Slide 1: Presentation to Investors & Analysts
v4 ZENITH Presentation to Investors & Analysts
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 in accordance with the International
Slide 3: 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 Overview Inter
Slide 4: Overview & Operating Environment
Overview & Operating Environment © 2018 ZENITH BANK PLC | Half 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 • With improving macroeconomic environment, GDP Growth Rate Nigeria remains Africa’s largest economy with strong sectors and significant opportunities. 1.40% 2.11% 1.95% 1.50% 0.72% -0.52% Real GDP Growth: Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17
Slide 6: Our Investment Proposition
Our Investment Proposition Strong earnings capacity and growth, 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 7: Group Results
Group Results © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts
Slide 8: Financial Highlights – Q3 2018
Financial Highlights – Q3 2018 Key Themes P or L Balance Sheet Gross Earnings: Gross Loans & N474.6Bn (10.7%) YoY Advances: N2.1Tn (8.3%) YtD Efficiency and Risk Management for Superior Net Interest Income: Total Assets: N5.6Tn +0.4% YtD Performance N228.5Bn +13.4% YoY Customers’ Deposits: Building
Slide 9: Financial Highlights – Q3 2018 Contd.
Financial Highlights – Q3 2018 Contd. Key Ratios 30-Sept-18 30-Sept-17 % change Return on average equity (RoAE) 24.0% 23.4% 3% Return on average assets (RoAA) 3.4% 3.5% (2%) EPS N4.6 N4.1 11% Net interest margin - NIM (Adjusted) 9.6% 8.4% 14% Cost of funds 3.3% 5.4% (40%) Cost of risk 0.9% 2.7% (67%
Slide 10: Profit or Loss Statement
Profit or Loss Statement Strong bottom-line profitability, driven by improved operating efficiencies in: Funding cost Risk cost Operational cost Group Group YoY (N’million) 9M 18 9M 17 Change Gross earnings 474,607 531,266 (10.66%) Interest and similar income 339,063 361,789 (6.28%) Interest a
Slide 11: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability • In spite of the macroeconomic backdrop, Zenith Bank has delivered an attractive earnings profile, supported by improving operating efficiency Comments 167 PBT (N’Bn) 153 PBT increased YoY by 9.7% from N152.5bn in Q3 2017 to 117 104 N167.3bn in Q3 2018. Th
Slide 12: Consolidating Earnings and Profitability Contd.
Consolidating Earnings and Profitability Contd. • In spite of the macroeconomic backdrop, Zenith Bank has delivered an attractive earnings profile, supported by improving operating efficiency. Comments Cost of Funds & Net Interest Margin (Adjusted) Net Interest Margin - NIM (Adjusted) increased Yo
Slide 13: Evolution of Revenue Base
Evolution of Revenue Base • Upward trend in revenue lines over the years. • Decline in interest income and trading income was due to the lower yielding environment in 2018 compared to 2017. 362 339 286 257 213 N’Bn 82 70 71 53 9 50 55 16 46 16 Sept 14 Sept 15 Sept 16 Sept 17 Sept 18 Interest Income
Slide 14: Revenue Base: Interest Income Diversification
Revenue Base: Interest Income Diversification • Interest income declined by 6% YoY as a result of the decline in total loans to customers and lower yielding environment • The Group has maintained a consistent mix of interest income across the various interest-generating assets over the years Interes
Slide 15: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income Diversification • The bank is committed to continually improve on its income diversification and growth. • Fees on electronics products grew by over 100% as the bank continues to improve on its electronic platforms and increase its share of the retail business. Q3 2
Slide 16: Interest Expense: Funding Cost Optimization
Interest Expense: Funding Cost Optimization • The Group achieved a massive 31% drop in interest expense as it continues its drive towards cost optimization Interest Expenses Q3 2018 Current accounts Savings 6.4% accounts N'million Q3 2018 Q3 2017 YoY 10.2% Current accounts 8,277 6,755 23% Time Borro
Slide 17: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies • Despite the significant increase in AMCON charge, the Group was able to contain its operating expenses growth at 6% YoY. • We expect a moderation in operating expenses for the remaining part of the year as we continue to improve on our operational ef
Slide 18: Balance Sheet – Assets
Balance Sheet – Assets • Strong and liquid balance sheet led by securities portfolio and interbank placements. Group Group YTD Group (N‘Million) Sep-18 Dec-17 Change Sep-17 Cash and balances with central banks 904,235 957,663 -5.58% 767,394 Treasury bills 818,395 936,817 -12.64% 718,964 Assets pledg
Slide 19: Balance Sheet – Liabilities & Equity
Balance Sheet – Liabilities & Equity • Assets are well funded by a significant deposit base and the balance sheet remains robustly capitalised, providing a buffer for further growth. Group Group YTD Group (N’Million) Sep-18 Dec-17 Change Sep-17 Customers deposits 3,275,547 3,437,915 -4.72% 3,062,214
Slide 20: Balance Sheet – Currency Breakdown
Balance Sheet – Currency Breakdown • Diversification of funding base contributes to matching FX loan exposures. • The short USD on- balance sheet position is covered by off-balance sheet derivative assets in the form of swaps (N’Million) @September 30, 2018 Naira Dollar GBP Euro Others Total Loans a
Slide 21: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match • Deposit funded loan portfolio, with largely term loans to top-rated corporates. • Deposit base is predominantly current accounts which supports attractive net interest margin extraction with increasing savings account balance. Gross Loans Evolution Loans & Adva
Slide 22: Continued Market Dominance through Strong Liquid Asset Base and Funding Mix
Continued Market Dominance through Strong Liquid Asset Base and Funding Mix • High quality and liquid balance sheet, with diversified source of funding. Liquid Assets Q3 2018 FYE 2017 Assets Assets pledged as Due from N'million Q3 2018 FYE 2017 YoY pledged as collateral other collateral Due from 26.
