Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — Q3 2021 Earnings Presentation
39 slides from Zenith Bank's earnings presentation, 2021
Slide 1: Third Quarter 2021 Report: Presentation to Investors & Analysts
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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 © 2021 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 Real GDP Growth: GDP Growth Rate Nigeria’s real GDP grew by 4.03% y/y in Q3 2021, indicating a sustained positive growth over the last four quarters since the recession witnessed in 2020. However, it was 0.98% 5.01% 4.03% lower than the 5
Slide 6: Our Investment Proposition
Our Investment Proposition Market leadership, growth capacity, formidable capital and liquidity buffer, 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
Slide 7: Non-financial Highlights
Non-financial Highlights © 2021 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts | Page 7
Slide 8: Group Results
Group Results © 2021 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts
Slide 9: Financial Highlights – Q3 2021
Financial Highlights – Q3 2021 Key Themes Income Statement Balance Sheet Gross earnings: Customers’ deposits: Efficiency and risk N6.04Tn +13.1% YtD N518.7Bn +1.91% YoY management for superior performance. Gross loans: Net-interest income: N234.7Bn +4.25% YoY N3.18Tn +9.0% YtD Building a shock-p
Slide 10: Financial Highlights – Q3 2021 Contd.
Financial Highlights – Q3 2021 Contd. Key Ratios 30-Sept-21 30-Sept-20 % change Earnings per share (EPS) N5.11 N5.07 0.8% Return on average equity (RoAE) 18.6% 21.5% (13.6%) Return on average assets (RoAA) 2.5% 3.0% (16.2%) Net interest margin - NIM 6.8% 8.3% (18.1%) Cost of funds 1.4% 2.2% (35.0%)
Slide 11: Profit or Loss Statement
Profit or Loss Statement • Strong bottom line, boosted by strong growth in fees & commission income and reduction in funding cost. Group Group YoY (N’million) 9M 21 9M 20 Change Gross income 518,673 508,975 1.91% Interest and similar income 308,844 318,820 -3.13% Interest and similar expense (74,098
Slide 12: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability Zenith Group continues to deliver PBT (N’Bn) 176 177 180 attractive earnings profile, supported by diversified revenue base. 167 153 PBT increased by 1.4% YoY from N177.3 billion in Q3 2020 to N179.8 billion in Q3 2021 amidst a challenging Sept 17 Sept 18 S
Slide 13: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. Cost of Funds & Net Interest Margin Net Interest Margin - NIM contracted from 8.3% in 9.6% Q3 2020 to 6.8% in Q3 2021 due to the lower yield 8.4% 8.7% 8.3% 6.8% environment. 5.4% 3.3% 3.0% Cost of Funds dropped to 1.4% in Q3 2021 from 2.2% 2.2% 1.4
Slide 14: Evolution of Revenue Base
Evolution of Revenue Base % to Total % to Total N'million Q3 2021 Q3 2020 YoY Revenue Revenue • Contribution of non- Interest income 308,844 59.5% 318,820 62.6% -3.1% interest income to total Trading income 90,662 17.5% 89,817 17.6% 0.9% revenue increased from Fees and commissions income 95,356 18.4
Slide 15: Revenue Base: Interest Income Lines
Revenue Base: Interest Income Lines • Interest income declined by 3% YoY due to the prevailing low yield environment which affected yields on some marketable securities. Interest Income Q3 2021 Q3 2020 N'million Q3 2021 Q3 2020 YoY Placement with Others Placement with Loans and advances 206,861 189,
Slide 16: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income (NII) Diversification • The impressive growth recorded in fees on electronic products (30%), account maintenance fee (42%) and agency & collection (55%) sustained net non-interest income which grew by 11% YoY. N'million Q3 2021 Q3 2020 YoY Account Q3 2021 Q3 2020 ma
Slide 17: Interest Expense: Funding Cost Reduction
Interest Expense: Funding Cost Reduction Interest Expenses Q3 2021 Current accounts Borrowed 9.1% • Interest expense declined by 21% YoY as a result funds Savings accounts of rebalancing of deposit mix and the declining 42.1% 16.0% yield environment. Time deposits N'million Q3 2021 Q3 2020 YoY 32.7%
Slide 18: Continuous Efforts Towards Cost Optimisation
Continuous Efforts Towards Cost Optimisation. • Total operating expenses grew by 12% YoY due to regulatory costs, inflationary pressure and exchange rate movement. Total Operating Expenses N'million Q3 2021 Q3 2020 YoY Q3 2020 Q3 2021 Personnel expenses 60,307 59,925 1% Security & cash handling Depr
Slide 19: Balance Sheet – Assets
Balance Sheet – Assets • Robust balance sheet - well positioned for growth opportunities as the economy continues to recover. Group Group YTD Group (N‘million) Sep-21 Dec-20 Change Sep-19 Cash and balances with central banks 1,581,848 1,591,768 -0.62% 913,830 Treasury bills 1,788,167 1,577,875 13.33
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-21 Dec-20 Change Sep-19 Customers deposits 6,040,887 5,339,911 13.13% 5,224,564 Derivative liabilities 14,754
Slide 21: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • Total deposits grew by 13.1% YTD, partly driven by increased customer acquisition via our retail channels. • Gross loans was up 9.0% YTD as additional funding were extended to the productive sectors of the economy. Gross Loans Loans & Advances 3,181 Q3 2021 FYE
Slide 22: 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 Q3 2021 FYE 2020 Debt N'million Q3 2021 FYE 2020 YTD securities Due from Due from Cash 105,151 104,544 1% Debt securities 25.9% other banks other 26.3% 16.
