Slide 1: 2016 Group Results Presentation to Investors & Analysts
2016 Group Results Presentation to Investors & Analysts ZENITH BANK PLC 1
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 – 7 Group Results Slides 8 – 21 Risk Management Slides 22 – 26 Strategy & Outlook Slides 27 – 30 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 Despite a challenging macroeconomic environment and short-to-medium term complications, Nigeria remains Africa’s largest economy with strong sectors and significant opportunities. Real GDP Growth (Rebase): GDP Growth Rate GDP growth rate
Slide 6: Highlights of CBN Circulars and Directives for 2016
Highlights of CBN Circulars and Directives for 2016 The banking sector has proved resilient to macroeconomic challenges and an evolving regulatory environment over the course of 2016. In order to stabilize the exchange rate and narrow the gap between official and parallel market rates, the FX Mark
Slide 7: 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 Keyplayer in the Nigerian Banking Industry: A dominant Controls a significant share of the high end corporate clien
Slide 8: 2. Group Results
Z Zz ZENITH BANK® 2. Group Results
Slide 9: Financial Highlights – FYE 2016
Financial Highlights – FYE 2016 Efficiency and Risk Management for Superior Performance Key Themes Building A Shock-Proof Balance Sheet Gross Earnings: N508.0bn +17.5% YoY Net Interest Income: N240.2bn +6.9% YoY Non-Interest Income: N123.4bn +45.9% YoY P or L Profit Before Tax: N156.7bn +24.8% YoY P
Slide 10: 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) 12M 16 12M 15 Change Gross earnings 507,997 432,535 17.45% Interest income 384,557 348,179 10.45% Inte
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 increasing revenue and improving operating efficiency. Comments Net Interest Margin 8.7% Net Interest Margin (NIM) decreased YoY by 8.6% 8.2% 8.
Slide 12: Revenue Base: Sustained Diversification
Revenue Base: Sustained Diversification • Attractive YoY growth in interest income (+10%) to support the Bank’s net interest margin, while non-interest income (+46%) was driven by account maintenance fees, FX revaluation gain and trading income. Interest Income 2016 2015 Inter-bank N' million 2016 2
Slide 13: Continuous Efforts in Cost-Reduction Strategies
Continuous Efforts in Cost-Reduction Strategies • Interest expense increased by 17% as funding cost remained high in 2016. • Continued cost control has meant lower costs as a proportion of the balance sheet. Despite the increase in inflation, Naira devaluation and rising regulatory charges (e.g. AMC
Slide 14: Balance Sheet – Assets
Balance Sheet – Assets Strong, liquid balance sheet with continued growth led by loans and securities portfolio. Group Group YOY (N'm) Dec-16 Dec-15 Change Cash and balances with central banks 669,058 761,561 -12.15% Treasury bills 557,359 377,928 47.48% Assets pledged as collateral 328,343 265,051
Slide 15: 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 YOY (N'm) Dec-16 Dec-15 Change Customers deposits 2,983,621 2,557,884 16.64% Derivative liabilities 66,834
Slide 16: Balance Sheet – Currency Breakdown
Balance Sheet – Currency Breakdown Diversification of funding base contributes to matching FX loan exposures. (N’million) Naira Dollar GBP Euro Others Total Loans and Advances (Gross) Cash and balances with central banks 606,079 40,877 11,131 10,971 – 669,058 2016 Euro Others Treasury bills 463,787
Slide 17: Sustained Assets & Liabilities Match
Sustained Assets & Liabilities Match Deposit funded loan growth, with largely term loans to top-rated corporates and a predominantly demand deposit funding base that supports attractive net interest margin extraction. Loan Growth 2,360.8 Loans & Advances Advances 2,032.3 2016 2015 under Advances 1,7
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 Assets Due from N' million 2016 2015 YoY 2015 pledged as 2016 other banks Assets collateral 21.4% Due from Cash 36,953 41,649 -11% pled
Slide 19: P&L by Geography
P&L by Geography Nigeria continues to be the main driver of profitability, providing about 90% of gross revenue. FYE December 2016 Gross Revenue (N’million) 12M16 Nigeria Nigeria Rest of Africa Europe Eliminations Consolidated 90.0% Total Revenue 464,493 39,737 12,010 (8,243) 507,997 Share of profit
Slide 20: P or L – By Sector
P or L – By Sector Continuous diversification and improved profitability across core business sectors FYE December 2016 Gross Revenue (N’million) 12M16 Large Small and Medium Public Consolidated Corporates Corporates / Retail Large Corporates Total revenue 278,463 84,012 145,522 507,997 54.8% Public
Slide 21: Loans & Deposits – By Sector
Loans & Deposits – By Sector Corporate-oriented franchise, with recently improved retail component. Gross Loans Total Deposits 2016 Gross Loans – N2.36 Trillion 2016 Total Deposits – N2.98Trillion Small and Medium Small and Corporates / Medium Retail Corporates / 19.7% Large Retail 38.8% Corporates
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 controls have resulted in a largely stable NPL ratio, with robust coverage levels that compare favourably with peers and the sector. NPL Coverage Ratio Our Risk Management Strategy 100.1% The Group adopts a complete and integrated approach to
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 – 2016 Loans by Sector – 2015 Real Estate and Construction Communication Flour Mills 5.29% 5.85% Real Estate and 5.22% Flour Mills Transportation Construction
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. The NPL ratio of 3% is currently one of the lowest in the industry. 2016 2015 Additional provision was made for power sector as a result of the current events in the sector
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 profile. Liquidity and Capital Adequacy 60% 60% 51% 47% Capital
Slide 27: 4. Strategy
Z Zz ZENITH BANK® 4. Strategy
Slide 28: Strategies for driving our vision
Strategies for driving our vision 1 The Bank focuses on cost 2 The Bank accomplishes this Compete effective deposits from the strategy by: aggressively for retail end of the market to Consistent focus and market share, but Delivering superior lend to the corporate end investment in attracting
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 FY2017
Outlook and Prospects for FY2017 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: Thank you
Z Zz ZENITH BANK® Thank you