INVESTORS CALL PRESENTATION FULL YEAR 2017 AND Q RESULTS POSITIONED FOR GROWTH AND IMPROVED PROFITABILITY

Transcription

1 INVESTORS CALL PRESENTATION FULL YEAR 2017 AND Q RESULTS POSITIONED FOR GROWTH AND IMPROVED PROFITABILITY

2 This presentation contains or incorporates by reference forward-looking statements regarding the belief or current expectations of Diamond Bank, the Directors and other members of its senior management about the Group s businesses and the transactions described in this presentation. Generally, words such as could, will, expect, intend, anticipate, believe, plan, seek or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and/or its Group and are difficult to predict, that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements. Such risks and uncertainties include, but are not limited to, regulatory developments, competitive conditions, technological developments and general economic conditions. The Bank assumes no responsibility to update any of the forward looking statements contained in this presentation. Any forward-looking statement contained in this presentation based on past or current trends and/or activities of Diamond Bank should not be taken as a representation that such trends or activities will continue in the future. No statement in this presentation is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company. Each forward-looking statement speaks only as of the date of the particular statement. Diamond Bank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Diamond Bank s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 2

3 OVERVIEW STRATEGY & BUSINESS UPDATE FY 2017 RESULTS & ANALYSIS Q RESULTS & ANALYSIS UZOMA DOZIE CEO UZOMA DOZIE CEO CHIUGO NDUBISI CFO CHIUGO NDUBISI CFO 2018 OUTLOOK & CONCLUSION Q&A UZOMA DOZIE CEO 3

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5 BUSINESS SNAPSHOT Key strengths 1. Digitally-led proposition is fully aligned to Nigerian lifestyles and preferences. 2. Leadership and market position in promoting financial inclusion across Nigeria. 3. High quality and expanding partnership network broadening customer access to full suite of financial services. 4. Ethos of continual innovation and technology development. 5. Clear strategy and approach for capturing market opportunity. Countries where we operate (number of branches) Total Assets Total Equity Nigeria (277), UK (1) N1.7 trillion N213.6 billion Key partnerships MTN Diamond Y ello IFC MSME Banking WWB BETA Banking Interswitch - Payments USAID Mediloan Visa Debit & Credit Cards Microsoft Cloud Computing Gates Foundation Financial inclusion ATMs/POS 1,170/14,800 Ratings S&P: B-; Fitch: BB+; GCR: BBB+ Head Count 3,280 Share Holding (%) 17.75% Market Capitalization* N34.4bn 61.95% 9.25% 4.95% 6.10% Listing Nigerian Stock Exchange (2005) Ticker (Bloomberg) DIAMONDBNK:NL London Stock Exchange (2008) Ticker (Bloomberg) DBPA:LI Carlyle Kunoch Mr and Mrs. Dozie Diamond Partners Free Float Auditors KPMG Professional Services * Bank, As at December 31,

6 MACRO ECONOMIC ENVIRONMENT FOREIGN RESERVES RISE AS OIL PRODUCTION INCREASES AND GLOBAL OIL PRICES RECOVER INSECURITY PREVAILS IN SECTIONS OF THE COUNTRY WITH LOOMING PROSPECTS OF FOOD SHORTAGES TAX REVENUE ON THE INCREASE AS TAX BASE WIDENS AND COLLECTION IMPROVES DELAYED PASSAGE OF 2018 BUDGET BY THE LEGISLATIVE ARM SLOWS DOWN GOVERNMENT BUSINESS GDP OUTLOOK REMAINS POSITIVE AS NON OIL REVENUE STREAMS ARE DIVERSIFIED UNEMPLOYMENT RATE INCREASED TO 18.8% IN 2017 EVEN AS LABOUR FORCE EXPANDED TO 85.1 MILLION MULTIPLE EUROBOND ISSUES DURING 2017 OVER SUBSCRIBED IN EXCESS OF 400% UPCOMING ELECTIONS AND ELECTIONEERING EXPECTED TO CAUSE SLOWDOWN IN ACTIVITIES 6