Slide 23: Risk Management
Risk Management © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts
Slide 24: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio • Historically strong risk management have resulted in a contained NPL ratio, with robust coverage levels that compare favourably with peers and the sector. NPL Coverage Ratio Our Risk Management Strategy The significant growth in Coverage Ratio from Q1 The Group ad
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 2018 Loans by Sector – FYE 2017 Communication Communication Flour Mills 5.5% Real Estate and 4.2% Transportation 5.6% Transportation Real Estate and Con
Slide 26: NPL by Sectors
NPL by Sectors • Zenith Bank continues to develop its risk management strategy and maintain a good quality loan portfolio. Q3 2018 FYE 2017 Agriculture Agriculture General 0.98% General 0.90% Commerce/Trading Commerce/Trading 26.53% 28.19% Education 0.25% Oil and Gas Oil and Gas 37.42% 45.51% Educat
Slide 27: Foreign Currency Loans & Restructured Loans
Foreign Currency Loans & Restructured Loans • Well diversified loan portfolio across sectors support asset quality. Foreign Currency Loans – Q3 2018 Cumulative Restructured Loans – Q3 2018 % to % to Gross Restructured Loans by sector N'm Restructured % to US$ % to Total loans USD loans by sector US$
Slide 28: Strong Capitalisation and Liquidity
Strong Capitalisation and Liquidity • Liquidity buffer well in excess of regulatory requirements. Solid and high-quality capital position provides room for further growth and has supported Zenith Bank’s historically strong dividend pay-out ratio. Liquidity & Capital Adequacy 77.0% 69.7% 70.5% 72.0%
Slide 29: Business Segments Performance & Subsidiary Review
Business Segments Performance & Subsidiary Review © 2018 ZENITH BANK PLC | Half Year 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 9 Months Ended September 2018 Gross Revenue (N’million) Commercial/ Q3 2018 Corporates Public Retail Consolidated SMEs Total revenue 287,088 53,540 31,671 102,309 474,607 Corporat
Slide 31: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments • Corporate-oriented franchise, with improving retail component. Gross Loans Total Deposits Q3 2018 Gross Loans – N2.07 Trillion Q3 2018 Total Deposits – N3.28 Trillion Commercial/ Commercial/ SMEs SMEs 19.0% 22.4% Retail 0.8% Corporates Retail 54.2% Corporate
Slide 32: Electronic Banking Products Performance
Electronic Banking Products Performance • The bank recorded a remarkable growth in both value and volume of electronic product transactions, resulting in a 109% (ref.: slide 15) growth in income on electronic products Value of Electronic Product Transactions Volume of Electronic Product Transactions
Slide 33: Geographical Presence
Geographical Presence © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts | Page 33
Slide 34: Performance by Geography
Performance by Geography • Subsidiaries contribution to revenue has improved YoY from 8.9% to 13.1%, improving revenue diversification by geography 9 Months Ended September 2018 Gross Revenue (N’Million) Nigeria Nigeria Rest of Africa Europe Eliminations Consolidated Q3 2018 86.9% Total Revenue 417,
Slide 35: Non-financial Highlights – Q3 2018
Non-financial Highlights – Q3 2018 © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts | Page 35
Slide 36: Strategy & Outlook
Strategy & Outlook © 2018 ZENITH BANK PLC | Half Year Group Results Presentation to Investors & Analysts
Slide 37: Strategies for driving our vision
Strategies for driving our vision 1 The Bank focuses on cost 2 The Bank accomplishes this strategy by: Compete effective deposits from the Use of robust digital platform aggressively for retail end of the market to Delivering superior Consistent focus and investment in market share, but service
Slide 38: Our Key Growth Target Sectors
Our Key Growth Target Sectors Driving profitability with our competitive advantages Identified Growth Sectors Competitive Advantage • Agriculture • Strong capital and liquidity • Infrastructure • Strong brand • Manufacturing • Strong international rating • Petrochemicals • Extensive branch network •
Slide 39: Outlook and Prospects for FY2018
Outlook and Prospects for FY2018 Customer Services: At the center of the Group’s pursuit of Retail Banking: The bank is committed to continue to grow its excellent customer service, we would continue to focus on retail business. This will be achieved through the deployment of strengthening our r
Slide 40: Guidance for FYE 2018
Guidance for FYE 2018 9 Months – September 2018 FYE 2018 Guidance FYE 2017 Achieved Achieved PBT N215.0Bn N167.3Bn N203.5Bn Effective Tax Rate 15.0% 13.82% 12.6% PAT N182.7Bn N144.2Bn N177.9Bn ROAE 23.4% 24.0% 23.3% ROAA 3.5% 3.4% 3.4% NIM (Adjusted) 9.0% 9.6% 9.0% Cost of Funds 3.5% 3.3% 5.2% Cost
Slide 41: 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