Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — Q1 2018 Earnings Presentation
32 slides from Zenith Bank's earnings presentation, 2018
Slide 1: Q1 2018 Group Results
Q1 2018 Group Results 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: Agenda
Agenda Overview & Operating Environment Slides 4 – 6 Group Results Slides 7 – 21 Risk Management Slides 22 – 26 Strategy & Outlook Slides 27 – 31 Q&A 3
Slide 4: 1. Overview & Operating Environment
1. Overview & Operating Environment
Slide 5: Nigerian Economy and Key Developments in the Banking Sector
Nigerian Economy and Key Developments in the Banking Sector With improving macroeconomic environment, Nigeria remains Africa’s largest economy with strong sectors and significant opportunities. Real GDP Growth (Rebase): GDP Growth Rate Nigeria recorded a real GDP growth of 1.90% YoY in Q4 2017, up
Slide 6: Our Investment Proposition
Our Investment Proposition Strong earnings capacity and growth, solid and liquid capital base, strengthened ERM practices, Key good returns on investment and excellent customer service Theme A dominant player in the Nigerian Banking Industry: Controls a significant share of the high end corporat
Slide 7: 2. Group Results
Z Zz ZENITH BANK® 2. Group Results
Slide 8: Financial Highlights – Q1 2018
Financial Highlights – Q1 2018 Efficiency and Risk Management for Superior Performance Key Themes Building A Shock-Proof Balance Sheet Gross Earnings: N169.2bn +14.5% YoY Net Interest Income: N95.9bn +35.8% YoY Non-Interest Income: N26.6bn -10.4% YoY P or L Profit Before Tax: N54.0bn +22.2% YoY Prof
Slide 9: Profit or Loss Statement
Profit or Loss Statement • Strong bottom-line profitability, driven by robust core earnings generation and continued cost control to deliver improved operating leverage. Group Group YOY (N’million) 3M 18 3M 17 Change Gross earnings 169,192 147,736 14.52% Interest Income 142,618 118,092 20.77% Intere
Slide 10: Consolidating Earnings and Profitability
Consolidating Earnings and Profitability • In spite of the macroeconomic backdrop, Zenith Bank has delivered an attractive earnings profile, supported by increasing revenue and improving operating efficiency. Comments Net Interest Margin 9.3% 9.0% 8.5% 8.6% 8.4% Net Interest Margin (NIM) increased
Slide 11: Revenue Base: Interest Income Diversification
Revenue Base: Interest Income Diversification • Attractive YoY growth in interest income (+21%) to support the Bank’s net interest margin • The Group has maintained a consistent mix of interest income across the various interest-generating assets over the years Interest Income Q1 2018 Q1 2017 N'mill
Slide 12: Revenue Base: Non-Interest Income Diversification
Revenue Base: Non-Interest Income Diversification • Trading income declined mainly as a result of the reclassification of T-bills trading income to interest income. Q1 2018 Q1 2017 Other Credit Other Other fees & Corporate N'million Q1 2018 Q1 2017 YoY Corporate operating related Other fees & operat
Slide 13: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies • The Group achieved a reduction of 2% YoY in interest expense despite the additional $500m Eurobond issued in May 2017. • Interest rates on time deposits were repriced downwards as yields continue to drop. Interest Expenses Q1 2018 Current accounts Sa
Slide 14: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies • High inflation rate, exchange rate movement and AMCON premium contributed significantly to the 33% increase in total operating expenses. • We expect a moderation in operating expenses for the remaining of the year as 6 months’ AMCON charge was taken
Slide 15: Balance Sheet – Assets