7 FINANCIAL YEAR 2017: KEY DEVELOPMENTS SALE OF WEST AFRICA BUSINESS OPERATIONS FOCUSING RESOURCES ON NIGERIA S SIGNIFICANT MARKET OPPORTUNITY GROSS INCOME INCREASED YEAR ON YEAR ON THE BACK OF IMPROVED INTEREST INCOME ACTION TO DRIVE FURTHER IMPROVEMENTS IN INTEREST AND NON INTEREST INCOME TO CONTINUE OPERATING EXPENSE INCREASED YEAR ON YEAR INVESTMENT IN TECHNOLOGY AND IMPROVED OPERATIONAL EFFICIENCY TO DELIVER LONG TERM COST SAVINGS PROFIT BEFORE TAX DECLINED BECAUSE OF HIGHER INTEREST AND OPERATING EXPENSES & LOWER FEES IMPROVED PROFITABILITY IS A KEY FOCUS IN

8 FINANCIAL YEAR 2017: KEY DEVELOPMENTS RETAIL AND BUSINESS BANKING DEPOSITS INCREASE YEAR ON YEAR FROM 2016 DRIVE TO ATTRACT LOW COST DEPOSITS AND REDUCE COST OF FUNDS IS ONGOING CORPORATE BANKING LOANS RISES TO N680BN. SLIGHT CHANGES IN SEGMENT SHARE RECORDED. NAIRA DEVALUATION EFFECTS STILL IN PLAY, BUT OPPORTUNITIES EMERGE IN NON OIL AND GAS RELATIONSHIPS CORPORATE DEPOSITS DECLINE TO N231BN BY END OF DEC 2017 VERSUS N257BN END OF DEC 2016 IMPROVED FX AVAILABILITY LEADS TO GREATER DEPOSIT UTILIZATION 8

9 STRATEGY AND BUSINESS UPDATE UZOMA DOZIE, CEO

10 1. TECHNOLOGY-LED RETAIL BANKING 2. IMPROVED UNDERWRITING & RISK MANAGEMENT 3. EFFICIENT USE OF CAPITAL 4. PROFITABLE OPERATIONS AFRICA S LARGEST ECONOMY AND POPULATION / MOBILE / INNOVATION / ENTREPRENEURSHIP 10

11 RETAIL BANKING: DELIVERING THE STRATEGY PERFORMANCE SNAPSHOT LOANS (GROSS) N64bn N61bn N60bn N61bn N52bn 27% 28% 28% 28% 30% CHANNEL TRANSACTION SPLIT 15% 14% 12% 11% 11% 28% 26% 26% 26% 24% 41% 41% 41% 42% 37% 8% 8% 8% 7% 5% 5% 3% 3% 7% 3% 19% 18% 20% 20% 23% Dec. 16 Mar. 17 Jun. 17 Sep. 17 Dec. 17 Personal Loan Auto Loan & Lease Mortgages MSME Credit Card 52% 55% 58% 59% 62% 6% 5% 4% 4% 3% Q Q Q Q Q Diamond Online Mobile Banking ATM Branch DEPOSITS N727bn N729bn N709bn N680bn N758bn 9% 9% 4% 10% 15% LOANS The economic recession and selective loan underwriting caused decline in portfolio size but yields remain attractive. 91% 91% 96% 90% 85% DEPOSITS Deposits increased year on year, and quarter on quarter due to existing customers using our innovative and bespoke offerings. Low cost base remains stable. Dec Mar Jun Sep Dec Low Cost Deposits Fixed Deposits CHANNELS SPLIT Share of mobile banking transactions continues to grow. The advent of the USSD banking platform has increased customer migration to the mobile banking platform providing greater convenience and efficiency. 11

12 FASTEST GROWING RETAIL BANK IN NIGERIA FINANCIAL INCLUSION CUSTOMERS EMERGING BUSINESS CUSTOMERS OTHER RETAIL CUSTOMERS 9,928, ,425 6,532,749 8,601, ,000 6,303,532 Dec Dec Dec Dec Dec Dec AGENT NETWORK 36,106 59,251 Dec Dec NO. OF DEBIT & CREDIT CARDS IN ISSUE 6,642,584 8,777,745 Dec Dec ATM STATISTCS FUTURE FOCUS Number of Active ATMs 1,170 ATM transaction count 80 m ATM income earned N1,392m Expand financial inclusion services to the unbanked population. Increase channel footprint. Improve fees and income by encouraging borrowing through our digital platforms. Leverage on customers value chain to further penetrate the retail market. 12

