Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — H1 2010 Earnings Presentation
30 slides from Zenith Bank's earnings presentation, Jul 29, 2010
Slide 1: Zenith Bank Plc Group Results for 6 Months Ended June 30, 2010
ZENITH BANK PLC GROUP RESULTS For 6 Months Ended June 30, 2010 People Technology Service July 29, 2010
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 under the historical cost convention
Slide 3: Speakers
Speakers Godwin Emefiele – MD/CEO Designate Udom Emmanuel – Executive Director/Chief Financial Officer Peter Amangbo – Executive Director-Corporate Banking Andy Ojei – Executive Director/Chief Risk Officer 3
Slide 4: Agenda
Agenda Operating Environment Company Overview Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 4
Slide 5: Improving macroeconomic environment
Improving macroeconomic environment 2007 2008 2009 Q1 2010 Q2 2010 GDP Growth (%) 6.2 6.1 6.9 7.23 7.68 Inflation (%) 6.6 15.1 12.4 12.3 10.3 Oil Price 69.1 94.5 61.1 76.01 72.49 Exchange Rate 125.8 126.5 149.6 150.35 150.24 (USD/NGN) Foreign Reserves ($’bn) 51.3 53.0 42.5 40.7 37.63 Source: NBS GDP
Slide 6: Banking Sector Outlook for H2 2010
Banking Sector Outlook for H2 2010 POSITIVE The successful take-off of the Asset Management Company of Nigeria (AMCON) will be a key determinant of how events play out in the Nigerian Banking Sector space. Improved margins by the banks. Improved corporate governance. New guidelines issued on
Slide 7: Agenda
Agenda Operating Environment Company Overview Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 7
Slide 8: Zenith Bank Plc
Zenith Bank Plc The most capitalized company in the country with shareholders’ funds of N344bn as at date. Strong local franchise Total assets of N1.75trn. Capital adequacy and liquidity ratios are comfortably above the Strong & Stable Strong Asset management quality CBN benchmarks & requirements. H
Slide 9: Agenda
Agenda Operating Environment Company Overview Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 9
Slide 10: Financial Highlights
Financial Highlights Strong bottom line income Key Large Capital and liquidity cushion Theme Positive outlook for the rest of the year Gross Earnings: N96bn -12.80% YoY P&L Net Interest Income: N40bn -12.33% YoY Net Interest Margin: 2.37% -9.54% YoY PBT: N25bn +101% YoY Customer Deposit: N1.29trn N1
Slide 11: Profit & Loss Statement
Profit & Loss Statement Group Group (N’m) 6 mths to 6 mths to YOY June-10 June-09 Change Gross Income 96,850 111,071 -13% Interest Income 63,827 79,883 -20% Interest Expense -23,352 -33,714 -31% Net Interest Income 40,475 46,169 -12% Fees and Commission Income 20,964 21,355 -1.8% Foreign Exchange Tr
Slide 12: Revenue Base - Sustained diversification
Revenue Base- Sustained diversification...... H1 2010 Interest Income H1 2009 Non-Interest Income H1 2010 H1 2009 12
Slide 13: Sustained efforts at cost reduction yielding results
Sustained efforts at Cost reduction yielding results…. H1 2010 Interest Expenses H1 2009 31% YoY drop in Interest Expense More reliance on demand deposits significantly improving cost of funds H1 2010 Operating Expenses H1 2009 12.5% YoY drop in Operating Expense 13
Slide 14: Balance Sheet - Assets
Balance Sheet- Assets Group Group Group (N'm) June-10 Dec-09 June-09 Cash and balances with central banks 145,824 126,779 120,064 Treasury bills 358,813 234,115 260,212 Due from other banks 286,024 341,830 357,506 Loans and advances 667,633 698,326 662,898 Advances under finance lease 11,114 5,506 8
Slide 15: Balance Sheet - Liabilities & Equity
Balance Sheet- Liabilities & Equity Group Group Group (N'm) June-10 Dec-09 June-09 Customer deposits 1,285,538 1,173,917 1,130,436 Claims Payable 125 198 370 Liabilities on insurance contracts 2,392 1,202 1,744 Borrowings 43,016 35,984 42,092 Current income tax 6,179 7,407 9,956 Other liabilities 66
Slide 16: Improving yield through lower cost funding and better asset-liability match
Improving yield through lower cost funding and better Assets- Liabilities match up… Jun’10 Loans & Advances Mar’10 Deposits Mar’10 Jun’10 16 Lower Funding cost through low cost Demand Deposits
Slide 17: Maintaining Good Safety-Profitability matrix
Maintaining Good Safety-Profitability matrix….. Jun’10 Liquid Assets Mar’10 Jun’10 Funding Mix Mar’10 17 Customer Deposits continue to be a significant funding source for the Group
Slide 18: Summary of Q2 2010 Performance
Summary of Q2 2010 Performance… Excellent Continued customer focus on Reduced services Diversified strong capital interest & through well Growth in revenue base, Overhead motivated Profitability streams liquidity and Expenses staff force, capital and robust adequacy ICT platform Declining cost to in
Slide 19: Revenue - By Segment
Revenue - By Segment Revenue by Segment Revenue by Segment – H1’10 * * •Comprises Registrars, Trustees and Pension Funds Corporate & Retail Banking continues to be the cornerstone of our business and focus… 19
Slide 20: Revenue - By Geography
Revenue - By Geography Revenue by Geography Revenue by Geography – H1’10 Nigeria continues to remain the dominant driver of income and profitability for the Group…… 20
Slide 21: PBT - By Geography
PBT- By Geography PBT by Geography PBT by Geography – H1’10 Contribution margins from the Rest of Africa expected to be on an upward trend given business growth in Ghana & Sierra Leone 21
Slide 22: Agenda
Agenda Operating Environment Company Overview Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 22
Slide 23: Strong risk management policies & practice
Strong risk management policies & practice….. Loans/Provisions LoanLoan to Deposit to Deposit RatioRatio Group Group Group Group Well diversified loan portfolio (N’m) June-10 Mar-10 Dec-09 Sep-09 Low NPL Ratios in comparison to industry peers Gross Loans and Advances 718,622 691,522 747,465 701,54
Slide 24: Focused risk management via portfolio diversification
Focused risk management via portfolio diversification Loans by Sector – June ‘10 Enterprise Risk management driven by the Board of Directors across all business activities…providing means of dealing with uncertainties and opportunities Strategies include: Integrating risk Mgt into all facets of the
Slide 25: 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 & sector averages. Capital Mix Capital base predominantly made up of Tier I capital sustaining low co
Slide 26: Agenda
Agenda Operating Environment Company Overview Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 26
Slide 27: Our 2010 Strategic Objectives - impressive scorecard
Our 2010 Strategic Objectives……impressive scorecard 2010 - Targets • Continuous reduction in NPL volume 2010 - Scorecard • Curtail cost to income ratio • Maintain high level of capital • Good H1 performance and adequacy barring any unforeseen circumstances, this trend is • Remain conservative but ex
Slide 28: Revisiting our Strategic Objectives for 2010 and beyond
Revisiting our Strategic Objectives for 2010 and beyond… Strategies….. • Maintain strong risk mgt. and Beyond 2010 corporate governance culture • Sustain strong profitability • Ensure proper pricing of our and ensure adequate Return products and services on Equity (ROE) • Improving our corporate and
Slide 29: Agenda
Agenda Operating Environment Company Overview Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 29
Slide 30: Q&A
Q&A 30