Balance Sheet – Assets Strong and liquid balance sheet led by loans and securities portfolio. Group Group YTD Group (N‘million) Mar-18 Dec-17 Change Mar-17 Cash and balances with central banks 940,981 957,663 (1.74%) 604,419 Treasury bills 986,571 936,817 5.31% 646,387 Assets pledged as collateral 4
Slide 16: 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) Mar-17 Dec-17 Change Mar-17 Customers deposits 3,396,182 3,437,915 (1.21%) 2,996,262
Slide 17: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match Deposit funded loan portfolio, with largely term loans to top-rated corporates and a predominantly demand deposit funding base that supports attractive net interest margin extraction. Loans & Advances Loan Growth Q1 2018 FYE 2017 2,428 Advances under 2,299 2,273
Slide 18: 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 Q1 2018 FYE 2017 Assets Assets Due from pledged as pledged as other N'million Q1 2018 FYE 2017 YoY collateral collateral Due from banks
Slide 19: Performance by Geography
Performance by Geography Nigeria continues to be the main driver of profitability, providing almost 90% of gross revenue. Gross Revenue 3 Months Ended Mar 2018 (N’million) Q1 2018 Nigeria Nigeria Rest of Africa Europe Eliminations Consolidated 87.8% Total revenue 149,317 16,303 4,355 -783 169,192 To
Slide 20: Performance – By Business Segments
Performance – By Business Segments Continuous diversification and improved profitability across core business segments 3 Months Ended Mar 2018 Gross Revenue (N’million) Q1 2018 Corporates Public Retail SMEs Consolidated Total revenue 98,839 22,440 10,457 37,456 169,192 Corporates 58.4% Total expense
Slide 21: Loans & Deposits – By Business Segments
Loans & Deposits – By Business Segments Corporate-oriented franchise, with recently improved retail component. Gross Loans Total Deposits Q1 2018 Gross Loans – N2.04 Trillion Q1 2018 Total Deposits – N3.40 Trillion SMEs 19.8% SMEs 23.3% Retail 0.6% Corporates Corporates Public 64.9% Retail 56.0% 14.
Slide 22: 3. Risk Management
Z Zz ZENITH BANK® 3. Risk Management
Slide 23: 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 320.7% Coverage Ratio for Q1 The Grou
Slide 24: Focused Risk Management via Portfolio Diversification
Focused Risk Management via Portfolio Diversification Well diversified loan portfolio across sectors supports asset quality. Loans by Sector – Q1 2018 Loans by Sector – FYE 2017 Communication Real Estate Communication and 4.2% Real Estate and 4.3% Construction Transportation Construction Transportat
Slide 25: NPL by Sectors
NPL by Sectors Zenith Bank continues to develop its risk management strategy and improve on the quality of its loan portfolio. Q1 2018 FYE 2017 Agriculture Agriculture 1.06% General General 0.90% Commerce/ Commerce/Trading Trading 28.19% 25.83% Oil and Gas 37.37% Oil and Gas 37.42% Education Educati
Slide 26: 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 payout ratio. Liquidity and Capital Adequacy 70% 60% 60% 51% 47% Capit
Slide 27: 4. Strategy & Outlook
Z Zz ZENITH BANK® 4. Strategy & Outlook
Slide 28: 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 lend to
Slide 29: 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 30: Outlook and Prospects for FY2018
Outlook and Prospects for FY2018 Retail Banking: The bank will continue to grow its retail Customer Services: At the center of the Group’s pursuit of business especially in liability generation. This will be excellent customer service, we would continue to focus on achieved through the deploymen
Slide 31: Guidance for FYE 2018
Guidance for FYE 2018 FYE 2018 Guidance FYE 2017 Achieved FYE 2017 Guidance PBT N210.0bn N203.5bn N160.0bn Effective Tax Rate 13.00% 12.55% 18.00% PAT N182.7bn N177.9bn N131.2bn ROAE 23.40% 23.30% 19.00% ROAA 3.45% 3.40% 3.00% NIMBusiness line & 8.69% 9.00% 7.50% Cost ofGeography Funds 4.00% 5.20% 4
Slide 32: Thank you
Z Zz ZENITH BANK® Thank you