13 MOBILE APPS PHONE AIRTIME PURCHASE 21,390,813 14,366,457 2,186,349 4,747,544 1,762,707 3,875,980 7,412,882 6,059,291 10,226,049 8,402,483 3,864,021 3,114,949 8,570,789 6,875,683 11,623,819 17,407,615 Mar Jun Sep Dec Mar Jun Sep Dec Volume (N'000) Count MOBILE APPS BILLS PAYMENT 8,637,474 5,119,832 3,095,104 2,464,265 2,632,359 1,994,770 1,616,708 1,165,653 1,171, , , , , , , ,567 Mar Jun Sep Dec Mar Jun Sep Dec Mobile Banking Our flagship app, Diamond Mobile continues to deliver convenience in banking to our customers. At the end of Q1 2018, we had over 2.6 million customers on the platform. Volume (N'000) Count 13

14 BUSINESS BANKING PERFORMANCE SNAPSHOT LOAN (GROSS) N116bn N114bn N109bn N105bn N82bn NUMBER OF BUSINESS BANKING CUSTOMERS 30,687 16,332 Dec Mar Jun Sep Dec Dec Dec DEPOSITS N151bn N144bn N138bn N128bn N176bn Dec Mar Jun Sep Dec LOANS DEPOSITS CUSTOMERS Loan volume decreased quarter on quarter, and year on year, reflecting stricter loan underwriting and monitoring framework. Deposits increased as a result of increase in business by existing customers using our innovative and bespoke offerings. Restructuring of operating segments due to the retail strategy, has led to business banking customers migrating to other segments. 14

15 CORPORATE BANKING PERFORMANCE SNAPSHOT LOANS (GROSS) N676bn N686bn N669bn N655bn N680bn CUSTOMER COLLECTIONS (N m) 410,527 62% 62% 63% 64% 64% 400,845 15% 15% 15% 15% 14% 23% 23% 22% 21% 22% Dec Mar Jun Sep Dec Dec Dec DEPOSITS Institutional banking Infrastructure & Transport Energy Business N257bn N271bn N232bn N223bn N231bn 27% 25% 24% 23% 25% 22% 26% 18% 25% 30% 43% 50% 54% 51% 57% Dec Mar Jun Sep Dec Institutional banking Infrastructure & Transport Energy Business LOANS DEPOSITS COLLECTIONS Corporate banking loans increased by 0.6% year on year due to emerging opportunities in relationships with blue chip companies and devaluation of the naira. Deposits decreased through the year as the high yield on government securities posed a challenge. The slowdown in economic activities affected the returns of our general commerce customers. 15

16 FY 2017 RESULTS & ANALYSIS CHIUGO NDUBISI, CFO

17 2017 FULL YEAR FINANCIAL SUMMARY GROSS EARNINGS INCREASED DRIVEN BY GROWTH IN INTEREST AND NON INTEREST INCOME PROFIT IS DOWN DUE TO INCREASE IN INTEREST COST & OPEX INVESTMENT IN TECHNOLOGY TO DELIVER FUTURE COST SAVINGS INTEREST AND OPERATING EXPENSES INCREASE GREATER COST DISCIPLNE UNDERWAY NPL RATIO IS UP BUT STRENGHTENED RISK MANAGEMENT IS DELIVERING VALUE BALANCE SHEET SIZE INCREASED YEAR ON YEAR ON BACK OF DEPOSIT GROWTH 17

