Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — FY2010 Earnings Presentation
44 slides from Zenith Bank's earnings presentation, Mar 24, 2011
Slide 1: Zenith Bank Plc Group Results
ZENITH BANK PLC GROUP RESULTS For 12 Months Ended December 31, 2010 Thursday March 24, 2011 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 under the historical cost convention
Slide 3: Speakers
Speakers Godwin Emefiele – Managing Director/Chief Executive Officer 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 Company Overview Operating Environment Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 4
Slide 5: Zenith Bank Plc – Commitment to excellence
Zenith Bank Plc – Commitment to excellence Strengthened global institutional brand with Zenith’s success is anchored on its continued upside from strong talent pool, increased investment in people, technology and excellent footprint and expanded market share. customer service-focused strategy. A sta
Slide 6: Ratings consistently above industry average
Ratings…...consistently above industry average Fitch Ratings – “B+” (2010 – international) “The Stable Outlook for the long term IDR reflects Zenith’s strong and well-established domestic franchise and acceptable levels of Tier 1 capital” S&P Rating – “B+/B-” (2010 - international) “The Stable Outlo
Slide 7: Agenda
Agenda Company Overview Operating Environment Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 7
Slide 8: Optimistic Macro-Economic Environment for Nigeria
Optimistic Macro-Economic Environment for Nigeria 2008 2009 Q1’10 Q2’10 Q3’10 Q4’10 GDP Growth (%) 6.1 6.9 7.36 7.69 7.86 8.29 Inflation (%) 15.1 12.4 14.8 14.1 13.60 11.80 Oil Price ($) 94.5 61.1 76.01 72.49 77.48 88.99 Exch. Rate (USD/NGN) 126.5 149.6 147.84 148.22 149.04 150.66 Foreign Reserves (
Slide 9: Optimistic Macro-Economic Environment…
Optimistic Macro-Economic Environment… Oil Prices: Owing to improvement and stability of oil production at an average of 2.2 million barrels per day and strong prices averaging $80.90 per barrel in 2010, oil sector contribution to the economy received a boost. This also impacted positively on the Ba
Slide 10: Positive Micro-Economic Environment…
Positive Micro-Economic Environment… In 2010 a number of the stronger banks in Nigeria applied a sizeable number of stress-free banks in Nigeria applied to AMCON to request for AMCON to take on their NPLs. This move underscores the level of confidence the financial institutions place on the Corporat
Slide 11: Positive Micro-Economic Environment…
Positive Micro-Economic Environment… The manufacturing sector last year witnessed some challenges that eventually renewed Government interest in this sector of the economy. Anticipated real sector growth is expected to boost confidence and lending activities. Zenith will support this growth initiati
Slide 12: Agenda
Agenda Company Overview Operating Environment Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 12
Slide 13: Financial Highlights
Financial Highlights Key Consolidating Superior Performance and Sustaining Competitive Advantage Theme through our People, Technology and Exceptional Customer Service Gross Earnings: N192.5bn -13.23% YoY Net Interest Income: N91.5bn 4.42% YoY P&L Net Interest Margin: 5.95% -25.63%YoY PBT: N50bn 78.2
Slide 14: Profit & Loss Statement
Profit & Loss Statement Group Group 12 mths to 12 mths to YOY Dec-10 (N’m) Dec-09 (N’m) Change Audited Audited (Annualized) Gross Income 192,488 221,840 -13.23% Interest Income 127,265 154,836 -17.81% Interest Expense -35,719 -67,166 -46.82% Net Interest Income 91,546 87,670 4.42% Fees and Commissio
Slide 15: Strong Earnings and Profitability
Strong Earnings and Profitability Gross Revenue PBT PAT ROE/ROA 15
Slide 16: Diverse Revenue Base
Diverse Revenue Base 2010 Interest Income 2009 2010 Non-Interest Income 2009 16
Slide 17: Revenue Composition
Revenue Composition Interest Income/ Income Drop in Interest Income as a result of low money market rates prevalent for the most part of 2010. Non-Interest Income / Income Growth in Non Interest Income fueled by improved fees and commissions … an attestation of our excellent customer focused service
Slide 18: Sustained Efforts towards Cost Effectiveness…
Sustained Efforts towards Cost Effectiveness… 2010 Interest Expenses 2009 2010 Operating Expenses 2009 18
Slide 19: Cost Analysis
Cost Analysis Cost Income Ratio 1.78% YoY reduction in Total Cost to Income ratio. Significant YoY drop in Interest Expense as a result of strategic focus on mobilizing cheap demand and savings accounts deposits through our extensive branch network. Continuous efforts in cost-reduction strategies. I
Slide 20: Balance Sheet - Assets
Balance Sheet - Assets Group Group Dec-10 (N’m) Dec-09 (N’m) Cash and balances with central banks 141,724 126,779 Treasury bills 298,869 234,115 Due from other banks 399,503 341,830 Loans and advances 713,285 698,326 On-lending facilities 22,536 - Advances under finance lease 13,188 5,506 Insurance
Slide 21: Balance Sheet - Liabilities & Equity
Balance Sheet- Liabilities & Equity Group Group Dec-10 (N’m) Dec-09 (N’m) Customer deposits 1,318,072 1,173,917 Claims Payable 218 198 Liabilities on insurance contracts 2,287 1,202 On-lending facilities 26,049 - Borrowings 27,975 35,984 Current income tax 3,735 7,407 Other liabilities 145,750 100,0
Slide 22: Loan and Deposit Growth
Loan and Deposit Growth Loan Growth Enterprise Risk Management policies yielding results with over 2% increase in net loans despite drop in gross loans. Deposit Growth Successfully leveraging on extensive and strategically located branches to drive deposit mobilization. Over 12% YoY growth in Deposi
