Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — Q3 2020 Earnings Presentation
40 slides from Zenith Bank's earnings presentation, 2020
Slide 1: Third Quarter Report: Presentation to Investors and Analysts 2020
ya ZENITH THIRD QUATER REPORT Presentation to Investors and Analysts 2020 PEOPLE TECHNOLOGY, SERVICE
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 © 2020 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 recorded a negative growth of -3.62% y/y in real GDP in Q3 2020, an improvement of 2.48% points over the –6.10% y/y growth rate recorded in Q2 2020. The decline was largely 2.12% 2.28% 2.55% 1.87%
Slide 6: Our Response to Covid-19 Pandemic
Our Response to Covid-19 Pandemic As we transit to 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 | Third Quarter Group Results Presentation to Investors & Analysts | Page 8
Slide 9: Group Results
Group Results © 2020 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts
Slide 10: Financial Highlights – Q3 2020
Financial Highlights – Q3 2020 Key Themes Income Statement Balance Sheet Gross earnings: Customers’ deposits: Efficiency and risk N5.22Tn +22.6% YTD N509.0Bn +3.6% YoY management for superior performance. Gross loans: Net-interest income: N225.2Bn +4.9% YoY N2.89Tn +17.2% YTD Building a shock-pr
Slide 11: Financial Highlights – Q3 2020 Contd.
Financial Highlights – Q3 2020 Contd. Key Ratios 30-Sep-20 30-Sep-19 % change Earnings per share (EPS) N5.07 N4.80 5.6% Return on average equity (RoAE) 21.5% 23.8% (9.7%) Return on average assets (RoAA) 3.0% 3.4% (11.8%) Net interest margin - NIM 8.3% 8.7% (4.6%) Cost of funds 2.2% 3.0% (26.7%) Cost
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) 9M 20 9M 19 Change Gross income 508,975 491,268 3.60% Interest and similar income 318,820 321,938 -0.97% Interest and similar expense (93,641) (107,
Slide 13: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability Zenith Group has continued to deliver PBT (N’Bn) 177 an attractive earnings profile, 167 176 153 supported by a robust revenue base 121 despite market turbulence. PBT increased by 0.6% YoY from N176.2bn in Q3 2019 to N177.3bn in Q3 2020 despite the challeng
Slide 14: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. Cost of Funds & Net Interest Margin Net Interest Margin - NIM contracted by 4.6% YoY (from 9.6% 8.7% in Q3 2019 to 8.3% in Q3 2020) due to the 8.4% 8.7% 8.3% 7.6% declining yield environment. 5.4% 3.8% 3.3% 3.0% Cost of Funds dropped to 2.2% in Q3
Slide 15: Evolution of Revenue Base
Evolution of Revenue Base % to % to Total • Contribution of non- N'million Q3 2020 Total Q3 2019 Revenue YoY interest income lines Revenue to total revenue Interest income 318,820 62.6% 321,938 65.5% -1.0% continues to grow, Non Interest Income: Trading income 89,817 17.6% 66,856 13.6% 34.3% increas
Slide 16: Revenue Base: Interest Income Lines
Revenue Base: Interest Income Lines • Treasury bills (T-bills) interest income dipped by 46% YoY due to the significant decline in treasury bills rates. Interest Income Q3 2020 N'million Q3 2020 Q3 2019 YoY Q3 2019 Placement with Others Placement with Loans and advances 189,386 175,178 8% banks & di
Slide 17: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income (NII) Diversification • Sustained growth in non-Interest Income which grew by 11% YoY. Q3 2020 Q3 2019 N'million Q3 2020 Q3 2019 YoY Credit Credit related fees 13,106 14,262 -8% related Fees on Account maintenance fee 17,045 15,821 8% Other Credit fees Account Accou
Slide 18: Interest Expense: Funding Cost Optimization
Interest Expense: Funding Cost Optimization Interest Expenses Q3 2020 Current accounts • Interest expense declined by 13% YoY as a result Borrowed 9.2% Savings of rebalancing of deposit mix and the declining funds accounts yield environment. 35.6% 20.0% Time deposits N'million Q3 2020 Q3 2019 YoY 35
Slide 19: Continuous Implementation of Cost-Reduction Strategies
Continuous Implementation of Cost-Reduction Strategies. • Total operating expense grew by 11% YoY in Q3 2020 due to inflationary pressure and foreign currency denominated expenses (exchange rate movement). Total Operating Expenses Q3 2020 Q3 2019 N'million Q3 2020 Q3 2019 YoY Security & cash Personn
