Investors Call Presentation

Transcription

1 Investors Call Presentation Q Results 11 NOVEMBER 2014

2 Forward looking statements 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 Outline Executive Summary (by Uzoma Dozie, GMD Designate) Strategy & Business Update (by Uzoma Dozie, GMD Designate) 9-Months 2014 Financial Performance (by Abdulrahman Yinusa, CFO) Concluding Remarks (by Uzoma Dozie, GMD Designate) 3

4 Overview Global Economy Despite positive signs of recovery in the U.S. economy, the global economic output remained weak following significant slowdown in major Asian economies - China and Japan. The Eurozone continued to experience economic challenges despite positive outlook in U.K. This is due to the huge debt burdens across most Euro countries and the recent dip in the German economy. Consequently, the QE program that was scheduled for liquidation in Q has now been extended further, likely for another year to Q So Emerging markets will continue to benefit from FDI flows. Nigerian Economy Our Strategy Outlook The Nigerian economy recorded further improvement following the growth in GDP to 6.5% in Q from 6.2% recorded in Q in spite of armed insurgency in some areas of the North. Although the decline in the price of crude oil poses a threat to the revenue accretion to the reserve, the Central Bank of Nigeria has put some measures in place to mitigate this threat. The Bank s Q results remained positive in the face of regulatory restrictions which has continued to constrain our earnings capability. We continue to offer unequalled customer experience across all segments by retaining our competitive edge in the Retail/SME space whilst remaining relevant in the business and corporate banking segments. We expect the tough operating environment for banks to continue, given continued regulatory headwinds, upcoming general elections and oil price volatility and its impact on exchange rates. However, we expect performance to remain strong given retail growth opportunities that exists within the West African region. 4

5 9-Months 2014 Group Performance Summary & Forecast P & L (N Bn) 9M M 2013 % Growth Deposits (N Bn) Operating Profit and PBT (N Bn) Gross Earnings Net Operating Income Profit Before Tax (8) Profit After Tax est Operating Profit PBT Balance Sheet 9M M 2013 % Growth ROAE Total Assets 1,682 1, Loans to customers est. > 20% * 22.7% 23.0% Deposits 1,255 1, % 5 * Prior to impact of rights issue

6 Outline Executive Summary (by Uzoma Dozie, GMD Designate) Strategy & Business Update (by Uzoma Dozie, GMD Designate) 9-Months 2014 Financial Performance (by Abdulrahman Yinusa, CFO) Concluding Remarks (by Uzoma Dozie, GMD Designate) 6

7 Retail Banking Retail Banking Loan Portfolio N70bn N72bn N79bn N94bn N93bn 16% 22% 25% 27% 27% More Efficient Balance Sheet Retail Banking Growth Strategy Continue to drive low-cost deposits by deploying cost effective delivery channels. 53% 11% 10% 4% 9% 8% 8% 5% 5% 6% 8% 16% 12% 11% 10% 11% 7 51% 50% 49% 46% Dec. 12 Sep. 13 Dec. 13 Jun. 14 Sep. 14 Personal Loan Auto Loan & Lease Mortgages MSME Credit Card N305bn Retail Banking Deposits N343bn 14% 14% 15% 19% 18% 86% 86% 85% 81% 82% Dec Sep Dec Jun Sep Low Cost Deposits N393bn N460bn Fixed Deposits N466bn Strategic Partnerships New Segments MSME Initiatives Continue to expand reach to the un(der)banked population through the BETA proposition in partnership with Women s World Banking (WWB) Continue to expand distribution and further financial inclusion through the Diamond Y ello Account in partnership with MTN. Continue to refine and deepen propositions to the massmarket - youth & school banking and affluent segments. Partnership with Medical Credit Fund (SafeCare) to increase lending to healthcare sector. Partnerships with asset lease companies across Auto, Telco, FMCG sectors to drive quality retail risk assets. Launched the Diamond Y ello account to provide cost efficient banking and drive financial inclusion. Piloted Agency Banking initiative to drive low cost deposits and increase retail banking footprint. Unveiled Medi Loan Product to boost low-cost access to finance for healthcare sector. Increase access to low cost finance via CBN led MSMEDF program Improve retail loan book quality via risk-share partnership with African Guarantee Fund

