Zenith Bank Plc · NSENG:ZENITHBANK
Zenith Bank — H1 2016 Earnings Presentation
28 slides from Zenith Bank's earnings presentation, June 2016
Slide 1: H1 2016 Group Results Presentation to Investors & Analysts
H1 2016 Group Results Presentation to Investors & Analysts June 2016 ZENITH BANK PLC
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 Speaker: Managing Director/Chief Executive Officer Peter Amangbo Slides 4 - 6 Results - Group Speaker: Chief Financial Officer Stanley Amuchie Slides 8- 16 Q&A 3
Slide 4: Nigerian Economy and Key Developments in the Banking Sector
Nigerian Economy and Key Developments in the Banking Sector Real GDP Growth (Rebase): GDP growth rate declined to -0.36% y/y in Q1 2016, down by 247bps from 2.11% recorded in Q4 2015. Key Headline Inflation: Theme Headline Inflation increased to 16.5% y/y in Jun’16 from 15.6% y/y recorded in M
Slide 5: New CBN Circulars and Other Directives
New CBN Circulars and Other Directives Liberalization of FX Rate The Central Bank of Nigeria (CBN) liberalized the foreign exchange market in order to return liquidity to the market OTC FX Futures An Over-The-Counter (OTC) FX Futures Market for the Dollar against the Naira was introduced by the CBN
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: Key Controls a significant share of the high end corporate clien
Slide 7: Agenda
Agenda Overview & Operating Environment Speaker: Managing Director/Chief Executive Officer Peter Amangbo Slides 4 - 6 Results - Group Speaker: Chief Financial Officer Stanley Amuchie Slides 8- 16 Q&A 7
Slide 8: Financial Highlights
Financial Highlights Key Efficiency and Risk Management for Superior Performance Theme Building A Shock-Proof Balance Sheet Gross Earnings: N214.81bn -6.23% YoY Net Interest Income: N127.02bn +12.77% YoY P&L Net Interest Margin: 8.02% -3.60% YoY PBT: N63.28bn -12.35% YoY PAT: N44.84bn -15.68% YoY Cu
Slide 9: Profit & Loss Statement
Profit & Loss Statement Group Group (N’m) 6 mths to 6 mths to YOY Jun-16 Jun-15 Change Gross Income 214,812 229,082 -6.23% Interest and similar income 181,408 176,223 2.94% Interest and similar expense -54,385 -63,585 -14.47% Net interest income 127,023 112,638 12.77% Impairment charge for credit lo
Slide 10: Consolidating earnings and profitability...
Consolidating earnings and profitability... Comments Net Interest Margin Net Interest Margin (NIM) decreased YoY by 3.6% (from 8.3% in H1 2015 to 8.0% in H1 2016) as a result of a drop in the yield on assets. However, it increased QoQ from 7.9% (Q1) to 8.0% (Q2) Cost-to-Income Ratio inched up by
Slide 11: Revenue Base ...Sustained Diversification
Revenue Base …Sustained Diversification Interest Income H1 2015 H1 2016 N'million H1 2016 H1 2015 YoY PBT Interbank Placements 779 5,156 -85% Treasury Bills 23,348 27,540 -15% Govt & Other Bonds 25,200 14,218 77% Loans & Advances 132,081 129,309 2% Total 181,408 176,223 3% Zenith Group recorded a
Slide 12: Continuous efforts in cost-reduction strategies
Continuous efforts in cost-reduction strategies ….. H1 2016 Interest Expenses H1 2015 N'million. H1 2016 H1 2015 YoY Current accounts 1,438 2,504 -43% Savings accounts 6,592 5,364 23% Time deposits 29,870 50,385 -41% Borrowed funds 16,485 5,332 209% Total 54,385 63,585 -14% Interest expense declin
Slide 13: Balance Sheet- Assets
Balance Sheet- Assets Group Group YTD Group (N'm) Jun-16 Dec-15 Change Jun-15 Cash and balances with central banks 627,156 761,561 -17.65% 634,972 Treasury bills 379,990 377,928 0.55% 287,989 Assets pledged as collateral 277,862 265,051 4.83% 239,078 Due from other banks 343,389 272,194 26.16% 499,0
Slide 14: Balance Sheet- Liabilities & Equity
Balance Sheet- Liabilities & Equity Group Group YTD Group (N'm) Jun-16 Dec-15 Change Jun-15 Customers deposits 2,685,477 2,557,884 4.99% 2,604,804 Derivative liabilities 3,562 384 827.60% 697 Current income tax 4,824 3,579 34.79% 5,958 Deferred income tax liabilities 50 19 163.16% 23 Other liabiliti