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 YTD Group (N‘million) Sep-20 Dec-19 Change Sep-19 Cash and balances with central banks 1,799,136 936,278 92.16% 913,830 Treasury bills 1,058,712 991,393 6.79%
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 Group Liabilities Sep-20 Dec-19 Change Sep-19 Customers deposits 5,224,564 4,262,289 22.58% 3,951,829 Derivative liabilities 19,496
Slide 22: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • The 23% growth in customers’ deposits in Q3 2020 is a reflection of the increasing confidence in the Zenith brand. Gross Loans Loans & Advances 2,799 2,887 2,740 Q3 2020 FYE 2019 2,462 2,205 Overdrafts On-lending On-lending facilities facilities 8.6% Overdrafts
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 Q3 2020 FYE 2019 Debt Due from securities Due from N'million Q3 2020 FYE 2019 YTD Debt securities other 28.4% other banks Cash 137,423 55,255 149% 22.0% ba
Slide 24: Risk Management
Risk Management © 2020 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts
Slide 25: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio NPL Coverage Ratio Credit Risk Management Amidst Covid-19 148.4% 148.2% 132.0% Engaging our customers in key sectors of the economy to 125.2% 126.8% better understand their current challenges and provide 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 – Q3 2020 Loans by Sector – FYE 2019 Communication Flour Mills Communication Finance and Flour Mills 4.5% Finance and Insurance 2.0% Real Estate and 4.3% 4.3
Slide 27: NPL by Sectors
NPL by Sectors Q3 2020 FYE 2019 General Commerce General Commerce 12.08% Agriculture Education 9.21% Education 0.13% 1.13% 1.35% Agriculture 0.36% Communication 22.10% Oil and Gas Communication Oil and Gas 40.05% 29.47% 30.75% Transportation 1.92% Transportation 0.14% Power Consumer Power 1.37% Cons
Slide 28: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans Foreign Currency Loans – Q3 2020 Cumulative Restructured Loans – Q3 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 363,755 68.97% 12.60% Oil and gas
Slide 29: Strong Capitalisation
Strong Capitalisation • Solid and high-quality capital position provides room for further growth. Liquidity & Capital Adequacy 63.8% 67.4% 57.3% 50.8% Capital and liquidity ratios – well 41.8% above regulatory requirements of 23.8% 22.0% 19.6% 20.0% 21.5% 30% for Liquidity and 15% for Capital Adequa
Slide 30: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2020 ZENITH BANK PLC | Third Quarter 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 gross revenue increased from 11.0% to 12.4% YoY. Gross Revenue Q3 2020 9 Months Ended September 2020 Corporates (N’million) 57.0% Public Comme
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 33.4% YTD while total deposits grew by 22.6% over the same period. Gross Loans Total Deposit Q3
Slide 33: Electronic Banking Products Performance by Channels
Electronic Banking Products Performance by Channels. Value of Electronic Product Transactions Number of Electronic Product Transactions Q3 2020 Q3 2019 YoY Q3 2020 Q3 2019 YoY Total Transaction Total Number of 31,021 15,141 105% 694.2 384.7 80% Value (N'bn) Transactions (million) 240.0 231.3 14,377
Slide 34: Geographical Presence
Geographical Presence © 2020 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts | Page 34
Slide 35: 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 9 Months Ended September 2020 (N’million) Rest of Nigeria Nigeria Europe El
Slide 36: Strategy & Outlook
Strategy & Outlook © 2020 ZENITH BANK PLC | Third Quarter Group Results Presentation to Investors & Analysts
Slide 37: Strategies for Driving our Vision
Strategies for Driving our Vision The Bank accomplishes this 1 2 strategy by: Compete aggressively The Bank focuses on cost Use of robust digital platform. effective deposits from the Delivering superior for market share, but Consistent focus and investment in retail end of the market to foc
Slide 38: 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 39: Guidance for FYE 2020
Guidance for FYE 2020 9 Months – Q3 2020 FYE 2020 Guidance FYE 2019 Achieved Achieved PBT N253.0Bn N177.3Bn N243.3Bn Effective Tax Rate 12.0% 10.1% 14.2% PAT N222.6Bn N159.3Bn N208.8Bn ROAE 22.0% 21.5% 23.8% ROAA 3.3% 3.0% 3.4% NIM 8.5% 8.3% 8.2% Cost of Funds 3.0% 2.2% 3.0% Cost of Risk 2.0% 1.3% 1
Slide 40: 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