Slide 23: Risk Management
Risk Management © 2021 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts
Slide 24: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio NPL Coverage Ratio Credit Risk Management Amidst Covid-19 126.8% 112.2% 114.0% 115.0% 112.4% Engaging our customers in key sectors of the economy to better understand their current challenges and provide effective and bespoke actions to alleviate their hardships while
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 2021 Loans by Sector – FYE 2020 Flour Mills Communication Communication Flour Mills Finance and 2.8% 2.7% Finance and Real Estate and 3.7% 4.1% Insuranc
Slide 26: NPL by Sectors
NPL by Sectors Q3 2021 FYE 2020 General Commerce Agriculture General Commerce 24.25% 4.36% 24.70% Agriculture 4.44% Education Education Oil and Gas 1.42% Oil and Gas 1.27% 29.87% 29.97% Communication Communication Consumer Consumer 24.27% 24.12% Credit Credit 6.27% 5.98% Manufacturing Transportation
Slide 27: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Foreign Currency Loans Cumulative Restructured Loans Q3 2021 Q3 2021 % to % to Restructured % to % to USD loans US$' m N'm US$ Gross Loans by N'm Restructured Gross Public Others by sector loans loans Others sector loans loans 15.6% 4.6% 21.2% Oil and gas
Slide 28: Strong Capitalisation
Strong Capitalisation • Solid and high-quality capital position provides room for further growth. Liquidity & Capital Adequacy 67.4% 66.2% 70.0% 69.9% 52.9% Capital and liquidity ratios – well above regulatory requirements of 23.0% 21.1% 22.0% 20.1% 30% for Liquidity and 15% for 21.5% Capital Adequa
Slide 29: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2021 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 the group’s gross revenue increased from 12.4% to 12.5% YoY while its PBT contribution increased from 17.4% to 17.9% YoY. Gross Revenue Q3 202
Slide 31: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments Gross Loans Total Deposit Q3 2021 Gross Loans – N3.18 Trillion Q3 2021 Total Deposits – N6.04 Trillion Corporates Commercial 19.2% & SMEs Commercial 20.0% & SMEs 37.8% Retail 3.8% Corporates Public 61.0% 10.8% Public 15.3% Retail 32.2% FYE 2020 Gross Loans – N
Slide 32: Electronic Banking Products Performance by Channels
Electronic Banking Products Performance by Channels. Value of Electronic Product Transactions Number of Electronic Product Transactions Q3 2021 Q3 2020 YoY Q3 2021 Q3 2020 YoY Total Transaction Total Number of 60,171 31,710 90% 1,393.3 754.3 85% Value (N'bn) Transactions (million) 26,608 24,831 398.
Slide 33: Geographical Presence
Geographical Presence © 2021 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts | Page 33
Slide 34: Performance by Geography
Performance by Geography Total Revenue 9 Months Ended September 2021 (N’million) Nigeria Nigeria Rest of Africa Europe Eliminations Consolidated Q3 2021 86.5% Total Revenue 462,842 57,919 14,433 (16,521) 518,673 Total expense (292,698) (34,232) (10,757) (1,176) (338,863) Profit before tax 170,144 23
Slide 35: Strategy & Outlook
Strategy & Outlook © 2021 ZENITH BANK PLC | Third Quarter 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 Q3 2021 Achieved FYE 2021 Guidance FYE 2020 Achieved PBT N179.8Bn N270Bn N255.9Bn Effective Tax Rate 10.7% 13.0% 9.9% PAT N160.6Bn N235Bn N230.6Bn ROAE 18.6% 23.0% 22.4% ROAA 2.5% 3.2% 3.1% NIM 6.8% 8.0% 7.9% Cost of Funds 1.4% 2.0% 2.1% Cost of Risk 1.3% 2.0% 1.5% Cost to Inco
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