings +31% YoY P&L N109bn Net Interest Income +28% YoY N21b PAT N21bn -60% 60% YoY YY Total Assets N1.7trn Balance 59% Loan to Deposit Ratio Sheet Shareholde
Slide 16: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 16
Slide 17: Profit & Loss Statement
Profit & Loss Statement Group Group Bank Bank (N’m) 15mths to 15mths to YOY 15mths to 15mths to YOY Dec-09 Sep-08 Change Dec-09 Sep-08 Change Gross Income 277 300 277,300 211 639 211,639 31% 254 147 254,147 190 120 190,120 34% Interest Income 193,545 138,737 40% 186,019 137,814 35% Interest Expense
Slide 18: Details of provisions & taxation
Details of provisions & taxation… 2009 2008 Provisions Provision for non-performing loans 38,455 4,419 Provision for performing loans - 1,850 Provision no longer required on performing loans -4,177 - ….mainly due to exceptional ti l loss l Provision for non- performing advances under - 57 finance le
Slide 19: Profit & Loss – Cumulative quarterly breakdown
Profit & Loss – Cumulative quarterly breakdown st nd rd th th 2009 (N'bn) 1 Qtr 2 Qtr 3 Qtr 4 Qtr 5 Qtr Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Gross Earnings 52.04 109.69 166.61 199.00 277.30 Diminution in Asset V Values & Extraordinaryy Items 0.00 0.00 -18.55 -26.14 -39.86 PBT 14.26 26.02 18.94 21.01 3
Slide 20: Positive earnings despite increasingly difficult operating environment
Positive earnings despite increasingly difficult operating environment… Gross Earnings PBT PAT 2009 2008 Total Cost to Income Ratio 71% 67% Interest Income/Total Income % 70% 68% % ROE 6.1% 14.2% ROA 1.2% 2.5% Adjusted EPS 82k 205k 20
Slide 21: Revenue Composition - well diversified revenue base
Revenue Composition- well diversified revenue base… 2009 Interest Income 2008 2009 Non-Interest Income 2008 21
Slide 22: Cost - continuous efforts towards cost effectiveness
Cost- continuous efforts towards cost effectiveness… 2009 Interest Expenses 2008 2009 Operating Expenses 2008 22
Slide 23: Stable total cost income ratios
Stable total cost income ratios… Total Cost / Income HIGHLIGHTS Our continuous efforts towards cost effectiveness is evident in: 11 % reduction in borrowed funds Conscious switch from more expensive purchased funds to relatively cheap checking & savings account volumes Re-evaluation of staff costs I
Slide 24: Leveraging our network for greater efficiency
Leveraging our network for greater efficiency… STRATEGY TO IMPROVE Operating Efficiency REVENUES PER BRANCH: All income leakages are plugged Operating Cost to Income Ratio All concessions on accounts are reviewed periodically to ascertain that the covenants Stable at 41% agreed are met by the custom
Slide 25: Balance Sheet - Assets
Balance Sheet- Assets Group Group YOY Bank Bank YOY (N'm) Dec-09 Sep-08 Change Dec-09 Sep-08 Change Cash and balances with central banks 126,779 239,562 -47% 115,044 232,267 -50% Treasury bills 234,115 401,445 -42% 225,371 396,772 -43% Due from other banks 341,830 536,846 -36% 290,025 481,092 -40% L
Slide 26: Balance Sheet - Liabilities & Equity
Balance Sheet- Liabilities & Equity Group Group YOY Bank Bank YOY (N'm) Dec-09 Sep-08 Change Dec-09 Sep-08 Change Customer deposits 1,173,917 1,188,876 -1% 1,111,328 1,164,460 -5% Liabilities on insurance contracts 1 400 1,400 1 311 1,311 7% - - Borrowings 35,984 40,431 -11% 35,984 40,431 -11% Curre
Slide 27: Driving competitive advantage through balance sheet quality
Driving competitive advantage through balance sheet quality and strength… 2009 Loans & Advances 2008 2009 D Deposits it 2008 27
Slide 28: Strong liquid asset base and funding mix
We continue to dominate the market through strong liquid asset base and funding mix… 2009 Liquid Assets 2008 2009 Funding Mix 2008 28