Slide 23: Core deposits more than sufficient to fund longer tenured assets
Core deposits…more than sufficient to fund relatively longer tenured assets Dec’10 Loans and Advances Dec’09 Improving yield through strategic focus on short to medium term funding. Dec’10 Deposits Dec’09 Excellent Customer Service and Robust ICT platform driving up Demand & Savings Accounts Volumes
Slide 24: Sustained dominance through strong liquidity and right funding mix
Sustained dominance of the market through strong liquidity and right funding mix 2010 Liquid Assets 2009 2010 Funding Mix 2009 24
Slide 25: Agenda
Agenda Company Overview Operating Environment Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 25
Slide 26: P&L – By Segment
P&L – By Segment Investment General 12 Months Ended Dec 2010 (N’m) Corporate & Mgmt & Health & Life (Audited) Retail Banking Stockbroking Insurance Others Eliminations Consolidated Total Revenue 182,033 1,686 7,642 3,094 -1,967 192,488 Operating Expenses 137,564 -430 6,292 1,003 -1,967 -142,462 Prof
Slide 27: P&L – By Segment
P&L – By Segment Gross Revenue by Segment – Dec’10 Gross Revenue by Segment – Dec’09 Core Banking activities continue to dominate the Revenue stream of the Group. 27
Slide 28: Agenda
Agenda Company Overview Operating Environment Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 28
Slide 29: P&L – By Geography
P&L – By Geography 12 Months Ended Dec 2010 (N’m) (Audited) Nigeria Rest of Africa Europe Eliminations Consolidated Total Revenue 181,787 10,074 2,594 -1,967 192,488 Operating Expenses 133,321 9,386 1,722 -1,967 -142,462 Profit Before Tax 48,466 688 872 - 50,026 Tax -12,117 -240 -255 - -12,612 Profi
Slide 30: P&L – By Geography
P&L – By Geography Gross Revenue by Geography – Dec’10 Gross Revenue by Geography – Dec’09 Business from Nigeria continues to account for a substantial portion of the Group’s Revenue base. 30
Slide 31: Agenda
Agenda Company Overview Operating Environment Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 31
Slide 32: Sound Enterprise Risk Management Structure
Sound Enterprise Risk Management Structure BOARD RISK BOARD OF AUDIT MANAGEMENT DIRECTORS COMMITTEE COMMITTEE BOARD CREDIT COMMITTEE Risk Management EXECUTIVE structure and processes COMMITTEE are continually MANAGEMNT RISK GLOBAL CREDIT ASSETS / LIABILITIES reviewed to ensure COMMITTEE COMMITTEE CO
Slide 33: Our Strategy for Risk Management
Our Strategy for Risk Management oIntegrating risk management into the culture of the Bank via training and acculturation. o Continuing to identify all risk exposures, threats and opportunities which are then managed with appropriate processes in line with best practices and regulatory requirements.
Slide 34: Diversified Loan Portfolio
Diversified Loan Portfolio Loans by Sector – Dec’10 Sustaining loan policy of no concentration risk 34
Slide 35: NPL Analysis
NPL Analysis Loans/Provisions Sustaining conservative loan to deposit Group Group ratio giving room to take advantage of (N’m) Dec‐10 Dec‐09 emerging business opportunities. Consistent low NPL ratios in Gross Loans and Advances 746,051 747,465 comparison with industry averages. Provision for Loan Lo
Slide 36: NPL Analysis
NPL Analysis 2010 NPLs by Sector 2009 NPLs by Sector NPLs by Sector/Total Loans 2010 2009 General commerce NPLs/ Total Loans 1.07% 0.89% Oil and gas NPLs/ Total Loans 0.96% 0.46% Transportation NPLs/ Total Loans 0.94% 0.82% Capital market NPLs/ Total Loans 0.85% 2.69% Losses spread across Manufactur
Slide 37: Strong Capitalization and Liquidity
Strong Capitalization and Liquidity Liquidity and Capital Adequacy Capital and liquidity ratios for the Bank – well above industry requirements. Capital Mix Capital base – predominantly made up of Tier 1 capital. 37
Slide 38: Agenda
Agenda Company Overview Operating Environment Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 38
Slide 39: Well positioned to deliver a strong performance in 2011
Well positioned to deliver a strong performance in 2011 Strong capitalization and liquidity with sustained capital and liquidity ratios well above industry requirements. Well disciplined and focused Adequate protection against any management team ; Well motivated adverse event with huge capital base
Slide 40: Pursue cost efficiency programme
Pursue cost efficiency programme….. STRATEGY FOR REDUCING COST TO INCOME RATIO: o Process review and realignment to enhance efficiency in our operations. o Collaboration with other industry players in shared services. o Developing more electronic platforms to further improve efficiency o Optimal use
Slide 41: Pursue cost efficiency programme
Pursue cost efficiency programme….. STRATEGY FOR INFORMATION TECHNOLOGY : o Designing the Bank’s IT infrastructure to maximize its efficiency, minimize cost of operation and improve overall business manageability. o Monitoring and evaluating Information Technology projects and achievements against I
Slide 42: Strategic Objectives … Beyond 2011
Strategic Objectives …. Beyond 2011 • Continue to uphold and preserve our “We will continue liquidity management philosophy. consolidating on our •Grow our assets with reasonable quality and Superior Performance increase our market share. and Sustaining •Projected loan growth of approximately 15% Co
Slide 43: Agenda
Agenda Company Overview Operating Environment Results Group By Segment By Geography Company Risk Management Strategy and Outlook Q&A 43
Slide 44: Q&A
Q&A 44