8 Our Retail Footprint: Diverse Channel Options Number of Direct Sales Agents No. of Business Locations 68% 1,567 1, % ,053 1,092 Dec Dec Dec Sep Number of Customer Accounts (million) Dec Dec Dec Sep Number of ATMs 180% % Dec Dec Dec Sep Dec Dec Dec Sep

9 Business Banking Loan Portfolio (N Bn) Business Banking Growth Strategy N213bn N254bn N222bn N240bn 4% 4% 4% 3% SMEs Continue to provide flexible access to credits provision of on-lending facilities 96% 96% 96% 97% Dec Sep Dec Sep Middle Market Others Deposits (N Bn) Strategic Partnerships International Trade Continue to partner with Development Financial Institutions to support SMEs and build capacity to increase access to agric. finance Continue to leverage on the relationship with our UK subsidiary (Diamond Bank UK Plc) in providing trade finance support N429bn N506bn N542bn N546bn 35% 34% 34% 27% 65% 66% 66% 73% Dec Sep Dec Sep Middle Market Others

10 Corporate Banking Loan Portfolio Corporate Banking Growth Strategy N328bn N388bn N418bn N447bn N421bn 56% 60% 61% 64% 60% More Efficient Balance Sheet Continue to leverage on e-payment and cash management services. 16% 18% 18% 16% 22% 28% 22% 21% 20% 18% Dec Sep Dec Jun Sep Institutional banking Infrastructure & Transport Energy Business Strategic Partnerships Continue to work with DFIs and multilateral agencies to provide funding for major deals such as long term financing. Deposits N176bn N190bn N242bn N247bn N199bn 31% 22% 42% 27% 32% 29% 30% 33% 27% 41% 47% 31% 38% 38% 32% Dec Sep Dec Jun Sep Institutional banking Infrastructure & Transport Energy Business 10

11 Outline Executive Summary (by Uzoma Dozie, GMD Designate) Strategy & Business Update (by Uzoma Dozie, GMD Designate) Q Financial Performance (by Abdulrahman Yinusa, CFO) Concluding Remarks (by Uzoma Dozie, GMD Designate) 11

12 Financial Highlights Strong Balance Sheet Growth (Sep to Sep. 2014) Assets +22% Loans (net) +5% Deposits +18% Revenue Mix Operating income up 13% Strong net interest margin of 7.2% 15% growth in gross earnings to N152 billion (Sep. 2013: N132 billion) Low cost of funds 3.8% driven by the continuous growth in retail deposits Efficiency and Profitability ROAE of 18.4% and ROAA of 1.7% Earnings per share (EPS) of 139k Profit after tax (PAT) up 0.5% to N20.2 billion Capital and Liquidity Capital ratios 16.9% risk adjusted capital ratio as against 15% statutory limit Liquidity ratios of 40.4% against 30% statutory limit Capital adequacy ratio (CAR) of above 20% expected by Dec Assets Quality NPL 4.6% in September 2014 (within 5% statutory limit) Coverage ratio of over 100% (104.5% in September 2014) 12

13 Group Statement of Comprehensive Income (9-M 2014) 9-M 2014 Actual N' billion 9-M 2013 Actual N' billion Gross Earnings Interest Income Interest Expense (37.5) (28.0) 33.9 Net Interest Income Impairment Charge (14.7) (16.7) (12.0) Net interest income (after impairment charge) Other Income (net) Operating Income Operating Expenses (73.4) (60.5) 21.3 Profit Before Tax (7.4) Profit After Tax YoY % Δ Comments Gross earnings up 15% or N19.4 billion to N151.6 billion (YoY) on the back of 12% increase in interest income and 23% growth in fees and commission income. Net interest income up 5% YoY to N83 billion driven by increase in risk assets. Total operating income rose by 13% to N97 billion in Q from N86 billion in Q on the back of improved earnings. Operating expense up 21% YoY to N73bn driven by increase in business activities, branch expansion, increase in staff strength, staff promotions and retirements. PBT dropped 7% YoY to N23.7 billion in Q from N25.6bn in Q PAT increased marginally by 1% YoY in spite of regulatory headwinds. Other comprehensive income (0.7) 0.1 (800.0) Total comprehensive income (3.5) 13