Slide 29: Core deposit base sufficient to fund longer tenured assets
Core portion of our deposit base is more than sufficient to fund the relatively longer tenured assets… Deposit Growth Growth in Loans 2009 Deposits by term 2009 Loans by term 29
Slide 30: Healthy risk assets portfolio
Healthy risk assets portfolio… Loans by Sector Loan to Deposit Ratio HIGHLIGHTS Well diversified Risk Asset Portfolio Conscious loan growth to ensure better ROA Loan growth reflective infrastructural development needs as well as deliberate expansion & focus on retail & consumer loans. Consistently p
Slide 31: NPL Analysis
NPL Analysis NPL Ratio Consistently Low NPLs in comparison with industry: Total provisions of N49bn 3% of total assets 15% of shareholders’ funds 08/09 NPLs impacted by new CBN provisioning guidelines . Provisions/ NPLs Provisions/Gross Loans 31
Slide 32: NPL Analysis cont'd
NPL Analysis cont’d 2009 NPLs by Sector 2008 NPLs by Sector NPL b NPLs by S Sector/Total t /T t l LLoans 2009 2008 …Losses spread Consumer credit NPLs/ Total Loans 1.35% 1.08% across all sectors Manufacturingg NPLs/ Total Loans 1.23% - Capital market NPLs/ Total Loans 1.02% 1.21% with i h the h high
Slide 33: Shareholder-focused business model
Shareholder-focused business model… Shareholders Funds ROA/ROE Effectt off extensive Eff t i provisioning. Consistent Returns to Shareholders EPS /DPS In November 2008, delivering on its promise to further enhance Effect of eextensive tensi e shareholders’ value, Zenith Bank provisioning. paid out N
Slide 34: Year in Review
Year in Review Navigating the business through the downturn and positioning for upturn…. Continued Improved Greater Diversified focus on Positive corporate asset business strong jaws governance liability lines capital framework matching adequacy 34
Slide 35: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 35
Slide 36: P&L - By Segment
P&L- By Segment Corporate & Investment General Retail Mgmt & Health & Life 15 Months Ended Dec 2009 (N’m) Banking Stockbroking Insurance Others Consolidated Revenue Derived From External 263,077 269 7,487 1,467 277,300 Customers Revenue Derived From Other 7,601 371 1,238 4,406 - Business Segments To
Slide 37: Corporate & Retail Banking
Corporate & Retail Banking PERFORMANCE REVIEW Revenue by Segment Constitutes 95% of the total activities and revenue base of the Group. 33% growth in revenue recorded between 2008 and 2009. Growth attributable to the Bank’s deliberate policy of innovative e-banking e banking products and engaging in
Slide 38: Investment Management & Stockbroking
Investment Management & Stockbroking PERFORMANCE REVIEW Revenue byy Segment g 40% decline in revenue recorded between 2008 and 2009. Poor performance mainly due to the lull witnessed in the capital markets throughout 2009. 2010 OUTLOOK With Western economies now coming out of recession, we expect FD
Slide 39: General, Health & Life Insurance
General, Health & Life Insurance PERFORMANCE REVIEW Revenue byy Segment g 141% ggrowth in topp line revenue recorded between 2008 and 2009. Crashed stock prices did impact insurance investments, leading to N1,501bn in provisioning from our insurance subsidiaries. subsidiaries 2010 OUTLOOK Insurance
Slide 40: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 40
Slide 41: P&L - By Geography
P&L- By Geography 15 Months Ended Dec 2009 (N’m) Nigeria Rest of Africa Europe Consolidated Revenue Derived From External 261,459 12,893 2,948 277,300 Customers Revenue Derived From Other Business 12,855 - 761 - Segments Total Revenue 274,314 12,896 3,709 277,300 Operating Expenses 242,225 10,975 2,
Slide 42: Nigeria