18 FINANCIAL HIGHLIGHTS FY 2017 INCOME STATEMENT FY 2017 N bn FY 2016 N bn CHANGE Gross Revenue Net Interest Income Non-Interest Revenue (Net) Profit before Tax Profit after Tax % 3.4% 1.3% (33.3%) (55.0%) BALANCE SHEET FY 2017 N bn FY 2016 N bn CHANGE Total Assets Gross Loans & Advances Customers Deposits Total Shareholders Fund 1, , , , % (4.9%) 2.6% 1.1% KEY RATIOS FY 2017 FY 2016 FY 2015 Net Interest Margin Cost-to-Income Ratio Capital Adequacy Ratio (CAR) NPL Ratio ROE Cost of Risk EPS Bank Figures Only See Details in Appendix 6.3% 60.0% 16.7% 14.7% 0.4% 6.8% N % 58.0% 15.0% 10.5% 0.9% 7.4% N % 60.1% 16.4% 7.2% 1.8% 7.4% N

19 BANK LENDING GROSS LOAN BREAKDOWN BY ECONOMIC SECTORS DEC (DEC. 2016) GROSS LOAN BREAKDOWN BY BUSINESS SEGMENTS DEC (DEC. 2016) Oil & Gas 52% (40%) General Comm 16% (16%) 84% Retail 6% (7%) 17% 11% 4% 2% Manufacturing 11% (11%) Others 2% (8%) Real Est & Const 4% (7%) 10% 6% Business Banking 10% (13%) Corporate Banking 84% (80%) 10% Power & Energy 10% (7%) 1% Government 1% (1%) 52% 1% 2% 1% Transportation 1% (1%) Agriculture 2% (2%) GROSS RISK ASSETS (N BN) % 1% Education 1% (1%) Information & Communication 1% (4%) Finance & insurance 1% (2%) Dec Mar Jun Sep Dec

20 BANK NPL ANALYSIS NPL BY SECTOR (DEC.2017) NON PERFORMING LOANS & PROVISIONS (N BN) General Commerce 4% 1% Oil & Gas 35% 35% 4% 2% 7% 4% 9% 38% Real Estate 1% Power & Energy 38% Manufacturing 9% Information & Communication 4% Transportation & Storage 7% Others 2% Dec Mar Jun Sep Dec Non Performing Loans Provisions NPL BY SECTOR (DEC. 2016) 40% General Commerce 12% Oil & Gas 40% 4% 1% Real Estate & Construction 4% 12% 1% 8% 23% 11% Finance & Insurance 1% Manufacturing 11% Information & Communication 23% Transportation & Storage 8% Others 1% 20

21 OIL & GAS NPL / LOAN ANALYSIS NPL BY SECTOR - DEC.2017 GROSS LOAN BY SECTOR (DEC.2017) 100% 37% 45% Upstream 37% Mid-stream 45% 18% Upstream Midstream Downstream Downstream 18% NPL BY SECTOR - DEC.2016 GROSS LOAN BY SECTOR (DEC.2016) 96% 36% 43% Upstream 36% Mid-stream 43% 4% Upstream Midstream Downstream 22% Downstream 22% 21

22 Q RESULTS & ANALYSIS CHIUGO NDUBISI, CFO

23 Q FINANCIAL SUMMARY IMPAIRMENT CHARGE DOWN 18% YEAR ON YEAR HIGHLIGHTING IMPROVED LOAN UNDERWRITING OPERATING EXPENSE DECREASE YEAR ON YEAR COST CUTTING INITIATIVES SLOWLY TAKE EFFECT PROFIT DOWN YEAR ON YEAR DUE TO INCREASED INTEREST EXPENSE THIS WILL ABATE SOON TOTAL ASSETS DECREASED AS WE CONTINUE TO RESTRUCTURE THE BALANCE SHEET FOR OPTIMUM EFFICIENCY 23