14 Group Profit Drivers Strong Revenue Generation Interest Income Loans to banks 5% (7%) Net Fee and Commission Income Sep (Sep. 2013) Loans and advances to customers Sep (Sep. 2013) 71% (72%) Service fees & charges 34% (37%) Others 40% (35%) Investment securities 24% (21%) Letter of credit commission 12% (10%) Commission on turnover 14% (18%) Revenue Mix (Gross) (YoY : +15%) N132.4bn N151.6bn Comments Gross earnings up 15% to N151.6 billion YoY. Interest income accounted for 79.2% of gross earnings (80.9% in 2013) while 20.8% was derived from non-interest income (19.1% in 2013). Revenue growth was driven by sustained growth in risk assets volume and fee generating transactions. Sep Sep Int Income Non int. Income 14 However, this was partially offset by the impact of margin compression.

15 Group Profit Drivers Moderate Operating Expenses Expense Summary (YoY: +21%) Cost to Income Ratio (excludes provisions) N Billion % 65.6% Sep Sep Operating expenses Employee benefit expenses Sep Sep Impairment Charge (YoY: -12%) N Billion 16.7 Comments The Group s staff strength increased to 5,078 in Sep from 4,158 in Sep Operating expenses increased 21.3% year-on-year to N73.4 billion, due mainly to investment in new branches and increase in staff strength Impairments dropped by 12.0% N14.7bn in Q from N16.7 billion in Q to Sep Sep

16 Group Statement of Financial Position 9-M 2014 Actual N' billion FY 2013 Actual N' billion % Δ 9-M 2013 Actual N billion YoY % Δ Comments Cash & Balances with Central Banks Loans & Advances to Banks Loans & Advances to Customers Investments Pledged Assets Other Assets Fixed Assets & Intangibles Deferred Tax Asset Total Assets 1, , , Net loan book of N719 billion, up 5.4% from September 2013 (N682 billion) primarily reflecting growth in volume of business. Deposit base continues to grow above the N1 trillion mark closing at N1.255 trillion, up 18.4% from September 2013 (N1.062 trillion). Total assets up 22.1% to N1.7 trillion from N1.4 trillion as at September Introduction of the new CRR Policy led to increase in cash and balances sterilized at the CBN. Deposits from Banks Deposits from Customers 1, , , Derivative Liability Other Liabilities Borrowings Long Term debt Equity Total Equity & Liabilities 1, , ,

17 Group Risk Management Metrics 9-M 2014 N billion H N billion Q N billion FY 2013 N billion 9-M 2013 N billion H N billion Q N billion FY 2012 N billion Gross Risk Assets NPL Provisions NPL Ratio 4.6% 4.6% 4.4% 3.5% 4.3% 4.1% 4.6% 4.7% NPL Coverage Ratio 104.5% 102.7% 104.0% 116.1% 108.4% 103.1% 112.1% 88.9% Comments NPL ratio remained unchanged at 4.6% in September 2014 Coverage Ratio increased to 104.5% in Q from 102.7% in H