Nigeria PERFORMANCE REVIEW Nigerian business activities continued to account for about 95% of the revenue of the Group in 2009. Revenue byy Geography g p y g Activities in Nigeria ggrew byy 31% between 2008 and 2009. However, profit of the Nigerian business was significantly depressed following the
Slide 43: Rest of Africa
Rest of Africa PERFORMANCE REVIEW Despite a 108% increase in revenue from the rest of Africa business activities, profit from the location remained relatively flat Revenue by Geography due principally to the 134% increase in operating expenses between 2008 and 2009. The Group engaged in branch netwo
Slide 44: Europe
Europe PERFORMANCE REVIEW The Group's European operations were more efficient in 2009 with a profit of N830m from a loss position of N74m in Revenue byy Geography g p y 2008 despite a marginal 7% drop in revenue earnings between the two years. 2010 OUTLOOK Similar to our Rest of Africa operations we
Slide 45: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 45
Slide 46: Robust Enterprise Risk Management Structure
Robust Enterprise Risk Management Structure BOARD RISK BOARD OF AUDIT MANAGEMENT BOARD DIRECTORS COMMITTEE COMMITTEE CREDIT COMMITTEE EXECUTIVE COMMITTEE MANAGEMNT GLOBAL ASSETS / RISK CREDIT LIABILITIES COMMITTEE COMMITTEE COMMITTEE CHIEF INTERNAL CHIEF RISK OFFICER COMPLIANCE TREASURY CONTROL & OF
Slide 47: Effective Credit Risk Management Structure
Effective Credit Risk Management Structure Board – Credit Committee p Credit Exception Committee Management Credit Committee H d C Head, Credit di Ri Riskk Management M Loan Recovery Unit L di Groups Lending G The Credit Risk Management Group (CRMG) provides high level centralized management of Grou
Slide 48: Clearly structured approach to ensure cohesive oversight
Clearly structured approach to ensure cohesive oversight and good corporate governance… Executive Management Committee •Chaired by MD/CEO (EXCO) • Comprises all Executive Directors • Meets weekly or as the need arises Assets and Liabilities Committee • Chaired by MD/CEO (ALCO) • Meets weekly •Compri
Slide 49: Risk management in practice
Risk management in practice Focused risk management via portfolio diversification Enterprise risk management via top down sectoral top-down exposures Prudent levels of loan to deposit ratios: 59% as at 31 December 2009 Prudent Loan to Deposit Ratios Consistently amongst lowest NPL ratio in the indus
Slide 50: Well matched assets & liabilities
Well matched assets & liabilities… Balance Sheet as at 31 December 2009 Other Capital & I Investments t t R Reserves Fixed assets Other Loans Borrowings and Advances Deposits Cash and short-term f d funds N1,660 bn 50
Slide 51: Strong capitalization coupled with low leverage
Strong capitalization coupled with low leverage-the keystone to our success… Liquidity & Capital Adequacy Capital Adequacy & Liquidity Ratios for the Bank are comfortably above industry requirements. C it l Mix Capital Mi Capital base predominantly made up of Tier I capital . 51
Slide 52: Significant market outperformance as market recognizes undervaluation
Significant market outperformance as market recognizes undervaluation of Zenith stock price Zenith passes CBN Special Audit 52
Slide 53: Strategic Objectives for 2010 and beyond
Strategic Objectives for 2010 and beyond… Beyond 2010 • Remain conservative but innovative 2010 • Maintain strong risk mgt. • Move back to 2008 and corporate governance profitability levels practices • Significantly reduce NPL • Sustain strong profitability volume l • Develop deeper & broader • Curt
Slide 54: Agenda
Agenda Challenging Operating Environment C Company O Overview i Results Group By Segment By Geography Company Risk Management & Strategy Q&A 54
Slide 55: Q&A
Q&A 55