24 FINANCIAL HIGHLIGHTS Q INCOME STATEMENT Q N bn Q N bn CHANGE Gross Revenue Net Interest Income Non-Interest Revenue (Net) Profit before Tax Profit after Tax (1.8%) (16.5%) (11.1%) (77.6%) (78.6%) BALANCE SHEET Total Assets Gross Loans & Advances Customers Deposits Total Shareholders Fund Q N bn FY 2017 N bn CHANGE 1, , , , (2.4%) 1.4% (4.1%) (1.1%) KEY RATIOS Q Q FY 2017 Net Interest Margin Cost-to-Income Ratio Capital Adequacy Ratio (CAR) NPL Ratio ROE (Annualised) Cost of Risk EPS (Annualised) 6.1% 70.2% 16.5% 15.7% 1.7% 4.1% N0.16k 7.0% 59.6% 15.1% 11.6% 7.6% 4.7% N0.18k 6.3% 60.0% 16.7% 14.7% 0.4% 6.8% N0.04k Bank Figures Only. See Details in Appendix 24

25 BANK LENDING GROSS LOAN BREAKDOWN BY ECONOMIC SECTORS MAR (DEC. 2017) GROSS LOAN BREAKDOWN BY BUSINESS SEGMENTS MAR (DEC. 2017) Oil & Gas 53% (52%) General Comm 16% (17%) 81% Retail 7% (6%) 16% Manufacturing 11% (11%) Business Banking 12% (10%) 11% 0% Others 0% (2%) 12% 7% 4% Real Est & Const 4% (10%) Corporate Banking 81% (84%) 10% Power & Energy 10% (10%) 53% 0% 1% 2% 0% 2% Government 0% (1%) Transportation 1% (2%) Agriculture 2% (1%) CUSTOMER DEPOSIT BY BUSINESS SEGMENT MAR (DEC. 2017) Retail 70% (65%) 1% Education 0% (1%) Information & Communication 2% (1%) Finance & insurance 1% (1%) 70% 13% 17% Business Banking 13% (15%) Corporate Banking 17% (20%) Education and Government loans are individually less than 1% of the total loan book. 25

26 BANK NPL ANALYSIS NPL BY SECTOR (MAR.2018) NON PERFORMING LOANS & PROVISIONS (N BN) General Commerce 4% 32% 1%1% 17% 3% Oil & Gas 32% Real Estate & Construction 1% Agriculture 1% Manufacturing 17% 4% 7% 35% Information & Communication 3% Power & Energy 35% Dec Mar Jun Sep Dec Mar Transportation & Storage 7% Non Performing Loans Provisions NPL BY SECTOR (DEC. 2017) 35% 1% General Commerce 4% Oil & Gas 35% Real Estate 1% 38% Power & Energy 38% Manufacturing 9% 4% 2% 7% 4% 9% Information & Communication 4% Transporttation & Storage 7% Others 2% 26

27 2018 OUTLOOK & CONCLUSION UZOMA DOZIE, CEO

28 GUIDANCE AND OUTLOOK FOR 2018 GUIDANCE FY 2017 GUIDANCE FY 2017 ACTUAL FY 2018 GUIDANCE ROE 3.0% 0.4% ~ 3.0% Net Interest Margin ~ 6.0% 6.3% ~ 6.0% Cost to Income Ratio ~ 65.0% 60.0% ~ 62.5% NPL Ratio ~ 10.0% 14.7% ~ 15.0% Cost of Risk 6.0% 6.8% ~ 5.0% Risk Asset Growth / Decline ~ (5.0%) (4.9%) ~ 10.0% Deposit Growth ~ (10.0%) 2.6% ~ 5.0% Profit Before Tax ~ N7.5 Billion N2.2 Billion ~ N8.0 Billion Total Assets ~ N2.0 Trillion N1.7 Trillion ~ N1.8 Trillion 28

29 REITERATION OF TECHNOLOGY-LED RETAIL STRATEGY IMPROVED BALANCE SHEET STRUCTURE LEADING TO EFFICIENCY MACRO CONDITIONS IMPROVING AND PROMISES GREATER PRODUCTIVITY ACTIONS TAKEN TO POSITION THE BANK FOR GROWTH AND IMPROVED PROFITABILITY 29