18 Group Key Performance Metrics 9-M 2014 H Q FY M 2013 H Q FY 2012 Net Interest Margin (NIM) Cost of Risk Cost of Funds Loan-to-Deposit Ratio Capital Adequacy Ratio (CAR) Liquidity Ratio Cost to Income Ratio Earnings per share (annualized) Net assets per share (N) ROE (annualized) 7.2% 7.1% 7.4% 8.1% 8.6% 8.8% 8.8% 9.9% 2.7% 2.4% 2.7% 3.5% 3.4% 3.1% 2.1% 3.3% 3.8% 3.4% 3.3% 3.4% 3.4% 3.5% 3.6% 2.9% 60.1% 60.6% 61.0% 59.6% 67.4% 64.0% 63.2% 67.1% 16.9% 17.0% 17.4% 17.3% 17.1% 16.5% 16.3% 17.3% 40.4% 34.1% 37.3% 41.8% 36.7% 48.2% 46.9% 42.3% 65.6% 65.8% 62.2% 60.3% 58.9% 59.1% 60.7% 60.6% 186k 190k 232k 197K 185k 175k 174k 153k % 19.2% 23.5% 23.0% 22.4% 22.1% 22.5% 22.7% Comments The Group Net Interest Margin (NIM) increased to 7.2% in September 2014 from 7.1% in H due to effective management of our assets and liquidity mix. 18

19 Group Balance Sheet Structure Total Assets (N Bn) Sep (Dec. 2013) Balance Sheet Trend (N Bn) 1,682 1, Total assets Liquid Assets Risk Assets Investments Pledged Assets Fixed Assets Other Assets 1,744 1,519 1,584 1,682 1,178 1,206 1,235 1,308 1, Dec Dec Mar Jun Sep Total Assets Deposits Loans & Advances Total Liabilities (N Bn) Sep (Dec. 2013) 1,682 1, ,255 1,206 Comments Total assets stood at N1.7 trillion as at Q3 2014, up N305 billion or 22%, from N1.4 trillion at the end of Sep Growth in balance sheet was driven by growth in deposits to N1.3 trillion as at Q3 2014, from N1.1 trillion in Sep Total Liabilities Dep. From Banks Deposits from Customers Borrowings Other Liabilities Tier 2 Capital Equity 19

20 Group Funding Mix & Deposits Composition Funding Structure Deposit Mix by Type 22% 24% 26% 32% 76% 77% 79% 75% 21% 17% 17% 57% 59% 57% 19% 49% 11% 9% 9% 9% Sep Equity Tier 2 Capital Borrowings Other Liabilities Deposits Dep. From Banks Sep Demand Savings Time Deposit Mix by Business Segment Sustaining Stable Low-Cost Funding Base Sep % Dec % 22% 24% 26% 32% 44% 38% 43% 31% 78% 76% 74% 68% 15% 24% Sep.2014 Retail Business Corporate Treasury Demand & Savings Deposits Time Deposits 20

21 Group Loan Growth Gross Risk Assets (N Bn) Gross Loans Non Performing Loans & Provisions (N Bn) Dec Sep Dec Mar Jun Sep Loan to Deposit Ratio 67.1% Dec Dec Mar Jun Sep Comments Non Performing Loans Provisions Loans and advances (gross) went up by 6% to N755 billion year-on-year (Sep. 2013: N715 billion) and up 5% year-to-date (Dec 2013: N719 billion). The growth in loan portfolio is driven by our growing customer relationships especially in the business and corporate banking segments. 59.6% 61.0% 60.6% 60.1% Loan to deposit ratio stood at 60.1% as at 30th Sep from 59.6% in Dec Dec Dec Mar Jun Sep

22 Group Lending Gross Loan Breakdown by Economic Sectors (Dec 2013) Sep 2014 Gross Loan Breakdown by Business Segments Dec (N719bn) N755bn Treasury 0% Oil & Gas (26%) 27% Retail 11% 9% 7% 13% General Comm (18%) 21% Manufacturing (8%) 9% Others (10%) 7% Business 31% 9% Real Est & Const (9%) 13% Corporate 58% 21% 27% 4% 1% 1% 1% 6% 1% Power & Energy (7%) 9% Government (4%) 4% Transportation (1%) 1% Agriculture (2%) 1% Education (1%) 1% Information & Communication (1%) 6% Sep Treasury 0% Business 31% Retail 12% Finance & insurance (4%) 1% Corporate 57% 22