Slide 15: Sustained assets & liabilities match
Sustained assets & liabilities match…... Loans & Advances Loan Growth H1 2016 H1 2015 Deposit Mix Deposit Growth H1 2015 H1 2016 15
Slide 16: Continued market dominance through strong liquid asset base and funding mix
Continued market dominance through strong liquid asset base and funding mix… H1 2016 Liquid Assets H1 2015 N'million H1 2016 H1 2015 YoY Cash 39,830 43,843 -9% Operating accounts with CBN 93,773 43,162 117% Treasury bills 379,990 287,989 32% Assets pledged as collateral 277,862 239,078 16% Due from
Slide 17: P&L – By Geography
P&L – By Geography Gross Revenue 6 Months Ended Rest of Nigeria Europe Eliminations Consolidated Jun 2016 (N’m) Africa H1 2016 Total Revenue 195,465 15,507 4,915 -1,075 214,812 Share of profit of - - - 0 - Associates Total Expense -136,932 -9,379 -5,616 396 -151,531 Profit Before Tax 58,533 6,128 -7
Slide 18: P&L – By Sector
P&L – By Sector Gross Revenue 6 Months Ended Corporate Institutional Public Retail Consolidated H1 2016 Jun 2016 (N’m) Total Revenue 109,351 31,669 15,056 58,736 214,812 Total Expenses -77,266 -23,516 -10,695 -40,055 -151,531 Profit Before 32,085 8,154 4,362 18,681 63,281 Tax Tax -9,348 -2,376 -1,27
Slide 19: Deposits & Loans – By Sector
Deposits & Loans – By Sector H1 2016 Total Deposits - N2.68tn H1 2015 Total Deposits - N2.60tn H1 2016 Gross Loans - N2.34tn H1 2015 Gross Loans - N1.94tn 19
Slide 20: Healthy Risk Assets Portfolio
Healthy Risk Assets Portfolio… Our Risk Management Strategy NPL Coverage Ratio The Group adopts a complete and integrated approach to risk management that is driven from the Board level to the operational activities of the bank. Risk management is practiced as a collective responsibility coordin
Slide 21: Focused risk management via portfolio diversification
Focused risk management via portfolio diversification Loans by Sector – H1 2016 Loans by Sector – H1 2015 Communication Real Estate and 7.12% Real Estate and Transportation Construction Construction Transportation Communication 2.47% Flour Mills 8.98% 7.39% 8.19% 5.36% Finance and 2.95% Flour Mills
Slide 22: NPL by Sectors
NPL by Sectors H1 2016 H1 2015 o Total NPLs – N54.67bn o Total NPLs – N27.92bn o NPL Ratio – 2.3% o NPL Ratio – 1.4% o We continue to develop our Risk Management Strategy and improve on the quality of our loan portfolio. o Overall NPL ratio of 2.3% is currently one of the lowest in the industry 22
Slide 23: Strong Capitalization and Liquidity
Strong Capitalization and Liquidity Liquidity and Capital Adequacy Capital and liquidity ratios for the Bank – well above industry requirements of 30% for Liquidity and 15% Capital Adequacy Ratio for Banks with international authorization and are systematically significant. Capital Mix Capital base
Slide 24: 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 lend Consistent focus and market share, but focus on high to the corporate end with Delivering superior invest
Slide 25: Our Key Growth Target Sectors
Our Key Growth Target Sectors Driving profitability with our competitive advantages Sector Identified Growth Sectors Competitive Advantage Business line & Geography Infrastructure Strong capital and liquidity Manufacturing Strong brand Petrochemicals Strong international rating Retail Extens
Slide 26: Outlook and Prospects for FY2016
Outlook and Prospects for FY2016 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 deployme
Slide 27: Guidance for FYE 2016
Guidance for FYE 2016 FYE 2016 Guidance H1 2016 Achieved FYE 2015 Achieved Capital Adequacy 18.00% 19.00% 21.00% ROAE 18.50% 14.80% 18.40% Cost to Income 55.00% 56.70% 57.20% ROAA 2.60% 2.10% 2.70% NIM Business line & 8.00% 8.00% 8.10% Liquidity Ratio 44.00% 55.20% 51.40% Geography NPL 2.50% 2.34% 2
Slide 28: Thank you
Q&A Thank you 32