30 Q&A

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32 BANK COMPREHENSIVE INCOME STATEMENT (FY 2017) FY 2017 ACTUAL N BILLION FY 2016 ACTUAL N BILLION Y-o-Y % Δ GROSS EARNINGS INTEREST INCOME INTEREST EXPENSE (47.3) (34.5) (37.1) NET INTEREST INCOME IMPAIRMENT CHARGE (56.8) (57.0) 0.4 NET INTEREST INCOME (AFTER IMPAIRMENT CHARGE) OTHER INCOME (NET) OPERATING INCOME OPERATING EXPENSES (88.4) (83.2) 6.3 PROFIT BEFORE TAX (31.3) PROFIT AFTER TAX (55.0) OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME (33.3) 32

33 BANK COMPREHENSIVE INCOME STATEMENT (Q1 2018) Q ACTUAL N BILLION Q ACTUAL N BILLION Y-o-Y % Δ GROSS EARNINGS (1.8) INTEREST INCOME (1.0) INTEREST EXPENSE (14.8) (10.6) 39.6 NET INTEREST INCOME (16.5) IMPAIRMENT CHARGE (8.2) (10.0) (18.0) NET INTEREST INCOME (AFTER IMPAIRMENT CHARGE) (15.6) OTHER INCOME (NET) (11.1) OPERATING INCOME (14.1) OPERATING EXPENSES (21.9) (22.0) (0.5) PROFIT BEFORE TAX (75.5) PROFIT AFTER TAX (78.6) OTHER COMPREHENSIVE INCOME (0.7) TOTAL COMPREHENSIVE INCOME (95.2) 33

34 BANK STATEMENT OF FINANCIAL POSITION Q ACTUAL N BILLION Q ACTUAL N BILLION YoY % Δ FY 2017 ACTUAL N BILLION QoQ % Δ CASH & BALANCES WITH CENTRAL BANKS (4.0) (10.1) LOANS & ADVANCES TO BANKS (24.9) LOANS & ADVANCES TO CUSTOMERS (5.5) INVESTMENTS PLEDGED ASSETS (30.0) OTHER ASSETS FIXED ASSETS & INTANGIBLES DEFERRED TAX ASSET TOTAL ASSETS 1, ,662.0 (0.5) DEPOSITS FROM BANKS DEPOSITS FROM CUSTOMERS 1, ,144.1 (2.4) DERIVATIVE LIABILITY OTHER LIABILITIES BORROWINGS (6.9) LONG TERM DEBT EQUITY (1.9) TOTAL EQUITY & LIABILITIES 1, ,662.0 (0.5) 77.6 (16.1) (1.0) (1.7) ,695.6 (2.4) ,164.7 (4.1) (1.8) (1.1) 1,695.6 (2.4) 34

35 Q FY 2017 Q FY M 2016 Q FY 2015 FY 2014 NET INTEREST MARGIN (NIM) 6.0% 6.3% 7.0% 6.3% 6.1% 6.0% 6.4% 6.9% COST OF RISK 4.0% 6.8% 4.7% 7.4% 6.5% 4.9% 7.4% 3.8% COST OF FUNDS 4.2% 3.3% 3.1% 2.6% 2.2% 2.6% 3.0% 3.5% COST INCOME RATIO 70.2% 60.0% 59.6% 58.0% 60.0% 59.1% 60.1% 64.2% EPS (ANNUALISED) 16K 4K 18K 9K 7K 22K 17K 144K NET ASSETS PER SHARE (N) ROE (ANNUALISED) 1.8% 0.4% 7.9% 0.9% 1.0% 9.8% 1.8% 12.8% GROSS RISK ASSETS (N BILLION) NPL (N BILLION) PROVISIONS (N BILLION) NPL RATIO 15.7% 14.7% 11.6% 6.9% 11.6% 7.5% 7.2% 4.4% NPL COVERAGE RATIO 54.6% 49.1% 70.5% 65.6% 69.2% 113.2% 107.4% 105.7% NPL COVERAGE RATIO (REG. RISK RSRV INCL) 78.5% 75.0% 99.8% 97.9% 96.4% 167.0% 166.0% 105.7% CAR 16.4% 16.7% 15.1% 15.0% 15.6% 16.2% 16.3% 18.4% LIQUIDITY RATIO 39.0% 43.0% 41.7% 42.3% 39.4% 52.4% 53.8% 41.7% 35