23 Group NPL Analysis NPL by Sector (Dec. 2009) NPL by Sector (Sep 2014) NPL by Classification General Commerce 24% Oil & Gas 4% N28.7bn 25% N25.4bn N33.0bn 16% 12% N36.1bn 28% N34.6bn 12% N34.6Bn Construction 5% Real Estate 43% Agriculture, Forestry & Fishing 1% Power & Energy 11% 52% 23% 51% 53% 42% 33% 35% 30% 37% 51% Information & Communication 3% Others 9% Dec Dec Mar Jun Sep Substandard Doubtful Lost NPL by Sector (Dec. 2009) NPL by Sector (Jun 2014) Comments N36.1Bn General Commerce 38% Oil & Gas 23% Construction 5% Transportation & Storage 2% Agriculture, Forestry & Fishing 5% Power & Energy 11% Information & Communication 3% Others 13% General Commerce and Real Estate accounted for about 67% of total NPLs. The Group has managed its credit risk more effectively through its improved risk management practices as demonstrated by < 5% NPL ratio. 23

24 Group Asset Quality NPL Ratio Coverage Ratio 4.7% 4.4% 4.6% 4.6% 88.9% 116.1% 104.0% 102.7% 104.5% 3.5% Dec Dec Mar Jun Sep Dec Dec Mar Jun Sep Cost of Risk Comments Cost of risk remained stable in Sep Coverage ratio increased to 104.5% in Sep from 102.7% in Jun % 3.5% 2.7% 2.4% 2.7% NPL ratio remained at sub 5% in Sep Dec Dec Mar Jun Sep

25 Group Net Interest Margin Strong Net Interest Margin (NIM) Yield on Earning Assets 9.9% 13.8% 8.1% 7.4% 7.1% 7.2% 11.1% 10.3% 10.1% 10.4% Dec Dec Mar Jun Sep Dec Dec Mar Jun Sep Low Cost of Funds Comments 2.9% 3.4% 3.3% 3.4% 3.8% The bank will continue to protect its margin by leveraging on its Retail Banking strategy to maintain cost of funds below industry average. Cost of funds of 3.8% Dec Dec Mar Jun Sep

26 Bank Capital and Liquidity Capital Adequacy (CAR) 17.3% 17.3% 17.1% 17.0% 16.9% 15% 15% 15% 15% 15% Comments Liquidity ratio of 40.4% in Q from 41.8% in FY The deposit liabilities funded 75% of the group s total assets. Capital adequacy ratio of 16.9% achieved in Q3 2014, which remained above the regulatory benchmark of 15%. CAR is expected to improve significantly with the conclusion of the Rights Issue in Q Dec Dec Mar Jun Sep Actual CAR Stat. Minimum Requirement Liquidity 42.3% 41.8% 38.4% 34.1% 40.4% 30% 30% 30% 30% 30% Dec Dec Mar Jun Sep Liquidity Stat. Minimum Requirement 26

27 Outline Executive Summary (by Uzoma Dozie, GMD Designate) Strategy & Business Update (by Uzoma Dozie, GMD Designate) 9-Months 2014 Financial Performance (by Abdulrahman Yinusa, CFO) Concluding Remarks (by Uzoma Dozie, GMD Designate) 27

28 Concluding remarks The 9-Months performance of the Group remained positive despite the prevailing regulatory challenges which has continued to constrain revenue generation. We will continue to sustain our leading position within the Retail/SME space. The new Central Bank leadership has indicated intention to retain the current tight stance of monetary policy. We will continue to explore opportunities that will enable us remain competitive within the market space. Following the success recorded in the just concluded Rights Issue, we remain on course to effectively deploy the additional capital to support our rapidly expanding businesses. As we round up the 2014 year, we are determined to continue our corporate journey in the strategic direction we set for ourselves. On the back of regulatory constraints that has impacted negatively on the earnings capability of Banks, we are confident of closing the year with a minimum PBT N30 billion. 28

29 29 Thank You